PNHP

Mandate model repeatedly tested in U.S. and always fails

Mandate model repeatedly tested in U.S. and always fails

I Am Not a Health Reform

By David U. Himmelstein and Steffie Woolhandler
The New York Times
December 15, 2007
Cambridge, Mass.

IN 1971, President Nixon sought to forestall single-payer national health insurance by proposing an alternative. He wanted to combine a mandate, which would require that employers cover their workers, with a Medicaid-like program for poor families, which all Americans would be able to join by paying sliding-scale premiums based on their income.

Nixon’s plan, though never passed, refuses to stay dead. Now Hillary Clinton, John Edwards and Barack Obama all propose Nixon-like reforms. Their plans resemble measures that were passed and then failed in several states over the past two decades.

In 1988, Massachusetts became the first state to pass a version of Nixon’s employer mandate — and it added an individual mandate for students and the self-employed, much as Mrs. Clinton and Mr. Edwards (but not Mr. Obama) would do today. Michael Dukakis, then the state’s governor, announced that “Massachusetts will be the first state in the country to enact universal health insurance.” But the mandate was never fully put into effect. In 1988, 494,000 people were uninsured in Massachusetts. The number had increased to 657,000 by 2006.

Oregon, in 1989, combined an employer mandate with an expansion of Medicaid and the rationing of expensive care. When the federal government granted the waivers needed to carry out the program, Gov. Barbara Roberts said, “Today our dreams of providing effective and affordable health care to all Oregonians have come true.” The number of uninsured Oregonians did not budge.

In 1992 and ’93, similar bills passed in Minnesota, Tennessee and Vermont. Minnesota’s plan called for universal coverage by July 1, 1997. Instead, by then the number of uninsured people in the state had increased by 88,000.

Tennessee’s Democratic governor, Ned McWherter, declared that “Tennessee will cover at least 95 percent of its citizens.” Yet the number of uninsured Tennesseans dipped for only two years before rising higher than ever.

Vermont’s plan, passed under Gov. Howard Dean, called for universal health care by 1995. But the number of uninsured people in the state has grown modestly since then.

The State of Washington’s 1993 law included the major planks of recent Nixon-like plans: an employer mandate, an individual mandate for the self-employed and expanded public coverage for the poor. Over the next six years, the number of uninsured people in the state rose about 35 percent, from 661,000 to 898,000.

As governor, Mitt Romney tweaked the Nixon formula in 2006 when he helped devise a second round of Massachusetts health care reform: employers in the state that do not offer health coverage face only paltry fines, but fines on uninsured individuals will escalate to about $2,000 in 2008. On signing the bill, Mr. Romney declared, “Every uninsured citizen in Massachusetts will soon have affordable health insurance.” Yet even under threat of fines, only 7 percent of the 244,000 uninsured people in the state who are required to buy unsubsidized coverage had signed up by Dec. 1. Few can afford the sky-high premiums.

Each of these reform efforts promised cost savings, but none included real cost controls. As the cost of health care soared, legislators backed off from enforcing the mandates or from financing new coverage for the poor. Just last month, Massachusetts projected that its costs for subsidized coverage may run $147 million over budget.

The “mandate model” for reform rests on impeccable political logic: avoid challenging insurance firms’ stranglehold on health care. But it is economic nonsense. The reliance on private insurers makes universal coverage unaffordable.

With the exception of Dennis Kucinich, the Democratic presidential hopefuls sidestep an inconvenient truth: only a single-payer system of national health care can save what we estimate is the $350 billion wasted annually on medical bureaucracy and redirect those funds to expanded coverage. Mrs. Clinton, Mr. Edwards and Mr. Obama tout cost savings through computerization and improved care management, but Congressional Budget Office studies have found no evidence for these claims.

In 1971, New Brunswick became the last Canadian province to institute that nation’s single-payer plan. Back then, the relative merits of single-payer versus Nixon’s mandate were debatable. Almost four decades later, the debate should be over. How sad that the leading Democrats are still kicking around Nixon’s discredited ideas for health reform.

David U. Himmelstein and Steffie Woolhandler are professors of medicine at Harvard and the co-founders of Physicians for a National Health Program.

Comment:

By Don McCanne, MD

Again, proven repeatedly, the “mandate model” for reform is economic nonsense. The reliance on private insurers makes universal coverage unaffordable.

I Am Not a Health Reform

By DAVID U. HIMMELSTEIN and STEFFIE WOOLHANDLER
The New York Times | Op-Ed
December 15, 2007

IN 1971, President Nixon sought to forestall single-payer national health insurance by proposing an alternative. He wanted to combine a mandate, which would require that employers cover their workers, with a Medicaid-like program for poor families, which all Americans would be able to join by paying sliding-scale premiums based on their income.

Nixon’s plan, though never passed, refuses to stay dead. Now Hillary Clinton, John Edwards and Barack Obama all propose Nixon-like reforms. Their plans resemble measures that were passed and then failed in several states over the past two decades.

In 1988, Massachusetts became the first state to pass a version of Nixon’s employer mandate — and it added an individual mandate for students and the self-employed, much as Mrs. Clinton and Mr. Edwards (but not Mr. Obama) would do today. Michael Dukakis, then the state’s governor, announced that “Massachusetts will be the first state in the country to enact universal health insurance.” But the mandate was never fully put into effect. In 1988, 494,000 people were uninsured in Massachusetts. The number had increased to 657,000 by 2006.

Oregon, in 1989, combined an employer mandate with an expansion of Medicaid and the rationing of expensive care. When the federal government granted the waivers needed to carry out the program, Gov. Barbara Roberts said, “Today our dreams of providing effective and affordable health care to all Oregonians have come true.” The number of uninsured Oregonians did not budge.

In 1992 and ’93, similar bills passed in Minnesota, Tennessee and Vermont. Minnesota’s plan called for universal coverage by July 1, 1997. Instead, by then the number of uninsured people in the state had increased by 88,000.

Tennessee’s Democratic governor, Ned McWherter, declared that “Tennessee will cover at least 95 percent of its citizens.” Yet the number of uninsured Tennesseans dipped for only two years before rising higher than ever.

Vermont’s plan, passed under Gov. Howard Dean, called for universal health care by 1995. But the number of uninsured people in the state has grown modestly since then.

The State of Washington’s 1993 law included the major planks of recent Nixon-like plans: an employer mandate, an individual mandate for the self-employed and expanded public coverage for the poor. Over the next six years, the number of uninsured people in the state rose about 35 percent, from 661,000 to 898,000.

As governor, Mitt Romney tweaked the Nixon formula in 2006 when he helped devise a second round of Massachusetts health care reform: employers in the state that do not offer health coverage face only paltry fines, but fines on uninsured individuals will escalate to about $2,000 in 2008. On signing the bill, Mr. Romney declared, “Every uninsured citizen in Massachusetts will soon have affordable health insurance.” Yet even under threat of fines, only 7 percent of the 244,000 uninsured people in the state who are required to buy unsubsidized coverage had signed up by Dec. 1. Few can afford the sky-high premiums.

Each of these reform efforts promised cost savings, but none included real cost controls. As the cost of health care soared, legislators backed off from enforcing the mandates or from financing new coverage for the poor. Just last month, Massachusetts projected that its costs for subsidized coverage may run $147 million over budget.

The “mandate model” for reform rests on impeccable political logic: avoid challenging insurance firms’ stranglehold on health care. But it is economic nonsense. The reliance on private insurers makes universal coverage unaffordable.

With the exception of Dennis Kucinich, the Democratic presidential hopefuls sidestep an inconvenient truth: only a single-payer system of national health care can save what we estimate is the $350 billion wasted annually on medical bureaucracy and redirect those funds to expanded coverage. Mrs. Clinton, Mr. Edwards and Mr. Obama tout cost savings through computerization and improved care management, but Congressional Budget Office studies have found no evidence for these claims.

In 1971, New Brunswick became the last Canadian province to institute that nation’s single-payer plan. Back then, the relative merits of single-payer versus Nixon’s mandate were debatable. Almost four decades later, the debate should be over. How sad that the leading Democrats are still kicking around Nixon’s discredited ideas for health reform.

David U. Himmelstein and Steffie Woolhandler are professors of medicine at Harvard and the co-founders of Physicians for a National Health Program.

Copyright 2007 The New York Times Company

David Himmelstein speaks

Why Not Universal National Health Insurance?

David Himmelstein, M.D.

kaisernetwork.org
National Congress on the Un and Underinsured
December 10-12, 2007

The conference is sponsored by the California HealthCare Foundation, the Commonwealth Fund, Harvard Health Policy Review, Health Affairs, the Journal of Health Politics, Policy and Law, Inquiry and the Milbank Fund.

If you ask Americans what they want, 64 percent of us say we want national health insurance. If you ask Canadians… would they like a U.S. system, 3 percent would prefer it, which is their illiteracy rate.

http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=2283
(For David Himmelstein’s 35 minute presentation, fast forward the video to 1 hour and 45 minutes. For those preferring a transcript, it will be available at this link in the near future.)

Comment:

By Don McCanne, MD

Harvard professor and PNHP cofounder David Himmelstein presented his remarks following a roundtable discussion by the health policy representatives of the leading Republican and Democratic candidates for president (also included in the video at the link above).

Listening to the political roundtable, the issues were framed as if there were two fundamental proposals for reform – either build on our multipayer system primarily by expanding the use of private plans (Democrats), or allow market forces to resolve the issues (Republicans). But listening to them, you realize that the Republican proposals are those of inaction, so there seems to be only one choice and that is the Democratic plan.

But then David Himmelstein defines the actual problems that we are facing. At first blush it would seem that the two real options are either to expand our multipayer system, or to adopt a national health insurance program. But, by listening to him, it becomes clear that the Democratic proposal is also one of inaction – leaving in place all of the flaws that are impairing access, affordability and quality, pretending that our problems are solved by requiring the purchase of plans that we cannot afford with coverage that won’t prevent financial hardship.

He shows us that we really do have only one choice – adopt a universal national health insurance program. Any other choice brings us more hardship, suffering and even death.

(A positive note for advocates of health care justice: David received an enthusiastic standing ovation for his presentation.)

The new Dutch health insurance system

Health insurance reform in the Netherlands

By Yvette Bartholomée and Hans Maarse
Eurohealth
Volume 12 Number 2, 2006

On 1 January 2006, a major reform of the Dutch health insurance system came into effect. The former system, a combination of a statutory sickness fund scheme for the majority of the population and private health insurance for the rest, was replaced with a single universal scheme.

Key elements of the new system

The extension of market competition is one of the key features of the new health insurance system. Health insurers, which may operate on a for-profit basis, are required to compete on premiums, types of health plan and service levels. Consumers are free to choose any health insurer and type of health plan (for example, with or without deductibles, with or without preferred provider networks) and are able to change to an alternative insurer or plan once a year. All legal residents of the Netherlands are obliged to purchase a basic health plan, but are free to purchase a complementary voluntary plan covering additional health services such as physiotherapy, dental care for adults, psychotherapy and various forms of preventive care (there is an enormous variety of complementary plans). The basic insurance package covering essential health care is defined by the government and is more or less the same as the package of the former statutory health insurance scheme. However, health insurers have some freedom to decide, for instance, which providers to contract, what types of care to cover and whether or not to offer benefits in kind or reimburse subscribers. Thus, the new health insurance legislation allows for some differentiation among health plans in order to give consumers choice.

Another element of the new system concerns premium-setting. The new system retains the nominal fee, so insurers must set a single flat rate premium for each type of health plan they offer. They are forbidden to vary premiums with age, sex or specific health risks. The government pays the premium for those under eighteen. Low-income groups receive an income-related government subsidy (a ‘health care allowance’) to purchase a health plan. Furthermore, each employed person pays a contribution of 6.5% of his/her income (up to an income ceiling of € 30,000 per year). Employers do not pay any contributions. For the selfemployed, retired persons and some other specific categories the contribution rate is set at 4.4%.

A further element of the health insurance reform relates to what the government terms ‘public constraints’. The new system is mandatory and covers the entire population. Pivotal in the new legislation is that health insurers must accept every applicant (open enrolment). They are not permitted to deny access to applicants with preexisting medical conditions or to charge them a higher premium. The ban on risk selection by insurers can only be enforced when insurers have no financial incentive to select risks. Therefore, a risk equalisation scheme has been developed to avoid risk selection by insurers and to facilitate fair competition. Insurers receive risk-adjusted capitation payments from a risk equalisation fund adjusted for age, sex, pharmaceutical consumption and major diagnostic groups. The risk equalisation fund pools income-related contributions and government contributions for those under eighteen.

A final element of the new health insurance scheme concerns its private character, as the government has presented it as an arrangement under private law.

Policy goals of the new legislation

…the preservation of risk and income solidarity can be regarded as a cornerstone of the new legislation. Health insurers must accept all applicants and premiums cannot vary based on individual characteristics. However, this regulation only applies to the basic health insurance scheme and not to complementary voluntary health insurance. In the future, health insurers may use the latter as a new instrument for risk selection (an insurer can do this by denying an applicant access to a complementary plan to discourage him/her from purchasing a basic health plan). The low-income groups health insurance subsidy system also aims to preserve income solidarity.

The key question, however, is how these arrangements will work in practice, particularly in the long-run? To what extent will market competition be compatible with solidarity arrangements? Markets tend to call for variation by differentiated packages and price-setting to enhance consumer choice. Health insurers and provider organisations may call for less restrictive government regulation to create more room for ‘private solutions’. One scenario therefore is that market competition will eventually lead to a redefinition of the solidarity arrangements. It is not simply a neutral policy instrument to achieve better the goals of health care policy but will impact upon how these goals are stated. Market competition is not only the outcome of a neo-liberal model of health care policymaking but also reinforces that model.

Preliminary results

First, since the new legislation has come into effect, many more people than expected have changed insurer. According the latest data available, about 18% of the insured have switched from one insurer to another. While some insurers have grown significantly larger, one insurer has lost almost a quarter of its subscribers. Changing insurers has also caused a huge amount of administrative work.

Second, further consolidation in the health insurance market is expected if insurers are to survive and build up bargaining power in negotiations with providers.

Third, the new system creates administrative problems for providers.

Fourth, the government has had to concede that the new legislation may have unfair distributive effects for some groups of people and is looking for ways to compensate them (albeit reluctantly).

Beyond receiving reduced premiums, groups can also choose a plan that is optimally geared to their specific needs. The latter possibility in particular has provided the incentive for patients’ associations to form groups, but it remains to be seen how attractive the arrangement will be for insurers and patients with chronic illnesses. There are already signs that health insurers are not interested in signing a contract with patient groups, which cause a predictable loss to them. Another interesting observation is that it has been estimated that € 70 million has been spent on advertising.

Conclusion

In spite of preliminary results (of which the high proportion of people changing insurer is the most remarkable and unexpected), it is too early to determine whether or not the reform has been a success. Success would imply that the competitive changes enhance value and efficiency in purchasing health care. This is the real test of the reform.

http://www.euro.who.int/Document/Obs/Eurohealth12_2.pdf

And…

The changing Dutch healthcare system

By Maud Rommers and Jeroen Breen
Watson Wyatt Europe
Healthcare Market Review

Under the new system, age or health risks cannot play a role in determining the premium to be charged. Therefore, to ‘compensate’ the insurer for the less healthy risks in their portfolios, the government will operate a ‘risk and claims settlement’ (risk equalisation) system along similar lines to that used by the former Dutch public health insurance funds.

Introduction of this system (vereveneningssysteem) means that, for an insurer, keeping a healthy, profitable portfolio will not be equated with the youthfulness of the policyholders, as was the case for private insurance portfolios previously. Now, policyholders who are older, and even ill, can be equally profitable risks. This, however, makes it a much more complex situation for the insurance companies to manage.

In the early years of the new system, there will be many uncertain factors which will make it difficult for insurers to balance competitive product pricing and securing distribution with the risks of unacceptable financial results. Some of this is purely technical and focused on suitable monitoring of claim progression at appropriate levels of detail. It will also be important to find out if there are groups of insured persons who are structurally worse off within the equalisation system.

http://www.watsonwyatt.com/europe/pubs/healthcare/render2.asp?ID=16652

And…

Going Dutch — Managed-Competition Health Insurance in the Netherlands

By Alain C. Enthoven, Ph.D., and Wynand P.M.M. van de Ven, Ph.D.
The New England Journal of Medicine
December 13, 2007

The Dutch system is still a work in progress, and substantial problems remain. First, the risk-equalization model requires further improvement and continuing adjustment. Second, since the Dutch combine income-related subsidies for health insurance with similar payments for housing, child care, and scholarships, a high percentage of each extra euro earned reduces the earner’s subsidy, leaving people with little incentive to earn more money. Third, the existence of supplemental insurance with risk rating and without open enrollment may leave too large an opportunity for insurers to profit from risk selection. Finally, the current focus is on insurers, but the promise of this model lies in competition among delivery systems — which the insurers are now creating.

A U.S. version of the Dutch model would provide an opportunity for U.S. physician organizations to form their own health plans and present themselves directly to the consumer market, freeing them from control by large, remote, third-party insurance carriers and from the maddening complexity of having to deal with 15 to 30 different insurance companies and self-insured employers, each with its own payment criteria and plan designs. Medical groups could build their own customer base and loyalties. They could design their own coverage criteria, incentive schemes, utilization management, and other features.

http://content.nejm.org/cgi/content/full/357/24/2421

And…

Can “Regulated Competition” for Health Insurance Control Health Care Costs, Preserve Access, and Serve Society? The New Dutch Health System

By Pauline Vaillancourt Rosenau, PhD, Management, Policy and Community Health, University of Texas School of Public Health, and Christiaan J. Lako, dr, Public Administration, Radboud University Nijmegen, Netherlands
American Public Health Association
Scientific Session
November 6, 2007

Health services experts note that, in isolation, health insurance reforms such as guaranteed issue, mandatory coverage, price competition for a standard health insurance package, and community rating, have limited potential. But if they are implemented together, with governmental sliding-scale subsidies based on income, might they form an integrated set of checks against gaming, promote cost containment, and serve society? The Health Insurance Act implemented in January 2006 in the Netherlands, is testing exactly this proposition. The first-year performance of new Dutch health system suggests that cost-containment has not yet been achieved, and that while insurance companies reported losses, consumers perceive the new health insurance policies to be more expensive than the old ones. Access is not compromised but the information made available to consumers to compare insurance plans is inadequate. Half find it more difficult to choose a health insurance plan now and a large percentage of the population distrusts the new health system (43%). On quality, more consumers perceive that quality has been reduced (41%) than find it improved (8%). Overall, with about 6 months of experience with the new system, only about 18% like it better than the old one. The Dutch experiment in health insurance reform indicates that efforts to both control health care costs and preserve access remain elusive. These conclusions are based on results of a poll by the Dutch Consumers Union and the financial assessment of the Dutch Central Bank. Results may change in the future because the experiment goes forward largely unmodified.

http://apha.confex.com/apha/135am/techprogram/paper_145775.htm

Comment:

By Don McCanne, MD

The recently adopted financing reform for health care in the Netherlands has received considerable attention in the United States, and is being proposed as a private sector model that would be especially compatible with American ideals. The Dutch have discontinued their public insurance program and replaced it with an individual mandate to purchase private health plans competing in the marketplace.

Harvard Professor of Business Regina Herzlinger, as an advocate of consumer-directed health care, supports the Dutch system, but with the proviso that government oversight be removed so that the free market can improve quality and control costs. Stanford Professor of Management Alain Enthoven lauds the Dutch program, but only as a step towards his concept of managed competition in which physicians organize themselves into plans that compete with each other in the health care marketplace. Sen. Ron Wyden touts the success of the Dutch system as an example of how his proposal for a universal individual mandate is just what the United States needs. The neoliberals who support the proposal of the leading Democratic candidates – an individual mandate with an option to purchase a public, Medicare-like plan – also use the Dutch model as an example that their proposal not only would work, but would have strong public support. Even HHS Secretary Michael Leavitt recently visited the Netherlands to learn from a system that traded their public-private insurance mix for a market of competing private insurance plans – an ideal from the perspective of our conservative administration.

In reality, it seems that each interested party is projecting their individual and institutional ideologies on their perceptions of the Dutch reform. If you step back and look objectively at what the Dutch have done, their reform falls far short of many of the goals of each interest.

Just look at the way they have achieved the goal of pooling risk and funding health care equitably. Private plans competing on the basis of their premiums have absolutely no meaning when financing is readjusted based on an administratively-complex risk equalization system that will surely fail to equitably compensate for the private insurers’ skills at gaming the system.

Further, the Dutch have granted to the private insurers the right to control health markets in a manner that we are finding to be offensive. Consolidation of insurers is taking place, creating oligopolies. They are allowed to use their complementary plans to leverage risk selection, benefit packages, and to implement restricted choice of providers. The insurers have a highly leveraged advantage over the providers, controlling their fees and services while increasing their administrative burdens.

It is unbelievable the number of people who should know better that are suggesting that we should try their system. You would think that they might first want to review the reports of the Dutch Consumers Union and Dutch Central Bank. With 43 percent of the Dutch population already distrusting the new health system we really should look elsewhere for reform models.

But, wait. We’ve already found single payer. Why do we have to keep looking?

Single-payer plan helps all

Richard Iammarino, M.D.
The Charleston Gazette
December 13, 2007

All presidential candidates seem to have plans for universal health care. Details are sketchy — and has been often said, “the devil is in the details.” All plans have or should have wellness initiatives which stress personal responsibility for health care.

Is health care a right or a privilege? I believe it is a right recognized in every industrial nation except ours.

Many health-care professionals see the current U.S. system as broken. I know some doctors who are leaving practice early and discouraging their children from becoming doctors because of the problems.

Americans pay on the average more than $7,000 a person on health care, the highest cost in the world — yet we rank 35th to 40th in world health parameters. How can this be? Health costs soon will account for 20 percent of our gross domestic product. These costs are already reflected in the price of automobiles and many other products.

Our high health costs are related to several issues. These include billing mechanisms, prescription drug costs, hospital charges, doctor charges, and health insurance costs including overhead and profits. What can be done?

I have been a physician for 54 years and have seen many iterations of health financing. In the 1960s when Medicare became a reality, the American Medical Association opposed it vigorously, but now embraces it along with the federal-state Children’s Health Insurance Program. Many AMA members now favor universal coverage as well.

Three states have universal coverage. While each state’s plans vary, none has a single-payer system. To understand the benefits of a single-payer plan, explanations are in order: There is a difference between cost and charge. For example, the cost to manufacture a box of corn flakes may be 15 cents, yet you will be charged anywhere from $1.25 to $3 for it. There are legitimate reasons for the price. These include processing, packaging, distribution, advertising and profit for both the company and the store.

In medical care, most charges are not related to cost. This is an important point. There have been many attempts to tie charges to cost. As health-care bills go up, it is clear that these are not working. It is in this area that a single-payer plan makes sense and will save money. A single-payer plan is the most effective way to help charges relate rationally to cost. The reason is the ability to be effective in negotiations.

A few months ago, Morgantown’s community hospital, Monongalia General, increased its daily room rate about 10 percent and cited the reason as costs of retirement plans for a segment of its staff. Interestingly, the increase wasn’t passed on to Medicare and PEIA patients. Why were Medicare and PEIA excluded? Because they both negotiate charges with the hospital. Private health insurers generally don’t, because they just pass along the increases to the subscribers.

Most hospitals are nonprofit entities. This does not mean they do not make money, but means their excess money is spent on hospital-related activities like expansion of programs and buildings. Morgantown’s two hospitals are doing rather well in this regard.

I hope it surprises no one that we have, horror of horrors, government-run socialized medicine. It is called Medicare and Medicaid. Do they have problems? Yes. Do they provide, in general, affordable health care for the elderly and poor? Yes.

Overhead is really the cost of doing business. The overhead for Medicare is 3 percent to 4 percent. Private health insurers have much higher administrative cost because they need many more people to determine and process claims. There is a lot of paperwork involved between providers and subscribers. These companies are owned by shareholders and need to make money to survive. Top-level managers are very well compensated. Overhead for private for-profit health plans is between 12 percent and 30 percent. Compare that to Medicare’s 3 percent to 4 percent.

There are a large number of private insurance companies. Each has its own system of control. They often have to authorize medical procedures in advance, and may have different criteria. These complexities force hospitals, doctors and other professionals to learn different systems of reimbursements. Although I am no longer in practice, I receive invitations to “coding seminars,” which are needed by the staff of many doctors to navigate the complex formulas for payment. Paper is strangling the system.

Drug costs are another reason for our higher health-care costs. We are only one of two countries in the world that allow TV advertisements for drugs. New Zealand is the other, and it is considering banning them. We are an over-drugged country. With less than 5 percent of the world’s population, we account for over 40 percent of global prescription and over-the-counter drug use. It is very hard to get a handle on drug costs and charges. After his inauguration, Gov. Manchin talked of a way West Virginia might use its purchasing power to lower costs. While it did not happen, it was an example of the possible use of negotiation to lower charges.

Medicare Part D (prescription coverage) is another issue. Passage of this bill was a disgrace. Congress was held hostage at a late-night session until enough favorable votes were available. Drug companies lobbied hard for passage. Congressmen and aides who backed the bill are now working for drug companies. This story was told as a segment of “60 Minutes.” Many drug companies were quick to raise their prices right after the bill’s passage. Insurance companies also are having a bonanza. The sickest patients who require expensive drugs over a long time have to pay significant out-of-pocket costs. You might be surprised to learn that Medicare is forbidden by this law to negotiate charges. Drug company lobbyists won on this issue and we pay.

What would a single-payer system do? While the government may be the “single payer,” it does not have to be. Go back to the Medicare program. It pays less because it negotiates. Insurance companies can negotiate and perhaps do, but have less leverage, and as organizations responsible to their shareholders, need to make a profit or go out of business.

As I look at the whole picture, the single-payer plan is the only one that will have a chance to eliminate the excess profit in health care and help stem rising costs through negotiating power. However, maybe the single most important reason for adopting a national single-payer system is that it will allow all of us to receive affordable health care.

I believe we are all together as a country and we need to stand together to provide affordable health care for each other.

Dr. Iammarino is retired and lives in Morgantown.

ERs in crisis, but writer knows well of solution

Palm Beach Post
Letters
Thursday, December 13, 2007

Your Dec. 6 piece “On-call ER crisis still on gurney” illustrates the problems facing emergency rooms all over the country. Health-care writer Phil Galewitz accurately recites the complexity of the solutions. It is disappointing that he ignores the best solution, one that he knows about since he was the moderator for a public debate several years ago on problems and solutions to our dysfunctional health-care system.

A single-payer system would provide the opportunity of a “medical home” (Health Affairs/Commonwealth Fund 2007) for everyone, thus reducing non-emergency traffic in ERs. It also would, and equally important, pay every doctor promptly for services rendered. These two solutions, and many others, have persuaded the American College of Physicians (124,000 physicians) to endorse single-payer along with 86 members of Congress (HR 676).

Single-payer is neither magical nor free; nor is it copied from another country. Please include this growing alternative solution whenever health care is seriously discussed.

ROBERT P. STEVENS
Floridians For Health Care
Jupiter

Watch your medFICO score!

How healthy is your medical credit score?

System being designed to help hospitals figure out whether you’ll pay them

By Jason Roberson
The Dallas Morning News
December 12, 2007

Mortgage lenders aren’t the only ones showing more interest in your credit score these days – the health industry is creating its own score to judge your ability to pay.

The new medFICO score, being designed with the help of credit industry giant Fair Isaac Corp., could debut as early as this summer in some hospitals.

Healthcare Analytics, a Waltham, Mass., health technology firm, is developing the score. It is backed by funding from Fair Isaac, of Minneapolis; Dallas-based Tenet Healthcare Corp.; and venture capital firm North Bridge Venture Partners, also based in Waltham. Each kicked in $10 million for the project.

The score is already raising questions from consumer advocacy groups that fear it will be checked before patients are treated. People with low medical credit scores could receive lower-quality care than those with a healthy medFICO, they argue.

(Steve Mooney, Tenet’s senior vice president of patient financial services) says the hospital business has changed over the past 30 years to take on characteristics of the retail industry. With patients expected to pay a larger share and do more comparison shopping, they soon will be able to purchase health care much like an automobile, he said.

Pamela Dixon, executive director of the World Privacy Forum, a consumer advocacy group, isn’t impressed. “I don’t like it; I don’t like it at all. These are people’s lives we’re talking about. This isn’t some car.”

http://www.dallasnews.com/sharedcontent/dws/bus/stories/121207dnbushealthcredit.299ccc0.html#

Comment:

By Don McCanne, MD

You can get an idea of the magnitude of the growth in the market of inadequate underinsurance products when the industry has identified yet another administrative service that they can sell us: a medical FICO score to determine the creditworthiness of patients who have significant out-of-pocket expenses as a result of today’s higher cost-sharing requirements.

And soon we’ll be purchasing health care much like an automobile? Does that mean that we’ll have to negotiate with the health care salesman who will have to obtain the approval of the health sales manager (after checking our medFICO score) before we can drive away with our health care?

Anything to keep the government out of our health care.

Obama's views on single payer national health insurance

(excerpted from USA Today, Dec. 11, 2007)

(In 1996) Obama said he would support a single-payer health plan for Illinois “in principal” [sic], “although such a program will probably have to be instituted at a federal level; the long-term objective would be a universal care system that does not differentiate between the unemployed, the disabled, and so on.” The campaign says Obama has consistently supported single payer health care in principle.

Under single-payer health care, a government system would replace private health insurance. Obama’s campaign said he has always supported the idea in concept, but thinks it is not currently practical because of the existing health care infrastructure.

In a statement, a campaign spokeswoman said, “Obama never saw or approved” the document, and the health care, capital punishment and gun control answers weren’t consistent with his stances, then or now.

Full article: http://www.usatoday.com/news/politics/election2008/2007-12-11-obama-views_N.htm

Health Care Reform

The New York Times
Letter
Published: December 12, 2007

Paul Krugman’s repeated focus on the Democratic presidential candidates’ opinions regarding mandates to buy health insurance is distracting (“The Mandate Muddle,” column, Dec. 7).

The true policy difference on health care reform within the Democratic Party is between those who support incremental reform within our current financing system (represented by Hillary Rodham Clinton, John Edwards and Barack Obama) and those who support reforming our current financing system into a single-payer system (represented by Dennis Kucinich).

Mr. Krugman has devoted many columns to extolling the benefits of a single-payer system, so I am not sure why he is repeating politicians’ talking points about minor differences rather than asking why the three leading Democrats aren’t supporting the best reform policy.

Jeremiah Schuur
Cambridge, Mass., Dec. 7, 2007

The writer is an emergency physician.

Obama’s views on single payer national health insurance

(excerpted from USA Today, Dec. 11, 2007)

(In 1996) Obama said he would support a single-payer health plan for Illinois “in principal” [sic], “although such a program will probably have to be instituted at a federal level; the long-term objective would be a universal care system that does not differentiate between the unemployed, the disabled, and so on.” The campaign says Obama has consistently supported single payer health care in principle.

Under single-payer health care, a government system would replace private health insurance. Obama’s campaign said he has always supported the idea in concept, but thinks it is not currently practical because of the existing health care infrastructure.

In a statement, a campaign spokeswoman said, “Obama never saw or approved” the document, and the health care, capital punishment and gun control answers weren’t consistent with his stances, then or now.

Full article: http://www.usatoday.com/news/politics/election2008/2007-12-11-obama-views_N.htm

Australia learns wrong lesson from U.S.

BUPA Australia Bids To Be Largest Health Insurer Down Under

By Vivian Wai-yin Kwok
Forbes.com
December 7, 2007

BUPA Australia confirmed Friday that it had sweetened its bid to take over MBF for 2.41 billion Australian dollars (U.S.$2.1 billion), stepping up its plan to become the biggest health insurer in the country.

MBF is Australia’s second-largest health insurance concern, currently serving 2 million people, representing approximately a 20% share of the country’s health insurance market. BUPA Australia, a subsidiary of British United Provident Association, which made landfall in Australia in 2002, has accumulated more than 1 million customers, for a 10.13% national market share.

“Together MBF and BUPA Australia would create the country’s leading health fund, which would be in a stronger position to provide affordable health insurance, greater efficiencies and improved services for members,” BUPA Australia’s Managing Director Richard Bowden said.

The integration of BUPA Australia and MBF would significantly challenge the state-owned Medibank Private, which has a 29% share of the country’s health insurance market.

BUPA’s revised proposal involves a cash payment of A$2.41 billion to be distributed among all the contributors to MBF, a mutual insurer, which provides policyholders with certain ownership rights.

MBF has been developing a proposal for demutualization and a listing early next year. “The Board is actively considering the BUPA proposal and preliminary informal consultations have been held with the MBF Council. The Board expects to make a decision in the near future as to whether to recommend this proposal formally to the MBF Council and contributors or continue with the demutualisation proposal.”

BUPA Australia first approached to MBF in August with an A$2 billion ($1.8 billion) takeover proposal. However, MBF turned down the initial bid and said it would follow the route taken by NIB Holdings, the country’s sixth-largest health insurer, and transform itself into a listed company.

NIB Holdings, with about 7% of the national market, floated its shares on the Australian Stock Exchange last month, marking the first time a private health insurer went public. NIB’s stock surged 29% on the first day, pushing up the company’s market capitalization to A$570 million ($499 million).

http://www.forbes.com/markets/2007/12/07/bupa-australia-mbf-markets-equity-cx_vk_1207markets02.html

And…

Revealed: highest-earning woman executive in Britain

By Fiona Macgregor
Scotsman.com
June 27, 2005

The head of the private medical firm Bupa has become Britain’s highest-earning woman executive.

Valerie Gooding, 54, was paid more than £1.4 million in salary and bonuses last year in her role as chief executive. That equates to £815 an hour.

She will receive a further £967,000 under an incentive plan and her pension pot grew from £2.7 million to £3.9 million, according to Bupa’s annual report.

http://business.scotsman.com/topics.cfm?tid=343&id=705382005

Comment:

By Don McCanne, MD

It is often said that private insurers in other nations with less expensive, universal health care systems are very different from those in the United States. They are highly regulated, non-profit entities that serve patients well. But is that always true? Step back and take a look at what is happening in Australia.

The private, for-profit British mega-insurer, BUPA, has moved into Australia big time in an effort to take over the financing of their health care system. Australia’s second largest insurer, MBF, is a mutual company owned by those insured. BUPA is competing with the management of MBF in offering a payout to the insured, opening the way for them to convert to a listed company on the Australian Stock Exchange.

Just as we heard in the United States, this conversion, they claim, would enable BUPA to provide “affordable health insurance, greater efficiencies and improved services for members.” But what we got in the United States was unaffordable premiums, financial barriers to care, greater administrative waste, and greater numbers of uninsured and underinsured.

Anyone paying attention then knew who would benefit: the board members and executives of the insurance companies and their friends on Wall Street who have enabled greed to become a major driving force in the American economy. Wealth moves up while more and more of us suffer financial hardship when medical needs arise.

BUPA was the subject of a previous Quote of the Day, when they pulled out of the insurance market in Ireland. They had been successful in insuring the healthy while leaving high-cost patients to be covered by the state-run program. They left in protest over the demand to adhere to their prior agreement that risk pool transfers would be made to correct for adverse selection. They thought that they should be allowed to keep the excess profits resulting from their devious scheme to market selectively to the healthy.

Someone in Australia should ask Valerie Gooding just how much frickin’ money does she really need. Now she is going to siphon off funds that should be going to patients and those who provide their care.

What she really needs is new quarters as luxurious as those that Sir Conrad Black will soon occupy. At least he didn’t stoop to taking money needed for others’ health care.

Experts pick apart Bill Clinton's medical bankruptcy comment

Jennifer Jacobs
Des Moines Register Staff Writer
December 10, 2007

A fact check is in order on a comment about medical bankruptcies that Bill Clinton and other leading Democrats keep making, two dueling experts say.

“Over half of all the bankruptcies in this decade can be tied to personal health emergencies,” the former president said Monday at a Hillary Clinton campaign rally in Ames.

And he’s said it before while stumping for his wife’s health care reform plan, which would require all Americans to carry health insurance either through the government or a private insurer.

“He’s wrong,” said Michael Millenson, a visiting scholar at Northwestern University’s Kellogg School of Management. “Well, it’s not that Bill Clinton is wrong, it’s that he’s quoting a piece of research which is wrong.”

Clinton’s reference was to a Harvard University study of medical bankruptcy that is widely quoted, including by Democratic presidential candidates John Edwards and Barack Obama.

Harvard professors David Himmelstein and Elizabeth Warren interviewed more than 1,700 families that were in bankruptcy courts across the country. About half of all families filing for bankruptcy did so in the aftermath of a serious medical problem, according to the findings, released in 2005.

But that figure was disputed by Millenson and Northwestern University professor David Dranove, who re-examined the study at the behest of the insurance industry. They said medical bills were a contributing factor in just 17 percent of the bankruptcies. And the Harvard researchers didn’t rule out other factors, such as job loss, college loans or housing costs, they found.

“Using their numbers is both factually inaccurate and politically unfortunate,” Millenson, an Obama supporter and volunteer, said in an interview Monday. “President Clinton and Hillary Clinton have a wonderful track record for trying to cover the uninsured. But when you go beyond the facts allowed, you give ammunition to those who are trying to minimize the problem of the uninsured.”

Hillary Clinton’s Iowa spokesman, Mo Elleithee, pointed out that the Clinton, Obama and Edwards campaigns have all cited this fact, and that it came from “a well-respected Harvard study.”

“I find it hard to believe that anyone would quarrel with the fact that skyrocketing health care costs have caused financial hardship for many American families,” Elleithee said. “That’s why Hillary Clinton has a plan to reduce health care costs while increasing both quality and access to all Americans.”

Himmelstein, reached by phone Monday at Harvard, said the study is accurate. The Northwestern academics misrepresented and manipulated the data, he said.

“President Clinton is correct,” Himmelstein said. “But he’s wrong in saying his wife’s plan would do something about it.”

Himmelstein is a passionate advocate for a system where the government insures everyone.

“I think Clinton’s plan is just an absolute fraud, and so is Edwards’ and Obama’s,” he said.

The “Swiss cheese coverage” of private insurance would still leave some Americans saddled with enormous bills, and those who lose their jobs would be particularly vulnerable to medical bankruptcy, he said.

Skip the back-and-forth, and these academics agree on some points. About 46 million Americans have no health insurance. And for the 250 million with insurance, high co-payments, deductibles and exclusions from coverage can harm their finances.

But the number of bankruptcies due to medical bills is unknown, said Millenson, who described himself and Dranove as “militant political moderates.”

Dranove recently started a year-long study on the issue, this time with a grant from the Robert Wood Johnson Foundation.