PNHP

The policy lesson of BC/BS of Michigan

The policy lesson of BC/BS of Michigan

Blue Cross Blue Shield of Michigan Answers Attorney General

MarketWatch
December 1, 2008

Blue Cross Blue Shield of Michigan provided more than 300 pages of detailed financial and membership information today to Michigan Attorney General Mike Cox to answer his request for further information about Michigan’s individual health insurance market. The information confirms growth of Michigan’s individual health insurance market and escalating financial losses suffered by BCBSM, the state’s last-resort insurance carrier, in its individual line of business.

BCBSM has warned policy makers and regulators over the past 16 months that because of Michigan’s 30-year-old regulatory structure — which allows all other carriers to dump high-risk individuals into BCBSM’s insurance pool without limit or regulation — uncontrollable financial losses on individual policies will escalate and lead to BCBSM’s entire business becoming financially unstable in the near future.

“Michigan’s individual health insurance market is set up to fail financially,” said Mark Bartlett, BCBSM executive vice president and chief financial officer. “It’s a hard truth, especially if you oppose reforming the market, but it is the truth. Unless comprehensive reform is achieved this year, the financial situation will grow into a crisis that threatens health care, the economy and the health insurance safety net for millions of Michigan residents.”

http://www.marketwatch.com/news/story/Blue-Cross-Blue-Shield-Michigan/story.aspx?guid=%7B5379FA18-BBBE-4084-A40A-AB5CFFB0BDAD%7D

Comment:

By Don McCanne, MD

The individual health insurance market in the United States has presented a policy challenge to those attempting to craft a health care financing system that includes everyone.

In most states, insurers marketing individual plans have slowed the increase in their premiums by selling exclusively to healthy individuals. This is important because it takes only a modest number of individuals with health care needs to drive up premiums to ever less affordable levels.

Now that the momentum is building for truly universal coverage, the policy makers crafting reform are faced with the problem of how to cover those with greater needs largely left out of the individual market. One solution has been to establish high risk pools, but the success with such efforts has been almost negligible. Blue Cross Blue Shield of Michigan provides us with a real life experiment of how disastrous that approach can be. They have been warned that they are at risk of losing their status as a licensee of the Blue Cross and Blue Shield Association.

That brings us back to the fundamental problem that has been stated repeatedly in these messages. If everyone were to be included in the risk pools for private plans, and if the coverage were adequate to prevent financial hardship for those with health care needs, then the private insurance industry is no longer capable of providing us with health plans that have affordable premiums.

The solution? One single, universal risk pool. A single payer national health program: a new and improved Medicare for all.

It's Time for a Real Debate on National Health Insurance

Editor’s note: This article from May, 1993 is important because it includes a quote from pollster Celinda Lake saying the more working Americans learn about the Canadian (single payer) system, “the higher the support goes.” In contrast, a proposal for a system based on competing private insurers was found “laughable.”

Public Health

by Jeff Cohen and Norman Solomon
May 12,1993
Page 78

When a coalition of groups concerned about health care held a loud public protest in midtown Manhattan on May 12 [1993], they didn’t set up their picket line outside a hospital or W insurance company headquarters or government agency.

Instead, they gathered in front of the New York Times building, and their demand was simple: “Stop rationing health care news!” The protesters are angry over the fact that the newspaper’s reporting routinely downplays a popular proposal-endorsed by 12 of New York City’s 14 members of Congress-to overhaul the American health system: a singlepayer system of publicly-financed health care.

Poll after poll has shown that most Americans favor tax-financed national health insurance. But at the New York Times and other national media, proponents are kept at the periphery of the health care debate. They include 58 members of Congress who, on March 3 [1993], introduced a bill-“The American Health Security Act”-to establish a Canadian-style, single-payer system.

In a single-payer system, private insurance companies are basically removed from health care. Instead, the government pays all health care providers, and controls fees and costs. As in Canada, consumers would choose their own doctors-but almost never receive a hospital or doctor bill. Insurance deductibles and co-payments are also eliminated.

By eliminating administrative waste and insurance company profits, the shift to a single-payer system would cut $67 billion per year from our country’s medical bill, according to the General Accounting Office-and $39 billion yearly in bureaucracy, according to the Congressional Budget Office. Of every health-care dollar spent in the U.S., 22 cents goes to administrators; in Canada, that figure is 10 cents.

A single-payer system has been endorsed by health care activists, seniors groups, labor unions and a number of regional dailies-including the Atlanta Journal-Constitution and St. Louis Post-Dispatch. A recent Times-Mirror poll found 41 percent of U.S. doctors in support.

After conducting extensive focus groups on health care, pollster Celinda Lake discovered that the more people are told about the Canadian system, “the higher the support goes.” In contrast, according to Lake, working Americans found the managed competition idea “laughable.”

But much of the national news coverage in recent weeks has been promoting Bill Clinton’s managed competition plan as the smart, new, “politically viable” option.

News reports trumpet the “consensus” behind managed competition: big insurance companies, most doctors, conservative Republican think tanks, George Bush, conservative Democratic think tanks, Hillary Rodham Clinton-and the wise men from the “Jackson Hole Group” who’ve been meeting in Wyoming for years to discuss “health care reform.”

In national media discourse, managed competition seems easier to tout than explain. Since no other country has ever tried such a system, it remains a complicated, untested theory.

The plan leaves the largest insurance companies in the center of the picture; after the federal government defines a minimum package of benefits, health care partnerships or superHMOs organized by insurance firms would “compete” to offer health packages. Meanwhile, giant “Health Insurance Purchasing Cooperatives” would be formed so that employers and consumers could search for the best deal. Between these behemoths would be the government, “managing the competition,” grading the medical providers and trying to restrain costs.

To the protesters outside the New York Times headquarters, the news tilt toward managed competition is explained by the clout of insurance companies and medical industry firms- which are major media advertisers. And, as it happens, four members of the New York Times board of directors are also directors of major insurance companies; two are directors of pharmaceutical companies.

While it’s far-fetched to hunt for a conspiracy, the imprint of the insurance industry is all over the managed competition idea. The Jackson Hole study group that originated the scheme is made up of big insurance companies like Prudential, Metropolitan Life, Aetna and Cigna, plus hospital and pharmaceutical interests. Insurers were important early contributors to Clinton’s presidential campaign, and donated $850,000 to the Democratic Party (and even more to the Republicans) for the 1992 elections.

Critics dismiss managed competition as a bureaucratic hoax that should be renamed the “Insurance Industry Preservation Act.” They warn that the freedom to choose one’s own doctor would be eroded. They say it’s absurd to leave “reform” to the Jackson Hole group of special interests who profit from the inefficient status quo.
Managed competition was the subject of a lengthy MacNeil-Lehrer NewsHour discussion on May 5 [1993]. The panel was made up of three government officials-a congressman, a governor and a state health commissioner-who said the Clinton approach would lower costs, and a fourth panelist, Dr. Steffie Woolhandler, who argued it would increase costs and bureaucracy. (Woolhandler founded Physicians for a National Health Program, representing thousands of doctors who support a single-payer system.)

Near the end of the discussion, anchor Robert MacNeil offered Woolhandler the last word “since you’re in the minority”-to which she responded: “Robert, I’m not in a minority. Polls are showing two-thirds of the American people support government-funded national health insurance.”

MacNeil then rephrased his question: “If this [managed competition] is the program that has a political consensus and the other one that you advocate [single-payer] is considered impossible politically at the moment, why are you then against the one that is viable?”

Because it won’t “provide Americans with the care they need,” the doctor replied.

But she could have offered another response: If much of the public supports national health insurance, and it’s not debated seriously in Washington or the national media because of the power of special interests like the insurance lobby, what does that say about the health of our democracy?

That is an issue journalists should be exploring.

It’s Time for a Real Debate on National Health Insurance

Editor’s note: This article from May, 1993 is important because it includes a quote from pollster Celinda Lake saying the more working Americans learn about the Canadian (single payer) system, “the higher the support goes.” In contrast, a proposal for a system based on competing private insurers was found “laughable.”

Public Health

by Jeff Cohen and Norman Solomon
May 12,1993
Page 78

When a coalition of groups concerned about health care held a loud public protest in midtown Manhattan on May 12 [1993], they didn’t set up their picket line outside a hospital or W insurance company headquarters or government agency.

Instead, they gathered in front of the New York Times building, and their demand was simple: “Stop rationing health care news!” The protesters are angry over the fact that the newspaper’s reporting routinely downplays a popular proposal-endorsed by 12 of New York City’s 14 members of Congress-to overhaul the American health system: a singlepayer system of publicly-financed health care.

Poll after poll has shown that most Americans favor tax-financed national health insurance. But at the New York Times and other national media, proponents are kept at the periphery of the health care debate. They include 58 members of Congress who, on March 3 [1993], introduced a bill-“The American Health Security Act”-to establish a Canadian-style, single-payer system.

In a single-payer system, private insurance companies are basically removed from health care. Instead, the government pays all health care providers, and controls fees and costs. As in Canada, consumers would choose their own doctors-but almost never receive a hospital or doctor bill. Insurance deductibles and co-payments are also eliminated.

By eliminating administrative waste and insurance company profits, the shift to a single-payer system would cut $67 billion per year from our country’s medical bill, according to the General Accounting Office-and $39 billion yearly in bureaucracy, according to the Congressional Budget Office. Of every health-care dollar spent in the U.S., 22 cents goes to administrators; in Canada, that figure is 10 cents.

A single-payer system has been endorsed by health care activists, seniors groups, labor unions and a number of regional dailies-including the Atlanta Journal-Constitution and St. Louis Post-Dispatch. A recent Times-Mirror poll found 41 percent of U.S. doctors in support.

After conducting extensive focus groups on health care, pollster Celinda Lake discovered that the more people are told about the Canadian system, “the higher the support goes.” In contrast, according to Lake, working Americans found the managed competition idea “laughable.”

But much of the national news coverage in recent weeks has been promoting Bill Clinton’s managed competition plan as the smart, new, “politically viable” option.

News reports trumpet the “consensus” behind managed competition: big insurance companies, most doctors, conservative Republican think tanks, George Bush, conservative Democratic think tanks, Hillary Rodham Clinton-and the wise men from the “Jackson Hole Group” who’ve been meeting in Wyoming for years to discuss “health care reform.”

In national media discourse, managed competition seems easier to tout than explain. Since no other country has ever tried such a system, it remains a complicated, untested theory.

The plan leaves the largest insurance companies in the center of the picture; after the federal government defines a minimum package of benefits, health care partnerships or superHMOs organized by insurance firms would “compete” to offer health packages. Meanwhile, giant “Health Insurance Purchasing Cooperatives” would be formed so that employers and consumers could search for the best deal. Between these behemoths would be the government, “managing the competition,” grading the medical providers and trying to restrain costs.

To the protesters outside the New York Times headquarters, the news tilt toward managed competition is explained by the clout of insurance companies and medical industry firms- which are major media advertisers. And, as it happens, four members of the New York Times board of directors are also directors of major insurance companies; two are directors of pharmaceutical companies.

While it’s far-fetched to hunt for a conspiracy, the imprint of the insurance industry is all over the managed competition idea. The Jackson Hole study group that originated the scheme is made up of big insurance companies like Prudential, Metropolitan Life, Aetna and Cigna, plus hospital and pharmaceutical interests. Insurers were important early contributors to Clinton’s presidential campaign, and donated $850,000 to the Democratic Party (and even more to the Republicans) for the 1992 elections.

Critics dismiss managed competition as a bureaucratic hoax that should be renamed the “Insurance Industry Preservation Act.” They warn that the freedom to choose one’s own doctor would be eroded. They say it’s absurd to leave “reform” to the Jackson Hole group of special interests who profit from the inefficient status quo.
Managed competition was the subject of a lengthy MacNeil-Lehrer NewsHour discussion on May 5 [1993]. The panel was made up of three government officials-a congressman, a governor and a state health commissioner-who said the Clinton approach would lower costs, and a fourth panelist, Dr. Steffie Woolhandler, who argued it would increase costs and bureaucracy. (Woolhandler founded Physicians for a National Health Program, representing thousands of doctors who support a single-payer system.)

Near the end of the discussion, anchor Robert MacNeil offered Woolhandler the last word “since you’re in the minority”-to which she responded: “Robert, I’m not in a minority. Polls are showing two-thirds of the American people support government-funded national health insurance.”

MacNeil then rephrased his question: “If this [managed competition] is the program that has a political consensus and the other one that you advocate [single-payer] is considered impossible politically at the moment, why are you then against the one that is viable?”

Because it won’t “provide Americans with the care they need,” the doctor replied.

But she could have offered another response: If much of the public supports national health insurance, and it’s not debated seriously in Washington or the national media because of the power of special interests like the insurance lobby, what does that say about the health of our democracy?

That is an issue journalists should be exploring.

Alain Enthoven responds on reform of the Dutch system

The Quote of the Day for November 28, 2008 briefly discussed the JHPPL article by Pauline Vaillancourt Rosenau and Christiaan J. Lako, “An Experiment with Regulated Competition and Individual Mandates for Universal Health Care: The New Dutch Health Insurance System.” The authors referred to the Dutch reform as “Enthoven-inspired.”
Alain C. Enthoven, Ph.D. is the Marriner S. Eccles Professor of Public and Private Management, emeritus, at Stanford University, and a core faculty member at CHP/PCOR. Known as the “father of managed competition,” he was one of the founders of the Jackson Hole Group, a national think-tank on healthcare policy.
Professor Enthoven provides this response to the November 28 Quote of the Day message:

Don’t leap to unfounded conclusions too quickly in this complex and important subject.
In 1977-8, when I designed and proposed Consumer Choice Health Plan, a plan for universal health insurance based on regulated competition in the private sector, I observed that, in the United States, there were many alternatives to inflationary uncoordinated fee-for-service which dominates our scene. They were mainly prepaid multi-specialty group practices (PGPs), also other multi-specialty group practices, all proven to be able to reduce and manage costs, as well as physician-created individual practice associations some of which were and are being successful in managing and reducing costs. So the main idea was to subject inflationary uncoordinated fee for service to competition to produce value for money from organized alternatives that were reducing costs, and ultimately to replace uncoordinated fee for service almost entirely. Unfortunately, the USA has not created market conditions favorable to efficient economical health care (most employers do not even offer PGPs as a choice), so these systems have not been able to prove themselves on a national scale. And Medicare has remained dominated by fee for service, and it is a huge strain on Federal finances. In smaller regional situations, however, competing multi-specialty group practices have been proved to be far less costly than fee for service when embedded in a competition model. Perhaps the best example is the public employee’s Employee Trust Funds in the State of Wisconsin. The state employees plan is a good model of managed competition. Employees are offered a variety of choices and the state pays approximately the low priced plan. They have some excellent multi specialty group practices with their own insurance plans, and some group health cooperatives which are similar. The great majority of employees have chosen HMOs. And the costs in Madison, the state capitol where the market is dominated by public employees are far less than they are on the east coast of Wisonsin dominated by fee for service (a difference of approximately $4000 per family per year.)
Unfortunately, the Dutch have no prepaid group practices or even multi specialty group practices. Their insurance companies are selling what we call “preferred provider insurance” which is a variation of fee for service solo practice. For several reasons, they have not been able or willing to become highly selective in their provider networks. For one, many prices are still regulated by government. For another, they lack public quality measures that the insurers could use to select narrower networks. So, as I told the Dutch leaders in a 2006 lecture, they have implemented only half of the managed competition concept. They need integrated delivery systems as we have in America. I suggested to the Minister of Health that after studying American integrated delivery systems, they get to work on starting some in Holland. That will take time. Nothing can change the whole health care system in a short time. So many Dutch people have been over here studying American integrated delivery systems, including the Minister of Health and his team. They need to find some doctors who are interested in the project and then fund some startups. That would put a lot of pressure on the insurance companies to innovate in more economical health care.
It is interesting to note that the British have several teams studying American integrated delivery systems. The process started in 2002 when a famous British doctor and his wife, a former Kaiser Permanente executive, published an article in the British Medical Journal called “More For their Dollar: A comparison of California’s Kaiser Permanente and the British National Health Service.” They found that after making appropriate price and other adjustments, that Kaiser costs were similar to the NHS and for that, Kaiser members got far more for their dollar than the NHS, including such things as much more prompt access to advanced technologies, aggressive outreach for cancer prevention, etc. That was met with a storm of debate. But when the dust settled, their conclusion proved unshakeable. British scholars found, for example, that members 65 and over in the UK spent 3.5 times as many days in hospital as did similar people in Kaiser in California. Their follow up studies found that the essential ingredient was far superior integration of medical practices. My editorial accompanying the 2002 article was entitled “Competition Made them Do It.”
So in my view, it would be a serious error to leap to the conclusion that the Dutch model is a flop. It is a work in progress. The Dutch health care model does get good ratings in international surveys and their costs remain far below ours in America. Whether we are talking Holland or the USA, costs will not be contained and quality not improved, until we replace uncoordinated fee for service with efficient organized delivery systems that use information technology to measure and improve results, that accept responsibility for managing costs and quality. The good news is that when given a responsible choice, most consumers choose the efficient organized delivery systems. So the change does not need to be forced on an unwilling population (as, unfortunately, many employers tried in the 1990s.)
Alain Enthoven
Quote of the Day, “Lessons from the Netherlands,” Nov. 28, 2008:
https://pnhp.org/news/2008/november/lessons_from_the_net.php
Quote of the Day, “Feachem’s Kaiser study not credible,” June 1, 2004:
https://pnhp.org/news/2004/june/feachems_kaiser_stu.php

We share with Alain Enthoven the concern over our very high and ever increasing spending for a mediocre health care system that leaves so many out. We have disagreed with him (sometimes obnoxiously so) on the best approach to return value and high performance to our health care delivery system. He supports “universal health insurance based on regulated competition in the private sector,” whereas we support a publicly administered and publicly financed single payer national health program.
Enthoven discusses prepaid multi-specialty group practices (PGPs) and physician-created individual practice associations (IPAs) as examples of integrated systems that can manage and control costs. Although there are several variations, Kaiser Permanente can serve as a proxy for the concept of an integrated health care delivery system.
We certainly have no problem with integrated health care delivery systems. In fact, we have included them in our models of single payer reform, though with the primary function of delivering health care, rather than in a risk-beariing insurance role. Arnold Relman, a single payer supporter, has stressed the importance of not only reforming health care financing, but also the importance of using multi-specialty, not-for-profit organizations to deliver health care.
It seems that where we part with Prof. Enthoven is over the role of competition. I think that we all agree that physicians, hospitals, and other health care providers competing based on the quality of their services would be beneficial in the health care marketplace. Competing on price is quite another issue.
Most economists agree that price competition plays almost no role for individuals who must access the system for health care. So most of the discussion of price competition has been in the choice of insurance products. We agree with Enthoven that our existing, dysfunctional, fragmented, multi-payer system in the USA “has not created market conditions favorable to efficient, economical health care.”
Enthoven seems to concede that the Dutch model is not yet a model for the United States since it relies on “preferred provider insurance” (PPOs). He considers the Dutch reform to be a work in progress, still requiring the transformation of the health care delivery system into “integrated delivery systems.”
Imagine maybe four competing integrated health care delivery systems within a metropolis, again using Kaiser Permanente as a proxy. Each one would have its own exclusive professionals, hospitals and other facilities to provide the full range of health care services, including the most advanced technological services. Would each one have an organ transplant service? What about the suburban and rural sectors served by these integrated systems? Would each integrated system provide a primary care outpost, four in each community, duplicating services in these outreach areas? Could one metropolis support four very costly, duplicative, integrated health delivery systems?
The point is that integrated delivery systems are an important part of our entire health care delivery system, but they can never serve as an exclusive single financing model to herd us into systems competing on price (and quality), with no other place to turn for health care.
In one paragraph above, Enthoven mentions the comparison of Kaiser Permanente with the British National Health Service, citing a study that was done by Richard Feachem, et al. Enthoven states that their study “met with a storm of debate… but when the dust settled, their conclusion proved unshakeable.” Feachem’s flawed study is a diversion from the important issues discussed here, but the dust never did settle. A critique of Feachem’s study can be found at the link above, and nothing more will be said about it here (Quote of the Day, June 1, 2004).
Prof. Enthoven raises a red flag that our policy makers need to take heed of. He attributes the failure of the Dutch to achieve their goals of reform to the fact that, to date, the insurers are selling only “preferred provider insurance.” That is currently the predominant form of private insurance in the United States. It forms the basis of the competing private insurance plans that we will be required to purchase under the current leading proposals for reform. Although some choices are nominally HMOs, in fact they are functionally PPOs in disguise. True HMOs such as Kaiser Permanente are not available to the majority of us.
We should listen to Prof. Enthoven and reject PPOs. We can obtain our care from any accessible integrated health delivery system, if we so choose. But let’s adopt a system that actually will slow the growth in health care costs while providing a mechanism for improving the allocation of our health care dollars: a single payer national health program (even if that is not Prof. Enthoven’s preferred model of reform).

Alain Enthoven responds on reform of the Dutch system

The Quote of the Day for November 28, 2008 briefly discussed the JHPPL article by Pauline Vaillancourt Rosenau and Christiaan J. Lako, “An Experiment with Regulated Competition and Individual Mandates for Universal Health Care: The New Dutch Health Insurance System.” The authors referred to the Dutch reform as “Enthoven-inspired.”

Alain C. Enthoven, Ph.D. is the Marriner S. Eccles Professor of Public and Private Management, emeritus, at Stanford University, and a core faculty member at CHP/PCOR. Known as the “father of managed competition,” he was one of the founders of the Jackson Hole Group, a national think-tank on healthcare policy.

Professor Enthoven provides this response to the November 28 Quote of the Day message:

Don’t leap to unfounded conclusions too quickly in this complex and important subject.

In 1977-8, when I designed and proposed Consumer Choice Health Plan, a plan for universal health insurance based on regulated competition in the private sector, I observed that, in the United States, there were many alternatives to inflationary uncoordinated fee-for-service which dominates our scene. They were mainly prepaid multi-specialty group practices (PGPs), also other multi-specialty group practices, all proven to be able to reduce and manage costs, as well as physician-created individual practice associations some of which were and are being successful in managing and reducing costs. So the main idea was to subject inflationary uncoordinated fee for service to competition to produce value for money from organized alternatives that were reducing costs, and ultimately to replace uncoordinated fee for service almost entirely. Unfortunately, the USA has not created market conditions favorable to efficient economical health care (most employers do not even offer PGPs as a choice), so these systems have not been able to prove themselves on a national scale. And Medicare has remained dominated by fee for service, and it is a huge strain on Federal finances. In smaller regional situations, however, competing multi-specialty group practices have been proved to be far less costly than fee for service when embedded in a competition model. Perhaps the best example is the public employee’s Employee Trust Funds in the State of Wisconsin. The state employees plan is a good model of managed competition. Employees are offered a variety of choices and the state pays approximately the low priced plan. They have some excellent multi specialty group practices with their own insurance plans, and some group health cooperatives which are similar. The great majority of employees have chosen HMOs. And the costs in Madison, the state capitol where the market is dominated by public employees are far less than they are on the east coast of Wisonsin dominated by fee for service (a difference of approximately $4000 per family per year.)

Unfortunately, the Dutch have no prepaid group practices or even multi specialty group practices. Their insurance companies are selling what we call “preferred provider insurance” which is a variation of fee for service solo practice. For several reasons, they have not been able or willing to become highly selective in their provider networks. For one, many prices are still regulated by government. For another, they lack public quality measures that the insurers could use to select narrower networks. So, as I told the Dutch leaders in a 2006 lecture, they have implemented only half of the managed competition concept. They need integrated delivery systems as we have in America. I suggested to the Minister of Health that after studying American integrated delivery systems, they get to work on starting some in Holland. That will take time. Nothing can change the whole health care system in a short time. So many Dutch people have been over here studying American integrated delivery systems, including the Minister of Health and his team. They need to find some doctors who are interested in the project and then fund some startups. That would put a lot of pressure on the insurance companies to innovate in more economical health care.

It is interesting to note that the British have several teams studying American integrated delivery systems. The process started in 2002 when a famous British doctor and his wife, a former Kaiser Permanente executive, published an article in the British Medical Journal called “More For their Dollar: A comparison of California’s Kaiser Permanente and the British National Health Service.” They found that after making appropriate price and other adjustments, that Kaiser costs were similar to the NHS and for that, Kaiser members got far more for their dollar than the NHS, including such things as much more prompt access to advanced technologies, aggressive outreach for cancer prevention, etc. That was met with a storm of debate. But when the dust settled, their conclusion proved unshakeable. British scholars found, for example, that members 65 and over in the UK spent 3.5 times as many days in hospital as did similar people in Kaiser in California. Their follow up studies found that the essential ingredient was far superior integration of medical practices. My editorial accompanying the 2002 article was entitled “Competition Made them Do It.”

So in my view, it would be a serious error to leap to the conclusion that the Dutch model is a flop. It is a work in progress. The Dutch health care model does get good ratings in international surveys and their costs remain far below ours in America. Whether we are talking Holland or the USA, costs will not be contained and quality not improved, until we replace uncoordinated fee for service with efficient organized delivery systems that use information technology to measure and improve results, that accept responsibility for managing costs and quality. The good news is that when given a responsible choice, most consumers choose the efficient organized delivery systems. So the change does not need to be forced on an unwilling population (as, unfortunately, many employers tried in the 1990s.)

Alain Enthoven

Quote of the Day, “Lessons from the Netherlands,” Nov. 28, 2008:
https://pnhp.org/news/2008/november/lessons_from_the_net.php

Quote of the Day, “Feachem’s Kaiser study not credible,” June 1, 2004:
https://pnhp.org/news/2004/june/feachems_kaiser_stu.php

Comment:

By Don McCanne

We share with Alain Enthoven the concern over our very high and ever increasing spending for a mediocre health care system that leaves so many out. We have disagreed with him (sometimes obnoxiously so) on the best approach to return value and high performance to our health care delivery system. He supports “universal health insurance based on regulated competition in the private sector,” whereas we support a publicly administered and publicly financed single payer national health program.

Enthoven discusses prepaid multi-specialty group practices (PGPs) and physician-created individual practice associations (IPAs) as examples of integrated systems that can manage and control costs. Although there are several variations, Kaiser Permanente can serve as a proxy for the concept of an integrated health care delivery system.

We certainly have no problem with integrated health care delivery systems. In fact, we have included them in our models of single payer reform, though with the primary function of delivering health care, rather than in a risk-beariing insurance role. Arnold Relman, a single payer supporter, has stressed the importance of not only reforming health care financing, but also the importance of using multi-specialty, not-for-profit organizations to deliver health care.

It seems that where we part with Prof. Enthoven is over the role of competition. I think that we all agree that physicians, hospitals, and other health care providers competing based on the quality of their services would be beneficial in the health care marketplace. Competing on price is quite another issue.

Most economists agree that price competition plays almost no role for individuals who must access the system for health care. So most of the discussion of price competition has been in the choice of insurance products. We agree with Enthoven that our existing, dysfunctional, fragmented, multi-payer system in the USA “has not created market conditions favorable to efficient, economical health care.”

Enthoven seems to concede that the Dutch model is not yet a model for the United States since it relies on “preferred provider insurance” (PPOs). He considers the Dutch reform to be a work in progress, still requiring the transformation of the health care delivery system into “integrated delivery systems.”

Imagine maybe four competing integrated health care delivery systems within a metropolis, again using Kaiser Permanente as a proxy. Each one would have its own exclusive professionals, hospitals and other facilities to provide the full range of health care services, including the most advanced technological services. Would each one have an organ transplant service? What about the suburban and rural sectors served by these integrated systems? Would each integrated system provide a primary care outpost, four in each community, duplicating services in these outreach areas? Could one metropolis support four very costly, duplicative, integrated health delivery systems?

The point is that integrated delivery systems are an important part of our entire health care delivery system, but they can never serve as an exclusive single financing model to herd us into systems competing on price (and quality), with no other place to turn for health care.

In one paragraph above, Enthoven mentions the comparison of Kaiser Permanente with the British National Health Service, citing a study that was done by Richard Feachem, et al. Enthoven states that their study “met with a storm of debate… but when the dust settled, their conclusion proved unshakeable.” Feachem’s flawed study is a diversion from the important issues discussed here, but the dust never did settle. A critique of Feachem’s study can be found at the link above, and nothing more will be said about it here (Quote of the Day, June 1, 2004).

Prof. Enthoven raises a red flag that our policy makers need to take heed of. He attributes the failure of the Dutch to achieve their goals of reform to the fact that, to date, the insurers are selling only “preferred provider insurance.” That is currently the predominant form of private insurance in the United States. It forms the basis of the competing private insurance plans that we will be required to purchase under the current leading proposals for reform. Although some choices are nominally HMOs, in fact they are functionally PPOs in disguise. True HMOs such as Kaiser Permanente are not available to the majority of us.

We should listen to Prof. Enthoven and reject PPOs. We can obtain our care from any accessible integrated health delivery system, if we so choose. But let’s adopt a system that actually will slow the growth in health care costs while providing a mechanism for improving the allocation of our health care dollars: a single payer national health program (even if that is not Prof. Enthoven’s preferred model of reform).

Single-payer is path to universal coverage

By Dr. Taro Adachi
Baltimore Sun
Letter to the Editor
Nov. 25, 2008

http://www.baltimoresun.com/news/opinion/letters/bal-ed.le.letters25n10nov25,0,3920952.story

The concept of the health insurance industry guiding the terms for a national health care plan would be worth a laugh if it wasn’t so dangerous (“Insurers propose health care terms,” Nov. 20).

Leaders of America’s Health Insurance Plans have suggested that, in exchange for agreeing to accept all customers regardless of health conditions, they want a federal requirement that everyone buy coverage. But we have already seen such plans consistently fail on a state level.

The Massachusetts health care plan, which was supposed to create universal coverage, has left hundreds of thousands of people uninsured because the premiums and out-of-pocket expenses are too costly for many to afford.

Other states have tried similar plans but have also failed to achieve universal coverage as a result of annual increases in insurance premiums that make the subsidies many people need to afford care prohibitively expensive.

Mandates requiring people to purchase health insurance are unrealistic when the cost makes health insurance unaffordable.

Health insurance premiums have significantly risen every year, hurting both employers and consumers. This trend would not end under the industry’s current proposal. Instead, we would continue to pay profit-seeking insurers more while we get less care.

We must face the fact that the health insurance industry is a market failure and encourage our political leaders to see that a true single-payer national health system is not only politically feasible but necessary.

The writer is a member of Physicians for a National Health Program.

Use opportunity to reform health care

By Elizabeth Frost, MD
Pioneer Press
Letter to the Editor
Sunday, November 23, 2008

As a family practice doctor who works with the uninsured in St. Paul, I have recently become involved in health care reform. I believe single-payer national health insurance is the only way to provide quality affordable care for all.

The U.S. Government Accountability Office has estimated that single-payer can save 10 percent of health costs overall — amounting to $300 billion annually. The savings come from slashing administrative waste.

As the economy worsens and we see our auto industry drowning in health care costs, the question becomes not how can we afford to have single-payer health care, but how can we afford not to have it?

Rahm Emanuel, chief-of-staff designate, said the economic crisis “provides the opportunity, as the president-elect has said repeatedly, to do things that Americans have pushed off for years.” I believe single-payer may be one of those things, and the time is now to institute the change.

Why Does Celinda Lake Oppose Single Payer?

By All Unions Committee For Single Payer Health Care–HR 676

Self-described as “one of the Democratic Party’s leading political strategists,” Celinda Lake has claimed that single-payer reform lacks meaningful popular support. Lake’s research, done for the Herndon Alliance, has consistently supported reform based upon private health insurance. She and the Herndon Alliance are largely responsible for the notion that a single payer Medicare-for-all healthcare system is ‘not politically feasible.’

Lake’s findings are in sharp contradiction to numerous polls showing that single payer is enormously popular.

* In a New York Times/CBS News poll in February 2007, 64% said that the federal government should guarantee health insurance for all Americans.

* In October 2003, 62% of respondents to a Washington Post/ABC News poll said they preferred “a universal health insurance program, in which everybody is covered under a program like Medicare that’s run by the government and financed by taxpayers.”

* These findings were repeated in a 2007 Associated Press-Yahoo poll in which 65% supported a Medicare-for-all system.

Kip Sullivan, an attorney and health systems analyst, has been at work on a soon-to-be published analysis of the research methods and methodology used by Celinda Lake to conduct her work on behalf of the Herndon Alliance.

Sullivan has written over 100 articles on health policy, many of which appeared in national newspapers, magazines and journals such as American Journal of Public Health, Health Affairs, Los Angeles Times, The Nation, New England Journal of Medicine, New York Times, and Washington Monthly. He is the author of “The Health Care Mess: How We Got Into It and How We’ll Get Out of It” (AuthorHouse, 2006). He has a BA from Pomona College and JD from Harvard Law School.

Below is Sullivan’s executive summary. For the full article, please click here.

An analysis of Celinda Lake’s slide show, “How to talk to voters about health care”

By Kip Sullivan, November 29, 2008

Executive Summary

Celinda Lake is a pollster who has developed a slide show entitled, “How to talk to voters about health care.” Based on research Lake did for the Herndon Alliance, a coalition formed in 2005, Lake offers an explanation of how “Americans” view “health care reform.” According to Lake, “Americans” have surprisingly conservative “values” about this topic. According to Lake, this means advocates for “health care reform” must not only use and avoid certain words, but they must endorse and avoid certain policies.

Examples of Lake’s findings include:

* Americans think Medicare is “frighteningly flawed” and, consequently, Americans oppose a national health insurance program based on Medicare or which resembles Medicare;

* Americans who have private health insurance not only like it, but like it so much they will resist a Medicare-for-all solution to the health care crisis because it does not leave them the option of continuing to receive coverage from a health insurance company;

* Americans don’t want to pay for health insurance for “the undeserving,” a category which includes even the parents of average Americans;

* Americans don’t like the phrase “universal coverage” or “universal health insurance,” and prefer “quality, affordable health care”;

* Similarly, activists should never say “Medicare for all,” and instead say “choice of public and private plans,” which is, of course, equivalent to saying no one should support a Medicare-for-all (or single-payer bill) and should instead only support legislation that allows the health insurance industry to continue to take in tax dollars and premium payments. (Under a Medicare-for-all system, one payer like Medicare would replace the nation’s 1,500 health insurance company as the sole payer of clinics, hospitals and other providers.)

To understand why Lake would depict Americans as Scrooges who like their health insurance company and are afraid of Medicare, it helps to understand why the Herndon Alliance was formed. The Alliance was founded by individuals who have either opposed or refused to support Medicare-for-all legislation and instead supported legislation like President Bill Clinton’s 1993 Health Security Act, a bill that would have pushed all but the wealthiest Americans into HMOs. In 2005, several individuals who would play leading roles in creating the Herndon Alliance met to discuss why they “keep losing,” that is, why none of the bills they had supported in the past were enacted or, if enacted, stayed enacted. These individuals decided that the primary problem was the “values” of the American people. According to this diagnosis of the problem, their failure to achieve universal coverage was not due primarily to the power of the insurance industry or the unattractiveness of the legislation they had supported, but rather to the “values” of the average American.

But this diagnosis conflicts with a large body of research which shows that 65 to 85 percent of Americans support universal health insurance, and 60 to 70 percent support a Medicare-for-all program. For example, a 2007 poll by AP-Yahoo asked respondents whether they agreed or disagreed with this statement: “The United States should adopt a universal health insurance program in which everyone is covered under a program like Medicare that is run by the government and financed by taxpayers.” Sixty-five percent said yes.

If the Herndon Alliance founders had said that a large majority of Americans support universal coverage and Medicare-for-all programs, and this support can be reduced by false propaganda against such programs, that would have been an accurate diagnosis. But they didn’t. Instead, they adopted the much more questionable assumption that most Americans harbor “values” that cause them not support universal coverage. It is reasonable to infer that Lake was hired by the Herndon Alliance to produce research to confirm their armchair diagnosis of the American pyche.

Lake’s research occurred in three stages: a “mapping values” stage, a focus group stage, and a polling stage. There were serious defects in all three stages.

In the first stage, as Lake put it, “[O]ur research … explor[ed] … the core values that shape … views on health care….” The result of this first stage was a report by a firm called American Environics (AE) that claimed to identify 117 “values” held by Americans that allegedly have some influence over how we think about health care reform. These “values” had names like “brand apathy,” “discount consumerism,” “more power for big business,” “meaningful moments,” and “sexual permissiveness.” The “value” known as “meaningful moments,” for example, was defined this way: “The sense of impermanence that accompanies momentary connections with others does not diminish the value of the moment.” Lake and AE refuse to explain where these “values” come from or how any of them relate to “health care reform,” much less deserve to be called “core values that shape … views on health care.”

On the basis of these “values,” AE divided Americans into eight groups or “clusters” with names as fanciful as the “values” AE says we hold. The three largest groups, in order of size, were “Proper Patriots” (34 percent), “Marginalized Middle-Agers” (17 percent), and “Mobile Materialists” (13 percent). AE describes the millions of people in these “clusters” in terms that can only be called psychobabble. Here is how AE stereotypes Mobile Materialists:

This group tries to impress others with their homes, cars, clothes and looks, scoring high on Status via Home, Buying on Impulse, Importance of Brand, Joy of Consumption, Crude Materialism and Ostentatious Consumption. … [T]he new rims for their car or yet more designer handbags are welcome escapes from everyday drudgery. They tune out after work by watching MTV Cribs (Living Virtually) and feel best when they make time for a workout at the gym or a mani-pedi (Look Good Feel Good, Concern for Appearance).

The second and third stages of Lake’s research were based on the bizarre results of the first stage. For her focus groups, Lake selected people who represented the strange “clusters” concocted by AE. Lake does not tell us how she determined that the people she selected fell into one of the “clusters,” or what questions she asked them. All we hear from Lake are her conclusions about what allegedly went on in the focus groups. It was from these focus groups that Lake allegedly learned that Americans don’t support “universal coverage,” fear Medicare, feel good about their health insurance company, and think their own parents are among “the undeserving.”

In the third stage, Lake conducted a poll designed to see how people felt about a health care reform proposal she developed during the second stage (called “guaranteed affordable choice”) compared with single-payer. She wrote the question in a way that ensured the respondents would favor “guaranteed affordable choice” (GAC) over the single-payer proposal. To offer just one example: Lake declined to tell her respondents that patients would continue to have limited choice of doctors and hospitals under the GAC plan while under the single-payer plan patients would have complete freedom to choose their doctors and other providers.

In short, Lake delivered to the Herndon Alliance the results the founders of the Alliance were looking for. She told them, in effect, that they were right all along to support legislation that leaves the insurance industry at the top of the health care food chain and not to support a Medicare-for-all or single-payer proposal. And she gave them the rationale they wanted to hear — that they were justified in abandoning single-payer and supporting a role for the health insurance industry because that’s what Americans want them to do.

But to give the Herndon Alliance the results they wanted, Lake had to rely on secretive and biased methods. Until Lake reveals her methods and offers a reasonable explanation for why her results are so different from those of other researchers, the public should treat Lake’s research as junk science.

Distributed by:

All Unions Committee For Single Payer Health Care–HR 676
c/o Nurses Professional Organization (NPO)
1169 Eastern Parkway, Suite 2218
Louisville, KY 40217
(502) 636 1551

Why is single-payer health reform not viable?

By MIKE DENNISON
Reporter’s notebook
Billings Gazette
Dec. 1, 2008

HELENA – When it comes to health care reform in America, there is a relatively simple solution that will cover everyone’s basic health care, control costs and save businesses, most people and the country a lot of money.

It’s called a single-payer health plan, where the government collects taxes to finance national health insurance. The government, which is the “single payer,” covers all citizens and pays the bills when they visit private (or public) doctors, hospitals and other facilities for medical care.

All would have basic coverage, regardless of whether they have a job, or where they work. Nobody gets billed for basic care. No-body goes broke because of medical bills.

Yet this option has been declared “off the table” by Sen. Max Baucus, D-Mont., who’s among those leading the charge for health care reform in America.

Top Democrats who will be deciding policy in America in 2009, including Baucus and President-elect Barack Obama, say single-payer is “not politically feasible,” because the public won’t strongly support it.

What they really mean is that when it comes to health care reform, they don’t want a political fight with some of the nation’s most powerful financial interests, which have the resources and the motivation to turn public opinion against meaningful reforms.

These interests include the health insurance industry, pharmaceutical drug companies, some hospitals, highly paid medical specialists, medical suppliers and others who now profit handsomely from our current system – and who could no longer command those profits under a single-payer system or an alternative form of a national health plan.

There’s no doubt that it would be a huge political battle to attempt to install a single-payer or other national health system in the United States.

But single-payer is not without its prominent supporters.

HR676, which would create national health insurance and a single-payer system, was introduced last year by Rep. John Conyers Jr., D-Mich. and has 93 co-sponsors in the U.S. House. It has not even had a hearing.

Nearly 500 labor unions from across the country have endorsed the bill, as have AFL-CIO units in 39 states, including Montana. There is a national coalition supporting single-payer, led in part by the California Nurses Association (CNA), which has 85,000 members.

Michael Lightly, director of public policy for CNA, said single-payer is “the most fiscally conservative approach” to health care, because by having one payer/insurer (usually the government), you eliminate the profits of private health insurers, you negotiate bulk purchases of drugs, you negotiate reasonable fees with health care providers and you have global budgets for hospitals and large clinics.

Single-payer or a regimented national plan also is how nearly all other developed countries run health care and cover everyone – and at a lower price than we do, because it’s more efficient.

Yet Democratic leaders in Congress, who want to reform health care, say single-payer won’t be an option, because it doesn’t “poll well.”

They cite polls showing that the public thinks single-payer equates with “big government” and taking away what insurance they already have. A majority may like the idea, but that support erodes when asked if they’d pay higher taxes to support it.

This polling is testing the obvious lines of attack that single-payer’s political opponents would employ: big government, higher taxes, less choice.

If single-payer is packaged in that context, of course it’s a loser. But as any skilled politician knows, if you craft a better message and get it out there, you win.

Higher taxes? Not if single-payer all but eliminates the health insurance premiums that you and your employer currently pay.

Big government? In America, the government is the people, and you tell it what to do. It has to be more responsive than big insurance.

Less choice? With single-payer, no doctors or hospitals are out of the network, because there is no network. It’s one system. Everyone gets the same basic care. You might have to wait for specialty care or some tests, but that’s not exactly a deal-breaker.

“The only reason it’s not on the table is because there is a belief that it’s not politically viable,” Lightly said. “That is a miscalculation in our view. We believe that a real policy debate means single-payer must be a part of that debate.”

Lightly also said that even the mild reforms proposed by Baucus and Obama are going to face a political fight from insurers and other interests.

If you’re going to have a fight, why not fight over something worth winning? he asks.

Finally, there’s the simple question of morality: In America, an incredibly wealthy country, shouldn’t we join the modern world and guarantee basic health care for all, regardless of the ability to pay?

As health care writer T.R. Reid told a Helena audience a week ago, our neighbors are suffering and dying because they don’t have decent health coverage.

You don’t believe that? Just open a newspaper or walk into your local grocery store. Every week, you’re bound to see a flier or advertisement for a fundraiser for someone who’s been horribly injured in an accident, or stricken with cancer or other debilitating disease, and can’t pay thousands upon thousands of dollars of medical bills.

Under a single-payer system or other national health care plan, that wouldn’t happen.

But unless citizens apply the pressure to our political leaders, it won’t even be considered.

Gazette State Bureau reporter Mike Dennison can be reached at mike.dennison@lee.net or at 800-525-4920 or 406-447-4068.

The time is now: Reform health care

Editorial
Des Moines Register
November 30, 2008

“There is no way to solve America’s economic problems without solving health care,” said U.S. Sen. Max Baucus, chairman of the Senate Finance Committee. The $2.3 trillion spent annually on health care “sucks up 16 percent of our economy and is still growing.”

Baucus is right, and the 98-page white paper on health care he recently unveiled is a welcome development to push reform. Our view: What’s needed is a government-administered health-insurance program – similar to Medicare, which covers seniors and disabled people – available to all Americans.

A single system could reduce administrative expenses associated with facilitating thousands of different private health-insurance plans in this country. It could increase leverage for negotiating lower prices. It could facilitate the expansion of electronic medical records, which would streamline paperwork and help prevent costly medical errors. It would boost the country’s economy in the long run.

Grappling with an economic crisis, Washington has focused on bailing out industries, extending unemployment benefits and tweaking interest rates. How can Congress – and taxpayers – also afford to tackle health care?

The country can’t afford not to. Anyone who doesn’t believe that should:

Ask struggling businesses

Start with the automakers. The Big Three are asking Congress for billions of dollars to help pay future health-care costs for retirees. It’s difficult for automakers – which have made generous health-care promises to retirees – to compete with foreign competitors operating in countries with taxpayer-supported health insurance for their citizens.

The cost of health care burdens all American businesses – big and small.

Employer-sponsored health insurance began as a job perk after a labor shortage following World War II. Now it’s an expensive obligation for employers who are expected – and encouraged through tax benefits – to offer health insurance to workers.

But such an obligation creates an unfair playing field. Companies that shoulder the cost of providing health insurance have less money to hire workers, develop products and expand – which is exactly what this country needs in a troubled economy. Other companies skate by without this contribution to the overall well-being of their employees and society.

Ask the unemployed

In response to rising unemployment, Congress recently increased the length of time people can collect unemployment benefits – which generally amount to a maximum of a few hundred dollars a week. But for many people, the loss of a job is worse than losing income. It’s losing health care.

Granted, federal law allows for people to buy the health-care benefits offered by their employer. However, since the unemployed must pay the entire cost of insurance, this option is frequently unaffordable. The average employer picks up 84 percent of the premium for individual coverage and 73 percent of the premium for family coverage. Lose your job, and covering your family could jump from $300 a month to $1,200 a month – at a time when your income has plummeted.

Ask average workers

For many Americans, every paycheck is a reminder of how expensive it is to buy health insurance. November offered a special reminder, because it’s health-benefit re-enrollment time for millions of workers. What they usually get: higher costs and decreased coverage.

Tying jobs to employment also means workers are afraid to quit their jobs to start businesses for fear of losing health insurance – which discourages innovation and entrepreneurship. A national health-care system would allow Americans to secure insurance without help from an employer.

Covering everyone in a national system will require higher taxes. Private-sector workers already pay not only for their own health insurance, but also for covering millions of others. Getting help from taxpayers to pay for health care is hardly a foreign concept in America. Anyone using Medicare or Medicaid or working in the public sector, from teachers to lawmakers, already gets help.

Counting the private and public sectors, this country already spends more than any country in the world on health care. We should spend it more wisely and fairly.

Baucus’ plan is a good sign that Congress – as well as President-elect Barack Obama – is serious about reform. The goal should be to create a system all Americans can buy into while controlling costs, making use of electronic medical records and improving health outcomes.

One need only look to history to see that this is the time for such reform. In 1964, the Democrats won control, and the election of Lyndon Johnson was seen as an endorsement of a national health-insurance system.

Congress and Johnson created Medicare. In signing the bill into law, Johnson quoted his predecessor, President Harry Truman: “Millions do not now have protection or security against the economic effects of sickness. The time has arrived for action to help them attain that opportunity and that protection.”

Seniors and the disabled got help. Forty-four years later, after election of another presidential candidate who vowed to address health care, it’s time for the rest of America to get help, too.

http://www.desmoinesregister.com/article/20081130/OPINION03/811300317/0/OPINION01

Lessons from the Netherlands

An Experiment with Regulated Competition and Individual Mandates for Universal Health Care: The New Dutch Health Insurance System

By Pauline Vaillancourt Rosenau, University of Texas, Houston, and Christiaan J. Lako, Radboud University Nijmegen, the Netherlands
Journal of Health Politics, Policy and Law
December 6, 2008
The 2006 Enthoven-inspired Dutch health insurance reform, based on regulated competition with a mandate for individuals to purchase insurance, will interest U.S. policy makers who seek universal coverage. This ongoing experiment includes guaranteed issue, price competition for a standardized basic benefits package, community rating, sliding-scale income-based subsidies for patients, and risk equalization for insurers. Our assessment of the first two years is based on Dutch Central Bank statistics, national opinion polls, consumer surveys, and qualitative interviews with policy makers. The first lesson for the United States is that the new Dutch health insurance model may not control costs. To date, consumer premiums are increasing, and insurance companies report large losses on the basic policies. Second, regulated competition is unlikely to make voters/citizens happy; public satisfaction is not high, and perceived quality is down. Third, consumers may not behave as economic models predict, remaining responsive to price incentives. Finally, policy makers should not underestimate the opposition from health care providers who define their profession as more than simply a job. If regulated competition with individual mandates performs poorly in auspicious circumstances such as the Netherlands, how will this model fare in the United States, where access, quality, and cost challenges are even greater? Might the assumptions of economic theory not apply in the health sector?
http://jhppl.dukejournals.org/cgi/content/abstract/33/6/1031

Why is this article so important? Simply because there is a rapidly building momentum for similar health care reform in the United States built on a model of competing private insurance plans (possibly with a public plan offered as an additional option). The recent Dutch reform has important lessons for us.
Although the Dutch health care system was in far better shape than ours, their politicians decided that they could improve their system even more, while making it more affordable, by replacing their dual public and private insurance programs with a single market of competing private plans.
They put into place the policies (listed in the abstract above) that we are currently discussing for our reform, which theoretically would regulate the market to ensure efficiency and prevent the private insurers from gaming the system. The Netherlands has provided us with a very instructive, real-life experiment on whether competing private plans would serve us well as a model for health care financing reform in the United States.
The Dutch model was not initiated with a clean slate on policy principles. We now have decades of research and experience which should provide us with a basis for predicting, to varying degrees of certainly, the anticipated results of these policy applications.
Essentially everyone agrees that market competition fails to provide greater value and control costs when applied to obtaining care within the health care delivery system. Many still believe, however, that competition between private health plans will achieve that goal. Consumers can shop based on differences in the private plans, while the insurers can contract with the providers, demanding the value and cost containment that we seek. Or so goes the theory.
When the Dutch embarked on this reform, those understanding health policy raised many red flags. Here we’ll discuss only the basic premise that private plans are more effective in controlling costs than was the public/private dual system. After all, cost containment was given by the Dutch government as the primary reason for health financing reform.
What did those of us who were concerned about their model predict? We predicted that the private plans would not be able to control costs, that there would be consolidation of the private plans, and that health care would become even less affordable for the Dutch citizens.
After almost three years of this experiment, what has happened? Health care costs have continued to grow well in excess of the rate of inflation. Health insurers attempted to keep their premiums affordable in order to gain market share, but because of insurer losses, premium increases have been greater than would have been anticipated based on the market competition theory. In spite of these premium increases, insurer losses have been increasing. Insurers with less penetration in the marketplace are now facing the necessity of consolidation.
In another article in this same journal, Kieke Okma states, “… the trend of market concentration in Dutch health insurance and health care will likely continue. This might result in both higher prices and more-restricted access to health care services, both of which will not be too popular with Dutch patients and insured.”
Although there are many policy lessons for us in the Dutch experiment, there is one predominant message that the U.S. policy community must understand. Everyone agrees that costs absolutely must be contained, and we need to do that in a manner that repairs our fractured health care delivery system. The primary reason for the Dutch reform was this need for cost containment. But what is their position now?
According to Rosenau and Lako, “In the face of initial failure to control costs, the reaction of the Dutch government has been to reiterate its faith in the free market for health insurance and to argue that cost containment was not an important rationale for the Health Insurance Act in any case (confidential personal interview, April 13, 2007).”
With the insistence that the mandates of political feasibility require that the ideology of private plan competition displace sound health policies, the path that our national policy makers are currently negotiating places at grave risk both our finances and our health.

Lessons from the Netherlands

An Experiment with Regulated Competition and Individual Mandates for Universal Health Care: The New Dutch Health Insurance System

By Pauline Vaillancourt Rosenau, University of Texas, Houston, and Christiaan J. Lako, Radboud University Nijmegen, the Netherlands
Journal of Health Politics, Policy and Law
December 6, 2008

The 2006 Enthoven-inspired Dutch health insurance reform, based on regulated competition with a mandate for individuals to purchase insurance, will interest U.S. policy makers who seek universal coverage. This ongoing experiment includes guaranteed issue, price competition for a standardized basic benefits package, community rating, sliding-scale income-based subsidies for patients, and risk equalization for insurers. Our assessment of the first two years is based on Dutch Central Bank statistics, national opinion polls, consumer surveys, and qualitative interviews with policy makers. The first lesson for the United States is that the new Dutch health insurance model may not control costs. To date, consumer premiums are increasing, and insurance companies report large losses on the basic policies. Second, regulated competition is unlikely to make voters/citizens happy; public satisfaction is not high, and perceived quality is down. Third, consumers may not behave as economic models predict, remaining responsive to price incentives. Finally, policy makers should not underestimate the opposition from health care providers who define their profession as more than simply a job. If regulated competition with individual mandates performs poorly in auspicious circumstances such as the Netherlands, how will this model fare in the United States, where access, quality, and cost challenges are even greater? Might the assumptions of economic theory not apply in the health sector?

http://jhppl.dukejournals.org/cgi/content/abstract/33/6/1031

Comment:

By Don McCanne, MD

Why is this article so important? Simply because there is a rapidly building momentum for similar health care reform in the United States built on a model of competing private insurance plans (possibly with a public plan offered as an additional option). The recent Dutch reform has important lessons for us.

Although the Dutch health care system was in far better shape than ours, their politicians decided that they could improve their system even more, while making it more affordable, by replacing their dual public and private insurance programs with a single market of competing private plans.

They put into place the policies (listed in the abstract above) that we are currently discussing for our reform, which theoretically would regulate the market to ensure efficiency and prevent the private insurers from gaming the system. The Netherlands has provided us with a very instructive, real-life experiment on whether competing private plans would serve us well as a model for health care financing reform in the United States.

The Dutch model was not initiated with a clean slate on policy principles. We now have decades of research and experience which should provide us with a basis for predicting, to varying degrees of certainly, the anticipated results of these policy applications.

Essentially everyone agrees that market competition fails to provide greater value and control costs when applied to obtaining care within the health care delivery system. Many still believe, however, that competition between private health plans will achieve that goal. Consumers can shop based on differences in the private plans, while the insurers can contract with the providers, demanding the value and cost containment that we seek. Or so goes the theory.

When the Dutch embarked on this reform, those understanding health policy raised many red flags. Here we’ll discuss only the basic premise that private plans are more effective in controlling costs than was the public/private dual system. After all, cost containment was given by the Dutch government as the primary reason for health financing reform.

What did those of us who were concerned about their model predict? We predicted that the private plans would not be able to control costs, that there would be consolidation of the private plans, and that health care would become even less affordable for the Dutch citizens.

After almost three years of this experiment, what has happened? Health care costs have continued to grow well in excess of the rate of inflation. Health insurers attempted to keep their premiums affordable in order to gain market share, but because of insurer losses, premium increases have been greater than would have been anticipated based on the market competition theory. In spite of these premium increases, insurer losses have been increasing. Insurers with less penetration in the marketplace are now facing the necessity of consolidation.

In another article in this same journal, Kieke Okma states, “… the trend of market concentration in Dutch health insurance and health care will likely continue. This might result in both higher prices and more-restricted access to health care services, both of which will not be too popular with Dutch patients and insured.”

Although there are many policy lessons for us in the Dutch experiment, there is one predominant message that the U.S. policy community must understand. Everyone agrees that costs absolutely must be contained, and we need to do that in a manner that repairs our fractured health care delivery system. The primary reason for the Dutch reform was this need for cost containment. But what is their position now?

According to Rosenau and Lako, “In the face of initial failure to control costs, the reaction of the Dutch government has been to reiterate its faith in the free market for health insurance and to argue that cost containment was not an important rationale for the Health Insurance Act in any case (confidential personal interview, April 13, 2007).”

With the insistence that the mandates of political feasibility require that the ideology of private plan competition displace sound health policies, the path that our national policy makers are currently negotiating places at grave risk both our finances and our health.