PNHP

We need major health reform

We need major health reform

By Glen Peterson
My View
The Free Press (Mankato, Minn.)
August 25, 2009

The author of two recent My View columns argues against a “public option” being added to our health care system in one column and argues that health insurance should be private in another column. Referring to a report published by the World Health Organization that compared 191 nations, he cites one WHO analysis of “being responsive to patient needs” in which the United States had the highest rating.

He fails to mention that was just one of many analyses conducted, and in the same report the WHO ranked the U.S. 37th in overall health system performance, just ahead of Cuba and Slovania and just behind Costa Rica.

Why does the U.S. compare so poorly to the rest of the industrial world? Among many reasons, our costs are excessive and a great number of Americans are uninsured or underinsured. These problems can be directly attributed to the practices of private health insurers who uniquely in the U.S. provide our primary means of connecting consumers with providers.

According to data published in the medical journal Health Affairs, in 2009 health care spending in the U.S. will total $2.5 trillion or $8,160 per capita (approximately double the health care spending in other industrial countries). Health care spending will account for 17.4 percent of the U.S. gross domestic product (GDP), compared to typically around 10 percent among other industrial countries.

Approximately 60 percent of the funding for health care comes directly or indirectly from taxes. We already pay as much per capita in taxes for health care as do residents in other nations that cover 100 percent of their citizens without additional costs to consumers or to businesses. Approximately 20 percent is paid by consumers for charges such as premiums, deductibles, co-pays, and other uncovered costs. The final 20 percent comes from employers who provide health insurance as part of employee compensation.

Where does the money we pay for health care go? While publicly administered health care programs such a Medicare or Veterans Health Administration have administrative overhead of about 2 or 3 percent, private insurers have varying costs for overhead. A widely cited and accepted average of 20 percent is consistent with the range of 10 percent to 30 percent that is estimated by Paul Keckly, executive director of Deliotte Center for Health Solutions. Executive compensation is just one example of why private insurer overhead is so costly. Current and previous CEOs of Minnetonka-based UnitedHealth Group both have been awarded unexercised stock options worth hundreds of millions of dollars. The previous CEO, who was ousted in a stock options backdating scandal, had many years of annual compensation of more than $50 million.

The Minnesota Office of the Legislative Auditor admits that oversight is inadequate and estimates overhead of “non-profit” health insurers to range from 6 percent to 20 percent. CEOs of Minnesota’s three major non-profit health insurers consistently exceed $1 million each in annual compensation with one CEO receiving closer to $3 million in many years. Among other “overhead” costs we are all paying for, The Center for Responsive Politics reports that insurers and HMO’s have contributed more than $40 million to current members of Congress over the past 10 years.

Recently private insurers are spending over $1 million per day on lobbying. Some insurers also pay employees whose job is to find ways and excuses to deny the claims of policy holders, even when denials are life threatening. It is not publicly administered programs that operate “death panels.” These examples of exorbitant costs are being paid for with our money intended to provide needed health care.

A second major problem associated with private health insurance has to do with limited coverage. With 47 million Americans having no form of health insurance approximately 16 percent of Americans have no systematic, reliable access to needed health care services. This “rationing” is virtually nonexistent in other industrial nations.

Also, in a recent study published in The American Journal of Medicine, researchers from Harvard found that 62.1 percent of all bankruptcies in the U.S. were related to medical costs. Of these, 75 percent actually had health insurance. Even with private health insurance, policy holders are tremendously vulnerable to caps, exclusions, denials and similar gaps that can result in needed treatments not being provided and bills not being paid.

Closer to home, during the August recess, staff from Congressman Tim Walz’s campaign office report retrieving over 130 personal stories from Congressional District 1 residents telling of being unable to get insurance, being dropped from insurance, having claims that are denied by insurers, and going broke or bankrupt. These abuses do not occur in publicly operated systems such as Medicare or the Veteran’s Health Administration, or in other industrial nations with entirely or primarily publicly administered health care systems.

The United States has by far the most expensive health care system in the world. Still, millions of Americans are un-served or underserved in our system. Much of the excessive cost and inefficiency can be attributed directly to the uniquely American approach of using private insurance as the “middleman” or connection between consumers and providers. Publicly administered systems in the United States and in other industrial nations have demonstrated the ability to better meet the needs of more people for less money. This fact should be a primary consideration in enacting much needed major health care reform.

Glen Peterson is a professor of rehabilitation counseling at Minnesota State University. He is an active member of the Minnesota chapter of Physicians for a National Health Program and of the Minnesota Universal Health Care Coalition, with whom he is a member of the Steering Committee and chair of the Community Organizing Committee.

http://www.mankatofreepress.com/letters/local_story_237225053.html

A simple solution

Bangor Daily News
Letter to the Editor
August 26, 2009

Let’s build on what works!

America invented Medicare; it is uniquely American. It is a proven, well-liked and efficient system. So why not just expand it so the rest of us can enjoy it?

If seniors feel they need to supplement what Medicare doesn’t cover, they go out and buy it from private insurance companies. So why can’t the rest of us do the same? Why do we have to create a whole new unproven system like a “health care exchange” or “public option”?

The old saying, “KISS — Keep It Simple Stupid,” is what is missing in the current health care reform debate.

We don’t need an incomprehensible 1,017-page health care reform plan like Congress’ HR 3200, which they can’t even ex-plain to their constituents.

I think most people would agree that if Medicare is good enough for our parents and grandparents, it’s good enough for us. So, I propose the follow-ing health care reform bill, which will meet the primary objectives for reform — affordable, universal, sustainable and equitable.

The KISS Healthcare Reform Act: Change every reference to the “age 65” in Medicare to read “age 0”; change the 2.8 percent Medicare funding in FICA to 9.9 percent; changes take effect January 2011.

Medicare is not perfect, but it’s a great place to start. We can work on improving it later as a separate issue.

Jerry Call
South Thomaston

Expand Medicare to cover the uninsured.

By Jack Bernard and Dr. Daniel Blumenthal

Atlanta Journal Constitution
Tuesday, August 25, 200

A Harvard study recently found that, despite the intense disinformation effort by those against change, Americans still view health care as one of their highest public priorities. Insurance premiums are going up four times as fast as workers’ wages, but only 28 percent of Americans rate our existing health care system as good or excellent. Our per capita health care spending is double that of any other developed country, while our health care system ranks 37th in the world, behind Costa Rica.

Yet, every day we view outrageous images of protestors disrupting town hall meetings called to discuss health care reform.

This campaign of disinformation is confusing our citizens and causing frightened members of Congress to kowtow to a shrill minority. The result is likely to be inaction, or a bill that makes only marginal adjustments to the current system. This will neither control costs (the top concern of most Americans) nor provide health care access for all (Americans’ second most important concern). What can be done?

The solution is clear: expand Medicare to cover everybody.

It is hard to attack a program almost everyone understands and that outperforms private insurance in satisfaction surveys. With universal Medicare, costs can be controlled, quality improved and access assured.

Almost every other developed country covers all its citizens with a program that resembles our Medicare, sometimes with supplemental private insurance.

In the U.S., we spend $6,714 per capita on health care annually, as compared to $3,040 in France, $3,371 in Germany, $3,678 in Canada and $2,999 in Australia. Yet all these countries have better morbidity and mortality statistics than we do.

We hear tales of foreigners who come here for medical care because of treatment delays in their home countries. Yet we rarely hear about the 750,000 Americans who went abroad for health care in 2007.

There are those who complain that the U.S. government cannot effectively run anything. Yet this is the government that put a man on the moon and operates the strongest military in the world. This is also the government that runs a health insurance program — Medicare — far more efficiently than does the private sector. Private insurance companies spend 20 to 25 percent of the premium dollar on marketing, administration, shareholder dividends and exorbitant CEO salaries. Medicare operates on an overhead of about 3 percent. The savings generated by changing to universal Medicare would literally be sufficient to cover all the uninsured.

Adding to the inefficiency of our system are the billing costs incurred by health care providers. Every hospital and medical practice must maintain massive billing departments to submit (and resubmit) claims to dozens of insurance companies with hundreds of different insurance plans. Providers in other countries typically need no more than a handful of billing staff.

Our system of providing very expensive private insurance through our employers has a deleterious effect on U.S. industry. American automobile manufacturers, struggling to survive, must pay insurance premiums for their employees. Their Japanese competitors do not have this burden. General Motors pays more for health care than for steel.

Medicare is an insurance program and all insurance programs, private or public, ration care to contain costs. The big difference is that Medicare must be responsive to the citizens because it is a public program. For example, because of public demand, Medicare added a prescription drug reimbursement benefit two years ago.

If we want to catch up with the rest of the world regarding quality, cost and access, let’s hope that more senators and representatives wake up before we are left with the status quo and our children have to deal with disaster.

Jack Bernard is a retired health care executive from Monticello. Dr. Daniel Blumenthal is associate dean at Morehouse School of Medicine.

Let's get back to what health care reform should be about

by Rose Ann DeMoro
Cleveland Plain Dealer
Wednesday August 26, 2009, 5:00 AM

From the fabricated “death panels” scares to the traumatized seniors urging legislators to keep the government’s hands “off my Medicare,” it’s apparent that the health care debate has lurched off the rails.

We’ve lost sight of families like Nathan Wilkes’ who, introducing President Barack Obama at a Colorado town hall meeting last week, described their frantic search for new health coverage after losing protection for their 6-year-old son, Thomas, who has hemophilia.

Or Janet Stephens, an emergency room nurse from Anaheim, Calif., with bladder disease who is facing the loss of her home because of monthly out-of-pocket costs of over $1,100 from her insurer.

Or the tens of thousands of other Americans callously and routinely refused needed medical care because their insurer doesn’t want to pay for it — a nightmare scenario Mike Madden of Salon wrote last week are the “death panels [that are] already here.”

Or the half of Americans who are already skipping needed medical care because of the cost. A Commonwealth Fund report Aug. 20 predicts that without reform, insurance premiums will increase another 94 percent by 2010.

How did such a critical reform, and our debate over it, go so badly astray?

In an MSNBC interview last week, Democratic Party consultant Lawrence O’Donnell said the White House erred from the start by paying too much heed to convention wisdom and compromising with themselves.

“They didn’t go for the best bill,” he said, which would have been a single-payer system, essentially expanding Medicare to cover everyone.

The system which even the fiercest critics of Obama’s plan strongly defend, when they demand protection for Medicare.

There’s a reason Americans love Medicare — and probably would love its universal expansion. A Commonwealth Fund study in May found that Medicare enrollees have greater access to care, fewer problems with medical bills and greater satisfaction with their health plans and the quality of care they receive than do customers of private plans.

Further, “elderly Medicare beneficiaries were also significantly more likely to report being very confident that they could get high quality and safe medical care when needed, and very confident that they would be able to afford the care they need.”

Even after all the attacks by Fox News, right-wing policy groups and the insurance industry, a Kaiser Foundation poll released Aug. 19 shows that by a margin of 75 percent to 22 percent, Americans favor expanding Medicare to cover people from age 55 to 64 who do not have health coverage.

Similar national systems, of course, exist in every other industrialized country, the reason the United States lags so far behind most of them in every crucial health care barometer from life span to health disparities to access, to even the much-debated issue of waiting times for care.

O’Donnell, who worked on President Bill Clinton’s failed health plan in 1994, said that his party failed to learn a crucial lesson from the 1994 debacle, that they should have spent the past 15 years preparing for this moment and pressing for the best plan of all — Medicare for all.

Instead, the administration and their allies in Congress chose to negotiate downward from the start, and ended up making concession after concession to conservative opponents likely to oppose any reform plan.

What they ended up with is a muddled message. That’s no surprise for a plan whose central element is a requirement that everyone buy private insurance products, with some subsidies offered to help low income people. This amounts to pass-throughs to the big insurers, and begins to look like another massive corporate bailout to another highly unpopular, wasteful industry.

With last November’s mandate, and sizable majorities in the House and Senate, there’s still time for the administration and Congress to salvage badly needed reform that will be genuinely universal, bring rising costs under control and improve quality.

The House has already committed to a floor vote in September on the option of expanding Medicare to cover everyone. That’s the public option that a majority of the nation’s registered nurses and doctors, those with the most daily experience with our fractured health care system, have long supported as the best way to achieve the promise of reform that started this debate.

Rose Ann DeMoro is executive director of the 86,000-member California Nurses Association/National Nurses Organizing Committee, the largest U.S. union of nurses, and a vice president of the AFL-CIO.

Trumka Tells Netroots Nation: “My Preference Is Single Payer”

Kay Tillow
All Unions Committee For Single Payer Health Care–HR 676

Pittsburgh, Pennsylvania — In a wide ranging speech to the annual Netroots Nation Convention, Richard Trumka, AFL-CIO Secretary-Treasurer, said, “My preference, and the feeling of many in the labor movement, is that we should have a single payer health care system.” Netroots Nation is the largest annual assembly of progressive bloggers and web journalists.

Trumka’s speech followed an impassioned appeal for single payer by Pennsylvania State Senator Jim Ferlo who presented the Paul Wellstone Award to Congressman Eric Massa (D-NY). Massa is a co-sponsor and one of the most outspoken supporters of HR 676, single payer healthcare legislation introduced by Congressman John Conyers (D-MI).

Trumka will return to Pittsburgh in mid September for the AFL-CIO Convention where he is expected to be elected President. More than fifty resolutions calling for the endorsement of HR 676 have been submitted to the convention.

Trumka’s remarks can be seen at: http://www.youtube.com/watch?v=WnNolT275Yw

HR 676 would institute a single payer health care system by expanding a greatly improved Medicare system to everyone residing in the U. S.

HR 676 would cover every person for all necessary medical care including prescription drugs, hospital, surgical, outpatient services, primary and preventive care, emergency services, dental, mental health, home health, physical therapy, rehabilitation (including for substance abuse), vision care, hearing services including hearing aids, chiropractic, durable medical equipment, palliative care, and long term care.

HR 676 ends deductibles and co-payments. HR 676 would save hundreds of billions annually by eliminating the high overhead and profits of the private health insurance industry and HMOs.

In the current Congress, HR 676 has 86 co-sponsors in addition to Conyers. Vermont Senator Bernie Sanders has introduced SB 703, a single payer bill in the Senate.

HR 676 has been endorsed by 556 union organizations in 49 states including 130 Central Labor Councils and Area Labor Federations and 39 state AFL-CIO’s (KY, PA, CT, OH, DE, ND, WA, SC, WY, VT, FL, WI, WV, SD, NC, MO, MN, ME, AR, MD-DC, TX, IA, AZ, TN, OR, GA, OK, KS, CO, IN, AL, CA, AK, MI, MT, NE, NY, NV & MA).

Let’s get back to what health care reform should be about

by Rose Ann DeMoro
Cleveland Plain Dealer
Wednesday August 26, 2009, 5:00 AM

From the fabricated “death panels” scares to the traumatized seniors urging legislators to keep the government’s hands “off my Medicare,” it’s apparent that the health care debate has lurched off the rails.

We’ve lost sight of families like Nathan Wilkes’ who, introducing President Barack Obama at a Colorado town hall meeting last week, described their frantic search for new health coverage after losing protection for their 6-year-old son, Thomas, who has hemophilia.

Or Janet Stephens, an emergency room nurse from Anaheim, Calif., with bladder disease who is facing the loss of her home because of monthly out-of-pocket costs of over $1,100 from her insurer.

Or the tens of thousands of other Americans callously and routinely refused needed medical care because their insurer doesn’t want to pay for it — a nightmare scenario Mike Madden of Salon wrote last week are the “death panels [that are] already here.”

Or the half of Americans who are already skipping needed medical care because of the cost. A Commonwealth Fund report Aug. 20 predicts that without reform, insurance premiums will increase another 94 percent by 2010.

How did such a critical reform, and our debate over it, go so badly astray?

In an MSNBC interview last week, Democratic Party consultant Lawrence O’Donnell said the White House erred from the start by paying too much heed to convention wisdom and compromising with themselves.

“They didn’t go for the best bill,” he said, which would have been a single-payer system, essentially expanding Medicare to cover everyone.

The system which even the fiercest critics of Obama’s plan strongly defend, when they demand protection for Medicare.

There’s a reason Americans love Medicare — and probably would love its universal expansion. A Commonwealth Fund study in May found that Medicare enrollees have greater access to care, fewer problems with medical bills and greater satisfaction with their health plans and the quality of care they receive than do customers of private plans.

Further, “elderly Medicare beneficiaries were also significantly more likely to report being very confident that they could get high quality and safe medical care when needed, and very confident that they would be able to afford the care they need.”

Even after all the attacks by Fox News, right-wing policy groups and the insurance industry, a Kaiser Foundation poll released Aug. 19 shows that by a margin of 75 percent to 22 percent, Americans favor expanding Medicare to cover people from age 55 to 64 who do not have health coverage.

Similar national systems, of course, exist in every other industrialized country, the reason the United States lags so far behind most of them in every crucial health care barometer from life span to health disparities to access, to even the much-debated issue of waiting times for care.

O’Donnell, who worked on President Bill Clinton’s failed health plan in 1994, said that his party failed to learn a crucial lesson from the 1994 debacle, that they should have spent the past 15 years preparing for this moment and pressing for the best plan of all — Medicare for all.

Instead, the administration and their allies in Congress chose to negotiate downward from the start, and ended up making concession after concession to conservative opponents likely to oppose any reform plan.

What they ended up with is a muddled message. That’s no surprise for a plan whose central element is a requirement that everyone buy private insurance products, with some subsidies offered to help low income people. This amounts to pass-throughs to the big insurers, and begins to look like another massive corporate bailout to another highly unpopular, wasteful industry.

With last November’s mandate, and sizable majorities in the House and Senate, there’s still time for the administration and Congress to salvage badly needed reform that will be genuinely universal, bring rising costs under control and improve quality.

The House has already committed to a floor vote in September on the option of expanding Medicare to cover everyone. That’s the public option that a majority of the nation’s registered nurses and doctors, those with the most daily experience with our fractured health care system, have long supported as the best way to achieve the promise of reform that started this debate.

Rose Ann DeMoro is executive director of the 86,000-member California Nurses Association/National Nurses Organizing Committee, the largest U.S. union of nurses, and a vice president of the AFL-CIO.

Europe leads in pharmaceutical research

Global Drug Discovery: Europe Is Ahead

By Donald W. Light
Health Affairs
August 25, 2009
It is widely believed that the United States has eclipsed Europe in pharmaceutical research productivity. Some leading analysts claim that although fewer drugs have been discovered worldwide over the past decade, most are therapeutically important. Yet a comprehensive data set of all new chemical entities approved between 1982 and 2003 shows that the United States never overtook Europe in research productivity, and that Europe in fact is pulling ahead of U.S. productivity. Other large studies show that most new drugs add few if any clinical benefits over previously discovered drugs.
Policy Reflections
Congressional leaders and others concerned about high prices of new patented drugs will be heartened by this analysis, because lower European prices seem to be no deterrent to strong research productivity. A previous analysis using industry-based data showed that pharmaceutical companies recover all costs and make a good profit at European prices. Europeans are not “free riders” on American patients–another myth promoted by industry that assumes that countries are separate R&D/market silos that should each pay for themselves.
The real innovation crisis for patients and society is not the recent decline in new molecular entities but the small percentage over many years of new molecular entities that provide clinical advantages to patients over existing medications. This longer pattern stems from defining “effective” as better than placebo and using soft surrogate endpoints, or substitute criteria, instead of hard clinical endpoints. As a result, the vast majority of new drugs that constitute 80 percent of U.S. pharmaceutical costs offer few therapeutic advantages and greater risks than good drugs discovered in prior years. High prices for these new drugs enable companies to spend two and a half times more on marketing than on R&D, to persuade physicians to prescribe them and patients to want them. Thus, current incentives reward better marketing more than better value.
If we want new drugs to be clinically superior to existing ones, we need to reward companies for developing them and not for developing drugs that are merely superior to placebo. Arjun Jayadev and Joseph Stiglitz propose a key strategy: pay in terms of clinical value added, as some large purchasers already do and as Consumer Reports Best Buy Drugs does by comparing value with price. Jayadev and Stiglitz also recommend having clinical trials independently run and paid for by a public body such as the National Institutes of Health so that they can be designed to measure comparative advantages and risks over existing treatments. Publicly funded trials would also reduce cost and risk for pharmaceutical companies and increase competition from smaller firms by lowering the high cost barrier that company-funded trials pose. These are some ways in which incentives can be restructured to foster greater competition for clinically superior drugs and to lower overall spending.
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.5.w969v1
Arjun Jayadev and Joseph Stiglitz, “Two Ideas To Increase Innovation And Reduce Pharmaceutical Costs And Prices,” Health Affairs, 28, no. 1 (2009): w165-w168
http://content.healthaffairs.org/cgi/content/abstract/28/1/w165

Our uniquely American health care system is noted for its high prices for relative mediocrity. Some contend that our pharmaceutical industry provides an exception. It doesn’t. We are paying high prices for new chemical entities that over 85 percent of the time are providing us with no real benefit over existing products.
Many contend nevertheless that innovations provided by U.S. pharmaceutical firms are well worth our very high prices. Yet productivity of European pharmaceutical firms remains even higher, and they are able to provide new products at much lower prices.
When reform advocates look at the excessive costs of U.S. health care, two favorite targets are the private insurance industry and the pharmaceutical firms. Policies that would reduce these burdens are no secret. Physicians for a National Health Program has described policies that would eliminate the private insurance burden. Arjun Jayadev and Nobel Laureate Joseph Stiglitz, in the article cited above, provide examples of policies that would increase value in our purchasing of pharmaceuticals.
So what is Congress’s response? They intend to expand the dysfunctional private insurance markets, and use more of our tax money for subsidies. For the biotech industry they are expanding data exclusivity thereby keeping generics off the market for longer periods. Reform is going to bring us more overpriced, inadequate private insurance plans and more overpriced pharmaceuticals/biologics.
Tell Congress that reform is not about enhancing the business models of the insurance and pharmaceutical firms. It’s about making health care affordable and accessible for everyone. Go back and get it right.

Europe leads in pharmaceutical research

Global Drug Discovery: Europe Is Ahead

By Donald W. Light
Health Affairs
August 25, 2009

It is widely believed that the United States has eclipsed Europe in pharmaceutical research productivity. Some leading analysts claim that although fewer drugs have been discovered worldwide over the past decade, most are therapeutically important. Yet a comprehensive data set of all new chemical entities approved between 1982 and 2003 shows that the United States never overtook Europe in research productivity, and that Europe in fact is pulling ahead of U.S. productivity. Other large studies show that most new drugs add few if any clinical benefits over previously discovered drugs.

Policy Reflections

Congressional leaders and others concerned about high prices of new patented drugs will be heartened by this analysis, because lower European prices seem to be no deterrent to strong research productivity. A previous analysis using industry-based data showed that pharmaceutical companies recover all costs and make a good profit at European prices. Europeans are not “free riders” on American patients–another myth promoted by industry that assumes that countries are separate R&D/market silos that should each pay for themselves.

The real innovation crisis for patients and society is not the recent decline in new molecular entities but the small percentage over many years of new molecular entities that provide clinical advantages to patients over existing medications. This longer pattern stems from defining “effective” as better than placebo and using soft surrogate endpoints, or substitute criteria, instead of hard clinical endpoints. As a result, the vast majority of new drugs that constitute 80 percent of U.S. pharmaceutical costs offer few therapeutic advantages and greater risks than good drugs discovered in prior years. High prices for these new drugs enable companies to spend two and a half times more on marketing than on R&D, to persuade physicians to prescribe them and patients to want them. Thus, current incentives reward better marketing more than better value.

If we want new drugs to be clinically superior to existing ones, we need to reward companies for developing them and not for developing drugs that are merely superior to placebo. Arjun Jayadev and Joseph Stiglitz propose a key strategy: pay in terms of clinical value added, as some large purchasers already do and as Consumer Reports Best Buy Drugs does by comparing value with price. Jayadev and Stiglitz also recommend having clinical trials independently run and paid for by a public body such as the National Institutes of Health so that they can be designed to measure comparative advantages and risks over existing treatments. Publicly funded trials would also reduce cost and risk for pharmaceutical companies and increase competition from smaller firms by lowering the high cost barrier that company-funded trials pose. These are some ways in which incentives can be restructured to foster greater competition for clinically superior drugs and to lower overall spending.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.5.w969v1

Arjun Jayadev and Joseph Stiglitz, “Two Ideas To Increase Innovation And Reduce Pharmaceutical Costs And Prices,” Health Affairs, 28, no. 1 (2009): w165-w168
http://content.healthaffairs.org/cgi/content/abstract/28/1/w165

Comment:

By Don McCanne, MD

Our uniquely American health care system is noted for its high prices for relative mediocrity. Some contend that our pharmaceutical industry provides an exception. It doesn’t. We are paying high prices for new chemical entities that over 85 percent of the time are providing us with no real benefit over existing products.

Many contend nevertheless that innovations provided by U.S. pharmaceutical firms are well worth our very high prices. Yet productivity of European pharmaceutical firms remains even higher, and they are able to provide new products at much lower prices.

When reform advocates look at the excessive costs of U.S. health care, two favorite targets are the private insurance industry and the pharmaceutical firms. Policies that would reduce these burdens are no secret. Physicians for a National Health Program has described policies that would eliminate the private insurance burden. Arjun Jayadev and Nobel Laureate Joseph Stiglitz, in the article cited above, provide examples of policies that would increase value in our purchasing of pharmaceuticals.

So what is Congress’s response? They intend to expand the dysfunctional private insurance markets, and use more of our tax money for subsidies. For the biotech industry they are expanding data exclusivity thereby keeping generics off the market for longer periods. Reform is going to bring us more overpriced, inadequate private insurance plans and more overpriced pharmaceuticals/biologics.

Tell Congress that reform is not about enhancing the business models of the insurance and pharmaceutical firms. It’s about making health care affordable and accessible for everyone. Go back and get it right.

Hold the line on healthcare, Mr President

Only in the US is medicine solely run for profit

Rose Ann DeMoro
The Times (of London)
August 21, 2009

The bizarre US healthcare debate, replete with wild distortions of the NHS, must seem incomprehensible to many in the UK. News reports have emphasised images of enraged conservatives fearing fabricated “death panels” or traumatised elderly people urging “hands off my Medicare”.

They face mostly Democratic legislators and some liberal advocacy groups who are circling their wagons around an embattled President Obama to defend their proposed minor revisions to the status quo after already surrendering more comprehensive reform.

To other industrialised countries, this fear of government having a role in protecting the health and safety of its citizens must seem especially hard to fathom. Among leading nations, only in the US is healthcare not a fundamental right, but bartered for profit by a maze of corporations.

The result is about 45 million Americans with no health coverage and tens of millions more denied medical care because their insurer won’t pay for it.

President Obama has had no trouble describing the problem. “We are held hostage at any given moment by health insurance companies that deny coverage or drop coverage or charge fees that people can’t afford,” he said in Montana in mid-August. But from the outset Mr Obama dismissed the call for a systemic transformation, deciding instead to seek support from conservative legislators and negotiate with the largest healthcare corporations in the hope of neutralising their opposition.

What’s left is a plan that will force the uninsured to buy private insurance, with subsidies for those on low incomes and limited constraints on high pricing and the denials of treatment that characterise the present faltering insurance-based system. In sum, it looks like another huge corporate bailout, after the one for the banks, for an equally unpopular insurance industry.

As a result, mobilising activists has proved a challenge, as the White House and Congress have found out in recent weeks as they struggle to counter those denouncing them from the right. Even the grassroots network built by Mr Obama that set new standards for campaigning last year has failed to produce much enthusiasm for his health plan.

America’s nurses and many doctors continue to press for wider reform, to a national or single-payer system that would look familiar to the rest of the industrial world. It is still possible. But time is running out.

Rose Ann DeMoro is executive director of the California Nurses Association/ National Nurses Organising Committee, the largest US union of nurses

The way is clear: Health insurance must end

BY JOHN HAMMOND
The News & Observer
Aug 16, 2009

PITTSBORO – In the first half of the 20th century, most health insurance was provided to those who could afford it by state-based, nonprofit Blue Cross/Blue Shield plans, which based premiums on a community rating system. The agency took the costs of its enrollees, added a reasonable overhead contribution and divided that by the number of enrollees to calculate the premium. Under this system, the young, healthy enrollees subsidized the cost of the older, more chronically ill enrollees.

At first, the for-profit insurance companies considered health insurance too risky. But by 1955, these companies figured out how to manage the risks and entered the health insurance market. To deal with adverse risk, they developed the concept of pre-existing conditions to exclude the sick from insurance coverage and applied liability-style risk rating to health insurance premiums, which reduced the premiums for the young while making insurance unaffordable for the older population. Thus, risk rating of premiums effectively ended the subsidy of older people by younger people.

The risk-based premium approach is appropriate for auto liability insurance, because people are responsible for their own driving records. But risk rating is totally inappropriate for human beings who cannot control their genetic inheritance, which plays a large role in their overall health. However, risk rating and pre-existing condition exclusions did protect the for-profit health insurance companies from the adverse risk of health insurance by denying access to insurance to those who need it most.

The introduction of risk-based premiums immediately caused major problems for the nonprofit BCBS plans. If they continued the community rating system, they would end up with all the sick (adverse selected population), and all the young healthy enrollees would flock to the cheaper rates of the for-profit risk-based premium system. This forced the nonprofit BCBSs to go to risk-based premiums and act like the for-profits. Today, for example, there is little difference between BCBS of North Carolina and CIGNA.

Another major problem is the total number of health insurance plans offered by the health insurance industry and the lack of any real regulation to ensure that they adequately cover the needs of the enrollees. The huge numbers of plans challenge doctors and hospitals to figure out what services are covered by what plans. Such choice drives the administrative costs for both the insurers and the providers higher than any other health insurance system in the world. It is profitable for the manufacturers of large mainframe computers and billing software vendors, but it adds billions to the administrative costs of the health-care system, and still hospitals cannot get our bills straight.

Further, the U.S. health-care system has the greatest number of administrative personnel of any country in the world. It is no wonder that our per-capita costs are 1.6 times other countries, even though millions have no health insurance. If these administrative costs could be reduced to the European or Canadian level, substantial money would become available to cover a part of the insurance costs of the 52 million to 55 million uninsured Americans for whom health care is difficult or impossible to get.

It is time to acknowledge that there are absolutely no market solutions for the chronically and mentally ill in a for-profit health insurance system. Boards of directors and executives of for-profit health insurance corporations aim to maximize the income of the corporations for investors. If for-profit and not-for-profit insurance companies with their plethora of plans are kept alive, it will be impossible to control costs, free the billions of dollars that today go to administrative costs and make these funds available for patient care.

All the existing health insurance companies must be eliminated. We need a single-payer system that covers every person in the country for medical, mental and dental health care. Its cost should be funded by income taxes paid by each adult/family in the country. It should provide universal access to care no matter where you are in the country, with equal quality and quantity and without regard to your wealth. It is time to face the reality that affordability and cost control are possible only with a single-payer system.

The current insurance system is both morally and financially bankrupt and cannot be sustained. It may not be possible to achieve all the necessary reforms quickly, but the direction we need to take is clear.

John Hammond, Ph.D., is professor emeritus at the School of Medicine, UNC-Chapel Hill.