PNHP

What Would An Employer’s Response be to California’s Employer Mandate?

What Would An Employer’s Response be to California’s Employer Mandate?

Employers’ Responses To A Play-Or-Pay Mandate: An Analysis Of California’s Health Insurance Act Of 2003
By Anna D. Sinaiko
Health Affairs – October 13, 2004

California, with 20 percent of its population uninsured and an unemployment rate of 6.2 percent, recently enacted the Health Insurance Act (known as SB 2), a play-or-pay employer mandate to expand health insurance coverage to a portion of the state’s working uninsured population. This law requires employers to either “play,” by providing employee health benefits that meet a minimum standard, or “pay” a fee to the state to cover workers under a state-sponsored program. Specific provisions of this program are still being determined. Although the law is scheduled to be phased in starting in 2006, a coalition of business groups is working to overturn it by referendum in November 2004.

With the passage of SB 2, California has brought the employer mandate back to the forefront of the health policy reform debate. Although state governments can mandate that employers provide coverage without committing public funds, someone must pay for the newly provided health insurance. In the best-case scenario, workers will value health insurance at more than its cost, and the combination of health insurance and lower wages will make workers better off without any adverse effects on employment or product prices. A more likely scenario is that some of the cost of health insurance will be passed to consumers, some felt by workers as unwelcome wage reductions, and some avoided by firms as they restructure their workforces. In California, workers at firms not offering benefits are more likely to be young males earning less than workers at firms that offer insurance; SB 2 will affect this group most adversely.

As employers restructure their workforces, fewer would-be-eligible workers will be offered health insurance. Although SB 2 will bring eligibility for health coverage to a portion of the uninsured in California, it will be lower than the estimated 1.07-1.56 million that researchers have projected. Moreover, because SB 2 does not include an individual mandate requiring workers to take up the coverage offered by their employers, some employees will decline employer-sponsored coverage, and fewer workers will be insured. This finding is not unique to California; similar results would be expected in other states.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w4.469

Comment: Proposition 72, on California’s ballot next month, will allow voters to accept or reject SB 2, the play-or-pay employer mandate.

An employer mandate is the wrong solution to the problem of the uninsured. It reduces wages of those who were previously uninsured, with the greatest negative impact on lower income individuals. It perpetuates regressive tax policies in which higher income individuals receive a greater tax benefit than do lower income individuals. It threatens loss of employment as employers adjust hiring and work requirements to minimize the financial impact of the mandate. It results in higher prices which impairs competitiveness in national or international markets. In can result in adverse selection as decisions are made to avoid pools that concentrate higher cost individuals. Workers may decline coverage because of the consequential reduction in their take-home pay.

The problem that the voters face is that Proposition 72 is the only current, politically feasible proposal that will increase health care coverage. It would provide health insurance for close to one million of California’s six million uninsured. The single payer proposals, Kuehl’s SB 921 and Conyers’ HR 676, are locked in political limbo. And any promise of the presidential candidates for bona fide reform cannot become reality until the Congressional partisan rift is mended, a highly unlikely event in the next decade or two. The most realistically feasible approach would be to expand Medicaid and SCHIP, but that is highly unlikely until the deficit is reduced by tax increases, at a time when no politician would dare utter those words.

Although Proposition 72 is the wrong solution, it is the ONLY solution, at the right time and the right place. Californians need to approve it and then move on with our grassroots efforts to create the political feasibility for the adoption of a single payer system. If we work hard enough, maybe we won’t have to wait a decade or two for genuine reform.

Hewitt Gives Little Hope of Containing Costs

U.S. Companies and Employees Continue to Struggle With Double-Digit Rate Increases
Hewitt Associates – Press Release
October 11, 2004

On average, Hewitt forecasts that companies will experience 2005 cost increases of 11.5 percent for health maintenance organization plans (HMOs), 10.5 percent for traditional indemnity plans, 11 percent for preferred provider organizations (PPOs) and 11.5 percent for point-of-service (POS) plans, with projected employee contribution increases of 15 percent across all plan types.

That means from 2004 to 2005, the average cost per person for major companies will increase from $6,519 to $7,269 for HMOs; $6,823 to $7,573 for PPOs; $7,192 to $8,019 for POS plans; and $6,793 to $7,506 for indemnity plans, according to Hewitt’s database of more than 2,000 health plans in 139 U.S. markets, including 300 major employers and more than 18 million health plan participants.

“While there are many different variables that factor into regional health care cost increases, one of the most powerful drivers is the level of consolidation in the market,” added (Hewitt’s national health care practice leader Jack) Bruner. “Plans and providers continue to merge in many cities, reducing the purchasing power and number of options available to employers.”

http://was4.hewitt.com/hewitt/resource/newsroom/pressrel/2004/10-11-04.htm

And…

Health costs to rise 11.3%, group says
By Kim Morris
Detroit Free Press
October 12, 2004

…costs are expected to increase between 8 and 12 percent in each of the next five years, said Jeff Nielson, senior benefits consultant in Hewitt Associates’ Detroit office.

http://www.freep.com/money/business/ebenes12e_20041012.htm

Comment:
According to Hewitt, market consolidation has reduced the impact of competitive pricing resulting in higher health plan premiums, and there is no relief in sight. Private marketplace plans continue to prove that they are not capable of controlling health care costs.

It’s time to replace our highly flawed, fragmented system of funding care with our own monopsonistic, single payer purchaser. That’s the only way that we are going to get the level of health care spending right, both for patients and for health care providers.

Drug Makers Spend More on Stock Dividends Than Research, Analysis Indicates

During the past 18 months, the nine largest pharmaceutical companies have spent a greater percentage of their money on dividends for shareholders and on company stock buy-backs than they have spent on research and development, according to a Banc of America Securities analysis, USA Today reports. According to the study, the nine drug makers have returned about $56 billion to investors during the past six fiscal quarters. At Pfizer, the world’s largest pharmaceutical company, $22.2 billion was spent on stock buy-backs and dividends during that time period — about 210% the amount spent on R&D. Merck returned $7.3 billion, or 143% of R&D spending. Despite the amount of dividends for investors, share prices only grew by 5% during the study period. The study comes as rising prescription drug prices have made drug makers’ R&D expenditures “a political lightning rod,” according to USA Today. While the drug industry maintains higher U.S. prices are necessary to fund research of new drugs, critics say “the industry has plenty of money” for R&D and concentrates too much of its research on copycat drugs instead of innovative treatments, USA Today reports (Appleby, USA Today, 10/11).

Health Experts to Debate National Health Insurance

Released by University Relations 12 October 2004
Contact: ISU Continuing Education and Conferences, 208-282-3155 or
800-753-4781.

Nationally Renowned Heath Experts
To Debate National Health Insurance at ISU

Pocatello – Should the United States have a national single-payer health insurance program?
That is the question that will be debated by two nationally renowned experts at 7 p.m. Oct. 21 at the Idaho State University Pond Student Union Building Salmon River Suite as a keynote address of the 17th annual Idaho Conference on Health Care.

The debate features Dr. Stephanie, an associate professor of medicine at Harvard and co-director of the Harvard Medical School General Internal Medicine Fellowship program, and Dr. Jane Orient, executive director of the Association of American Physicians and Surgeons (AAPS). “We pay too much for health care. More than any other industrialized nation, 78 percent more per capita than our nearest competitor Germany,” said Dr. William Woodhouse, physician, associate director of the ISU Family Practice Residency Program, and member of the health conference planning committee that organized the debate. “We can’t afford it. One in five Americans are uninsured and employers are increasingly unable to pay for employee health care and still stay competitive in the world market.

We don’t get what we pay for. Despite the huge cost we rank in the lower half or near last among industrialized countries for most commonly used health care quality outcomes.” Woolhandler and her organization, Physicians for a National Health Program, contend that a single payer national health insurance program is the answer to these problems.

Orient and her organization, the Association of American Physicians and Surgeons (AAPS), reject single payer national health insurance and assert that the answer lies in our current free-market system. “Both speakers are very strong, nationally-known proponents of their respective viewpoints. I expect a vigorous debate on this critical topic,” Woodhouse said.

Orient’s group, the AAPS, has been a voice for private physicians since 1943, and supports the sanctity of the patient-physician relationship, traditional medical ethics and free-market principles. Orient is a board-certified internist in solo private practice since 1980. She is author of the book “Your Doctor Is Not In: Healthy Skepticism about National Health Care.”

Woolhandler’s organization attempts to educate physicians, other health workers, and the general public on the need for a comprehensive, high-quality, publicly-funded health care program, equitably accessible to all residents of the United States. Equitable accessibility requires, in the view of PNHP, removal of the barriers to adequate health care currently faced by the uninsured, the poor, minority populations and immigrants, both documented and undocumented.

The debate is just one of many presentations of the health conference running Oct. 20-22 at ISU. On the theme “We Can Do Better,” this year’s conference will delve into a variety of topics presented by nationally recognized health care authorities. The event will feature health speakers on everything from the risks of fast foods to doping by athletes.”Once again, we have an extremely rich agenda with speakers who will address health issues relevant to all sectors of health care, including the general public,” said Dr. Linda Hatzenbuehler, Dean of the ISU Kasiska College of Health Professions. “We want to stress what a varied and informative Idaho Conference on Health Care we have planned this year. The constituencies including students, practicing professionals and the general public.”

The conference keynote addresses are open to the public, but registration fees are required for most conference events, including plenary speeches. Continuing education units are available to professionals desiring them. For more information on the conference or to register, contact the ISU Office of Continuing Education and Conferences, 800-753-4781 or 208-282-3155, or visit http://www.isu.edu/chp/hlthconf/.

###

ICHC Single payer events.
Thursday October 21, 2004

2:30 – ~4:30 PM: Reception / Activist work group
At home of Kellie and Bill Woodhouse, 1407
Juniper Hills Road*, Pocatello
Refreshments will be served
RSVP: Call Kellie at (208) 234-0973

7:00 – ~9:30 PM Idaho Conference on Health Care (see
www.isu.edu/chp/hlthconf for conference registration, accomodations, etc)
“Single Payer National Health Insurance – Is This the Answer?”
Steffie Woolhandler, MD (PNHP) vs Jane Orient, MD (Association of American Physicians and Surgeons)
This should be a very contentious debate. Both participants are very strong representatives of their viewpoints.
Salmon River Suite – Pond Student Union – Idaho State University

Friday October 22, 2004
9:45 – 10:45 AM “The HealthSystem Project”
Paul Ellwood, MD, Jackson Hole Group
Ballroom -Pond Student Union – Idaho State University

11:00 – 12:00 AM “We Can Do Better: The Future of the American Health Care System”

Panel discussion: Steffie Woolhandler, Jane Orient, Paul Ellwood
Clearwater Room – Pond Student Union – Idaho State University

Is NCQA's Goal of Equality Attainable?

National Committee for Quality Assurance (NCQA)
The State of Health Care Quality – 2004

From the Introduction:
NCQA is pleased to present its 2004 State of Health Care Quality report. This is the eighth such report NCQA has produced, and the fifth report in a row to find that performance on key measures of clinical quality has improved over the past year. For the 69 million people enrolled in the health plans that provided their performance data to help NCQA prepare this report, this trend is very good news; they can expect better care and better health outcomes.

But what of the rest of the health care system?

What of those with little or no access to care such as the 45 million people without health insurance? What of those who receive care through health plans that do not publicly report their performance? Using conservative estimates, this report finds that the performance of the rest of the system leaves much to be desired. Huge “quality gaps” exist, costing tens of thousands of lives, millions of illnesses and billions of dollars annually.

From the Summary:
Despite evidence of promising gains in certain sectors of the health care system, once again this year NCQA documented evidence of widespread, unexplained variation in quality that results in thousands of unnecessary deaths, tens of thousands of avoidable hospitalizations and illnesses and billions of dollars in lost productivity-hobbling an economy already encumbered by the ever-growing costs of health insurance.

Even as adherence to evidence-based care has improved in many health plans, there is cause for great concern that these gains could be erased in the years ahead. The trend toward PPOs and CDHPs, while holding great promise in terms of consumer engagement and harnessing of the Internet’s power, also relies more on patient decision making and less on aggressive care coordination.

http://www.ncqa.org/Communications/SOMC/SOHC2004.pdf

Comment: The abysmal quality of health care for the uninsured has been well documented. And it is no surprise that quality can be improved for those individuals who have comprehensive health care coverage. Clearly we need to enact changes that would ensure that everyone has comprehensive health care coverage.

What should alarm us about this report is the current trend in health care coverage. Because there is more flexibility in the design of PPOs (preferred provider organizations), premiums can be made more affordable by shifting costs to the beneficiary-patient. Also, the CDHPs (consumer-directed health plans) are designed to make patients more responsible health care shoppers by exposing them to higher out-of-pocket expenses. But as the NCQA report indicates, this trend places a greater emphasis on patient decision making at the cost of deemphasizing aggressive care coordination.

The great news about the NCQA report is that aggressive care coordination does improve quality outcomes. The NCQA report describes approaches to improve the identification of better outcomes through improved care coordination. A carefully designed system can be used to reward higher quality care. But PPOs and CDHPs, by shifting the direct spending decisions to the patient-consumer, also shift the responsibility for identifying quality to the patient. But our current fragmented system does not have the capability of providing readily accessible, easily understood data on quality variation. And limiting choice to health plans reduces the patient’s ability to have the more important choice of actual health care providers.

A single, universal system with truly comprehensive benefits would provide an infrastructure that would enable the promotion of inducements that would encourage aggressive care coordination. We have enough data already to know what would happen with a greater shift to CHDPs and PPOs. We do not need another decade of health policy experimentation ending with the inevitable impaired outcomes.

We also have enough data to know what a universal, comprehensive system would bring. Even the special interests opposing reform understand the vast superiority of the single payer model. So why do we continue to listen to and follow their rhetoric designed to protect their own interests? As we continue to postpone the inevitable, we are perpetuating suffering and death. The blood is on the hands of those who fail to act.

Is NCQA’s Goal of Equality Attainable?

National Committee for Quality Assurance (NCQA)
The State of Health Care Quality – 2004

From the Introduction:
NCQA is pleased to present its 2004 State of Health Care Quality report. This is the eighth such report NCQA has produced, and the fifth report in a row to find that performance on key measures of clinical quality has improved over the past year. For the 69 million people enrolled in the health plans that provided their performance data to help NCQA prepare this report, this trend is very good news; they can expect better care and better health outcomes.

But what of the rest of the health care system?

What of those with little or no access to care such as the 45 million people without health insurance? What of those who receive care through health plans that do not publicly report their performance? Using conservative estimates, this report finds that the performance of the rest of the system leaves much to be desired. Huge “quality gaps” exist, costing tens of thousands of lives, millions of illnesses and billions of dollars annually.

From the Summary:
Despite evidence of promising gains in certain sectors of the health care system, once again this year NCQA documented evidence of widespread, unexplained variation in quality that results in thousands of unnecessary deaths, tens of thousands of avoidable hospitalizations and illnesses and billions of dollars in lost productivity-hobbling an economy already encumbered by the ever-growing costs of health insurance.

Even as adherence to evidence-based care has improved in many health plans, there is cause for great concern that these gains could be erased in the years ahead. The trend toward PPOs and CDHPs, while holding great promise in terms of consumer engagement and harnessing of the Internet’s power, also relies more on patient decision making and less on aggressive care coordination.

http://www.ncqa.org/Communications/SOMC/SOHC2004.pdf

Comment: The abysmal quality of health care for the uninsured has been well documented. And it is no surprise that quality can be improved for those individuals who have comprehensive health care coverage. Clearly we need to enact changes that would ensure that everyone has comprehensive health care coverage.

What should alarm us about this report is the current trend in health care coverage. Because there is more flexibility in the design of PPOs (preferred provider organizations), premiums can be made more affordable by shifting costs to the beneficiary-patient. Also, the CDHPs (consumer-directed health plans) are designed to make patients more responsible health care shoppers by exposing them to higher out-of-pocket expenses. But as the NCQA report indicates, this trend places a greater emphasis on patient decision making at the cost of deemphasizing aggressive care coordination.

The great news about the NCQA report is that aggressive care coordination does improve quality outcomes. The NCQA report describes approaches to improve the identification of better outcomes through improved care coordination. A carefully designed system can be used to reward higher quality care. But PPOs and CDHPs, by shifting the direct spending decisions to the patient-consumer, also shift the responsibility for identifying quality to the patient. But our current fragmented system does not have the capability of providing readily accessible, easily understood data on quality variation. And limiting choice to health plans reduces the patient’s ability to have the more important choice of actual health care providers.

A single, universal system with truly comprehensive benefits would provide an infrastructure that would enable the promotion of inducements that would encourage aggressive care coordination. We have enough data already to know what would happen with a greater shift to CHDPs and PPOs. We do not need another decade of health policy experimentation ending with the inevitable impaired outcomes.

We also have enough data to know what a universal, comprehensive system would bring. Even the special interests opposing reform understand the vast superiority of the single payer model. So why do we continue to listen to and follow their rhetoric designed to protect their own interests? As we continue to postpone the inevitable, we are perpetuating suffering and death. The blood is on the hands of those who fail to act.

M. Calon on the Critique of Wisconsin's Drug Cost Program

Marty Calon, RPh, of Baltimore, Maryland, responds to the critique of Wisconsin’s program to reduce drug costs for state employees:
I usually couldn’t agree more with your comments, but I have to disagree with some of what you say here. I am a pharmacist with long experience in the Department of Veterans Affairs with these prescription practices.

As long as drug companies persist in pricing by dose, whereby a 5mg tablet and a 10mg tablet cost the same, splitting tablets is a viable option, as long as it is not done without controls. The drugs which are suitable for splitting must be specified and selected, on the basis of (in order of priority) suitability for splitting (physically and clinically), cost, and amount of usage (no point in requiring splitting of drugs which are rarely prescribed).

Specifically, there has to be good clinical judgment or clinical evidence that the particular medication and dosage form is suitable for splitting, and there has to be a liberal exception mechanism for patients who cannot or do not wish to deal with the splitting. The splitting program also should be monitored to ensure that the drug therapy with the split tablets is producing the desired results, although this monitoring should be happening regardless of tablet splitting.

For example, SSRIs and sildenafil (Viagra) are ideally suited to splitting. It doesn’t even matter if the dose is not precisely divided, because the exact dose is simply not very important, which is true for many drugs. In the case of SSRIs, which have a long-term effect, it’s just about irrelevant whether the patient gets his precise dose every day; cumulatively, he’ll get the right dose unless the tablet is falling apart. Warfarin is a drug that probably should not be split if possible. Pharmacists have a good understanding of the physical composition of the tablets (coatings, sustained-release mechanism, etc) and their pharmacokinetic parameters to determine their suitability for splitting.

Many physicians don’t have the knowledge, cost information, or motivation to prescribe generically. The majority of medications that are available generically do just fine if the pharmacist selects reputable generic vendors. The handful of notable exceptions (warfarin, theophylline SR, phenytoin, etc) are the only ones that need be limited to brand-specific prescribing. Pharmacists are well-qualified to make these judgments and advise physicians and patients on generic substitution, especially as they have the cost and legal equivalence information that is often not disclosed to physicians.

One more point: Rational selection of the most cost-effective medication, and controlled and monitored therapeutic substitution, again with appropriate exception mechanisms, are even more effective ways to save money. Think of all the people who are taking expensive antibiotics for trivial infections (if they need them at all), and the patients who take expensive “non-sedating” antihistamines and unnecessary COX-2 inhibitors, because they are so heavily promoted. And let’s not even start with all the patients taking medications that they don’t need at all.

I agree that these are not long-term or ideal solutions, and I make no apologies for the so-called “Pharmacy Benefit Managers”, but–properly implemented–they are appropriate responses to the current realities of medication prescribing and its costs.

Don’s response:
I emphatically agree with Marty Calon’s comments. They are certainly applicable to the real world of today, although we would hope might be modified eventually to apply to the ideal world which we envision.

One point that I failed to make was to acknowledge the crucial role that the pharmacist plays as part of the medical team. And I want to emphasize that the role to which I refer is as a health care professional who assists the patient and his or her practitioner in matters regarding drug therapy. This is in sharp contrast to a pharmacy benefit manager (PBM) that is primarily a middleman working the system to maximize profits for the PBM organization. Pharmacists must always be an integral part of the professional medical team.

The other point that I want to reemphasize is that we need fundamental structural changes that will improve access and affordability of prescription drugs. The pharmacist’s role should be to assist with the selection of the most appropriate drugs that also offer the best value. As the paper by Dean Baker demonstrates (a “quote” last week), we need to revise the drug patent system to provide incentives for better value in drugs. But also, we need to use negotiated purchasing that would also eliminate gimmickry designed to enhance profits. And we need to place the pharmacist in a position of being rewarded for applying his or her professional skills, rather than being placed in a subservient role of enhancing the success of a PBM business entity.

M. Calon on the Critique of Wisconsin’s Drug Cost Program

Marty Calon, RPh, of Baltimore, Maryland, responds to the critique of Wisconsin’s program to reduce drug costs for state employees:
I usually couldn’t agree more with your comments, but I have to disagree with some of what you say here. I am a pharmacist with long experience in the Department of Veterans Affairs with these prescription practices.

As long as drug companies persist in pricing by dose, whereby a 5mg tablet and a 10mg tablet cost the same, splitting tablets is a viable option, as long as it is not done without controls. The drugs which are suitable for splitting must be specified and selected, on the basis of (in order of priority) suitability for splitting (physically and clinically), cost, and amount of usage (no point in requiring splitting of drugs which are rarely prescribed).

Specifically, there has to be good clinical judgment or clinical evidence that the particular medication and dosage form is suitable for splitting, and there has to be a liberal exception mechanism for patients who cannot or do not wish to deal with the splitting. The splitting program also should be monitored to ensure that the drug therapy with the split tablets is producing the desired results, although this monitoring should be happening regardless of tablet splitting.

For example, SSRIs and sildenafil (Viagra) are ideally suited to splitting. It doesn’t even matter if the dose is not precisely divided, because the exact dose is simply not very important, which is true for many drugs. In the case of SSRIs, which have a long-term effect, it’s just about irrelevant whether the patient gets his precise dose every day; cumulatively, he’ll get the right dose unless the tablet is falling apart. Warfarin is a drug that probably should not be split if possible. Pharmacists have a good understanding of the physical composition of the tablets (coatings, sustained-release mechanism, etc) and their pharmacokinetic parameters to determine their suitability for splitting.

Many physicians don’t have the knowledge, cost information, or motivation to prescribe generically. The majority of medications that are available generically do just fine if the pharmacist selects reputable generic vendors. The handful of notable exceptions (warfarin, theophylline SR, phenytoin, etc) are the only ones that need be limited to brand-specific prescribing. Pharmacists are well-qualified to make these judgments and advise physicians and patients on generic substitution, especially as they have the cost and legal equivalence information that is often not disclosed to physicians.

One more point: Rational selection of the most cost-effective medication, and controlled and monitored therapeutic substitution, again with appropriate exception mechanisms, are even more effective ways to save money. Think of all the people who are taking expensive antibiotics for trivial infections (if they need them at all), and the patients who take expensive “non-sedating” antihistamines and unnecessary COX-2 inhibitors, because they are so heavily promoted. And let’s not even start with all the patients taking medications that they don’t need at all.

I agree that these are not long-term or ideal solutions, and I make no apologies for the so-called “Pharmacy Benefit Managers”, but–properly implemented–they are appropriate responses to the current realities of medication prescribing and its costs.

Don’s response:
I emphatically agree with Marty Calon’s comments. They are certainly applicable to the real world of today, although we would hope might be modified eventually to apply to the ideal world which we envision.

One point that I failed to make was to acknowledge the crucial role that the pharmacist plays as part of the medical team. And I want to emphasize that the role to which I refer is as a health care professional who assists the patient and his or her practitioner in matters regarding drug therapy. This is in sharp contrast to a pharmacy benefit manager (PBM) that is primarily a middleman working the system to maximize profits for the PBM organization. Pharmacists must always be an integral part of the professional medical team.

The other point that I want to reemphasize is that we need fundamental structural changes that will improve access and affordability of prescription drugs. The pharmacist’s role should be to assist with the selection of the most appropriate drugs that also offer the best value. As the paper by Dean Baker demonstrates (a “quote” last week), we need to revise the drug patent system to provide incentives for better value in drugs. But also, we need to use negotiated purchasing that would also eliminate gimmickry designed to enhance profits. And we need to place the pharmacist in a position of being rewarded for applying his or her professional skills, rather than being placed in a subservient role of enhancing the success of a PBM business entity.

Break the Insurance Lobby Choke-hold on Health Care

Embargo for Oct. 7
For more information:Larry Rubin 202-955-1250

Labor, Business, Medical Leaders Launch America’s Agenda: Health Care for All, Aiming To “Break the Insurance Lobby Choke-hold on Health Care”

WASHINGTON, DC, October 7 — “There will be no health care for all Americans until our political leaders are willing to take on a health insurance industry that showers them with cash,” said Douglas Dority today as he announced the launching of America’s Agenda: Health Care for All. “Insurers have proven time and time again they will spend whatever it takes to perpetuate a system of financing that makes them wealthy while restricting care only to those who can afford it.”

Dority, chair of the new organization that will help grassroots groups fighting for universal health care, is the former president of the United Food and Commercial Workers union (UFCW). He was joined by other union leaders, and by health care reform advocates from the business and medical communities and from Capitol Hill.

“The insurance companies with their scandalous profit-taking deny access to care to even those with insurance by practices of excluding pre-existing conditions, complex paperwork and uncovered benefits,” said Dr. Claudia Fegan, president of the Physicians for a National Health Program (PNHP). “Over 12,000 physicians support a national health insurance program that will cover everyone with the money we would save from the administrative waste of our current system.”

U.S. Rep. Tammy Baldwin (D-WI) said “it is time to put ‘health care for all’ at the top of our national agenda.” She has introduced a bill that would give federal funding to states that institute programs expanding access to health care. Rep. Baldwin and Dr. Fegan have agreed to serve on the Advisory Committee for America’s Agenda.

“Our medical system is dysfunctional and bad not just for our health, but for our entire economy,” said Bernard Rapoport, founder and former CEO of the American Income Life Insurance Company. Rapoport, a member of the America’s Agenda governing board, said “soaring costs are undermining the competitiveness of American business in the global economy. The U.S. is the only country in the industrialized world that doesn’t have publicly-financed health insurance, so American companies are burdened with expenses others don’t have, endangering our manufacturing base.” As examples, he cited Ford Motor Co. that spends $3.2 billion a year on health premiums and General Motors that spends more on health than on steel.

“The American people are fed up,” said Dority. “Poll after poll shows they want affordable health care that covers everyone. Why don’t we have it? Because America’s health insurance industry does everything in its power to block it . The current system may be a shambles, but it is a profitable shambles for those who run it.”

Joe Hansen, Dority’s successor as UFCW president and an America’s Agenda board member, renewed the union’s commitment to universal health care. “No one union, no one company, has a solution for the health care crisis,” said Hansen. “It has to be a political solution.”

“Out of control health care costs are a huge problem not just for workers but for employers who have health care plans,” said Marty Maddaloni, general president of the United Association of Plumbers and Pipefitters. “It puts these employers at a competitive disadvantage with those who do not have such plans.”

“I can think of no economic issue that impacts all working families in America more than the growing health care crisis,” added Morty Bahr, president of the Communications Workers of America. “It is criminal that 45 million Americans are without any health insurance and that number is projected to go to more than 51 million in 2006.” Both Bahr and Maddaloni serve on the governing board of America’s Agenda.

Dority noted that in recent years concerned citizens from Massachusetts to New Mexico have waged statewide campaigns for universal coverage. Additionally, health care reform initiatives and legislative hearings are progressing in several states, “but the industry continues to spend astronomical amounts of money to defeat them.”

Health insurers all across the nation have come together to create America’s Health Insurance Plans (AHIP) to lobby for the status quo. AHIP will run a multi-million dollar campaign with offices in 46 different states. “In the recent past, effort after effort by state-level grassroots groups to reform our broken health care system has been defeated by the well-heeled health insurance lobby,” Dority said. “We intend to help level the playing field. We must break the insurance lobby choke-hold on U.S. health care.”

To support grassroots groups, Dority said that America’s Agenda: Healthcare for All will utilize TV, radio, print media and the Internet to mount creative and coordinated “truth campaigns”. Business leaders, physicians, elected officials, labor leaders and universal health care campaign activists will be effective “messengers of truth” about the costs and benefits of specific health reform proposals. “We will counter the insurance lobbyists by taking the truth to the American people,” said Dority.

Until recently, Dority was president of the United Food & Commercial Workers (UFCW), a union whose members have been in the forefront of the battle to protect health benefits on the job. This past winter, tens of thousands of grocery workers were forced into bitter strikes in California, Ohio, Kentucky and West Virginia, in an effort to hold the line for workers across the nation whose health benefits were under attack. Dority didn’t blame the employers– he blamed the system. In March, he announced he was stepping down at UFCW “to devote my energies to a new effort to convince our political leaders that health care for all Americans is long overdue.”

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Please click here to view the pdf

Wisconsin Shows How to Curb Health Costs

Wisconsin State Journal
October 4, 2004

Wisconsin’s success in holding down costs in the state’s group health insurance plans offers lessons for other governments and the private sector.

The results of the strategy the state is using are nothing short of stunning. The average cost for state employee health insurance next year will rise only 5 percent, roughly half of earlier projections.

…the state’s accomplishment shines a spotlight on a part of the health care system called pharmacy benefits management.

Pharmacy benefits managers administer prescription drug insurance benefits.

However, not all pharmacy benefits managers are created equal. Many governments and businesses get stuck with poor pharmacy benefits management because they leave the job to health maintenance organizations or they look for the benefits manager who charges the lowest fee for the job.

…Wisconsin’s state government has taken the job away from HMOs in the state insurance plans and contracted with a single benefits manager, Navitus, based in Appleton and Madison. Navitus is a joint venture of Dean Health Plan and Touchpoint Health Plan.

…Navitus focuses on truly controlling costs. It has encouraged the use of generic drugs by waiving co-payments for the first filling of a generic prescription. It has boosted the use of mail-order drugs, and it has encouraged savings by pill-splitting, a technique that allows a consumer to buy a double-dose pill and split it in two to get the required dose cheaper.

Because of the way it does business, Navitus charges a higher fee than managers who dip into rebates or use other means to profit at consumers’ expense. But the fee is proving to be more than worth its cost because of the savings gained by the improved management.

http://www.madison.com/wsj/home/opinion/index.php?ntid=11732&ntpid=0

Comment: First, a comment about pill splitting. The marginal cost of producing most medications is negligible. Pharmaceutical firms frequently price their products based on a day’s dosage rather than the milligram amount. A 5 mg tablet may be the daily dose for one individual and a 10 mg tablet for another. The pharmaceutical firm may decide that this treatment should be priced at $90 per month or $3 per day. Thus both the 5 mg and 10 mg tablet may be priced at $3 each. It is obvious why pill splitting has become a common practice. But it has been condemned because of possible dosing errors due to crumbling pills or perhaps absorption differences due to disruption of the pill coating. We do need much more rational drug pricing policies, but we don’t need middlemen recommending unacceptable, potentially dangerous, cost saving practices.

Choosing a generic equivalent over a brand name drug may be a wise decision if the products are truly comparable, but that should be a clinical decision and not one based on paying the patient a bribe to make the switch (waiving the co-payment at the time a decision to offer the generic is made by the pharmacy benefit manager rather by than the physician).

Also, a rational system of drug pricing would not delay access to necessary prescriptions, a process which reduces patient compliance, by offering discounts for mail delivery.

But what is especially outrageous here is that the state of Wisconsin is rewarding Navitus above-market fees for having adopted policies that are detrimental to the health of their employees.

A universal, publicly funded and publicly administered health insurance program would ensure that medications would be available in the right amount, at the right time, in the right place, and that negotiated pricing would ensure that they would remain affordable for all of us.

Again, is there something about rational reform that our policymakers don’t understand?

Practice Variations and Health Care Reform: Connecting the Dots

Perspective: By John E. Wennberg
Health Affairs
October 7, 2004

Several papers in this Health Affairs collection show once again that unwarranted variation-variation not explained by illness, patient preference, or the dictates of evidence-based medicine-is a ubiquitous feature of U.S. health care. As shown in several of these papers, health care systems fail to provide in full measure such simple life-saving, morbidity-sparing interventions as immunizations, diabetic glucose monitoring, and the use of drugs for those with heart attacks. Every region and every state exhibits underuse of effective care, some more so than others. James Weinstein and his colleagues provide further evidence that the incidence of discretionary surgery, the use of which should depend on patient preference, is unduly influenced by local physician opinion, which has resulted in striking long-term variation in the risk of surgery among local regions-the “surgical signature” phenomenon. Elliott Fisher and his colleagues show that among the chronically ill, the frequency of physician visits, diagnostic testing, and hospitalization and the chances of being admitted to an intensive care unit (ICU) depend largely on where patients live and the health care system they routinely use, independent of the illness they have or its severity. Katherine Baicker and her colleagues show that variation affects minority groups as it does white Americans, which clouds the interpretation of racial and ethnic disparities based on national average rates.

While noting that the U.S. supply of physicians grew remarkably over the past twenty years, David Goodman shows that growth in aggregate supply does not “cure” variations: In 1999 the per capita supply of generalist physicians varied more than twofold and that of medical specialists more than fivefold among regions. I and my colleagues document that Medicare spending varies more than twofold among regions, but more spending is not associated with better quality, as measured by reduced underuse of effective care, or, surprisingly, with more major surgery. Greater per capita spending buys more intensive intervention among patients with chronic illness: Those who live in high-cost regions experience more visits to medical specialists, tests, hospitalizations, and ICU stays than their counterparts living in low-cost regions. And because of the way Medicare is financed, regions with low costs end up subsidizing a sizable proportion of the care for those living in high-cost regions.

The irony, as Fisher and his colleagues show, is that patients with similar chronic illnesses who live in high-cost regions, including those who receive most of their care from prominent academic medical centers (AMCs), do not have better health care outcomes than patients living in low-cost regions. In other words, the patterns of practice in managing chronic illness in low-cost regions do not appear to result in the withholding of valuable care (health care rationing); rather, systems of care serving high-cost regions are inefficient because they are wasting resources.

Three needed reforms:

First, the quality agenda must be extended beyond effective care; the agenda should also address unwarranted variation in preference-sensitive treatments such as discretionary surgery and the overuse of physician and acute care hospital services in managing chronic illness.

Second, reform of the payment system must be undertaken to enable providers to deal with the complicated and interrelated financial, organizational, and behavioral issues that need to be resolved if the quality of patient decision making is to be improved and inefficiencies and waste in the treatment of chronic illness remedied.

Third, AMCs and the National Institutes of Health (NIH) must respond to the glaring weaknesses in the scientific basis for clinical decision making by undertaking the systematic evaluation of the everyday practices of medicine.

http://content.healthaffairs.org/cgi/content/full/hlthaff.var.140/DC2

Editor’s Note
John K. Iglehart

Thirty-one years ago, researchers Jack Wennberg and Alan Gittelsohn began what has become a long odyssey to better understand the distinctive variations in clinical practice patterns that characterize medical care in the United States. By publishing their landmark paper in Science (14 December 1973), they launched a new chapter of health services research in relation to clinical care. In 1984 the editors of Health Affairs, struck by how resistant providers and patients were to addressing unwarranted practice variation, devoted a thematic issue to the subject (Summer 1984). Fast forward to today, and one can only marvel at how little variations that are unexplained by, as Wennberg notes, “illness, patient preference, or the dictates of evidence-based medicine” have been reduced.

With the publication of these papers, Health Affairs is once again lending its voice to the dialogue on variations. But for several reasons, this time the opportunities for real change seem more promising. First, Wennberg and his colleagues at Dartmouth Medical School have developed methods to link the practice variations with specific hospitals and physicians, and they plan to make provider-specific information available as part of the Dartmouth Atlas of Health Care project. As they note, provider-specific information can be used to identify efficient providers within a given region and should prove useful in configuring provider networks. Second, the opportunity to use this information to guide improvement is reinforced by the work of Elliott Fisher and colleagues, which shows that the problem of variation in intensity of treatment for chronic illness is primarily a problem of overuse and waste, not underuse and health care rationing. Third, as discussed in several papers, the puzzling problem of geographic variation in elective surgery is better understood and the value of shared physician-patient decision making, more firmly established. And fourth, the critical importance of creating economic incentives to reward providers who reduce unwarranted variation and the need for Medicare to assume greater leadership is increasingly recognized by payers and Congress alike. In the November/December 2003 issue of Health Affairs, fifteen prominent health policy figures, including Wennberg, signed an open letter to the Centers for Medicare and Medicaid Services (CMS) urging Medicare to assume more aggressive leadership in the “pay for performance” effort.

http://content.healthaffairs.org/cgi/content/full/hlthaff.var.3/DC2

For the index to the twenty articles on variations in clinical practice patterns (web exclusive for 7 October 2004): http://content.healthaffairs.org/webexclusives/index.dtl?year=2004

Comment:
In many of the papers, suggestions are made as to how Medicare reform might facilitate many of the improvements needed in resource allocation that would correct the waste and inadequacies demonstrated by the variations in clinical practice patterns. But improving Medicare alone would not be adequate to correct systemic problems such as capacity variations of academic medical centers or variations in the physician work force.

If Medicare were the only source of funding health care in the United States, then it could use its monopsonistic power to reduce perverse variations in clinical practice patterns. That would provide us all with better value for our health care investment. But it is unlikely that we’ll see that value until we do take control of health care funding through a single payer, national health program.

Health Care Can Be Cured: Here's How (TIME Magazine)

From the Oct. 11, 2004 issue of TIME magazine
Viewpoint / Health

Americans are burdened with a costly, hugely dysfunctional health-care system. In a new book, a pair of investigative reporters offers a fresh remedy based on a successful model we’re all familiar with.
By Donald L. Barlett; James B. Steele

This is the picture of health care in America. We spend more money than anyone else in the world — and yet have less to show for it than other developed countries. That’s one reason we don’t live as long. We don’t adequately cover half the population. We encourage hospitals and doctors to perform unnecessary medical procedures on people who don’t need them, while denying procedures to those who do. We charge the poor far more for medical services than we do the rich. We force senior citizens with modest incomes to board buses to Canada to buy drugs they can’t afford in America. We clog our emergency rooms with patients because they can’t get in to see their doctors. We spend more money treating disease than preventing it. We are victims of rampant fraud and overbilling. We stand a good chance of dying from a mistake if we are admitted to a hospital, and we kill more people with prescription drugs than with street drugs like cocaine and heroin. We have an endless choice of health-care plans, but most people have few real choices. We are forced to hold bake sales, car washes and pancake breakfasts to pay the medical bills of family members and friends when a catastrophic illness strikes.

Americans tend to believe they have the best health care in the world, but in truth it is a second-rate system and destined to get a lot worse and much more expensive.

It need not be this way.

The simplest and most cost-effective remedy is one that is considered untouchable in the U.S. because of the huge lobbying forces arrayed against it. Indeed, neither presidential candidate has come close to offering such a comprehensive solution. The remedy: provide universal coverage and create one agency to collect medical fees and pay claims. This would eliminate the staggering overlap, bureaucracy and waste created by thousands of individual plans. Under a single-payer system, all health-care providers — doctors, hospitals, clinics — would bill one agency for their services and would be reimbursed by the same agency. Every American would receive basic health care, including essential prescription drugs and rehabilitative care. Anyone who needed to be treated or hospitalized could receive medical care without having to wrestle with referrals and without fear of financial ruin.

Radical? We already have universal health care and a single-payer system for everybody age 65 and over: it’s called Medicare. For years, researchers and health-care professionals have advocated a similar plan for the rest of the population, but no plan has ever got far in the legislative process because of fierce opposition by the health-care industry. To discredit the single-payer idea, insurers, HMOs, for-profit hospitals and other private interests play on Americans’ long-standing fears of Big Government. In truth, it is the private market that has created a massive bureaucracy, one that dwarfs the size and costs of Medicare, the most efficiently run health-insurance program in the U.S. in terms of administrative costs. Medicare’s overhead averages about 2% a year. In a 2002 study for the state of Maine, Mathematica Policy Research Inc. concluded that administrative costs of private insurers in the state ranged from 12% to more than 30%. That isn’t surprising because unlike Medicare, which relies on economies of scale and standardized universal coverage, private insurance is built on bewildering layers of plans and providers that require a costly bureaucracy to administer, much of which is geared toward denying claims.

What kind of agency would administer this Medicare-like plan for the rest of us?

The idea of a single-payer plan run by the U.S. government carries with it far too much political baggage to ever get off the ground. What’s needed is a fresh approach, a new organization that is independent and free from politics. For in addition to covering the basic costs of all Americans, a new system would need to institute programs to improve America’s overall health that focus on preventing illness and disease as well as on treatment and do so without breaking the bank. How does the U.S. come up with such a mechanism?

One possible answer: loosely copy and then expand on what already exists in another setting — the Federal Reserve System, which oversees the nation’s money and banking policies. The Fed is one of America’s most ingenious creations, a public agency that is largely independent of politics. The Fed’s board members are appointed to 14-year terms by the President with the consent of the Senate, meaning that neither the White House nor Congress can substantively influence the Fed’s policies.

Call this independent agency the U.S. Council on Health Care (USCHC). Like the Fed, the council would set overall policy for health care and influence its direction by controlling federal spending — from managing research grants to providing medical coverage for all citizens. Unlike the Fed, it would be funded by taxpayers. The money could come from two taxes: a gross-receipts levy on businesses and a flat tax, as with Medicare, on all individual income, not just wages.

This would not represent an additional cost to society but would rather replace existing taxes and write-offs. It would cut costs for corporations and raise taxes slightly on individuals at the top of the income ladder. The council’s mission: implement policies that improve health care for everyone, not just those suffering from certain diseases. In short, make the unpopular decisions that the market cannot make. The council could establish regions similar to those of the Fed.

The geographic subdivisions could take into account cultural and regional differences. That would allow for health-care delivery to be fine-tuned at the local level and ensure that regulations take into account the differences between metropolitan and community hospitals. That is not to suggest that a single-payer system overseen by a Fed-like independent organization would instantly correct everything that’s wrong with market-driven health care. What it would do is provide the framework to reach that goal. For starters, it would:

Guarantee that all Americans receive a defined level of basic care, including a fixed number of visits to doctors, routine lab work, immunizations for children, coverage for all childhood illnesses and all hospital charges.

Establish flexible co-pays for basic care that would vary depending on income as well as usage. Those people who seldom seek medical attention could have their co-pays waived. So too could those at the bottom of the income ladder.

Pay all costs to treat any catastrophic illness, such as cancer and other devastating diseases.

Restore freedom of choice by allowing patients to choose their doctors and their hospitals.

Redirect health-care spending by allocating money for disease prevention as well as treatment.

Provide critically important drug information to consumers to balance the promotional hype of advertising.

Concentrate health-care spending on cost-effective areas, such as stemming the increased prevalence of diabetes in children.

Halt the existing practice by which insurers squeeze doctors through unrealistically low reimbursement rates. The same for hospitals and nursing homes that squeeze nursing salaries and staffing levels.

Reverse the costly but seldom discussed health-care trend of overdiagnosis and overtreatment — something no market system will ever do. While many Americans suffer from a lack of health care, a growing number get too much.

Once the basic care package is in place, its scope could be expanded as the system realizes savings derived from standardization, more efficient computer technology and the end of market-based health-care management, with its required profits, stock options and generous executive compensation.

Individuals could supplement their basic government-supported coverage through private insurance. Wealthier citizens could continue to get whatever care they wanted and pay for it. But they would still be required to pay the earmarked taxes, just as everyone must contribute to Medicare and Social Security. Similarly, hospitals would be free to accept a certain percentage of cash-paying patients from outside the USCHC plan. As for prescription drugs, a good health-care system would strive to prescribe fewer pills, especially since the effectiveness of many drugs is questionable. The USCHC could negotiate the best possible drug prices, something that Medicare is forbidden to do by Congress.

Many Americans fear that a universal health plan would cost too much, even though the market system has already given the U.S. the world’s most expensive health care. They fear the long waits they have heard about in Canada, even though comparable waiting times for tests and procedures are commonplace in many parts of the U.S. Lastly, they fear government-decreed rationing, even though health care is already rationed in the most inequitable of ways.

Despite all the fears, change will come, ultimately from two sources: working Americans who are disenchanted with ever rising costs and shrinking care, and U.S. corporations, which are increasingly refusing to pick up the added costs. They can’t afford to, because America’s privately funded system puts U.S. companies at a disadvantage to their competitors in the industrialized world, where health care is funded by government. GM says the cost of providing health care to its workers and retirees totals $1,400 for each vehicle sold in the U.S., more than the cost of steel.

America’s health-care system is in critical condition, and we find ourselves at a turning point. We can continue to hold bake sales to finance it, or we can do what every other civilized nation on earth does — take care of our citizens.