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San Francisco Mayor Signs Health Access Program Into Law

San Francisco Mayor Signs Health Access Program Into Law

Coverage & Access | [Aug 09, 2006]

San Francisco Mayor Gavin Newsom (D) on Monday signed into law a program to expand health care access to the estimated 82,000 uninsured city residents, the San Francisco Chronicle reports (Vega, San Francisco Chronicle, 8/8). The San Francisco Health Access Program, proposed on June 20, would not provide health insurance but would give uninsured adults access to the same network of doctors and hospitals, as well as surgeries and drug benefits that other workers in the city have. The goal is to reduce health care costs by emphasizing primary and preventive care, according to Newsom. San Francisco’s Board of Supervisors will vote on the plan later this month, though Newsom said he does not need the board’s approval to proceed with the program’s implementation. The program would cost the city an estimated $200 million in the first year, much of which would be redistributed from existing city programs serving the uninsured and low-income residents. Newsom said he “assume[s] costs will increase” but hopes that the city will not “need to do this in five or six years” because the program will be “replaced by some rational national strategy” (Kaiser Daily Health Policy Report, 7/7). Newsom said implementing the program will be “the most complex” aspect of the plan (San Francisco Chronicle, 8/8).

Private insurance better than public for Colorado children?

PEDIATRICS
August 2006

ABSTRACT. Increased Rates of Morbidity, Mortality, and Charges for Hospitalized Children With Public or No Health Insurance as Compared With Children With Private Insurance in Colorado and the United States By James Todd, MD, Carl Armon, MSPH, Anne Griggs, MSPH, Steven Poole, MD and Stephen Berman, MD

BACKGROUND. There has been a gradual decrease in the proportion of children covered by private health insurance in Colorado and the United States with a commensurate increase in those with public insurance or having no insurance which may impact access to care and outcomes.

OBJECTIVE. The purpose of this work was to determine whether children with public or no health insurance have differences in hospital admission rates, morbidity, mortality, and/or charges that might be improved if standards of primary care comparable to those of children with private insurance could be achieved.

METHODS. We conducted a retrospective comparison of hospitalization-related outcomes for children <18 years of age in Colorado from 1995-2003 and in the United States in 2000. Population-based rates for hospital admission were determined stratified by age, race/ethnicity, disease grouping, and health insurance status. RESULTS. Compared with those with private insurance, children in Colorado and the United States with public or no insurance have significantly higher rates of total hospital admission, as well as admission for chronic illness, asthma, diabetes, vaccine-preventable disease, psychiatric disease, and ruptured appendix. These children have higher mortality rates, higher severity of illness, are more likely to be admitted through the emergency department and have significantly higher hospital charges per insured child. Higher hospitalization rates occur in children who are nonwhite and/or Hispanic and those who are younger. If children with public or no health insurance in the United States in 2000 had the same hospitalization outcomes as children with private insurance, $5.3 billion in hospital charges could have been saved. CONCLUSIONS. There is an opportunity to achieve improved health outcomes and decreased hospitalization costs for children with public or no health insurance if private insurance standards of health care could be achieved for all US children. http://pediatrics.aappublications.org/cgi/content/abstract/118/2/577

And…

Doctor visits save dollars, kids’ lives
DenverPost.com
08/07/2006

Regular visits to the doctor by children on Medicaid or with no insurance could prevent serious illnesses and hospitalizations – saving state taxpayers $46 million, according to a study by two Denver pediatricians.

The study found the death rate for those children was almost double that of children with private insurance.

“What this shows is, if you don’t give children a medical home, they end up in the emergency department or the hospital,” (coauthor James) Todd said.

“That costs more, in dollars and also in morbidity and mortality,” he said.

In 2004, the two doctors surveyed colleagues across the state and found the number of pediatricians willing to treat Medicaid patients had dropped by almost half, from 41.4 percent in 2000, to 23.9 percent in 2003.

At that time, 83 percent of the doctors surveyed said Medicaid payments don’t cover their costs of seeing patients.

http://www.denverpost.com/news/ci_4144600

Comment:

By Don McCanne, M.D.

Reading the entire Abstract leads you to one unmistakable conclusion: children covered by private insurance have lower death rates and lower costs than do children covered by public insurance, which is the equivalent of having no insurance at all.

Whoever wrote this Abstract must be on the dole from AHIP (America’s Health Insurance Plans) since it is tantamount to an endorsement of private insurance without providing a hint at the real issues involved. Whether the insurance is public or private has nothing to do with the tragic outcomes described.

Medicaid in Colorado (and many other states) is a disaster, not because it is a public program, but because it is a welfare program that is severely underfunded because it serves a population without a political voice. Asking physicians to not only donate their services but to also pay the deficit in overhead expenses is not realistic. The margin of profit for other patients has been squeezed to the point that cost shifting is no longer an adequate option. Physicians have no other choice but to limit their exposure to Medicaid losses.

This leads to the real reason that Colorado has tragic outcomes in its Medicaid program. These children lack a medical home. Primary care is very effective in improving outcomes and lowering costs, but Colorado’s Medicaid program is impairing access to pediatricians and family physicians. Impaired outcomes, including death, is the consequence of the neglect by the public stewards of the Medicaid program.

The private insurers cannot claim that they have some marketplace magic that saves lives and reduces costs. Private insurers waste money, diverting resources away from patient care. Worse, they make every effort to avoid covering those with the greatest needs, and they are making health care less affordable by shifting more costs to those with needs. It is absolutely outrageous that the conclusion in this Abstract implies that “private insurance standards” should be achieved for all children. The standards that really should be achieved are those of a well-funded public program: universal, comprehensive, high quality, efficient, accessible, and affordable.

The editors of PEDIATRICS are guilty of journalistic malpractice.

Band-aid Therapy

Problems with Medicare payments to physicians, rising health-care costs, and the increasing number of Americans without insurance show the need for reforms.

By Jeff Atkinson Published July/August 2006

The United States seems to be adept at alleviating the pain caused by the health-care system–taking just enough action to forestall a system-wide crisis, but not enough to provide long-term solutions. Two recent examples of this are the changes to the Medicare payment structure for physicians and proposed solutions for the growing number of Americans without health insurance.

Congress halts Medicare cuts

At the beginning of the year, Medicare reduced payments to physicians by 4.4 percent, part of a cost-cutting plan that the Medicare trustees said would reduce payments to physicians by approximately 26 percent over six years. The American Medical Association (AMA) and others protested, citing an AMA survey that indicated payment cuts for 2006 would cause 38 percent of physicians to accept fewer new Medicare patients.

In February, Congress passed the Deficit Reduction Act (S. 1932), which delayed implementation of payment reductions and froze payments at the 2005 level, subject to adjustments announced earlier. Medicare carriers were instructed to repay physicians for the fees that were lost in the first month of the year.

AMA President J. Edward Hill, MD, said, “The current payment formula is tied to the ups and downs of the U.S. economy–not the growing health-care needs of America’s seniors. We must build on the momentum and awareness in 2005 to make 2006 the year Congress permanently repeals the broken Medicare physician payment formula.”

Without further action by Congress, Medicare payments to physicians for 2007 will be cut by 4.6 percent.

Uninsureds increase to 45.8 million

The bad news is that the number of people without health insurance in the United States has increased to 45.8 million–15.7 percent of the population and about 800,000 more people than the previous year. The good news is that the number of people with health insurance has increased as well to 245.3 million (84.3 percent of the population). These figures are from 2004, the most recent year for which the U.S. Census Bureau has reported data. The report is available on line at www.census.gov/prod/2005pubs/p60-229.pdf

For many people without health insurance, lack of health insurance is a crisis, but those who do have health insurance may not perceive such a need for major changes in the system. The government has worked on the issue of lack of health insurance through incremental changes, such as making health insurance more easily available for children through the State Children’s Health Insurance Program (SCHIP), which has insured more than 5 million children nationwide.

In addition, the Bush administration backs expansion of Health Savings Accounts (HSAs) by which Americans buy high-deductible insurance polices and place tax-free dollars in accounts to pay for health-care expenses. The deductible for an individual is at least $1,000 per year, and the deductible for a family is at least $2,000 per year. So far, about 3 million people have enrolled in HSAs. People with high incomes are most likely to benefit from and enroll in HSAs.

Although the incremental changes help certain segments of the population, the broader issues of a large number Americans without health insurance and the need for a stable, predictable reimbursement system remain.

Health spending up 7.9 percent

Meanwhile, health-care spending continues to grow faster than the general rate of inflation, although the growth of health-care spending is slower than in earlier years. According to figures released by the Centers for Medicare and Medicaid Services (CMS), national health expenditures rose 7.9 in 2004, which is lower than the 8.2 percent growth in 2003 and the 9.1 percent growth in 2002. (The 2004 figures were released in 2006.)

The 7.9 percent increase in 2004 is more than twice the general rate of inflation (3.3 percent) for the year. When health-care spending outstrips the general rate of inflation, the proportion of gross domestic product (GDP) devoted to health care rises. In 2004, health-care spending reached 16 percent of GDP. By comparison, the average industrialized country devotes about 8.6 percent of its GDP to health care. The CMS expects the proportion of GDP in the U.S. devoted to health care to grow to 20 percent by 2015.

Physicians’ piece of the pie

The total national health spending for 2004 was $1.878 trillion, which is $6,280 per person. Physicians received a slightly larger portion of the health-care spending pie in 2004 with total payment for physician services increasing by 9 percent. Spending for hospitals and for prescription drugs rose by slightly less amounts (8.6 percent and 8.2 percent, respectively).

The rate of increased spending for prescription drugs is down from double-digit increases of a few years ago. Reasons for the slower rate of increases in drug spending include more use of lower price generics, increased availability of over-the-counter (OTC) drugs, including anti-ulcerants and antihistamines, and more mail-order dispensing of drugs. For a comparison of health-care spending between 2000 and 2004, see the chart on page 11.

Conditions for reform

In a book review in Health Affairs, Professor Mark Peterson of UCLA comments, “None of the current policy alternatives seems to offer much hope of success, unless the health care system unravels so dramatically that it clears the political slate.” (Vol. 24, No. 6, Nov./Dec. 2005, p. 1682).

What could dramatically unravel the health-care system? A flu pandemic that wipes out a significant portion of the population and cripples the economy is one possibility. Another could be that enemies of the United States set off a few nuclear devices on U.S. soil. In such circumstances, with many of the country’s institutions crippled, the federal government would need to step in to maintain order and provide essential services, including health care.
Less dramatic, but also possible, would be steady erosion of the U.S. economy in which businesses, in larger numbers than is occurring already, conclude that they can no longer afford to provide health insurance to their workers. If that happens, political pressure from the business community and consumers could result in establishment of universal health care.

Another path to universal coverage (with or without a crisis) could be new leadership in the United States that would effectively convey a message of “We are in this together” and “There are certain essentials that all Americans should have, including health insurance.” Such leadership would move America away from an attitude of “Each person for himself” and more toward a Canadian view that universal health care is, in the words of Roy Romanow, former premier of Saskatchewan, an “expression of social cohesion.”

Models for universal health care

The simplest model for universal coverage would be to expand the Medicare system, dropping the age limit for eligibility, either all at once or gradually. Instead of covering the 42 million of the population over age 65, Medicare would cover all Americans. Increased funding would be required, obviously, either from a higher Medicare tax or from other taxes. However, this would in large part be merely a transfer of private-sector expenditures into the public system.

Another option is to mandate that all employers (or individuals) acquire health insurance and to provide subsidies to poor persons for insurance coverage. Most aspects of the current health-care system, including its administrative inefficiencies, would be maintained.

Alternatively, a system of vouchers for purchasing insurance could be adopted. The private insurance delivery system would still be in place, although there likely would be fewer insurance companies. Payment of the vouchers would come from the government and would be funded from general revenue or perhaps a value-added tax. The value of the vouchers would be risk-adjusted, and patients would have freedom to choose among health plans. For further discussion of different models of health-care reform, see the Nov./Dec. 2005 issue of Health Affairs (Vol. 24, No. 6), on line at www.healthaffairs.org/

Need for long-term solution

In the 1990s, Congress adopted a complex formula to set payments to physicians. The formula applies multiple variables, including the amount of utilization of services and the condition of the economy, as well as the Resource-Based Relative Value Scale. The goal of the formula is to ensure adequate payment to physicians and to promote high quality, efficient health care. For the last several years, the formula has not worked out well, and Congress has stepped in to provide a fix for the coming year, but without altering the underlying formula.

Similarly, some government leaders have lamented the growing number of Americans without health insurance. A solution–or a solution that is better than the current system–will require sustained, focused effort. Less harm will come to the country if solutions can be developed without waiting for a crisis.

Jeff Atkinson teaches courses in health-care law and policy at DePaul University College of Law in Chicago, where he graduated summa cum laude. He writes on legal, medical, and ethical issues.

Callahan and Wasunna's Medicine and the Market

Equity v. Choice
By Daniel Callahan and Angela A. Wasunna
Medicine and the Market
(2006 – The Johns Hopkins University Press)

Some Soft Conclusions (on competition)

Our reading of the literature and data on competition in health care allows only a soft conclusion: it may work here and there in bringing an increase in efficiency and cost control, but most likely only if coupled with strong government regulation designed to make it work. There is no consistent evidence anywhere that an unregulated competitive market can achieve those goals, much less do so while maintaining reasonably equitable access.
Moreover, when looking at the European experience, many countries turned to various competitive strategies to control costs, with mixed success. The most effective means always turn out to be government-imposed supply-side restrictions – with the help of demand-side control imposed by government monopsonistic purchasing clout. To control the availability of expensive technologies, hospital capacity, physician supply, physician fees, or the cost of pharmaceuticals works wonders for cost control. Even relatively successful competition has nowhere had the comparative force of direct government interventions to contain costs.

Here are our summary conclusions (on private health insurance):

On equity. Private health insurance contributes to the regressivity of health care financing in the United States and Switzerland. In Germany and the Netherlands, however, mainly affluent people purchase private insurance, contributing to the progressivity of the financing system. On the delivery side, private health insurance creates access based on willingness and ability to pay, and typically discriminates against the poor, ill, and elderly. Equitable access has also been undermined as a result of greater sophistication in risk-rating, which enables insurers to select preferred risks. The philosopher Allen Buchanan has noted that the conditions necessary for private insurance to be economically viable for those who sell it contradict the necessary ingredients for equitable access, which requires regulation of competition and the availability of generous public funds to fill in gaps in access.

On efficiency. With private insurance, there are no criteria to determine access to care from willingness and ability to pay. In most countries, private insurers compete with or parallel the public system. Private health insurance may cover cost-effective services, which the public sector does not deliver because of mismanagement. Private health insurance may cover more rapid access to services or the costs of amenities, such as private hospital rooms, not covered in public insurance packages. Administrative costs may be systematically higher in a health system with competing private insurers than in a monopsonistic system, because of the costs associated with marketing, promotion, and underwriting. In addition, if private insurers operate on a for-profit basis, further revenue needs to be generated to pay shareholder dividends.

Careful regulation can limit the harm that is a potential result of private insurance, mainly by keeping it at a limited level and working hard to make certain the public system does not require private insurance to guarantee good health for the population. At the systems level, financing health care mainly through private insurance is neither equitable nor efficient, and the United States is a clear example of this. Insurance overheads and a competitive market have made the U.S. system the most costly in the world, yet it still fails to cover the health care needs of millions of its citizens. That much said, a modest degree of private insurance can satisfy some desires for expanded choice, as in the United Kingdom, without harm to the public system.

The Case for Government

One such ingredient (of effective strategies for the provision of health care in the face of growing costs) is that only universal health care systems, government run and financed, or at least governmentally managed and monitored, will be able to cope with those pressures. The market is too much of a wild card to be depended upon to control costs, and is congenitally prone to introduce unfettered efforts to expand choice beyond affordable boundaries and to let individual preferences, regardless of their social or economic implications, rule the day. There are several things that government, and only government, can do. The first is to keep a central eye on the entire health care system and to manage it in a way aiming at the public interest. A good federal government system will decentralize as much as possible, giving regions or states considerable control over their local and regional policy, but it will work to coordinate all of them toward a common end: equitable and high-quality care. A second role of government is that, through its political system, it can find ways to gain the contribution of all citizens in defining the goals of the system; argument and debate will be the rule, but that is as it should be in democratic societies. This will be all the more important if we are correct in projecting cost pressures that will, for earlier specified reasons, just get worse and worse, with little chance of turning back. Those pressures will necessitate rationing and priority setting, sometimes in ways that will deny people the kind and quality of health care they desire, and even on occasion need. It is well understood that unlimited space travel is not possible with limited budgets, and so finite goals are set. It is far less understood that unlimited medical goals will not be possible with finite budgets. But such budgets are necessary and, in the future, will probably allow far less managerial maneuvering than is now possible. The necessity for citizens’ active role in setting priorities and determining limits – their informed consent to being denied treatments they want – will be all the more imperative. But that is only possible with integrated national systems, not fragmented mixtures of public and private health care with no guiding – and visible – hand, which is government’s role.

(Closing comment)

The market is not the way to go as a general panacea for health care, even if it works well in other sectors of society. But possibly it can contribute something. We want to leave that door open, looking carefully before entering.

http://www.press.jhu.edu/books/title_pages/3375.html

For a recent Quote of the Day message on Porter and Teisberg’s Redefining Health Care:
https://pnhp.org/news/2006/june/porter_and_teisberg.php

Comment:

By Don McCanne, M.D.

Callahan and Wasunna, in “Medicine and the Market,” confirm what Porter and Teisberg expressed in “Redefining Health Care”: market competition has failed to provide equity and efficiency in health care. They both acknowledge that the government must play a major role in financing health care, but their concepts of how market principles should be applied are quite different.

Porter and Teisberg, in their unwavering belief that market competition will always provide greater quality at lower cost than would government control, would radically contort the health care delivery system to make it more amenable to market forces. They would shove competition down the gullet of the health care system merely because it’s good for you, even if empirically it makes you regurgitate, threatening your ability to thrive.

In contrast, Callahan and Wasunna demonstrate that government-run universal programs are effective in ensuring equity and efficiency whereas reliance on markets inevitably fall far short. (In their book, they demonstrate that
purer market-based models in the proving grounds of developing nations may be effective as business entities, but a disaster for health care equity.)

Although Callahan and Wasunna make it very clear that universal health care systems must be “government run and financed, or at least governmentally managed and monitored,” they suggest that we should continue looking for
possible contributions that the market might be able to make.

That should lead us to a consideration of how the policy community should allocate its efforts. Do we engage in an intensive, expensive, time-consuming effort to identify market manipulations that might produce a slightly favorable tweak to the system, merely to placate the market ideologues? Or do we move forward immediately with enacting a proven, equitable and efficient system for all?

Every half hour we delay, another person dies for lack of insurance! That’s 3000 every two months (the same number as the tragic one-time loss of 9/11, except that this is repeated over and over). We can let the entrepreneurs work on the periphery with their market solutions. If they can show us something that will improve the system then we’ll take a serious look at it. In the meantime, let’s get busy with adopting a system that immediately will begin to save tens of thousands of lives.

Milton Friedman on U.S. medical care

“Free to Choose: A Conversation with Milton Friedman”
Hillsdale College
Imprimis
July 2006

Question: Is there an area here in the United States in which we have not been as aggressive as we should in promoting property rights and free markets?

Milton Friedman: Yes, in the field of medical care. We have a socialist-communist system of distributing medical care. Instead of letting people hire their own physicians and pay them, no one pays his or her own medical bills. Instead, there’s a third party payment system. It is a communist system and it has a communist result.

http://www.hillsdale.edu/imprimis/2006/07/

Comment:

Don McCanne, M.D.

So, outrageous health care cost escalation, impaired access, and impaired health outcomes (including tens of thousands of deaths) are a “communist result” of a “socialist-communist system.”

The way you frame the problem is very important since logical conclusions derive from that framing. Based on Professor Friedman’s observation, we should ferret out and expel all of the communists that have permeated our private insurance industry and our government agencies.

Of course that’s nonsense, but there is a point here. Using an ideological abstraction to frame the problems of our health care system not only defeats consensus, it can never lead to rational reform. A political, social and moral Utopia will always be a fiction.

However the dialogue on reform is framed, it is absolutely essential that every effort be made to objectively define the problems. Then every effort must be made to describe the potential options for reform along with the anticipated outcomes of each option and its variations.

Much of that important work has already been done. We know what the problems are, the options for reform, and the likely results of the various options. If the goals are affordable, high quality, comprehensive health care for everyone, then it is clear that either a national health service model or a single payer national health insurance model would be the most effective means of achieving those goals. The American preference is for the insurance model.

It is difficult to understand why so many are opposed to reform. But many of those who are opposed dump the framing of the problems in objective terms, and substitute the framing as an ideological abstraction of personal
freedom: I’ll take care of my needs and everyone else can take care of theirs. As mentioned, that type of framing prevents consensus and automatically achieves the opponents’ goal of obstructing reform efforts.

But does this ideology of personal freedom or self-interest mean that we should not join together for the common good (something which governments do very well)? Let’s see what Milton Friedman has to say about self-interest:

Question: Do you define self-interest as what the individual wants?

Milton Friedman: Yes, self-interest is what the individual wants. Mother Teresa, to take one example, operated on a completely self-interested basis. Self-interest does not mean narrow self-interest. Self-interest does not mean monetary self-interest. Self-interest means pursuing those things that are valuable to you but which you can also persuade others to value. Such things very often go beyond immediate material interest.

Question: Does that mean self-interest is a synonym for self-sacrifice?

Milton Freidman: If you want to see how pervasive this sort of self-interest is that I’m describing, look at the enormous amount of money contributed after Hurricane Katrina. That was a tremendous display ofself-interest: The self-interest of people in that case was to help others. Self-interest, rightly understood, works for the benefit of society as a whole.

(Professor Friedman seems to prefer Utopia, even if it is a fiction. Charity, as health policy, has been studied extensively. Unfortunately, it is the least effective method of addressing our health care financing problems, having almost no impact at all. 300 million people, each acting as an independent agent, would never contribute the $7000 apiece required to fund our health care system. On the other hand, as reluctant taxpayers, they would collectively fund the $2 trillion health care system, secure in the knowledge that everyone else is paying their equitable portion. Framing this objectively, only government policies can ensure an equitably funded system for everyone.)

Reduction in disparities requires both insurance and a medical home

Health Care Disconnect: Gaps in Coverage and Care for Minority Adults
By Michelle M. Doty and Alyssa L. Holmgren
The Commonwealth Fund
August 2006

Lack of insurance coverage and instability of coverage are persistent problems for low-income adults and racial and ethnic minorities. The Commonwealth Fund Biennial Health Insurance Survey (2005) documented that Hispanic working-age adults are particularly likely to lack basic access to medical care. This can be attributed in part to their very high uninsured rates, but it is also because of the difficulties Hispanics experience in establishing ongoing care relationships with their doctors. Findings suggest that improving coverage as well as access to a medical home would go a long way toward helping Hispanic adults connect with the health care system, receive the preventive care they need, and successfully manage and control chronic conditions.

Rates of unpaid medical bills and debt, meanwhile, are particularly high among African Americans, a consequence of the high prevalence of chronic disease and high uninsured rates found in this population. Helping to prevent the financial strain associated with unpaid medical bills and accrued debt should be a top priority area for policymakers.

Insurance alone does not ensure equal access and equal care. Having a regular doctor is important as well, in terms of timing and receipt of preventive care. Indeed, findings indicate that on certain measures of preventive care, there are few racial and ethnic disparities among Hispanics, African Americans, and whites once they have a regular doctor.

Whether insured or uninsured, or below or above poverty, people who have a regular provider are significantly more likely to get recommended preventive care, such as blood pressure and cholesterol screenings, and to feel confident about self-managing their chronic conditions. Ensuring that people have a medical home may thus be an important lever for reducing racial and ethnic disparities in care.

http://www.cmwf.org/usr_doc/941_Doty_hlt_care_disconnect_disparities_issue_bri.pdf

Comment:

By Don McCanne, M.D.

No reasonable person disputes that lack of insurance has been a major contributor to racial and ethnic disparities in care. Establishing a program of universal, comprehensive health care coverage may not be the only measure required, but it is absolutely essential. Health care access will always be impaired if there is not in place a system of paying for that care.

This study also demonstrates that lack of a medical home (primary care) also results in racial and ethnic disparities. We are currently witnessing an acceleration in the deterioration of our primary care infrastructure. Our current flawed method of funding health care has shifted financial resources from primary care to more lucrative, higher-tech services. Being able to pay for primary care is not enough if there is no primary care home to turn to.

A single payer national health insurance program not only would ensure that care would be paid for, but it also has the capability of correcting many of the structural defects in our health care system. One of the most important is that it could realign incentives to improve and expand our primary care infrastructure, ensuring that everyone would have access to a medical home.

Single payer is not only an insurance model. It is also a beneficent monopsony: a single purchaser of health care for the public good. As such, it would not only fund health care, but it would also enable much needed structural reforms such as improving the primary care infrastructure, improving pricing, reducing non-beneficial high-tech excesses, and dramatically reducing the profound administrative waste of our current, fragmented system.

Medicare more effective in controlling excess spending

The Slowdown in Medicare Spending Growth By Chapin White
Congressional Budget Office
July 2006
Working Paper Series

Abstract

The rate of so-called “excess” growth in Medicare spending per beneficiary has varied widely over the last several decades, and growth has slowed substantially in recent years. (Excess growth is defined as growth beyond the combination of the general rate of economic growth and the rate of change in the age composition among beneficiaries.) The annual rate of excess growth fell from 5.5 percent over the period from 1975 to 1983 to 0.9 percent over the period from 1992 to 2003. Changes in provider payment policies might help explain the observed slowdown. Those changes include the implementation of a prospective payment system for short-stay hospitals, and, more recently, the imposition of mechanisms to control aggregate Medicare physician spending. Possible alternative explanations-increases in managed care enrollment, changes in Medicare cost sharing, and a system-wide spending slowdown-do not account for the slowdown in Medicare spending. The slowdown is of an economically important magnitude and deserves further study.

http://www.cbo.gov/ftpdocs/74xx/doc7453/2006-08.pdf

And…

Medicare eases fee cuts
By Stephen Heuser
The Boston Globe
August 2, 2006

The Centers for Medicare and Medicaid Services, known as CMS, released a massive document dictating how much it will reimburse hospitals for hundreds of medical procedures in 2007. Medicare pays $125 billion to hospitals nationwide each year, making it the single most important payer in the American healthcare system. Changes in its policies can trigger shifts in both the American hospital system and the medical-device industry.

The changes detailed yesterday are far less dramatic than the federal agency first proposed in April, when it said it was considering slashing payments for some heart-repair procedures by one-third, and cutting reimbursement for defibrillator implants by one-fifth.

Hospitals and healthcare companies have been watching Medicare unusually closely this year because the agency has launched a major change to the way it pays hospitals. Medicare pays a fixed amount for each type of procedure, and studies had found that those payments had become highly unbalanced.
Hospitals were profiting on certain cases, such as cardiac procedures and orthopedic surgery, but losing money on others, such as stroke victims and lung patients.

The revision increases the amount Medicare pays overall by $3.4 billion.

But it shifts the money around in an effort to rebalance its payment system and clamp down on a new breed of hospitals that has emerged to take advantage of discrepancies in the system.

So-called “specialty hospitals,” owned by doctors, concentrate on the most profitable procedures, such as coronary angioplasty and orthopedic surgery, leaving the bulk of less profitable medical care to community hospitals.

http://www.boston.com/business/globe/articles/2006/08/02/medicare_eases_fee_cuts____and_boston_scientific_fears/

Comment:

By Don McCanne, M.D.

Everyone is concerned about the affordability of health care. We want the best care available, but we all realize that we cannot allow health care spending to bankrupt us. As a percent of our Gross Domestic Product (GDP), we spend far more than any other nation on health care, currently 16.5 percent. There is a general consensus that we are ever closer to the threshold that can be tolerated.

Over the past few decades, innumerable efforts have been made to attempt to control the “excess” growth in spending, excess being defined as a rate of growth in health care spending in excess of the rate of growth of our GDP (corrected for demographics, etc.). This CBO study of the success of Medicare cost containment provides us with some very important lessons.

Some will be surprised to see what has not been effective. Managed care has had an insignificant impact within the Medicare program, and actually resulted in an increase in spending because of the higher rates paid for a lower-risk sector of patients. Cost sharing, the tool being touted by the consumer-directed health care advocates, also has not had any significant impact in reducing excess spending.

Perhaps the most important theory dispelled by this study is that the slowdown in Medicare spending represents a general slowdown of spending in our entire health care system. This analysis confirms that Medicare spending slowed while system-wide spending continued to increase at an excessive rate.

So what has worked? Adoption and continual refinement of provider payment policies such as the prospective payment system for hospitals and the sustainable growth rate formula for physicians have been effective. These are not perfect systems. Refinements have been made, and further changes are essential. The point is that they are designed specifically to provide value to the taxpayer while ensuring that our health care delivery system is adequately and fairly funded.

The Medicare payment document just released by CMS demonstrates how well this can work. Policies are being adopted that will reduce excess spending in some sectors while shifting funds to important services that were losing money, and further modifications were made based on input during the public comment period. Isn’t that what we should expect from the stewards of our tax funds?

How does the private sector approach excess spending? It uses the blunt instrument of managed care: ratcheting down provider rates, erecting barriers to access, and now shifting often unaffordable costs to patients with needs. What is really ironic is that these mechanisms have failed to slow the increase in excess costs (except for the one-time impact of private-sector price controls).

What do you want: a government program that has a dynamic system of achieving the best value for our finite health care dollars, or a private, fragmented system that provides poor value and isn’t even effective in controlling excess spending?

Health insurance for all, for real

By Susan Duerksen
Op-Ed
San Diego Union-Tribune
July 21, 2006

Nobody likes to hear the health care horror stories: emergency rooms clogged with sick people who otherwise can’t see doctors, patients skipping treatments to afford food for their children, deaths from easily curable diseases that weren’t detected. We don’t want this in America.

Universal health coverage has become almost a universal goal across the political spectrum. There’s a growing recognition that covering the uninsured – besides directly helping millions of people – would be good for business, the economy and the taxpayers and premium-payers who now pick up the tab.

But that unity of purpose is hollow. The “how” is what matters, and that’s where we are deeply divided.

The celebrated Massachusetts health-care plan is almost as convoluted and unworkable as our current system, because it doesn’t change the one thing that most needs to be changed: the reliance on profit-driven insurance companies. In fact, those companies lobbied hard for this “reform.” What could be sweeter? The whole state is required to buy their products, no matter how substandard or overpriced, with taxpayers chipping in to ensure 100 percent sales.

The Massachusetts example, shaky as it is, brought a similar bill to life in the California Legislature. As numerous analysts immediately pointed out, however, a mandate to buy insurance has even less chance of success in this immense state, which has almost double the percentage of uninsured people, fewer employers providing coverage and less state regulation of the insurance money-grab.

Again and again, independent financial studies have shown that health insurers waste 25 percent to 30 percent of the dollars we mean to spend on health care. They have gigantic profits and eye-popping executive salaries, and they spend huge sums on “administrative costs” such as screening out the unhealthy, fighting claims and other maneuvers to keep from covering people. They make their money by denying rather than facilitating services.

Why don’t we get rid of these unneeded and costly middlemen? Because:

(1) Insurance companies don’t want to be eliminated, and they have the power to get their way. The source of their power is the wealth they have amassed from our health care dollars over the decades.

(2) As a nation, we revere the market system. We adhere unquestioningly to the belief that “the marketplace” can handle everything, even an endeavor as ill-suited to market forces as health care.

The natural market-driven behavior of insurers is to compete to cover only healthy people, to pay as little as possible of whatever medical costs they have and to jack up prices for anyone likely to be unhealthy. No matter how you twist it and patch it, this is a lousy basis for providing health care to a population.

Nonpartisan experts who crunch the numbers generally agree the best way to achieve universal coverage is with a single, nonprofit health plan covering everyone. Then they dismiss the idea, saying it’s not politically feasible. (See reasons No. 1 and 2 above.

True, that is our political reality in 2006. It is time to change it.

The math has been done. California could save roughly $20 billion in bureaucracy by pooling everyone from the thousands of health insurers and government programs now covering Californians. That’s enough to give every state resident first-class coverage: doctors of your choice, hospitals, vision, dental, mental health, drug coverage, even orthodontia and skilled nursing care.

Instead of paying premiums and deductibles, people would pay a graduated income tax to fund the plan. “Tax” is a dirty word in the United States, but try explaining the distinction to Massachusetts residents mandated to pay thousands of dollars a year to insurance companies. Sometimes a tax is the most efficient (read cheapest) and fairest way to get something done.

A single, nonprofit health plan is based on the original concept of insurance – create a large buying pool (a “risk pool” in industry language) to spread the financial risk of illness so families don’t face bankruptcy when a health crisis strikes. The government agency would simply negotiate and pay the bills, not employ the doctors or own the hospitals.

Certainly the big insurers and pharmaceutical companies, who have the most to lose, would not like this plan. And they have the expensive lobbying and marketing operations to ensure their viewpoint is heard loud and often. Ordinary taxpayers and 45 million uninsured people have no such lobby, but with straight facts and enough voices, we can drown out their self-serving objections.

A statewide volunteer organization, Health Care for All, is building a grass-roots movement to do just that, with a campaign called OneCareNOW. The California Democratic Party has put single-payer health care on its platform, and the League of Women Voters California, the California Nurses Association and many other organizations are working hard for passage of a single-payer bill in Sacramento.

The bill, SB 840, which creates a statewide single-payer health care system, has already passed the California Senate. Now the Assembly and the governor need to hear that the people are ready for a major change: a sensible and fair way to finance health care. California can show the nation how to do it right.

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Duerksen is co-director of Health Care for All-San Diego. She can be reached via e-mail at sduerksen@onecarenow.org.

States Push Healthcare Reform While Activists Demand Overhaul

In healthcare debate, single-payer still 800-pound gorilla

by Shreema Mehta

Aug. 1 — Across the nation, states have made headlines this year for innovative approaches to expanding residents’ access to health insurance. But when the publicity has cleared and the reality sets in, the uninsured are finding these plans fall short of the fanfare that surrounded their announcement.

What was billed in Massachusetts as the nation’s first universal healthcare plan turned out to be legislation strong arming moderate-income residents without employer-funded health insurance into buying expensive healthcare plans.

A plan touted in Arkansas to help small businesses extend insurance to low-wage workers lacks clear incentives for employers and provides workers with scant coverage: six clinician visits and seven hospital days per year, two outpatient or ER visits per year and two prescription fillings per month.

While some healthcare advocates praise these and other attempts to widen access, others are calling for a more fundamental overhaul of the nation’s healthcare system. Instead of plans that rely on increasing enrollment insurance offered by for-profit companies, they would like to see these companies replaced with a progressive tax system that pays for everyone’s health care.

San Francisco recently passed a measure that would provide access to healthcare for uninsured residents, which the city has estimated to be 82,000. The plan would require businesses with 20 or more employees to either provide health insurance to workers or contribute to a fund that would pay for healthcare services within city limits to uninsured residents.

The plan will take effect on January 1, 2007. Jim Lazarus, vice president of the San Francisco Chamber of Commerce, told the San Francisco Chronicle that members of the business community will likely sue the city in an attempt to block the measure.

Don Bechler, director of the San Francisco chapter of Healthcare for All, supports the plan.

“It’s good that 82,000 San Franciscans have some form of healthcare access,” he told The NewStandard. “It holds the line on employers dumping health coverage.”

According to an annual survey on employment-based insurance released last year by the Kaiser Family Foundation, the percentage of businesses of all sizes offering health insurance has been on a “steady decline.” While 69 percent of all firms offered health benefits in 2000, 60 percent offered benefits in 2005.

The San Francisco bill, however, only gives people who enroll in the program access to subsidized healthcare at facilities within city limits. “If I drive ten miles out of the city, I’m not covered,” said Bechler. “It’s not as good as a nationally paid healthcare system.”

Like the Massachusetts and Arkansas plans, the San Francisco scheme looks to employer-purchased insurance as the preferred method of coverage. Rachel DeGolia, director of the Universal Health Care Action Network, said ideally, governments should not rely on employers to meet health needs. As health costs increase, employers are ever-more reluctant to provide health insurance.

“The fewer people insurance companies cover, the fewer benefits they pay out, the more money they make … It’s a disincentive to provide benefits.”

“That system is really crumbling,” she said. “There’s a lot of people who don’t have jobs.”

For instance, “children don’t have jobs,” she said, adding that many people are delaying retirement to stay insured. “To have an insurance system based on jobs doesn’t make sense.”

Still, with states seen as taking the lead in experimenting with new ways to address the insurance crisis, some health advocates are pushing for “partnership projects” that would provide federal funding for states to design their own method of universalizing healthcare coverage.

Senator George Voinovich (R-Ohio) has proposed a bill that would enable states to pursue their own plans to bring healthcare to all residents. The proposal would set up a commission of governors, mayors and other government officials to determine which states should receive federal funding.

DeGolia said allowing states to create their own health-insurance plans is the most politically feasible way to increase access to health care. But she also predicted that giving states wide leeway would likely encourage them to pursue plans that coverage advocates find ineffective, such as funding “health savings accounts” tied to high-deductible insurance plans.

Instead, DeGolia and other universal-healthcare advocates would like to see the abolition of insurance companies, which they see as the main reasons behind millions of Americans lacking coverage and millions of dollars lost in the bureaucratic costs and profits.

Many healthcare advocates would like to see insurance companies replaced by a single payer system in which the government would use tax money to pay healthcare providers directly for patients’ care.

“The fewer people they cover, the fewer benefits they pay out, the more money they make,” she said. “It’s a disincentive to provide benefits… They only try to cover people who are healthy, and they want the government to cover the chronically sick.”

Many healthcare advocates would like to see insurance companies replaced by a single payer system in which the government would use tax money to pay healthcare providers directly for patients’ care.
Bills that would enact a single-payer system have been proposed in both the US House of Representatives and the California state senate.

George Savage is director of Healthcare for All-Los Angeles, which helped draft a California bill to implement a single-payer system. Savage said most healthcare facilities, both public and private, would stay intact under the overhaul proposed by his group.

The bill requires both employers and individuals to pay a health tax in lieu of insurance policies and co-payments. Private and public healthcare providers would both stay open in the system and would bill the government rather than different insurance companies for healthcare costs.

In addition to providing medical coverage for everyone, advocates say healthcare costs would be far lower because the government – not numerous, competing for-profit insurance companies – would “negotiate” prices with hospitals, drug companies and other healthcare providers.

According to the Kaiser Family Foundation, the cost of healthcare has consistently grown at a higher rate than the Gross Domestic Product and makes up 16 percent of the national economy, up from 7.2 percent in 1965. Out-of-pocket expenses have increased alongside overall health costs. In 2006, healthcare expenditures are expected to reach $2.6 trillion.

At the same time, insurers and big providers’ profits have taken big leaps in the past few years. According to Weiss Ratings, a financial analysis firm, HMOs experienced a 21 percent increase in profits during the first few months of 2005 over profits made during the same period the prior year. Other recent first-quarter jumps include 153 percent in 2002 and 61 percent in 2003.

Advocates say that with an increase in government funds, a single-payer system would distribute more funds to often-troubled health clinics in low-income communities. They also insist patients would be free to choose any physician they want without the restrictions most insurance companies enforce.

But Mohit Ghose, a spokesman for the Health Insurance Association of America, says that a single-payer system would restrict patients’ prerogative to choose a healthcare plan that works for them.

“We do not believe that a one-size-fits-all answer is the answer,” he said. “If I’m purchasing healthcare as an individual, I may not want coverage for 30 different things that are mandated by that state, so as a result, the mandates can price me out of the market,” he said. “Americans continue to want to preserve choice. It’s based on the idea that I should be able to make decisions for myself… [and] find the coverage that suits me the best.”
Supporters of a single-payer system say it would save taxpayers millions of dollars by eliminating the high administrative costs of private insurance companies.

According to a 1991 report released by the Government Accountability Office, 14 percent of the typical private insurance company’s budget goes to administrative costs. Just 3 percent of government-run plans, such as Medicare, is spent on overhead.

“This is the biggest bureaucracy buster,” Bechler said.

Savage noted that insurance companies spend many healthcare dollars on advertising and promotion, expenditures that a single-payer system would totally eliminate.

Considering the political power of insurance companies and the public’s view on universal health insurance, however, DeGolia says bills such as Voinovich’s and the San Francisco initiative are positive despite their flaws.
“There’s a huge amount of money invested in maintaining the status quo,” she said, referring to lobbyists for insurance companies. “Because the federal government has not acted, states and cities are exploring ways to cover more people.”

DeGolia said measures to expand access should be based on “current political realities.”
But Savage said such steps were not productive. “There’s almost hundreds of incremental plans,” he said. “That doesn’t add efficiencies to the system. We need a holistic change, and [single-payer] is a system… that [would] provide real benefits to everyone and not just a segment of the population.”

Published by The New Standard, newstandardnews.net

Shorter waiting times in Ireland's public system

Private not much quicker for treatment
By Susan Mitchell and Nicole Matthews
The Sunday Business Post (Ireland)
July 30, 2006

Hospital consultants have questioned the benefits of paying for private health insurance. Some claim going private does not necessarily ensure a fast-track to the operating table and that chronically ill patients are often better off in the public system.

Citing the reduction in procedure waiting times under the National Treatment Purchase Fund (NTPF), the private sector’s inability to treat patients and the escalating cost of health insurance, they believe the benefits of having private health insurance are diminishing.

Consultant neurologist Dr. Orla Hardiman, director of neurology at Beaumont, and a medical adviser to the Neurological Alliance of Ireland, said that in some instances her public waiting list is actually shorter than her private waiting list.

“For some neurological conditions people can actually be seen more quickly in the public sector. Most neurologists have small private practices, so the number of private patients we can take is quite small. If someone has a problem that requires ongoing management and multi-disciplinary care they are better off in the public system,” she said.

“There are times when the private sector can offer quicker access for patients looking for specific procedures, but the benefits are not as clear-cut for chronically ill patients. There is no huge advantage in these patients having private cover as the services are not available in private hospitals,” said Hardiman.

Other consultants have had similar experiences. Professor John Crown, consultant oncologist at St Vincent’s Hospital in Dublin, said of patients with cancer: “We have had a much bigger waiting list for patients with private health insurance trying to get chemotherapy in St Vincent’s Private Hospital.

“That has been the case for a number of years. The public waiting list has been a lot shorter.”

Crown said he and his colleagues often move private patients who need urgent treatment into the public system.

In a recent interview with the Irish Medical News, Brendan Healy, orthopaedic surgeon in Sligo and an elected member of the Medical Council, said the NTPF was getting patients off the lengthy outpatient lists.

Established in 2002 to try to tackle long-term waiting lists for surgical procedures, the NTPF finds spare capacity in the system – both public and private – and uses it to arrange operations for patients who have been waiting three months or more before contacting the fund.

Healy said patients were being treated for free in the same private beds as fee-paying insured patients. He stressed that he was not suggesting people shelve their private health insurance, but that they consider their cover needs.

“I’m wondering should people bother having insurance, and having double taxation, unless they have a fast-track.

“Because if you are waiting for three months, you can get into the same hospital under the NTPF and end up in a bed alongside somebody who has paid thousands in extra taxes (subscriptions),” he said.

http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=NEWS%20FEATURES-qqqs=news-qqqid=16048-qqqx=1.asp

Comment:

By Don McCanne, M.D.

The policy lesson is that directing efforts to simple queue management will reduce waiting times, whether in the public or private sector. Those who state that excessive queues are inevitable in publicly funded programs and are eliminated with private funding are flat-out wrong.

Effective queue management is dependent on the diligence of the stewards of the health care system and not on whether the source of funding is private or public.

The infrastructure of a single payer system for the United States would include queue management and is ideally suited to do so, especially when compared to our current fragmented system of funding care. You should emphatically reject the claim of those who state that excessive delays are inevitable in a single payer system and non-existent in the privately insured market.