PNHP

People go without health care as insurance CEOs make massive salaries

People go without health care as insurance CEOs make massive salaries

Letter to the Editor
Capital Times (Madison, Wis.), July 2, 2011

Dear Editor:

The “laboratories of democracy” concept was conceived by Supreme Court Justice Louis Brandeis in 1932. This concept has been used by Gov. Scott Walker and other business leaders to explain how the state could experiment with new ideas to improve its finances and job market.

It is ironic that Justice Brandeis was opposed to large corporate monopoly of American democracy. In 2009, $3.47 billion was spent on lobbying Congress, and almost all of this represented big corporations.

Over the last 30 years, wages for the working class have been stagnant, whereas the “Wall Street/corporate class” has seen a phenomenal concentration of wealth. In 1970, 1 percent of citizens had 9 percent of all wealth; today that 1 percent has 23.5 percent of all wealth.

In 1991, Appleton and Green Bay had the lowest health care costs in the United States, but between 2000-2010, the physician/health insurance cartels have concentrated health care monopolies there, so that health care costs have risen 290 percent. While over 50 million Americans cannot afford health insurance, UnitedHealth Group pays CEO Dr. William McGuire a $124 million annual salary ($60,000 per hour).

Money “earned” by NOT spending it on patients.

Donors to members of Congress who favor Rep. Paul Ryan’s Medicare voucher plan, which further enriches these same private health corporations, consist of the large physician/insurance corporations. Walker’s budget cuts further concentrates wealth to the Wall Street/corporate class at the expense of the working class. The last time our nation had this unbalanced concentration of wealth was in the fall of 1929.

Let’s stop experimenting with democracy in the lab, and actually put it to use: “promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, …”

Timothy Shaw, M.D.
Fitchburg, Wisc.

http://host.madison.com/ct/news/opinion/mailbag/article_c19c037a-d963-5db7-b6e6-7f50786fcb18.html

GAO report on difficulty with Medicaid and CHIP referrals

MEDICAID AND CHIP: Most Physicians Serve Covered Children but Have Difficulty Referring Them for Specialty Care

GAO
June 2011

Report to Congressional Committees

On the basis of its 2010 national survey of physicians, GAO estimates that more than three-quarters of primary and specialty care physicians are enrolled as Medicaid and CHIP providers and serving children in those programs. A larger share of primary care physicians (83 percent) are participating in the programs — enrolled as a provider and serving Medicaid and CHIP children — than specialty physicians (71 percent). Further, a larger share of rural primary care physicians (94 percent) are participating in the programs than urban primary care physicians (81 percent). Nationwide, physicians participating in Medicaid and CHIP are generally more willing to accept privately insured children as new patients than Medicaid and CHIP children. For example, about 79 percent are accepting all privately insured children as new patients, compared to about 47 percent for children in Medicaid and CHIP. Nonparticipating physicians — those not enrolled or not serving Medicaid and CHIP children — most commonly cite administrative issues such as low and delayed reimbursement and provider enrollment requirements as limiting their willingness to serve children in these programs.

Physicians experience much greater difficulty referring children in Medicaid and CHIP to specialty care, compared to privately insured children. On the basis of the physician survey, more than three times as many participating physicians — 84 percent — experience difficulty referring Medicaid and CHIP children to specialty care as experience difficulty referring privately insured children — 26 percent.

http://www.gao.gov/new.items/d11624.pdf

Comment: 

By Don McCanne, MD

This highly credible report from GAO provides more evidence that access remains a problem within the Medicaid and CHIP programs. Less than half of physicians are willing to accept children in these programs as new patients, and over four-fifths experience difficulty referring Medicaid and CHIP children to specialty care. Instead of trying to expand this chronically underfunded program, we should replace it and all other programs with a single comprehensive program for everyone that eliminates financial barriers to care. No one would ever have to ask again if a physician accepts whatever program. They would simply get the care they need, no questions asked.

GAO report on difficulty with Medicaid and CHIP referrals

MEDICAID AND CHIP: Most Physicians Serve Covered Children but Have Difficulty Referring Them for Specialty Care

GAO
June 2011

Report to Congressional Committees

On the basis of its 2010 national survey of physicians, GAO estimates that more than three-quarters of primary and specialty care physicians are enrolled as Medicaid and CHIP providers and serving children in those programs. A larger share of primary care physicians (83 percent) are participating in the programs — enrolled as a provider and serving Medicaid and CHIP children — than specialty physicians (71 percent). Further, a larger share of rural primary care physicians (94 percent) are participating in the programs than urban primary care physicians (81 percent). Nationwide, physicians participating in Medicaid and CHIP are generally more willing to accept privately insured children as new patients than Medicaid and CHIP children. For example, about 79 percent are accepting all privately insured children as new patients, compared to about 47 percent for children in Medicaid and CHIP. Nonparticipating physicians — those not enrolled or not serving Medicaid and CHIP children — most commonly cite administrative issues such as low and delayed reimbursement and provider enrollment requirements as limiting their willingness to serve children in these programs.

Physicians experience much greater difficulty referring children in Medicaid and CHIP to specialty care, compared to privately insured children. On the basis of the physician survey, more than three times as many participating physicians — 84 percent — experience difficulty referring Medicaid and CHIP children to specialty care as experience difficulty referring privately insured children — 26 percent.

http://www.gao.gov/new.items/d11624.pdf

This highly credible report from GAO provides more evidence that access remains a problem within the Medicaid and CHIP programs. Less than half of physicians are willing to accept children in these programs as new patients, and over four-fifths experience difficulty referring Medicaid and CHIP children to specialty care. Instead of trying to expand this chronically underfunded program, we should replace it and all other programs with a single comprehensive program for everyone that eliminates financial barriers to care. No one would ever have to ask again if a physician accepts whatever program. They would simply get the care they need, no questions asked.

Improved Medicare system needed for all

Letters
The Coloradoan, July 2, 2011

Rep. Cory Gardner wants us to have vouchers to pay for our health care. This would end Medicare as we know it and would decrease the quality of medicine for everyone. I propose we do something that would save money, provide health care for everyone and create a more competitive opportunity for all businesses, especially small businesses and those in the manufacturing sector.

An Improved Medicare for All (single-payer system) would create the ability to control national health expenditures with uniform rates and fees. It would have a uniform information technology system. This system would provide a single standard of care for everyone. It would increase choice where patients would choose their health provider freely. Physicians would be able to use their best clinical judgment without the interference from either insurance or government administrators.

A big plus is it will virtually eliminate bankruptcies due to medical debt.

A national single-payer health system would create conditions that will stimulate our economy. In some ways, single payer is a jobs bill.

For small businesses, single payer means relief from the increasing burden of providing health benefits to employees. By controlling rising health-care costs, single payer will allow large businesses to be more competitive in the global market.

Single payer enables those who are staying in jobs until they are eligible for Medicare to retire early, which opens jobs for those who are younger.

Congress could address both our health-care crisis and our federal deficit woes by improving and expanding Medicare to all people in our nation.

Ann Molison
Fort Collins, Colo.

ALERT: The private insurers are taking over!

Managed Care Enters The Exam Room As Insurers Buy Doctor Groups

By Christopher Weaver
Kaiser Health News/Washington Post, July 1, 2011

Even if UnitedHealth Group isn’t your insurance company, there’s a good chance it touches you in some way. The $100 billion behemoth sells technology to hospitals and other insurers, distributes drugs, manages clinical trials and offers continuing medical education, among other things, through the growing web of firms it owns.

Now, that touch could get a lot more personal.  United’s health services wing is quietly taking control of doctors who treat patients covered by United plans in several areas of the country — buying medical groups and launching physician management companies, for example.

It’s the latest sign that the barrier between companies that provide health coverage and those that actually provide care to patients is crumbling. Other large insurers, including Humana and WellPoint, have announced deals involving doctors in recent months, part of a strategy to curb rising health costs that could cut into profits and to weather new challenges to their business arising from the federal health law. But United is the biggest insurer by revenue, making the trend much more significant.

Many patients insured by these companies are going to see much tighter management of their care.

“Health care costs are still going to rise,” said Wayne DeVeydt, chief financial officer of WellPoint, which entered the business of running clinics in June with the announcement that it would acquire CareMore, a health plan operator based near Los Angeles that owns 26 clinics. “But the only way to stem those costs in the long term is to manage care on the front end.”

That means enlisting doctors. Their orders drive most health care spending, including the wasteful share: treating heart patients with expensive stents when cheaper drugs might work, or overusing high-tech imaging devices, for example. By managing doctors directly, insurers believe they can reshape the practice of medicine – and protect their profits.

For instance, CIGNA, another large insurer, saves 9 percent on patients treated by doctors in a Phoenix medical group it controls, said Stephanie Gorman, president of CIGNA Arizona. CIGNA has expanded the group over the last 18 months in response to the health law, and it now serves patients at 32 locations.

Insurance companies are pursuing doctors in response to increasing financial pressure. The health law cuts government spending on private Medicare plans that many insurers offer, imposes rules that could limit profits, and increases scrutiny of their rates. Adding to the pressure, the insurers’ customers are tired of rising prices.

Employers and other customers “are saying, I want more value for the dollars I spend in health care,” said Dawn Owens, chief executive officer of OptumHealth, United’s health services subsidiary. But, “there’s also a realization that the delivery system isn’t ready for that kind of change. That’s where we come in.”

The tools needed to control costs and improve care are things insurers have “invested in over the years,” she said. “The provider community doesn’t have those tools.”

Dr. Amir Bacchus, chief medical officer of HealthCare Partners of Nevada, a large physician group, said he learned about United’s plans in a phone call from a United recruiter. He was asked if he’d be interested in joining the company to manage 500 doctors at a network of clinics United planned to build around the country, one part of its physician strategy.

By adding physicians in some places, United “can definitely control the health system” in those areas, said Bacchus, who declined United’s overture. “It’s a threat for us,” he added. “They are going to compete directly with our business model.”

United’s OptumHealth subsidiary, meanwhile, is buying doctors’ groups, building management companies to organize physicians, fostering new partnerships with medical groups and hiring doctors at a group it already controls.

Insurers managed physician practices before, especially in the 1990s. But customers rejected those tightly managed plans. Some local plans, and larger insurers such as Kaiser Permanente, continue to employ practicing doctors. But the biggest national insurers shed such arrangements.

One reason the strategy makes sense now is that the health law could reward such arrangements. The law envisions so-called accountable care organizations, groups of doctors and hospitals that take responsibility for patients and the financial risk that comes with them. If they cut spending, they would keep some of the savings.

While hospitals are widely seen as the natural leaders of ACOs, United’s strategy positions it to lead the new systems, too, a company executive acknowledged.

Some observers watching the developments say the health law, which in part was sold as a way to rein in insurers, has had the opposite result, opening the door for the companies to take control of even more parts of the health system.

“There’s a gigantic Murphy’s law emerging here,” said Ian Morrison, a California-based health care consultant who does some work for United, as well as most of its competitors. “The very people who were the demons in all of this, that the public can’t stand” – managed-care firms – “are the big winners.”

http://www.kaiserhealthnews.org/Stories/2011/July/01/unitedhealth-insurers-buy-doctors-groups.aspx

Comment: 

By Don McCanne, MD

In the push towards integrated health systems, hospitals have been consolidating within markets in order to gain leverage in the negotiation of insurance contracts. Physicians have been consolidating within medical groups, also giving them greater market leverage. Leading the way, virtually all metropolitan insurance markets are now highly concentrated. In this power play between the health care giants, who is winning and who is losing?

Although the Medicare Shared Savings version of accountable care organizations is not gaining much traction, the underlying concept of integrating physicians and hospitals is. We are witnessing a power play by physician groups that want to be the entry point for health care through primary care medical homes and integrated specialty services. Many of these medical groups are establishing associations with hospitals in order to be able to contract with insurers as providers of comprehensive health care services.

On the other hand, hospitals would like to be in control, so they are not only consolidating but they are also purchasing physician practices. Is it the hospitals or the physicians who are winning this game?

Think back on how health care reform played out. Hospitals and physicians meekly supported the process mostly out of fear that their lot would be much worse off if they weren’t there during the process. But who was placed in control, with representatives actually writing the Affordable Care Act? The insurance industry! Everyone will be required to purchase their products, Medicaid is being converted to managed care organizations, and Medicare Advantage private health plans have been expanding. The private insurers are being given control of much of our national health care spending.

Look what the insurers are doing with that control. In the full version of the article provided at the link above and in many other information resources, you will see that the insurers are very busy trying to buy up enough of the health care delivery system to gain control of the health care markets. They will not only be the money managers for health care, but they will replace the current owners of the health care delivery system. In the worst possible outcome imaginabl
e, they will be the actual providers of our health care!

Karen Ignagni of Americas Health Insurance Plans stated repeatedly during the reform process that the measure must provide effective mechanisms of controlling costs. It doesn’t. But now that the insurers are gaining total control, they will be able to bring us cost containment, but on their terms. How? As the CFO of WellPoint states, by owning the delivery system, they will be able to “manage care at the front end.” They will use their own doctors to prevent “overuse” and “protect their profits.”

A single payer system would be designed to macromanage dollars but would leave micromanagement of health care to the physicians and their patients. Once the insurers become the owners, the insurers will move in as the micromanagers of health care. Patients not only lose choice of their health care providers, but they also lose choice of their health care services and products.

So between the hospitals and the physicians, who comes out the winners? Neither. It’s the insurers who win. You can argue about whether or not the hospitals and physicians would be losers (or rather how much they would lose), but the tragedy of all of this is that the real losers would be those for whom the health care system should be designed – the patients.

For those who support a single payer Medicare for all system and believe that it will only be a matter of time before we’re there, think about this. When we have enacted a single payer system, the government will then negotiate with the providers of health care for delivery of health care services. That will not be with the physicians nor the hospital administrators, but it will be with the owners of the health care delivery system – the private insurers!

Unless we can enlist an outraged public to fight this thing, we will not end up with a single payer health care nirvana for all, but a single payer health care inferno from hell. Never have we had a greater imperative to inform and activate the public than right now. Let’s do it!

Vermont plan aims to control health care costs

By Wally Retan, M.D.
The Birmingham News, July 3, 2011

Begin with what everyone knows. Health care costs and health insurance costs are climbing more than twice as fast as the cost of living and have been for years. There is no need for numbers to prove that statement. Just ask anyone who buys health insurance on his own, any employer trying to take care of his employees, and any employee whose wages are flat because of the rising cost of insurance.

There are two big ways governments are trying to control the rising cost of care. The federal government is cranking up the Independent Payment Advisory Board. The state of Vermont is starting something that’s a little bit similar to the IPAB — similar, but also a whole lot different.

The IPAB has gotten the most attention lately. The board is to be made up of 15 experts, including doctors and patient advocates, nominated by the president and confirmed by the Senate.

If Medicare costs continue to rise faster than the cost of living, the IPAB would recommend policies to Congress to help Medicare provide better care at lower cost. This could include ideas on coordinating care, getting rid of waste in the system, incentivizing best practices and prioritizing primary care.

The IPAB is specifically prohibited by law from recommending any policies that ration care, raise taxes, increase premiums or cost-sharing, reduce benefits or modify who is eligible for Medicare.

Congress then has the power to accept or to reject the IPAB’s recommendations. If Congress rejects recommendations and Medicare spending exceeds specific targets, Congress must either enact policies that achieve equivalent savings or let the secretary of Health and Human Services follow the board’s recommendations.

It would be fair to say there are critics of the IPAB. The Wall Street Journal wrote that President Barack Obama “is relying on the so-far-unidentified technocratic reforms of 15 so-far-unidentified geniuses who are supposed to give up medical practice or academic research for the privilege of a government salary.” The Journal then concludes “the most likely outcome of the Board’s activity is the political rationing of care for the elderly as now occurs in Britain or else the board will drive prices so low that many doctors and hospitals drop out of Medicare.”

Whether the critics are right could be beside the point. There’s one fatal flaw in the way the IPAB is intended to work: Everything depends on a future Congress choosing to follow orders the recent Congress wrote into the Affordable Care Act. There is absolutely no reason to believe a future Congress would feel it had to follow those orders. The only orders any Congress has to follow are in the Constitution.

Vermont has taken health care reform one step further. This spring, its governor signed a law intended to give all of its citizens government-funded, taxpayer-financed health insurance. It sets up a board with the following duties, among others: “Oversee the development and implementation, and evaluate the effectiveness, of health care payment and delivery system reforms designed to control the rate of growth in health care costs and maintain health care quality in Vermont, including (control over) payment reform pilot projects.”

Also, it is to “implement methodologies for achieving payment reform and containing costs, which may include the creation of health care professional cost-containment targets, global payments, bundled payments, global budgets, risk-adjusted capitated payments, or other uniform payment methods and amounts for integrated delivery systems, health care professionals, or other provider arrangements.”

No limitations. No exclusions. No exceptions. All insurance, not only Medicare.

Yes, Vermont’s health care system is intended to become a single-payer system someday soon, but a single-payer system that controls the growing cost of health care.

Wally Retan, M.D., of Mountain Brook is state coordinator for the Alabama chapter of Physicians for a National Health Program (www.PNHP.org) and Health Care for Everyone-Alabama (www.HealthCareForEveryone-Alabama.org). Email: wretan2900@charter.net.

http://blog.al.com/birmingham-news-commentary/2011/07/my_view_vermont_plan_controls.html

The Old, the Young and Medicare

Letters
The New York Times, July 3, 2011

I disagree with Daniel Callahan. I think that the economist Robert B. Reich expressed it best: “Medicare isn’t the problem. It is the solution.”

We do not have to reduce benefits or raise the age of eligibility to save Medicare. We need to expand and improve it so we have Medicare for all. This is what many other industrialized nations have done. They bring high-quality medical care to all their citizens at half the cost of what we spend.

It’s a no-brainer. Expanding the pool of beneficiaries to include everyone and financing it with progressive taxes is the way to “save” Medicare. There is already a bill in Congress, H.R. 676, that accomplishes this. We need to pass it.

ELIZABETH R. ROSENTHAL
Larchmont, N.Y., June 29, 2011

The writer is a dermatologist.

http://www.nytimes.com/2011/07/03/opinion/sunday/l03dialogue.html?_r=1&pagewanted=1

ALERT: The private insurers are taking over!

Managed Care Enters The Exam Room As Insurers Buy Doctor Groups

By Christopher Weaver
Kaiser Health News/Washington Post, July 1, 2011

Even if UnitedHealth Group isn’t your insurance company, there’s a good chance it touches you in some way. The $100 billion behemoth sells technology to hospitals and other insurers, distributes drugs, manages clinical trials and offers continuing medical education, among other things, through the growing web of firms it owns.

Now, that touch could get a lot more personal.  United’s health services wing is quietly taking control of doctors who treat patients covered by United plans in several areas of the country — buying medical groups and launching physician management companies, for example.

It’s the latest sign that the barrier between companies that provide health coverage and those that actually provide care to patients is crumbling. Other large insurers, including Humana and WellPoint, have announced deals involving doctors in recent months, part of a strategy to curb rising health costs that could cut into profits and to weather new challenges to their business arising from the federal health law. But United is the biggest insurer by revenue, making the trend much more significant.

Many patients insured by these companies are going to see much tighter management of their care.

“Health care costs are still going to rise,” said Wayne DeVeydt, chief financial officer of WellPoint, which entered the business of running clinics in June with the announcement that it would acquire CareMore, a health plan operator based near Los Angeles that owns 26 clinics. “But the only way to stem those costs in the long term is to manage care on the front end.”

That means enlisting doctors. Their orders drive most health care spending, including the wasteful share: treating heart patients with expensive stents when cheaper drugs might work, or overusing high-tech imaging devices, for example. By managing doctors directly, insurers believe they can reshape the practice of medicine – and protect their profits.

For instance, CIGNA, another large insurer, saves 9 percent on patients treated by doctors in a Phoenix medical group it controls, said Stephanie Gorman, president of CIGNA Arizona. CIGNA has expanded the group over the last 18 months in response to the health law, and it now serves patients at 32 locations.

Insurance companies are pursuing doctors in response to increasing financial pressure. The health law cuts government spending on private Medicare plans that many insurers offer, imposes rules that could limit profits, and increases scrutiny of their rates. Adding to the pressure, the insurers’ customers are tired of rising prices.

Employers and other customers “are saying, I want more value for the dollars I spend in health care,” said Dawn Owens, chief executive officer of OptumHealth, United’s health services subsidiary. But, “there’s also a realization that the delivery system isn’t ready for that kind of change. That’s where we come in.”

The tools needed to control costs and improve care are things insurers have “invested in over the years,” she said. “The provider community doesn’t have those tools.”

Dr. Amir Bacchus, chief medical officer of HealthCare Partners of Nevada, a large physician group, said he learned about United’s plans in a phone call from a United recruiter. He was asked if he’d be interested in joining the company to manage 500 doctors at a network of clinics United planned to build around the country, one part of its physician strategy.

By adding physicians in some places, United “can definitely control the health system” in those areas, said Bacchus, who declined United’s overture. “It’s a threat for us,” he added. “They are going to compete directly with our business model.”

United’s OptumHealth subsidiary, meanwhile, is buying doctors’ groups, building management companies to organize physicians, fostering new partnerships with medical groups and hiring doctors at a group it already controls.

Insurers managed physician practices before, especially in the 1990s. But customers rejected those tightly managed plans. Some local plans, and larger insurers such as Kaiser Permanente, continue to employ practicing doctors. But the biggest national insurers shed such arrangements.

One reason the strategy makes sense now is that the health law could reward such arrangements. The law envisions so-called accountable care organizations, groups of doctors and hospitals that take responsibility for patients and the financial risk that comes with them. If they cut spending, they would keep some of the savings.

While hospitals are widely seen as the natural leaders of ACOs, United’s strategy positions it to lead the new systems, too, a company executive acknowledged.

Some observers watching the developments say the health law, which in part was sold as a way to rein in insurers, has had the opposite result, opening the door for the companies to take control of even more parts of the health system.

“There’s a gigantic Murphy’s law emerging here,” said Ian Morrison, a California-based health care consultant who does some work for United, as well as most of its competitors. “The very people who were the demons in all of this, that the public can’t stand” – managed-care firms – “are the big winners.”

http://www.kaiserhealthnews.org/Stories/2011/July/01/unitedhealth-insurers-buy-doctors-groups.aspx

In the push towards integrated health systems, hospitals have been consolidating within markets in order to gain leverage in the negotiation of insurance contracts. Physicians have been consolidating within medical groups, also giving them greater market leverage. Leading the way, virtually all metropolitan insurance markets are now highly concentrated. In this power play between the health care giants, who is winning and who is losing?

Although the Medicare Shared Savings version of accountable care organizations is not gaining much traction, the underlying concept of integrating physicians and hospitals is. We are witnessing a power play by physician groups that want to be the entry point for health care through primary care medical homes and integrated specialty services. Many of these medical groups are establishing associations with hospitals in order to be able to contract with insurers as providers of comprehensive health care services.

On the other hand, hospitals would like to be in control, so they are not only consolidating but they are also purchasing physician practices. Is it the hospitals or the physicians who are winning this game?

Think back on how health care reform played out. Hospitals and physicians meekly supported the process mostly out of fear that their lot would be much worse off if they weren’t there during the process. But who was placed in control, with representatives actually writing the Affordable Care Act? The insurance industry! Everyone will be required to purchase their products, Medicaid is being converted to managed care organizations, and Medicare Advantage private health plans have been expanding. The private insurers are being given control of much of our national health care spending.

Look what the insurers are doing with that control. In the full version of the article provided at the link above and in many other information resources, you will see that the insurers are very busy trying to buy up enough of the health care delivery system to gain control of the health care markets. They will not only be the money managers for health care, but they will replace the current owners of the health care delivery system. In the worst possible outcome imaginable, they will be the actual providers of our health care!

Karen Ignagni of Americas Health Insurance Plans stated repeatedly during the reform process that the measure must provide effective mechanisms of controlling costs. It doesn’t. But now that the insurers are gaining total control, they will be able to bring us cost containment, but on their terms. How? As the CFO of WellPoint states, by owning the delivery system, they will be able to “manage care at the front end.” They will use their own doctors to prevent “overuse” and “protect their profits.”

A single payer system would be designed to macromanage dollars but would leave micromanagement of health care to the physicians and their patients. Once the insurers become the owners, the insurers will move in as the micromanagers of health care. Patients not only lose choice of their health care providers, but they also lose choice of their health care services and products.

So between the hospitals and the physicians, who comes out the winners? Neither. It’s the insurers who win. You can argue about whether or not the hospitals and physicians would be losers (or rather how much they would lose), but the tragedy of all of this is that the real losers would be those for whom the health care system should be designed – the patients.

For those who support a single payer Medicare for all system and believe that it will only be a matter of time before we’re there, think about this. When we have enacted a single payer system, the government will then negotiate with the providers of health care for delivery of health care services. That will not be with the physicians nor the hospital administrators, but it will be with the owners of the health care delivery system – the private insurers!

Unless we can enlist an outraged public to fight this thing, we will not end up with a single payer health care nirvana for all, but a single payer health care inferno from hell. Never have we had a greater imperative to inform and activate the public than right now. Let’s do it!

Prof. Gerald Friedman on single payer

Universal Health Care: Can We Afford Anything Less?

By Gerald Friedman
Dollars and Sense, July/August 2011

America’s broken health-care system suffers from what appear to be two separate problems. From the right, a chorus warns of the dangers of rising costs; we on the left focus on the growing number of people going without health care because they lack adequate insurance. This division of labor allows the right to dismiss attempts to extend coverage while crying crocodile tears for the 40 million uninsured. But the division between problem of cost and the problem of coverage is misguided. It is founded on the assumption, common among neoclassical economists, that the current market system is efficient. Instead, however, the current system is inherently inefficient; it is the very source of the rising cost pressures. In fact, the only way we can control health-care costs and avoid fiscal and economic catastrophe is to establish a single-payer system with universal coverage.

In short, the question is not whether we can afford a single-payer health-insurance system that would provide adequate health care for all Americans. The real question is: can we afford anything else?

(Gerald Friedman is a professor of economics at the University of Massachusetts-Amherst.)

http://www.dollarsandsense.org/archives/2011/0711friedman.html

Comment:

By Don McCanne, MD

It is great to have on board another economist from the academic community who understands the imperative of the single payer model. We should be hearing more from Professor Gerald Friedman.

NOW reaffirms support for single-payer health reform

National Organization for Women

Press release, June 27, 2011

The National Organization for Women wrapped up its 45th National Conference in Tampa, Fla. on Sunday, June 26, setting NOW’s policy and agenda for the coming year and looking toward the 2012 elections and beyond. Topping NOW’s policy agenda are improved Social Security benefits for women and a “Medicare for All” single-payer health care system as the solution to our health and fiscal crisis, including supporting Sen. Bernie Sanders’ American Health Security Act of 2011 (S 915).

“Women need jobs, not cuts,” said NOW President Terry O’Neill. “We oppose any cuts to Medicare, Medicaid and any health benefits derived from the Social Security Act. And candidates who want women’s support need to stand with us in support of single-payer health care legislation on the state and federal levels.”

Celebrations erupted throughout the conference when the New York state senate passed the marriage equality bill by a 33-29 vote. “This was a historic moment,” said O’Neill, “New York is the largest state to recognize same-sex marriage and we want other states to follow suit quickly. I’m proud of NOW’s long support for LGBT rights and even prouder that the conference passed a resolution calling for stepped-up activism for marriage equality.”

Other resolutions passed on the final day of the conference included pressing for reproductive civil rights legislation, using Title IX action networks to help end sex discrimination in education, ensuring inclusion of women and girls with disabilities in the U.S. Department of State programming and more.

The conference presenters, speakers and honorees, who included influential women in politics, groundbreaking activists and leaders in the medical field, were inspiring and motivating to the hundreds of NOW leaders gathered in Tampa.

O’Neill concluded: “The energy of the women that filled the rooms made this year’s NOW conference one to remember. I’m thrilled by the success of our gathering, and re-energized to win women’s long struggle for equality.”

http://now.org/press/06-11/06-27.html

Universal Health Care: Can We Afford Anything Less?

Why only a single-payer system can solve America’s health-care mess.

By Gerald Friedman
Dollars and Sense, July 2011

America’s broken health-care system suffers from what appear to be two separate problems. From the right, a chorus warns of the dangers of rising costs; we on the left focus on the growing number of people going without health care because they lack adequate insurance. This division of labor allows the right to dismiss attempts to extend coverage while crying crocodile tears for the 40 million uninsured. But the division between problem of cost and the problem of coverage is misguided. It is founded on the assumption, common among neoclassical economists, that the current market system is efficient. Instead, however, the current system is inherently inefficient; it is the very source of the rising cost pressures. In fact, the only way we can control health-care costs and avoid fiscal and economic catastrophe is to establish a single-payer system with universal coverage.

The rising cost of health care threatens the U.S. economy. For decades, the cost of health insurance has been rising at over twice the general rate of inflation; the share of American income going to pay for health care has more than doubled since 1970 from 7% to 17%. By driving up costs for employees, retirees, the needy, the young, and the old, rising health-care costs have become a major problem for governments at every level. Health costs are squeezing public spending needed for education and infrastructure. Rising costs threaten all Americans by squeezing the income available for other activities. Indeed, if current trends continued, the entire economy would be absorbed by health care by the 2050s.

Conservatives argue that providing universal coverage would bring this fiscal Armageddon on even sooner by increasing the number of people receiving care. Following this logic, their policy has been to restrict access to health care by raising insurance deductibles, copayments, and cost sharing and by reducing access to insurance. Even before the Great Recession, growing numbers of American adults were uninsured or underinsured. Between 2003 and 2007, the share of non-elderly adults without adequate health insurance rose from 35% to 42%, reaching 75 million. This number has grown substantially since then, with the recession reducing employment and with the continued decline in employer-provided health insurance. Content to believe that our current health-care system is efficient, conservatives assume that costs would have risen more had these millions not lost access, and likewise believe that extending health-insurance coverage to tens of millions using a plan like the Affordable Care Act would drive up costs even further. Attacks on employee health insurance and on Medicare and Medicaid come from this same logic—the idea that the only way to control health-care costs is to reduce the number of people with access to health care. If we do not find a way to control costs by increasing access, there will be more proposals like that of Rep. Paul Ryan (R-Wisc.) and the Republicans in the House of Representatives to slash Medicaid and abolish Medicare.

The Problem of Cost in a Private, For-Profit Health Insurance System

If health insurance were like other commodities, like shoes or bow ties, then reducing access might lower costs by reducing demands on suppliers for time and materials. But health care is different because so much of the cost of providing it is in the administration of the payment system rather than in the actual work of doctors, nurses, and other providers, and because coordination and cooperation among different providers is essential for effective and efficient health care. It is not cost pressures on providers that are driving up health-care costs; instead, costs are rising because of what economists call transaction costs, the rising cost of administering and coordinating a system that is designed to reduce access.

The health-insurance and health-care markets are different from most other markets because private companies selling insurance do not want to sell to everyone, but only to those unlikely to need care (and, therefore, most likely to drop coverage if prices rise). As much as 70% of the “losses” suffered by health-insurance providers—that is, the money they pay out in claims—goes to as few as 10% of their subscribers. This creates a powerful incentive for companies to screen subscribers, to identify those likely to submit claims, and to harass them so that they will drop their coverage and go elsewhere. The collection of insurance-related information has become a major source of waste in the American economy because it is not organized to improve patient care but to harass and to drive away needy subscribers and their health-care providers. Because driving away the sick is so profitable for health insurers, they are doing it more and more, creating the enormous bureaucratic waste that characterizes the process of billing and insurance handling. Rising by over 10% a year for the past 25 years, health insurers’ administrative costs are among the fastest-growing in the U.S. health-care sector. Doctors in private practice now spend as much as 25% of their revenue on administration, nearly $70,000 per physician for billing and insurance costs.

For-profit health insurance also creates waste by discouraging people from receiving preventive care and by driving the sick into more expensive care settings. Almost a third of Americans with “adequate” health insurance go without care every year due to costs, and the proportion going without care rises to over half of those with “inadequate” insurance and over two-thirds for those without insurance. Nearly half of the uninsured have no regular source of care, and a third did not fill a prescription in the past year because of cost. All of this unutilized care might appear to save the system money. But it doesn’t. Reducing access does not reduce health-care expenditures when it makes people sicker and pushes them into hospitals and emergency rooms, which are the most expensive settings for health care and are often the least efficient because care provided in these settings rarely has continuity or follow-up.

Sources of Savings and Added Costs for a Hypothetical Massachusetts Single-Payer Health System

The great waste in our current private insurance system is an opportunity for policy because it makes it possible to economize on spending by replacing our current system with one providing universal access. I have estimated that in Massachusetts, a state with a relatively efficient health-insurance system, it would be possible to lower the cost of providing health care by nearly 16% even after providing coverage to everyone in the state currently without insurance (see Table 1). This could be done largely by reducing the cost of administering the private insurance system, with most of the savings coming within providers’ offices by reducing the costs of billing and processing insurance claims. This is a conservative estimate made for a state with a relatively efficient health-insurance system. In a report prepared for the state of Vermont, William Hsiao of the Harvard School of Public Health and MIT economist Jonathan Gruber estimate that shifting to a single-payer system could lead to savings of around 25% through reduced administrative cost and improved delivery of care. (They have also noted that administrative savings would be even larger if the entire country shifted to a single-payer system because this would save the cost of billing people with private, out-of-state insurance plans.) In Massachusetts, my conservative estimates suggests that as m
uch as $10 billion a year could be saved by shifting to a single-payer system.

Greater Increase in Cost for U.S. Health-Care System, 1971-2007

Single-Payer Systems Control Costs by Providing Better Care

Adoption of a single-payer health-insurance program with universal coverage could also save money and improve care by allowing better coordination of care among different providers and by providing a continuity of care that is not possible with competing insurance plans. A comparison of health care in the United States with health care in other countries shows how large these cost savings might be. When Canada first adopted its current health-care financing system in 1968, the health-care share of the national gross domestic product in the United States (7.1%) was nearly the same as in Canada (6.9%), and only a little higher than in other advanced economies. Since then, however, health care has become dramatically more expensive in the United States. In the United States, per capita health-care spending since 1971 has risen by over $6,900 compared with an increase of less than $3,600 in Canada and barely $3,200 elsewhere (see Table 2). Physician Steffie Woolhandler and others have shown how much of this discrepancy between the experience of the United States and Canada can be associated with the lower administrative costs of Canada’s single-payer system; she has found that administrative costs are nearly twice as high in the United States as in Canada—31% of costs versus 17%.

The United States is unique among advanced economies both for its reliance on private health insurance and for rapid inflation in health-care costs. Health-care costs have risen faster in the United States than in any other advanced economy: twice as fast as in Canada, France, Germany, Sweden, or the United Kingdom. We might accept higher and rapidly rising costs had Americans experienced better health outcomes. But using life expectancy at birth as a measure of general health, we have gone from a relatively healthy country to a relatively unhealthy one. Our gain in life expectancy since 1971 (5.4 years for women) is impressive except when put beside other advanced economies (where the average increase is 7.3 years).

The relatively slow increase in life expectancy in the United States highlights the gross inefficiency of our private health-care system. Had the United States increased life expectancy at the same dollar cost as in other countries, we would have saved nearly $4,500 per person. Or, put another way, had we increased life expectancy at the same rate as other countries, our spending increase since 1971 would have bought an extra 15 years of life expectancy, 10 years more than we have. The failure of American life expectancy to rise as fast as life expectancy elsewhere can be directly tied to the inequitable provision of health care through our private, for-profit health-insurance system. Increases in life expectancy since 1990 have been largely restricted to relatively affluent Americans with better health insurance. Since 1990, men in the top 50% of the income distribution have had a six-year increase in life expectancy at age 65 compared with an increase of only one year for men earning below the median.

Increase in Health-Care Expenditures per Capita Associated with an Increase of One Year in Female Life Expectancy, 1971-2007

Rising health-care costs reflect in part the greater costs of caring for an aging population with more chronic conditions. As such, the United States looks especially bad because our population is aging less quickly than that of other countries because of high rates of immigration, relatively higher fertility, and the slower increase in life expectancy in the United States. Countries also buy higher life expectancy by spending on health care; rising health expenditures have funded improvements in treatment that have contributed to rising life expectancy throughout the world. Female life expectancy at birth has increased by nearly nine years in Germany since 1971, by over eight years in France, by seven years in Canada and the United Kingdom, and by six years in Sweden. By contrast, the United States, where female life expectancy increased by a little over five years, has done relatively poorly despite increasing health-care expenditures that dwarf those of other countries. In other countries, increasing expenditures by about $500 per person is associated with an extra year of life expectancy. With our privatized health-insurance system, we need spending increases over twice as large to gain an extra year of life (see Figure 1).

Difference in Female Life Expectancy at Birth (in Years), U.S. Compared with Other Countries, 1971 and 2007

The international comparison also provides another perspective on any supposed trade-off between containing costs and expanding coverage. In countries other than the United States, almost all of the increase in health-care spending as a share of national income is due to better quality health care as measured by improvements in life expectancy (see Figure 2). The problem of rising health-care costs is almost unique to the United States, the only advanced industrialized country without universal coverage and without any effective national health plan.

In short, the question is not whether we can afford a single-payer health-insurance system that would provide adequate health care for all Americans. The real question is: can we afford anything else?

Gerald Friedman is a professor of economics at the University of Massachusetts-Amherst

Sources: Cathy Shoen, “How Many Are Underinsured? Trends Among U.S. Adults, 2003 and 2007,” Health Affairs, June 10, 2008; “Insured but Poorly Protected: How Many Are Underinsured?  U. S. Adults Trends, 2003 to 2007,” Commonwealth Fund, June 10, 2008 (commonwealthfund.org); David Cutler and Dan Ly, “The (Paper) Work of Medicine: Understanding International Medical Costs,” Journal of Economic Perspectives, Spring 2011; Stephen M. Davidson, Still Broken: Understanding the U.S. Health Care System, Stanford Business Books, 2010; P Franks and C M Clancy, “Health insurance and mortality. Evidence from a national cohort,” The Journal of the American Medical Association, August 11, 1993; Allan Garber and Jonathan Skinner, “Is American Health Care Uniquely Inefficient?” Journal of Economic Perspectives, Fall 2008; Jonathan Gruber, “The Role of Consumer Co-payments for Health Care: Lessons from the RAND Health Insurance Experiment and Beyond,” Kaiser Family Foundation, October 2006 (kff.org); David Himmelstein and Steffie Woolhandler, “Administrative Waste in the U.S. Health Care System in 2003,” International Journal of Health Services, 2004; “The Uninsured: A Primer: Supplemental Data Tables,” Kaiser Family Foundation, December 2010; Karen Davis and Cathy Shoen, “Slowing the Growth of U.S. Health Care Expenditures: What are the Options?” Commonwealth Fund, January 2007 (commonwealthfund.org); “Accounting for the Cost of Health Care in the United States,” McKinsey Global Institute, January 2007 (mckinsey.com); “Investigation of Health Care Cost Trends and Cost Drivers,” Office of Massachusetts Attorney General Martha Coakley, January 29, 2010 (mass.gov);
 Trends in Mortality Differentials and Life Expectancy for Male Social Security-Covered Workers, by Average Relative Earnings by Hilary Waldron, Social Security Administration, October 2007; Richard G. Wilkinson, The Spirit Level, Bloomsbury Press, 2010; William Hsiao and Steven Kappel, “Act 128: Health System Reform Design.  Achieving Affordable Universal Health Care in Vermont,” January 21, 2011 (leg.state.vt.us); Steffie Woolhandler and Terry Campbell, “Cost of Health Care Administration in the United States and Canada,” New England Journal of Medicine, 2003.

http://www.dollarsandsense.org/archives/2011/0711friedman.html

Prof. Gerald Friedman on single payer

Universal Health Care: Can We Afford Anything Less?

By Gerald Friedman
Dollars and Sense, July/August 2011

America’s broken health-care system suffers from what appear to be two separate problems. From the right, a chorus warns of the dangers of rising costs; we on the left focus on the growing number of people going without health care because they lack adequate insurance. This division of labor allows the right to dismiss attempts to extend coverage while crying crocodile tears for the 40 million uninsured. But the division between problem of cost and the problem of coverage is misguided. It is founded on the assumption, common among neoclassical economists, that the current market system is efficient. Instead, however, the current system is inherently inefficient; it is the very source of the rising cost pressures. In fact, the only way we can control health-care costs and avoid fiscal and economic catastrophe is to establish a single-payer system with universal coverage.

In short, the question is not whether we can afford a single-payer health-insurance system that would provide adequate health care for all Americans. The real question is: can we afford anything else?

(Gerald Friedman is a professor of economics at the University of Massachusetts-Amherst.)

http://www.dollarsandsense.org/archives/2011/0711friedman.html

It is great to have on board another economist from the academic community who understands the imperative of the single payer model. We should be hearing more from Professor Gerald Friedman.