PNHP

Statement of Dr. Quentin Young on "Health Care for America Now"

Statement of Dr. Quentin Young on "Health Care for America Now"

For Immediate Release:
July 8, 2008

Contact:
Quentin Young, M.D., (312) 782-6006, info@pnhp.org

In a statement coinciding with today’s announcement of a new coalition called Health Care for America Now, Dr. Quentin Young, national coordinator of Physicians for a National Health Program, made the following remarks:

“Physicians for a National Health Program welcomes the call for quality, affordable health care for all by the new Health Care for America Now coalition.

“We note that a number of the organizations in Health Care for America Now are supporters of single-payer national health insurance, and we sincerely hope they will convince the entire coalition to adopt single payer as its platform and hasten the enactment of HR 676.”

“Based on more than two decades of research, including the study of domestic programs like Medicare and the failed “universal” reform efforts of several states, as well as the health care systems of other nations, we remain convinced that the only way to achieve the goal of truly universal, equitable and affordable health care in the United States is to remove the for-profit private insurance industry from the health care picture and to establish a single-payer national health insurance system, an improved and expanded version of Medicare for all.”

“The U.S. private insurance system is not the solution, but the source of the present problem.”

“We share the coalition’s abhorrence of health care policies that have been associated with the Bush administration and the presidential campaign platform of Sen. John McCain. These policies, if fully implemented, would substantially worsen an already untenable situation in which 47 million Americans are uninsured and a comparable number are underinsured, thanks to the profiteering and administrative waste of the for-profit private insurance industry.”

“At a time when the U.S. Conference of Mayors unanimously endorsed HR 676 and a recent poll indicated that 59 percent of U.S. physicians now support government-sponsored national health insurance, this is hardly the time to fall back to failed private insurance programs.”

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Physicians for a National Health Program (www.pnhp.org), a membership organization of over 15,000 physicians, supports a single-payer national health insurance program. PNHP is headquartered in Chicago and has chapters across the United States. To contact a physician-spokesperson in your area, contact info@pnhp.org or call (312) 782-6006.

What is “Health Care for America Now” doing?

HEALTH CARE FOR AMERICA NOW!

Campaign launch – July 8, 2008
For coalition members see:
http://healthcareforamericanow.org/site/content/who_we_are/

Campaign ad:

Mother with son, consulting Magic Eight Ball: Will they pay for his inhaler?

Magic Eight Ball: Not likely

Gentleman, in workshop of his garage: Is my surgery covered?

Magic Eight Ball: Don’t think so

Pregnant mother-to-be: Can I chose my child’s doctor?

Magic Eight Ball: Better not tell you

Concerned woman, too young to die: Will they cover the chemo?

Magic Eight Ball: Doubtful

Off-screen voice: Will health insurance companies ever put your health before their profits?

Magic Eight Ball: Not a chance

Off-screen voice: We can’t trust insurance companies to fix the health care mess.

http://www.youtube.com/watch?v=tirU5qpmFK4

Statement of common purpose:

Our government’s responsibility is to guarantee quality affordable health care for everyone in America and it must play a central role in regulating, financing, and providing health coverage by establishing:

A choice of a private insurance plan, including keeping the insurance you have if you like it, or a public insurance plan without a private insurer middleman that guarantees affordable coverage.

(… and nine other requirements for a regulated private insurance industry.)

http://healthcareforamericanow.org/site/content/statement_of_common_purpose

Comment:

By Don McCanne, MD

The members of the Health Care for America Now! (HCAN) coalition are very dedicated, altruistic individuals and organizations who share with us the goal of affordable, comprehensive, high quality care for everyone. They agree with us that the private insurance industry has failed miserably in fulfilling its responsibility to bring to all of us the affordable health care that we need.

The private insurance industry, as it functions today, clearly must be replaced with a system that works. So what is the solution proposed by the HCAN coalition? Let’s replace the private insurance industry with… the private insurance industry. Only let’s regulate it by requiring the insurers to provide us with the comprehensive coverage that we need “through the largest possible pools” – thus ensuring that their products will have premiums that only the very wealthiest of us can afford.

The HCAN coalition also would enact a public program in competition with the private plans to be sure that the private plans would sell us the comprehensive products that we need – a not-so-difficult challenge considering that the public program would be outrageously expensive due to adverse selection. So then we would have a choice of highly-regulated, unaffordable private plans, or an even less affordable public program option.

Why did the coalition insist on including private plans when the industry’s track record is so miserable? It was a political decision based not on which policies would actually work, but rather based on rhetorical framing that would resonate with a public that remains relatively uninformed on the make-or-break nuances of health policy. Focus groups and polls showed that “choice of private plans” resonated well, so they decided to abandon policy and go with messaging.

The members of Physicians for a National Health Program would take a more “doctorly” approach toward reform. While the HCAN coalition is recommending placebo therapy, we would point out that effective treatment is available: a single payer national health program.

“Show Me the Money”: Labor and the Bottom Line of National Health Insurance

By Marie Gottschalk
Dissent Magazine
Spring 2008

http://dissentmagazine.org/article/?article=1166

A WELL-KNOWN political scientist once declared that the definition of the alternatives is the supreme instrument of power. The simple question–single-payer or not–conceals major differences over whether to frame the health care issue primarily as an economic question or a moral one. Economic considerations are critical to propelling the cause of universal health care. But advocates of universal health care should not cast the economic competitiveness of U.S. business as the central economic issue at stake in the debate over health care reform.

If we are to finally achieve a fair, affordable, and truly universal health care system, other economic considerations need to frame the debate. These include: How efficient is the U.S. health system? How is the health care cost burden distributed between business, government, and the public? What are the trends in health care cost shifting? What is (and what should be) the role of insurance companies in the U.S. health system and the wider political economy? To their credit, single-
payer supporters have been some of the loudest and most articulate voices raising these important questions.

In bringing up these issues, advocates of universal health care need to be wary about emphasizing the economic rationale for health care reform at the cost of the moral rationale. The two cannot be disentangled. All of these economic issues in some way touch on how to redivide the economic pie–and that raises basic questions about economic and social justice.

Organized labor has enormous potential to be the pivotal player in raising these economic and moral questions and anchoring a reform coalition that fundamentally reshapes the health care debate. For well over a century now, labor has been instrumental in the development of the U.S. health system. It established some of the first prepaid group practices and health maintenance organizations, was the leading voice for national health insurance up until the mid-1970s, and was decisive in the establishment of Medicare and in the expansion of other major social programs, like Social Security and the Great Society. The employment-based system of health benefits is largely the product of a collective-bargaining regime established during and immediately after the Second World War. That system is under siege today. Without unions to act as a brake, today’s downward spiral in health benefits for union and nonunion workers would be even faster.

Divided and hemorrhaging members, organized labor still has formidable resources to influence the course of health care reform. The membership rolls and resources of the major unions dwarf those of most public interest groups. Labor’s lobbying capacity has expanded dramatically as the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO), other labor groups, and individual unions have invested more heavily in lobbyists, enlarged their research departments, and developed grassroots lobbying networks. Labor’s financial resources have not contracted significantly despite its dwindling membership base.

Today the Democratic Party is more dependent than ever on labor’s money, votes, and electoral apparatus. Although money and members are important, they are not decisive in determining the political influence of organized labor. As Douglas A. Fraser, the late former president of the United Auto Workers, once said, the strength of the union movement also depends “on the agenda, the sense of commitment and the manner in which the labor movement allocates resources.”

As we stand at the brink of another major attempt to overhaul the U.S. health care system, organized labor is divided about how to define the alternatives. At one pole is Andrew Stern, president of the Service Employees International Union (SEIU), the nation’s largest union, and arguably the best known labor leader today. He stridently contends that health care reform must be pitched primarily as an economic competitiveness issue, not a moral one. Stern also has indicated that the single-payer approach, for all its virtues, is a political nonstarter. At the other pole is the growing number of national unions, locals, labor councils, and rank-and-file members pledged to the single-payer solution. Somewhere in between is the AFL-CIO, the nation’s largest labor federation, which in March 2007 endorsed the idea of “Medicare for All” but carefully avoided mentioning the “s” word, that is, single-payer.

So far, Stern has garnered a disproportionate amount of media and popular attention. His business-friendly stance on health care reform, which stresses how the U.S. health care system is fundamentally hurting the country’s economic competitiveness, helps explain why. But his economic competitiveness argument is not convincing and could undermine efforts to forge a successful coalition or movement on behalf of affordable, high-quality care for all.

Economic Competitiveness

In breaking away from the AFL-CIO in 2005 to form the Change to Win federation, which represents about six million workers, Stern implored organized labor to radically reposition itself on organizing new members and other issues. Yet his position on health care reform is remarkably similar to the pro-business stance that John Sweeney, currently president of the nine-million-member AFL-CIO, maneuvered the federation into as chairman of its health care committee in the lead-up to the battle over the Clinton plan in the early 1990s. Like Sweeney years ago, Stern has focused on courting the business sector. In his view, no fundamental change in health care will “arrive until American business leaders make the call for change.”

Stern has aggressively identified the interests of the SEIU with the interests of the business sector. In July 2006, he sent a letter to every Fortune 500 CEO asking them to make health care their national priority. In January 2007, Stern’s union launched a new health care coalition with two organizations that have checkered pasts on universal health care–the Business Roundtable, the elite business organization of top CEOs that helped torpedo the Clinton plan, and the AARP, the country’s largest organization for senior citizens, which gave critical support to the controversial Medicare prescription drug bill in 2003. In December 2006, Stern joined Safeway’s chief executive, Steve Burd, and Senator Ron Wyden (D-OR) in support of the Healthy Americans Act. The bill is modeled on the individual-mandate solution lionized in the Massachusetts reform effort. But it also includes a radical proposal to end employer-sponsored health insurance altogether.

Stern’s most controversial public dalliance is with H. Lee Scott, Jr., chief executive officer of Wal-Mart. In February 2007, Stern joined Scott and other business executives to announce the creation of “Better Health Care Together,” a business-labor coalition. Despite Wal-Mart’s dismal record on health benefits and other labor issues, Stern appears confident that the bottom line provides compelling reasons for Wal-Mart and other large employers to be constructive allies in health reform. “Obviously, we have a huge problem for American business because it is pretty hard to compete in a global economy when the price of your health care is put on the cost of goods, while in other countries, it is shared among society,” he contends.

In tapping big business as a key ally in the health care debate beginning in the 1980s, much of organized labor took a stance remarkably similar to Stern’s position today. Labor leaders largely accepted the Fortune 500’s definition of what was ailing the American economy and hence the American worker. Many of them jumped on the competitiveness bandwagon. In their public statements, labor and business leaders regularly sang off the same song sheet. Their refrain was a simple one–higher medical costs were making American products less competitive in the international marketplace, which was severely hurting the U.S. economy and the American worker.

Health care economists have raised numerous objections to the claim that escalating health care costs imperil the economic competitiveness of the United States and the overall health of the U.S. economy. Their analyses, however, have made little headway against what Princeton professor Uwe Reinhardt calls the “shared folklore” that higher health care costs are pricing U.S. products out of the market.

It is true that employer spending on health care, measured as a percentage of after-tax profits, did jump in the late 1990s. But the rise in health care costs as a percentage of profits was due partly to a drop overall in corporate profits as the dot-com and high technology sectors went bust in the late 1990s. Spending on health care measured as a percentage of after-tax corporate profits declined steadily from 1986 to 2004, except during the 1998Ć¢ā‚¬ā€œ2001 period. More significantly, employer spending on wages and salaries and on total compensation as a percentage of after-tax profits has dropped precipitously since 1986, except during the 1998Ć¢ā‚¬ā€œ2001 period. [1] While health care costs continue to escalate, employers have had great success at squeezing wages and other forms of compensation and shifting more health care costs onto their employees. Wages and salaries make up the smallest portion of the country’s gross domestic product since the government began collecting such data in 1947. In 2006, on the eve of the subprime crisis and the recession, corporate profits were at their highest level in four decades.

To underscore the exceptional severity of the health care cost crunch, Stern and some business leaders stress (as they did in the late 1980s and early 1990s) what U.S. employers pay directly for health care compared to their foreign competitors. Once again, the auto industry is the designated poster child as auto executives and labor leaders bemoan how crippling medical expenses add $1,500 to the cost of each car manufactured by General Motors, while some of its competitors pay as little as $200 per vehicle.

The focus on comparing what U.S. companies pay directly for health care relative to what their foreign competitors pay directly ignores the higher indirect costs that many European and Japanese firms and individuals shoulder due to higher corporate and personal income taxes to support more extensive public welfare states. This amount generally exceeds what even the most generous U.S. firms spend on health care for their employees. “The cost of employment-related health benefits as a percentage of payroll is nearly 50 percent greater in Germany than in the United States, but little is heard about this,” according to health care economist Mark Pauly. The fact is that many European and Japanese firms are highly competitive even though their workers enjoy more generous health, vacation, maternity, and other benefits.

In the early 1990s, much of labor’s political energy went into forging an elite-level deal between labor, business, and the government over health care. The failed Clinton plan, which caused such an uproar with much of the business sector, called for larger employers to contribute a modest 7.9 percent of their payroll to help pay for employees’ health coverage. According to Drew Altman, president of the Henry J. Kaiser Family Foundation, “You couldn’t have done more to pay off corporate America than they did with the Clinton plan, but in the end, companies turned on it because it was viewed as a big government plan.” When business walked away from the table, there was no sustained grassroots pressure to bring it back. The ingredients for that mobilization had been squandered by promises that business would do right by workers on health care even as it was engaged in a massive assault on workers in other areas, such as the right to unionize and passage of the North American Free Trade Agreement (NAFTA) in late 1993. Labor leaders repeatedly portrayed employers as ready to do the right thing on health care–until they weren’t.

The persistent faith that business will somehow unlock the door to universal, affordable health care flies in the face of the experience of other countries. While analysts may disagree about precisely why universal and near-universal health care took root in Western Europe and Canada, they concur that business was at best a passive player and at worst an obstructionist. Studies of the politics of health policy in other countries reveal that the medical providers, the business sector, and other conservative political forces often fiercely opposed the establishment of universal health care.

The Bottom Line

As we gear up for another major debate over universal health care, what economic factors should be stressed? First, the focus needs to stay squarely on the question of who bears the greatest burden of rising health care costs. There is a health care crisis in the United States, but it is a health care crisis with wrenching economic consequences for individuals and households, not employers. Emphasizing what U.S. employers pay out directly for health insurance obscures the question of who really shoulders the U.S. health care bill. Government expenditures account for about 36 percent of the tab. Household spending comes in next at 33 percent, and employers are in third place at 27 percent. The burden on households is even greater than these figures suggest because of hidden costs in taxes, lower wages, and higher prices for goods and services.

The economic competitiveness framework obscures the fact that employers and insurers have been remarkably successful at shifting health care costs onto employees, their families, and other individuals through higher co-pays, higher deductibles, restrictions on coverage, and other measures. Since the demise of the Clinton health plan fifteen years ago, the benefits of unionized workers have come under attack from many directions. The erosion of benefits in unionized jobs has hastened the erosion of benefits for workers in nonunion jobs. Some employers are eliminating benefits altogether; others are whittling away at them. Companies are creatively using bankruptcy proceedings to wiggle out of contract obligations to unionized workers. They also have been suing their retirees in an effort to renege on earlier promises made to retired workers. New national accounting standards for private and public employers threaten to hollow out retiree benefits further. In the public sector, the new standards pit taxpayers against state and municipal employees. The U.S. government has been remarkably complicit in this assault on employee benefits. For example, the U.S. Labor Department has not taken up the cause of retired workers denied promised health benefits, arguing that they “aren’t our constituents anymore.”

Another important economic question has to do with economic efficiency. The United States has the most expensive, inefficient health care system in the world with great variations in quality. The country spends over 15 percent of its GDP on health care, yet has forty-seven million people who are uninsured and millions more who are underinsured. By comparison, other industrialized countries have been able to achieve universal care while spending on average about 9 percent of their GDP on health care. The United States spends so much more, yet has fewer hospital beds, doctors, and nurses per capita than many other industrialized countries. No wonder that only 40 percent of Americans describe themselves as satisfied with the U.S. medical system, making the United States nearly last in public satisfaction (and dead last among public health experts polled).

One reason the U.S. health care system is so expensive is because it is so highly regulated by the private insurance industry. The main difference between here and other countries is that the commercial insurers–not the government–are the prime regulators. They determine, with little public input, who is fit to be insured and who is not; which medical bills to pay and which to deny; and which treatments are “experimental” and which are not. These regulations are expensive and have created what Henry Aaron characterizes as “an administrative monstrosity.” In 2006, Wellpoint, the country’s largest for-profit insurer, spent nearly $9 billion in marketing and administrative costs, many of which involved “regulating” the insurance market. Even with these high marketing and administrative costs, the health insurers are incredibly profitable. In 2006, the six largest health insurance companies had combined profits of more than $10 billion. Ironically, the costs of administering the U.S. health system roughly equal what employers pay out directly for health care–or about one-quarter of total spending on health care in the United States. And these calculations for administrative costs do not include all the time wasted as patients chase down referrals, wade through piles of incomprehensible medical bills, and navigate phone trees that take them nowhere. Streamlining U.S. administrative costs to levels comparable to those of Canada would reduce the U.S. health tab by an estimated 17 percent.

Another important economic question is where to assign blame for health care inflation. The recent stampede to enact health care legislation based on an individual mandate that penalizes people without insurance is shifting the wider understanding of who is to blame for rising medical costs. Somehow the uninsured have become the prime culprits. Fingers are pointed at the sickly uninsured who rely on expensive emergency room care and rack up unpaid hospital and doctors’ bills that have to be shifted onto someone else. They also are directed at the young and healthy who forgo insurance because they cannot imagine falling ill and needing expensive medical care. As one analyst remarked, attempting to solve the problem of the uninsured by mandating they buy insurance is akin to attempting to solve world hunger by ordering the hungry to buy food. Blaming individuals for medical inflation shifts attention away from the more significant culprits, such as the expansive for-profit health care system with its high administrative and marketing costs; the perverse incentives to perform high-cost medical procedures and not invest in primary care, preventive care, and public health; and the enormous economic clout of the pharmaceutical companies and other health care industries, which buys them enormous political clout.

The bottom line is that to achieve universal health care, the country needs to have real cost containment and to reallocate its health care resources. If we are truly committed to creating a high-quality, affordable universal health care system, someone will have to give something up, and some will have to give up more than others. The call for health care reform in the name of economic competitiveness holds out the chimera that a bloodless win-win solution is possible for all the stakeholders in the health care system–insurers, medical providers, and the general population.

A Dose of Political Realism

The economic rationales for national health insurance are considerable. But we need to resist the temptation to reduce this mainly to a question of dollars and cents. As Uwe Reinhardt recently said, the health care debate really boils down to one question: “Should the child of a gas station attendant have the same chance of staying healthy or getting cured, if sick, as the child of a corporate executive?” Reinhardt notes that it would cost about $100 billion in additional government spending to provide health care coverage for every man, woman, and child in the United States–or about what the country spends every nine months to fund the war in Iraq.

Successful reform movements in the United States–the abolitionist movement, the New Deal, the civil rights movement–have always had strong moral overtones. President Franklin D. Roosevelt did not invoke the dollars-and-cents language of an accountant to spur the country to support the landmark social insurance programs that became known as the second New Deal.

The New Deal example is relevant in another respect. In the 1930s, the popular Townsend movement of older Americans took the country by storm. This movement induced FDR and business to support Social Security and other social welfare protections so as to neutralize growing public sentiment for more radical pension proposals. Facing not only ruinous economic competition at the time but also a burgeoning and threatening social movement, employers decided to accept some legislated solution.

It is reasonable to raise the question whether the pursuit of a single-payer strategy is realistic given how politically and economically entrenched the drug and insurance industries are and how entrenched the for-profit medical system is. But Stern of the SEIU is wrong to claim that single-payer is a dead end because Americans deeply mistrust the government, are basically satisfied with their health care system, and don’t like anyone else’s system. Recent public opinion data show strong public support for a government guarantee of health care. Moreover, a revealing new study of voter discontent by the Democracy Corps found the most commonly chosen phrase to characterize what’s wrong with the country was, “Big business gets whatever they want in Washington.” Instead of attempting to ride what New York Times columnist Paul Krugman has characterized as the “strong populist tide running in America right now,” Stern is flying against it. As the famous German sociologist Max Weber once said, “Successful politics is always the art of the possible. It is no less true, however, that the possible is often achieved only by reaching out towards the impossible which lies beyond it.”

Marie Gottschalk is an associate professor of political science at the University of Pennsylvania and author, among other works, of The Shadow Welfare State: Labor, Business and the Politics of Health Care in the United States (Cornell University Press, 2000) and The Prison and the Gallows: The Politics of Mass Incarceration in America(Cambridge, 2006). A longer version of this article will appear in Ten Excellent Reasons for National Health Insurance, ed. Mary E. O’Brien, M.D. (New Press, forthcoming 2008).

Failing grades for individual health insurance market

Failing Grades: State Consumer Protections in the Individual Health Insurance Market

Families USA
June 2008
Key Findings

  • Only five states prohibit all insurance companies from cherry-picking the healthiest consumers and excluding everyone else.
  • In 35 states and the District of Columbia, there are no limits on how much insurers can vary premiums based on health status. An additional six states have limits that still allow dramatic variations in premiums.
  • In 21 states and the District of Columbia, insurers can exclude coverage for pre-existing conditions for more than one year. In eight of those states and the District of Columbia, insurers can exclude coverage for pre-existing conditions for the duration of an individual’s policy.
  • In 20 states and the District of Columbia, insurers can set and raise premiums without adequate oversight.
  • In 45 states and the District of Columbia, insurers can spend less than 75 cents of every premium dollar on medical services.
  • Insurers in 29 states and the District of Columbia are allowed to look at a policyholder’s medical history and perform medical underwriting months, or even years, after they issued the policy.
  • In 44 states and the District of Columbia, insurers can revoke an individual’s health insurance policy without advance review by the state.

http://www.familiesusa.org/assets/pdfs/failing-grades.pdf

Most of the politicians are telling us that national health insurance is not politically feasible. They tell us that we should not abandon what is already working well for us: the private insurance industry. They tell us that they would improve the private insurance market so that health plans would become affordable for all of us while still providing us with the protection that we need.
Looking at this Families USA report card of private plans in the individual market, it is clear that the private insurance utopia that they envision does not exist. Because of the lax regulatory requirements in far too many states, the insurers have been able to dodge their responsibility to cover everyone regardless of their health care needs.
So what kind of improvement in the insurance market are the politicians proposing?
Sen. McCain would further relax the regulatory oversight which would result in some insurance products with lower premiums, but at the cost of reducing even further the inadequate consumer protections we have. Being able to afford health insurance is of almost no value if it makes health care itself even less affordable.
Sen. Obama would close many of the insurance loopholes noted in this report by increasing the regulatory oversight of this industry. What would happen to insurance premiums if you required the plans to include everyone regardless of needs, and required them to provide benefits comprehensive enough to prevent financial hardship? Sen. Obama certainly knows, and this is why he says that we cannot require each individual to purchase insurance until he has made the plans affordable. Merely wishing that you could make comprehensive private plans affordable will never make it happen.
Numerous simulations and the experience of other nations have proven that using private health plans to provide reasonably comprehensive coverage for everyone is by far the most expensive method of financing health care. Looking at the Families USA report card, you can imagine how expensive it would be to bring our coverage up to a passing grade level. A single payer national health program would be less expensive and much more efficient. Why would a more expensive model that isn’t working for us be considered to be more feasible than a less expensive model that would?

Failing grades for individual health insurance market

Failing Grades: State Consumer Protections in the Individual Health Insurance Market

Families USA
June 2008

Key Findings

* Only five states prohibit all insurance companies from cherry-picking the healthiest consumers and excluding everyone else.

* In 35 states and the District of Columbia, there are no limits on how much insurers can vary premiums based on health status. An additional six states have limits that still allow dramatic variations in premiums.

* In 21 states and the District of Columbia, insurers can exclude coverage for pre-existing conditions for more than one year. In eight of those states and the District of Columbia, insurers can exclude coverage for pre-existing conditions for the duration of an individual’s policy.

* In 20 states and the District of Columbia, insurers can set and raise premiums without adequate oversight.

* In 45 states and the District of Columbia, insurers can spend less than 75 cents of every premium dollar on medical services.

* Insurers in 29 states and the District of Columbia are allowed to look at a policyholder’s medical history and perform medical underwriting months, or even years, after they issued the policy.

* In 44 states and the District of Columbia, insurers can revoke an individual’s health insurance policy without advance review by the state.

http://www.familiesusa.org/assets/pdfs/failing-grades.pdf

Comment:

By Don McCanne, MD

Most of the politicians are telling us that national health insurance is not politically feasible. They tell us that we should not abandon what is already working well for us: the private insurance industry. They tell us that they would improve the private insurance market so that health plans would become affordable for all of us while still providing us with the protection that we need.

Looking at this Families USA report card of private plans in the individual market, it is clear that the private insurance utopia that they envision does not exist. Because of the lax regulatory requirements in far too many states, the insurers have been able to dodge their responsibility to cover everyone regardless of their health care needs.

So what kind of improvement in the insurance market are the politicians proposing?

Sen. McCain would further relax the regulatory oversight which would result in some insurance products with lower premiums, but at the cost of reducing even further the inadequate consumer protections we have. Being able to afford health insurance is of almost no value if it makes health care itself even less affordable.

Sen. Obama would close many of the insurance loopholes noted in this report by increasing the regulatory oversight of this industry. What would happen to insurance premiums if you required the plans to include everyone regardless of needs, and required them to provide benefits comprehensive enough to prevent financial hardship? Sen. Obama certainly knows, and this is why he says that we cannot require each individual to purchase insurance until he has made the plans affordable. Merely wishing that you could make comprehensive private plans affordable will never make it happen.

Numerous simulations and the experience of other nations have proven that using private health plans to provide reasonably comprehensive coverage for everyone is by far the most expensive method of financing health care. Looking at the Families USA report card, you can imagine how expensive it would be to bring our coverage up to a passing grade level. A single payer national health program would be less expensive and much more efficient. Why would a more expensive model that isn’t working for us be considered to be more feasible than a less expensive model that would?

What About Single Payer?

An Answer to the Question About How to Reform Our Health Care System

BY EDWARD P. EHLINGER, M.D., MSPH, AND SUSANNE KING, M.D.
MetroDoctors
July/August 2008

In discussions of health care reform, consensus is rapidly developing around the urgent need for universal health care coverage in the United States. There is also an almost universal understanding that this coverage is not feasible without cost containment. Given the facts that over 47 million people in the U.S. are uninsured and an even greater number are underinsured and that the percentage of the U.S. Gross Domestic Product (GDP) going to health care is over 16 percent, it’s not surprising that the issues of access and cost have become priority issues in our country.

An increasing number of health care professionals and policy makers are claiming that a single-payer system is the only rational approach that can actually contain costs, achieve universal coverage, and maintain or improve quality. They argue that only a single-payer approach can address the economic pressure on businesses and the rising costs of health care for individuals and still be able to expand coverage to everyone. However, these statements are guaranteed to bring forth a series of questions about single payer. Here are responses to some of the questions that are frequently raised.

1) What is single-payer health care?

“Single payer” means that there is one payer — one insurer — who reimburses health care providers for their services. This is in contrast to the current system that provides payment through multiple insurance companies. This one payer has the authority to negotiate limits on what providers, pharmaceutical companies, and equipment manufacturers charge just as insurance companies do now. This payer could be either the state or the federal government. Every industrialized country in the world, other than the U.S., has some form of nationally administered health coverage. Medicare is a single-payer system that has been in place in the U.S. since 1966. However, Medicare is a less than ideal single-payer system because it cannot set budgets for hospitals nor negotiate prices with pharmaceutical companies.

2) Is single payer socialized medicine?

Single payer is not socialized medicine because hospitals and clinics would still be privately owned, rather than owned by the government, and doctors would still be in private practice. “Single payer” simply refers to the taking in and paying out of the health care dollars, which would replace the current multiple-payer system dominated by private insurance companies. Single payer refers to the mechanism used to pay for health care services not how the services are delivered. Many industrialized countries have a single-payer system; some provide services through a national health service, but most provide services through physicians in private practice. All of the leading single-payer bills introduced in the U.S. at the federal and state level would leave the health care provider sector in the hands of private practitioners.

3) Doesn’t Medicare have big problems?

Traditional Medicare has worked very well for patients and they have been happy with it. Because the traditional Medicare program spends a lot less money on administrative functions than private-sector insurers, Medicare is the most efficient health insurance program, public or private, in America. However, the partial privatization of Medicare since the 1980s and the recent total privatization of the Medicare drug benefit have raised costs and brought prosperity to many health plans and insurance companies. Their administrative costs have created an economic burden for the program of billions of dollars per year. Subsequently, payments to doctors, the actual providers of care, have been cut.

In many ways it is the actual need for Medicare that is causing some concern. As the U.S. population ages, there will be an increase in demand for Medicare services. That means there will be an increased need for funding to provide those services. This is not a crisis but a predictable occurrence that needs to be addressed by policy makers and health care planners.

There is a need to find a way to finance that increase in services. Reducing administrative waste through a single payer would be one of the mechanisms of doing that. Funding Medicare Part B (which is the primary revenue source for the physician and drug parts of Medicare) from general revenues rather than payroll taxes would also help eliminate the illusion that somehow Medicare Part B could “go bankrupt.” Imminent bankruptcy is never a concern for government programs, like the Pentagon, which are financed by general revenues.

4) Can we afford single payer, if that means covering 47 million uninsured people?

Compared to other countries, the United States already pays enough to provide comprehensive coverage for everyone. However, coverage for everyone isn’t realized because 31 percent of our health care spending goes for administration through the patchwork of private for-profit and not-for-profit insurance companies and health plans. Potential savings from eliminating the administrative waste and marketing expenditures of insurance carriers have been estimated at $350 billion per year.

5) Won’t there be waiting lines or rationing with single payer?

A poll done in the late 1990s showed that rationing was worse in the United States than in Canada, which has a single-payer system. At that time, 12 percent of Americans said they couldn’t get necessary health care in the previous year compared to 8 percent of Canadians. In 2005, the median wait for specialists or elective surgery was four weeks. A 2007 study highlighted the fact that 37 percent of Americans reported being unable to get necessary medical care “because of cost during the past year” versus 12 percent in Canada.

The United States already rations care based on ability to pay and 18,000 Americans die every year because they lack health insurance. Canadians live longer and are more satisfied with their health care than Americans, while paying half as much per person. If waiting problems in Canada are an issue, it’s because the health care system is underfunded rather than because it is single payer. No single-payer advocate is proposing that the United States lower health care spending to Canadian levels.

6) Won’t our aging population break the bank in a single-payer system?

Japan and European countries have a higher percentage of elderly citizens, yet they spend much less on health care than we do — and have better outcomes. Universal access to health care will improve the health of the population. The issue is what is the best way to get to that universal access in a way that is economically sustainable? A single-payer approach is the most likely approach to achieve that goal.

A single-payer system that provides universal access would also be better able to address the lifestyle and behavior issues, like obesity and tobacco and alcohol use that are major contributors to health care costs.

7) Some people believe that their insurance is meeting their needs; why should they change?

While some people may be comfortable with their present insurance coverage, that coverage is unstable and often inadequate when it is most needed. Because our current system is tied to employment, if people change or lose jobs, their coverage and care is disrupted. Others find their coverage fails when they get sick: 75 percent of the one million Americans experiencing medical bankruptcy each year were insured when they got sick. Insurance premiums are going up every year for policies that cover less and less.

8) How would single payer be financed?

There are a variety of ways that a single-payer system could be financed. Currently, about 60 percent of our health care system is publicly financed (via our taxes), 20 percent is financed by private employers, and 20 percent is financed by individuals. With a state or national single-payer health program, that funding formula could be maintained as a way to finance universal access.

Another option would be a payroll tax on employers (approximately 7 percent) and an income tax on individuals (approximately 2 percent). The payroll tax would replace all other employer expenses for employee health care. The income tax would take the place of all current insurance premiums, co-pays, deductibles, and any other out-of-pocket payments. For the vast majority of people, a 2 percent income tax is less than what they now pay for insurance premiums and out-of-pocket payments. This is particularly true for anyone who has had a serious illness or has a family member with a serious illness. Small employers would also benefit from this payroll tax approach since many now have to pay 25 percent or more of payroll for health insurance compared to the 8.5 percent currently paid by large employers.

While most people and businesses would pay less with a single-payer approach, everyone would have more comprehensive coverage. In addition to medical care and drugs, benefits would include mental health care, dental care, and long-term care.

9) Who would run a single-payer plan?

It is a myth that with national health insurance the government will be making the medical decisions. The government would only be the administrator of the health care funds. In a publicly financed, universal health care system, medical decisions are left to the patient and doctor. Cost containment measures like negotiating limits on what providers, pharmaceutical companies, and equipment manufacturers could charge would be publicly managed by an elected and appointed body. This body, in consultation with medical experts in all fields of medicine, would decide on the benefit package, negotiate doctor fees and hospital budgets, and be responsible for health planning and the distribution of expensive technology. Right now, insurance companies make many health care decisions behind closed doors. Their primary interest is in profits, not the health of the people.

10) Won’t doctors dislike a single-payer system?

Because of its administrative burdens and the hurdles to care created by insurance companies, most physicians are very dissatisfied with the current health care system. Physicians would like to make medical decisions with their patients, without the intrusion of profit-motivated insurance companies. In addition, when patients are unable to pay because they are uninsured or underinsured, doctors often provide care for which they don’t get reimbursed. More and more physician groups are also supporting single payer.

In 2007, almost 60 percent of physicians supported government legislation to establish National Health Insurance — a 10 percent increase in support since 2002. This level of support is similar to that found among physicians in Minnesota and Massachusetts where two-thirds of physicians support single payer. This increase in support for National Health Insurance is distributed across every medical specialty. The largest increase was seen among physicians who “strongly support” National Health Insurance; now almost twice as many physicians support it as oppose it. It has been reported that the number of physicians currently supporting National Health Insurance is much larger than the entire membership of the American Medical Association.

In addition to individual physicians, a single-payer approach is supported by multiple professional organizations like the American College of Physicians, the American Medical Student Association, the National Medical Association, the American Public Health Association, and the American Nurses Association to name just a few.

11) How would we get to a single-payer system?

There are multiple paths to achieving a single-payer system. The most logical would be to develop an expanded and improved “Medicare for all” approach at the national level. National single-payer legislation (HR676) has been introduced and has more supporters than any other proposal for health care reform.

While a full-scale conversion seems unlikely in the short-term, there are steps that could move the country and states in that direction. One approach at the national level would be to add children to Medicare followed by adults. In Minnesota, single-payer legislation could be adopted for children with adults gradually added. Another Minnesota option would be to open MinnesotaCare to small employers and individuals and then expand it to large employers.

Single-payer legislation for Minnesota (SF2324) has been introduced in the Minnesota legislature by Senator John Marty and has garnered a great deal of support. In Canada, single-payer health legislation was introduced province by province, rather than at the national level which gives credence to this state-based approach as a way of moving toward a national single-payer system in the U.S.

Support for single-payer health care is increasing as people learn about the benefits of this solution for our ill-conceived health care system.

Edward P. Ehlinger, M.D., MSPH is the director of Boynton Health Service in Minneapolis, MN. Susanne L. King, M.D. is a child and adolescent psychiatrist in Lenox, Massachusetts.

But What Have They Done Lately?

Wall Street Journal
Letter
July 7, 2008; Page A12

Benjamin Zycher’s “Drug Development Needs Private Industry” (op-ed, June 28) aims to refute my statement, which he accurately quotes, “The drug companies do almost no innovation now [italics added].” But the examples of innovation he cites date back to the 1980s or earlier. Moreover, he doesn’t tell the whole story even about these older drugs. For example, Amgen did not work out the synthesis of Epogen on its own; it licensed the basic technique from Columbia University. Nearly every top-selling drug today has progenitors dating back many years, often based on NIH-funded research in universities.

Even Mr. Zycher found that of the 35 drugs he reviewed, “private-sector research was responsible for central advances in basic science for seven.” That’s not much of a yield. (Mr. Zycher should have mentioned that the Tufts Center for the Study of Drug Development, with which he collaborated, is largely supported by the pharmaceutical industry.) Far from doing scientific innovation, the large drug companies license or otherwise acquire discoveries from universities or small biotech companies, then develop them for commercial production and sponsor the clinical research necessary for FDA approval. That’s expensive, but hardly creative in the scientific sense. As one senior executive told Journal reporter Gautam Naik (Feb. 13, 2002), “We’re not going to put our money in-house if there’s a better investment vehicle outside.”

The problem with this sequence — publicly-funded innovation handed off to the drug companies — is that the industry expects to be rewarded as though it were the source of innovation, pricing drugs as high as the traffic will bear and doing everything possible to extend its exclusive marketing rights. The only really innovative thing about this industry today is the claims of its apologists.

Marcia Angell, M.D.
Harvard Medical School
Cambridge, Mass.

Britain's NICE and social solidarity

Britain Weighs the Social Cost of High-Priced Drugs

By Joanne Silberner
NPR
July 3, 2008
Funding ‘Wonder’ Drugs
The government agency that decides what drugs the NHS will provide is the National Institute for Health and Clinical Excellence (NICE). Sir Michael Rawlins, chairman of NICE, says he knows his agency’s rulings can cause much disappointment.
Paying huge amounts of money for every new drug with the faintest hope of extending life by even a small amount would make it impossible for the NHS to provide universal care.
And Rawlins is sure that someday Americans will have to deal more directly with these same thorny questions of rationing and hope.
The United States will one day have to take cost effectiveness into account, he says. “There is no doubt about it all. You cannot keep on increasing your health care costs at the rate you are for so poor return. You are 29th in the world in life expectancy. You pay twice as much for health care as anyone else on God’s Earth.”
Social Solidarity
And then of course, he points to the millions of Americans with no access to health care because they can’t afford it.
“We have in Britain, as in most of Europe actually, a health care system based on social solidarity,” he says. “We look after each other when we’re sick. And that’s very precious to us in Britain. And I think that’s what we find so difficult about your health care system; you don’t have that.”
Cancer patient Donald Sutherland is happy with the British system, even with its limits.
“I think we’re quite patient people, albeit if we want something, we’ll make sure that we get it,” he says. “In my experience, I can only say that whenever I’ve needed the National Health Service, it’s always been there, and I’ve always had first-class treatment.”
Sutherland’s big interest is in more funding for the search for an effective treatment for lung cancer. And he doesn’t expect his fellow taxpayers to pay for a drug until there’s solid proof that there’s a benefit.
http://www.npr.org/templates/story/story.php?storyId=91996282

And…

Weighing the Costs of a CT Scan’s Look Inside the Heart

By Alex Berenson and Reed Abelson
The New York Times
June 29, 2008
(CT angiograms) were given to more than 150,000 people in this country last year at a cost exceeding $100 million. Their use is expected to soar through the next decade. But there is scant evidence that the scans benefit most patients.
And they expose patients to large doses of radiation, equivalent to at least several hundred X-rays, creating a small but real cancer risk.
Mr. (Robert) Franks has a family history of cardiac disease, and his father and two uncles died of heart attacks. But Mr. Franks… is in excellent shape.
(Mr. Franks) decided to have a nuclear stress test. When that test showed no problem, the cardiologist who conducted it said he did not need more testing.
After doing research on the Internet, (Mr. Franks) found Dr. (Harvey) Hecht, who recommended a CT angiogram. Dr. Hecht acknowledged that Mr. Franks probably did not have severe heart disease. But he said the scan would be valuable anyway because it might reassure him. And his insurance would cover the cost.
http://www.nytimes.com/2008/06/29/business/29scan.html?hp=&pagewanted=all

One of the more important reasons that the U.S. health care system is so much more expensive than those of other nations is our well documented excess use of expensive high-tech services and products. As much as 30 percent of spending is for services of little or no benefit, and often leads to adverse consequences as a direct result of the intervention or indirectly due to other interventions that this overuse may lead to.
$100,000 drugs that have a 100 percent incidence of poisoning, but have only a negligible impact on the malignancy targeted, are not the breakthrough technology that those profiting from them imply. An expensive imaging procedure that has not been demonstrated to be of benefit, but has radiation doses known to cause cancer, is another breakthrough that favorably impacts profits to the detriment of patients.
We can learn much from the National Institute for Health and Clinical Excellence (NICE), an independent organization that provides Britain’s National Health Service with “national guidance on promoting good health and preventing and treating ill health.” Sadly, much of the publicity in the U.S. on NICE has come from the opponents of a government role in health care, claiming that NICE is depriving British citizens of life-saving cures. In fact, NICE is reducing the waste of taxpayer funds by providing better guidance on how those funds should be spent.
Compare that to the United States. Mr. Franks (NY Times article above) received an expensive test that was not medically indicated, but that perhaps could provide him with reassurance, and it would add to Dr. Hecht’s income, possibly at the cost of giving Mr. Franks cancer. But it was okay because his insurance would pay for it. What?
Whether health care is paid for by a public program or a private insurance plan, we all pay for it. Excess public spending wastes our taxes, but excess private insurer spending wastes our premium dollars and further adds a surcharge in outrageous administrative costs that are tacked on to our health care bill.
A NICE-like program combined with public financing in the United States would dramatically increase the value received for health care spending for all of us, and isn’t that what social solidarity is all about?
You should go to the NICE website to familiarize yourself with this program. Not only will you be able to answer the ideologues who try to demonize this program, but, much more importantly, you will be in a position to advocate with greater confidence for an even better health care system that is more affordable for all of us.
National Institute for Health and Clinical Excellence (NICE):
http://www.nice.org.uk/

Britain's NICE and social solidarity

Britain Weighs the Social Cost of High-Priced Drugs

By Joanne Silberner
NPR
July 3, 2008

Funding ‘Wonder’ Drugs

The government agency that decides what drugs the NHS will provide is the National Institute for Health and Clinical Excellence (NICE). Sir Michael Rawlins, chairman of NICE, says he knows his agency’s rulings can cause much disappointment.

Paying huge amounts of money for every new drug with the faintest hope of extending life by even a small amount would make it impossible for the NHS to provide universal care.

And Rawlins is sure that someday Americans will have to deal more directly with these same thorny questions of rationing and hope.

The United States will one day have to take cost effectiveness into account, he says. “There is no doubt about it all. You cannot keep on increasing your health care costs at the rate you are for so poor return. You are 29th in the world in life expectancy. You pay twice as much for health care as anyone else on God’s Earth.”

Social Solidarity

And then of course, he points to the millions of Americans with no access to health care because they can’t afford it.

“We have in Britain, as in most of Europe actually, a health care system based on social solidarity,” he says. “We look after each other when we’re sick. And that’s very precious to us in Britain. And I think that’s what we find so difficult about your health care system; you don’t have that.”

Cancer patient Donald Sutherland is happy with the British system, even with its limits.

“I think we’re quite patient people, albeit if we want something, we’ll make sure that we get it,” he says. “In my experience, I can only say that whenever I’ve needed the National Health Service, it’s always been there, and I’ve always had first-class treatment.”

Sutherland’s big interest is in more funding for the search for an effective treatment for lung cancer. And he doesn’t expect his fellow taxpayers to pay for a drug until there’s solid proof that there’s a benefit.

http://www.npr.org/templates/story/story.php?storyId=91996282

And…

Weighing the Costs of a CT Scan’s Look Inside the Heart

By Alex Berenson and Reed Abelson
The New York Times
June 29, 2008

(CT angiograms) were given to more than 150,000 people in this country last year at a cost exceeding $100 million. Their use is expected to soar through the next decade. But there is scant evidence that the scans benefit most patients.

And they expose patients to large doses of radiation, equivalent to at least several hundred X-rays, creating a small but real cancer risk.

Mr. (Robert) Franks has a family history of cardiac disease, and his father and two uncles died of heart attacks. But Mr. Franks… is in excellent shape.

(Mr. Franks) decided to have a nuclear stress test. When that test showed no problem, the cardiologist who conducted it said he did not need more testing.

After doing research on the Internet, (Mr. Franks) found Dr. (Harvey) Hecht, who recommended a CT angiogram. Dr. Hecht acknowledged that Mr. Franks probably did not have severe heart disease. But he said the scan would be valuable anyway because it might reassure him. And his insurance would cover the cost.

http://www.nytimes.com/2008/06/29/business/29scan.html?hp=&pagewanted=all

Comment:

By Don McCanne, MD

One of the more important reasons that the U.S. health care system is so much more expensive than those of other nations is our well documented excess use of expensive high-tech services and products. As much as 30 percent of spending is for services of little or no benefit, and often leads to adverse consequences as a direct result of the intervention or indirectly due to other interventions that this overuse may lead to.

$100,000 drugs that have a 100 percent incidence of poisoning, but have only a negligible impact on the malignancy targeted, are not the breakthrough technology that those profiting from them imply. An expensive imaging procedure that has not been demonstrated to be of benefit, but has radiation doses known to cause cancer, is another breakthrough that favorably impacts profits to the detriment of patients.

We can learn much from the National Institute for Health and Clinical Excellence (NICE), an independent organization that provides Britain’s National Health Service with “national guidance on promoting good health and preventing and treating ill health.” Sadly, much of the publicity in the U.S. on NICE has come from the opponents of a government role in health care, claiming that NICE is depriving British citizens of life-saving cures. In fact, NICE is reducing the waste of taxpayer funds by providing better guidance on how those funds should be spent.

Compare that to the United States. Mr. Franks (NY Times article above) received an expensive test that was not medically indicated, but that perhaps could provide him with reassurance, and it would add to Dr. Hecht’s income, possibly at the cost of giving Mr. Franks cancer. But it was okay because his insurance would pay for it. What?

Whether health care is paid for by a public program or a private insurance plan, we all pay for it. Excess public spending wastes our taxes, but excess private insurer spending wastes our premium dollars and further adds a surcharge in outrageous administrative costs that are tacked on to our health care bill.

A NICE-like program combined with public financing in the United States would dramatically increase the value received for health care spending for all of us, and isn’t that what social solidarity is all about?

You should go to the NICE website to familiarize yourself with this program. Not only will you be able to answer the ideologues who try to demonize this program, but, much more importantly, you will be in a position to advocate with greater confidence for an even better health care system that is more affordable for all of us.

National Institute for Health and Clinical Excellence (NICE):
http://www.nice.org.uk/

Britain’s NICE and social solidarity

Britain Weighs the Social Cost of High-Priced Drugs

By Joanne Silberner
NPR
July 3, 2008

Funding ‘Wonder’ Drugs

The government agency that decides what drugs the NHS will provide is the National Institute for Health and Clinical Excellence (NICE). Sir Michael Rawlins, chairman of NICE, says he knows his agency’s rulings can cause much disappointment.

Paying huge amounts of money for every new drug with the faintest hope of extending life by even a small amount would make it impossible for the NHS to provide universal care.

And Rawlins is sure that someday Americans will have to deal more directly with these same thorny questions of rationing and hope.

The United States will one day have to take cost effectiveness into account, he says. “There is no doubt about it all. You cannot keep on increasing your health care costs at the rate you are for so poor return. You are 29th in the world in life expectancy. You pay twice as much for health care as anyone else on God’s Earth.”

Social Solidarity

And then of course, he points to the millions of Americans with no access to health care because they can’t afford it.

“We have in Britain, as in most of Europe actually, a health care system based on social solidarity,” he says. “We look after each other when we’re sick. And that’s very precious to us in Britain. And I think that’s what we find so difficult about your health care system; you don’t have that.”

Cancer patient Donald Sutherland is happy with the British system, even with its limits.

“I think we’re quite patient people, albeit if we want something, we’ll make sure that we get it,” he says. “In my experience, I can only say that whenever I’ve needed the National Health Service, it’s always been there, and I’ve always had first-class treatment.”

Sutherland’s big interest is in more funding for the search for an effective treatment for lung cancer. And he doesn’t expect his fellow taxpayers to pay for a drug until there’s solid proof that there’s a benefit.

http://www.npr.org/templates/story/story.php?storyId=91996282

And…

Weighing the Costs of a CT Scan’s Look Inside the Heart

By Alex Berenson and Reed Abelson
The New York Times
June 29, 2008

(CT angiograms) were given to more than 150,000 people in this country last year at a cost exceeding $100 million. Their use is expected to soar through the next decade. But there is scant evidence that the scans benefit most patients.

And they expose patients to large doses of radiation, equivalent to at least several hundred X-rays, creating a small but real cancer risk.

Mr. (Robert) Franks has a family history of cardiac disease, and his father and two uncles died of heart attacks. But Mr. Franks… is in excellent shape.

(Mr. Franks) decided to have a nuclear stress test. When that test showed no problem, the cardiologist who conducted it said he did not need more testing.

After doing research on the Internet, (Mr. Franks) found Dr. (Harvey) Hecht, who recommended a CT angiogram. Dr. Hecht acknowledged that Mr. Franks probably did not have severe heart disease. But he said the scan would be valuable anyway because it might reassure him. And his insurance would cover the cost.

http://www.nytimes.com/2008/06/29/business/29scan.html?hp=&pagewanted=all

Comment:

By Don McCanne, MD

One of the more important reasons that the U.S. health care system is so much more expensive than those of other nations is our well documented excess use of expensive high-tech services and products. As much as 30 percent of spending is for services of little or no benefit, and often leads to adverse consequences as a direct result of the intervention or indirectly due to other interventions that this overuse may lead to.

$100,000 drugs that have a 100 percent incidence of poisoning, but have only a negligible impact on the malignancy targeted, are not the breakthrough technology that those profiting from them imply. An expensive imaging procedure that has not been demonstrated to be of benefit, but has radiation doses known to cause cancer, is another breakthrough that favorably impacts profits to the detriment of patients.

We can learn much from the National Institute for Health and Clinical Excellence (NICE), an independent organization that provides Britain’s National Health Service with “national guidance on promoting good health and preventing and treating ill health.” Sadly, much of the publicity in the U.S. on NICE has come from the opponents of a government role in health care, claiming that NICE is depriving British citizens of life-saving cures. In fact, NICE is reducing the waste of taxpayer funds by providing better guidance on how those funds should be spent.

Compare that to the United States. Mr. Franks (NY Times article above) received an expensive test that was not medically indicated, but that perhaps could provide him with reassurance, and it would add to Dr. Hecht’s income, possibly at the cost of giving Mr. Franks cancer. But it was okay because his insurance would pay for it. What?

Whether health care is paid for by a public program or a private insurance plan, we all pay for it. Excess public spending wastes our taxes, but excess private insurer spending wastes our premium dollars and further adds a surcharge in outrageous administrative costs that are tacked on to our health care bill.

A NICE-like program combined with public financing in the United States would dramatically increase the value received for health care spending for all of us, and isn’t that what social solidarity is all about?

You should go to the NICE website to familiarize yourself with this program. Not only will you be able to answer the ideologues who try to demonize this program, but, much more importantly, you will be in a position to advocate with greater confidence for an even better health care system that is more affordable for all of us.

National Institute for Health and Clinical Excellence (NICE):
http://www.nice.org.uk/

Let's end the Medicare Advantage shell game

Medicare Advantage in 2008

By Marsha, Gold, Sc.D.
The Henry J. Kaiser Family Foundation
June 2008
Today, a disproportionate share of the growth in MA (Medicare Advantage) appears to reflect industry response to higher payments, the ease of establishing PFFS (private fee-for-service) plans that involve no networks, and the ability to piggyback on existing administrative structures used to market Medigap and other insurance products. It is possible that some of the PFFS growth could migrate eventually to more managed options. Lack of traction among regional PPOs (preferred provider organizations) suggests that any such migration would be most likely in local plans, as long as that option remains. The growth in local CCP (coordinated care plan) availability is moderately encouraging, but also contrasts with the relatively stagnant state of current CCP enrollment and limited national scope of offerings currently available in the CCP market through most major MA firms. While this analysis does not address this aspect, there is the possibility that PFFS itself is eroding the more managed segments of the MA market. Such erosion would run counter to the interest of some policymakers who support transitioning beneficiaries to more managed products that are presumed to more effectively manage patient care at a lower cost to Medicare.
In sum, MA plans are offering expanded choice which is potentially attractive to some beneficiaries and to some employers who offer group retiree coverage. The issue for policymakers is whether such expansion also holds long-term promise for Medicare’s financial condition and overall stability. If it does not, policymakers soon may have limited ability to alter course since continued growth in Medicare Advantage plan enrollment will generate entrenched interests and shifts in money flow that could be hard to reverse.
http://www.kff.org/medicare/upload/7775.pdf

And…

Higher Spending Relative to Medicare Fee-for-Service May Not Ensure Lower Out-of-Pocket Costs for Beneficiaries

GAO (U.S. Government Accountability Office)
Medicare Advantage
February 28, 2008
MA plans receive a per member per month (PMPM) payment to provide services covered under Medicare FFS. Almost all MA plans receive an additional Medicare payment, known as a rebate. Plans use rebates and sometimes additional beneficiary premiums to fund benefits not covered under Medicare fee-for-service; reduce premiums; or reduce beneficiary cost sharing. In 2007, MA plans received about $8.3 billion in rebate payments.
GAO found that MA plans projected they would use their rebates primarily to reduce cost sharing, with relatively little of their rebates projected to be spent on additional benefits. Nearly all plansā€”91 percent of the 2,055 plans in the studyā€”received a rebate. Of the average rebate payment of $87 PMPM, plans projected they would allocate about $78 PMPM (89 percent) to reduced cost sharing and reduced premiums and $10 PMPM (11 percent) to additional benefits. The average projected PMPM costs of specific additional benefits across all MA plans ranged from $0.11 PMPM for international outpatient emergency services to $4 PMPM for dental care.
While MA plans projected that, on average, beneficiaries in their plans would have cost sharing that was 42 percent of Medicare FFS cost-sharing estimates, some beneficiaries could have higher cost sharing for certain service categories. For example, some plans projected that their beneficiaries would have higher cost sharing, on average, for home health services and inpatient stays, than in Medicare FFS. If beneficiaries frequently used these services that required higher cost sharing than Medicare FFS, it was possible that their overall cost sharing was higher than what they would have paid under Medicare FFS.
Out of total revenues of $783 PMPM, on average, MA plans projected that they would allocate about 87 percent ($683 PMPM) to medical expenses. MA plans projected they would allocate, on average, about 9 percent of total revenue ($71 PMPM) to nonmedical expenses, including administration and marketing expenses; and about 4 percent ($30 PMPM) to the plans’ profits. About 30 percent of beneficiaries were enrolled in plans that projected they would allocate less than 85 percent of their revenues to medical expenses.
As GAO concluded in its report, whether the value that MA beneficiaries receive in the form of reduced cost sharing, lower premiums, and additional benefits is worth the additional cost to Medicare is a decision for policymakers.
http://www.gao.gov/new.items/d08522t.pdf

This week, the AMA and AHIP (America’s Health Insurance Plans) have each begun intensive campaigns to influence Congress on the anticipated Medicare adjustments that will be made when the members return from their recess. The AMA wants to prevent the disastrous 10 percent reduction in physicians’ reimbursement rates, and AHIP does not want that to be paid for by a reduction in overpayments to the private Medicare Advantage plans. It is crucial that we understand what we are purchasing with these Medicare Advantage overpayments.
The Medicare Advantage plans are being paid about 12 percent more (17 percent for PFFS plans) than the costs of patients in the traditional Medicare program. Of the funds received, the plans use 13 percent for non-medical purposes including administration, marketing expenses, and profits (4 percent) or about $101 PMPM, much higher than the administrative costs of the traditional Medicare program. Obviously this is a very expensive program, so what are the beneficiaries receiving for this high cost?
Most of the extra benefits received by the Medicare Advantage enrollees are paid from rebates paid to the plans, amounting to $88 PMPM, obviously less than the $101 the plans are using for administration and profits. The GAO study further found that most of the benefit (89 percent of the rebate, or $78 PMPM) received by the Medicare Advantage beneficiaries was in the form of reduced out-of-pocket payments. Only 11 percent ($10 PMPM) was for additional benefits, a mere drop in the bucket when considering the overall benefits provided by the traditional program.
So we are paying the Medicare Advantage plans a lot of money for for administration and profits, but for what end? Merely to reduce premiums and cost sharing. The private plans waste a tremendous amount of our tax funds accomplishing this when these extra administrative costs and profits would disappear if Congress were to make the same premium and cost sharing adjustments by mere legislative fiat! What a waste!
Worse yet, why shouldn’t everyone in Medicare receive the same relief as the privileged individuals who enroll in the private plans? Congress should end this Medicare Advantage shell game and take the money they are wasting on these plans and distribute it equitably so all Medicare participants can benefit. Even if they use it now to prevent the crumbling of the physician infrastructure, that would still benefit all patients.

Let's end the Medicare Advantage shell game

Medicare Advantage in 2008

By Marsha, Gold, Sc.D.
The Henry J. Kaiser Family Foundation
June 2008

Today, a disproportionate share of the growth in MA (Medicare Advantage) appears to reflect industry response to higher payments, the ease of establishing PFFS (private fee-for-service) plans that involve no networks, and the ability to piggyback on existing administrative structures used to market Medigap and other insurance products. It is possible that some of the PFFS growth could migrate eventually to more managed options. Lack of traction among regional PPOs (preferred provider organizations) suggests that any such migration would be most likely in local plans, as long as that option remains. The growth in local CCP (coordinated care plan) availability is moderately encouraging, but also contrasts with the relatively stagnant state of current CCP enrollment and limited national scope of offerings currently available in the CCP market through most major MA firms. While this analysis does not address this aspect, there is the possibility that PFFS itself is eroding the more managed segments of the MA market. Such erosion would run counter to the interest of some policymakers who support transitioning beneficiaries to more managed products that are presumed to more effectively manage patient care at a lower cost to Medicare.

In sum, MA plans are offering expanded choice which is potentially attractive to some beneficiaries and to some employers who offer group retiree coverage. The issue for policymakers is whether such expansion also holds long-term promise for Medicare’s financial condition and overall stability. If it does not, policymakers soon may have limited ability to alter course since continued growth in Medicare Advantage plan enrollment will generate entrenched interests and shifts in money flow that could be hard to reverse.

http://www.kff.org/medicare/upload/7775.pdf

And…

Higher Spending Relative to Medicare Fee-for-Service May Not Ensure Lower Out-of-Pocket Costs for Beneficiaries

GAO (U.S. Government Accountability Office)
Medicare Advantage
February 28, 2008

MA plans receive a per member per month (PMPM) payment to provide services covered under Medicare FFS. Almost all MA plans receive an additional Medicare payment, known as a rebate. Plans use rebates and sometimes additional beneficiary premiums to fund benefits not covered under Medicare fee-for-service; reduce premiums; or reduce beneficiary cost sharing. In 2007, MA plans received about $8.3 billion in rebate payments.

GAO found that MA plans projected they would use their rebates primarily to reduce cost sharing, with relatively little of their rebates projected to be spent on additional benefits. Nearly all plans–91 percent of the 2,055 plans in the study–received a rebate. Of the average rebate payment of $87 PMPM, plans projected they would allocate about $78 PMPM (89 percent) to reduced cost sharing and reduced premiums and $10 PMPM (11 percent) to additional benefits. The average projected PMPM costs of specific additional benefits across all MA plans ranged from $0.11 PMPM for international outpatient emergency services to $4 PMPM for dental care.

While MA plans projected that, on average, beneficiaries in their plans would have cost sharing that was 42 percent of Medicare FFS cost-sharing estimates, some beneficiaries could have higher cost sharing for certain service categories. For example, some plans projected that their beneficiaries would have higher cost sharing, on average, for home health services and inpatient stays, than in Medicare FFS. If beneficiaries frequently used these services that required higher cost sharing than Medicare FFS, it was possible that their overall cost sharing was higher than what they would have paid under Medicare FFS.

Out of total revenues of $783 PMPM, on average, MA plans projected that they would allocate about 87 percent ($683 PMPM) to medical expenses. MA plans projected they would allocate, on average, about 9 percent of total revenue ($71 PMPM) to nonmedical expenses, including administration and marketing expenses; and about 4 percent ($30 PMPM) to the plans’ profits. About 30 percent of beneficiaries were enrolled in plans that projected they would allocate less than 85 percent of their revenues to medical expenses.

As GAO concluded in its report, whether the value that MA beneficiaries receive in the form of reduced cost sharing, lower premiums, and additional benefits is worth the additional cost to Medicare is a decision for policymakers.

http://www.gao.gov/new.items/d08522t.pdf

Comment:

By Don McCanne, MD

This week, the AMA and AHIP (America’s Health Insurance Plans) have each begun intensive campaigns to influence Congress on the anticipated Medicare adjustments that will be made when the members return from their recess. The AMA wants to prevent the disastrous 10 percent reduction in physicians’ reimbursement rates, and AHIP does not want that to be paid for by a reduction in overpayments to the private Medicare Advantage plans. It is crucial that we understand what we are purchasing with these Medicare Advantage overpayments.

The Medicare Advantage plans are being paid about 12 percent more (17 percent for PFFS plans) than the costs of patients in the traditional Medicare program. Of the funds received, the plans use 13 percent for non-medical purposes including administration, marketing expenses, and profits (4 percent) or about $101 PMPM, much higher than the administrative costs of the traditional Medicare program. Obviously this is a very expensive program, so what are the beneficiaries receiving for this high cost?

Most of the extra benefits received by the Medicare Advantage enrollees are paid from rebates paid to the plans, amounting to $88 PMPM, obviously less than the $101 the plans are using for administration and profits. The GAO study further found that most of the benefit (89 percent of the rebate, or $78 PMPM) received by the Medicare Advantage beneficiaries was in the form of reduced out-of-pocket payments. Only 11 percent ($10 PMPM) was for additional benefits, a mere drop in the bucket when considering the overall benefits provided by the traditional program.

So we are paying the Medicare Advantage plans a lot of money for for administration and profits, but for what end? Merely to reduce premiums and cost sharing. The private plans waste a tremendous amount of our tax funds accomplishing this when these extra administrative costs and profits would disappear if Congress were to make the same premium and cost sharing adjustments by mere legislative fiat! What a waste!

Worse yet, why shouldn’t everyone in Medicare receive the same relief as the privileged individuals who enroll in the private plans? Congress should end this Medicare Advantage shell game and take the money they are wasting on these plans and distribute it equitably so all Medicare participants can benefit. Even if they use it now to prevent the crumbling of the physician infrastructure, that would still benefit all patients.