Nearly 40 million persons in the United States were without health insurance for all of 2000. National health insurance would remedy this situation, and many believe the success of reform efforts in this direction may depend on physician support.

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Doctor Speaks for Universal Health care
By Richard Creaser
Derby Line Forum
Derby Line, Vermont
November 12, 2003

DERBY LINE – The workers at the Tivoly Inc. plant in Derby Line have serious concerns regarding their healthcare insurance options. Not only have costs continued to climb over the last decade, they are finding it increasingly difficult to find a carrier willing to take them on. The future of healthcare at Tivoly and in the state of Vermont were the topic of discussion at a public forum at St. Edward’s Church in Derby Line on Thursday night.

“The average age at the plant is 51 years old,” said John Kudla of Brownington. “Blue Cross wouldn’t even quote us.”

A battle over healthcare funding and insurance is brewing among legislators, and Governor Jim Douglas recently announced that he favors a plan that would attract more insurance companies back to Vermont. His plan would encourage more companies rather than a government-funded single-payer system.

The main speaker at the forum in Derby Line Thursday, Dr. Deborah Richter of the Vermont Healthcare for All (VTHCA), said workers like the people at Tivoly would be most likely to benefit from a single-payer system.

Under the current system, premiums increase and coverage continues to decline as the Tivoly workers struggle to maintain some kind of medical insurance plan, said Eric Crowe of Beebe.

“We have 110 workers on the plan plus another 15 retirees drawing from it,” said Mr. Crowe. “If we lose the plan, if we go down, they’ll be swallowed up with us.”

Escalating costs are a reaction from the insurance companies, said Dr. Richter. Competition among insurers is to secure the largest pool with the least amount of risk.

The aging workforce at the Tivoly plant represents one of the least desirable factors insurance analysts can see. Older people are simply more likely to require medical care in the near future.

As insurance premiums continue to rise and qualifying services decline, the number of people opting into their employer’s medical plan will also decline, further driving up the costs for those still enrolled. Within the next few years, particularly among the younger work force, the decision to forego insurance is likely going to increase, said Dr. Richter.

“You are going to see a rise in people taking out catastrophic policies that will keep them from losing their homes but they will have to pay the first ten or fifteen thousand dollars,” she said. “That’s where we’re headed.”

Statistics indicate that roughly 10 percent of the population uses 72 percent of healthcare resources, said Dr. Richter. This figure includes individuals with long-term healthcare needs like diabetics and people with extended medical requirements such as post-operative patients or premature babies.

Financially, it makes little sense for insurance companies to want to cover the sickest 10 percent. This has given rise to exclusions based on risk pools and other statistical data.

Dr. Richter challenges the notion that bringing in more insurance carriers will help to reduce or slow climbing premiums. She contends that such ideas are “magical thinking”.

“Bringing in more insurance companies won’t lower costs any more than bringing in more real estate agents will affect property value,” she said.

The very flexibility and number of insurance plan options is what helps contribute to rising healthcare costs, said Dr. Richter. No single billing clerk can fully understand the proper paperwork protocol for every insurance plan and every option within that plan.

“What would happen if everyone went to the corner grocery using different currencies and bought a gallon of milk at a different price?” she asked. “How many clerks would need to be behind that counter? More than one, I can tell you that.”

This complexity consumes 15 percent of healthcare dollars, she said. Administrators are using nearly one in every seven cents simply to make sure that claims are properly accounted for and remittance paid.

The simplest way to eliminate much of that bureaucracy is to move towards a single payer healthcare system. The VTHCA has championed a universal healthcare model for Vermont for several years and the movement is gaining momentum.

“Financially, economically the numbers add up,” said dr. Richter. “Now we just need the political will to put it into practice.”

Under the proposed model, Medicare and Medicaid funds would be shifted into a general pool. A 5.8 percent employer payroll tax and a 2.9 percent employee payroll tax would also be added to the general pool. That money would form the financial basis for the single payer system.

“We could support the current healthcare system, provide coverage for all Vermonters based on the money we are already spending,” she said.

Representative David Bolduc expressed his reservations about expecting government to take on the burden of managing a healthcare system.

“I have some very real concerns about becoming involved in this based on the results of other things the government has done like Act 60,” he said. “It’s probably best to keep government out of healthcare.”

Professionals in the healthcare field would handle the management of the system with oversight provided by a board advocating for the general population, replied Dr. Richter. The government’s role would be to ensure that the payments are distributed promptly and efficiently.

“Paying for things is something that the government does and does very well,” she said. “I do trust them to finance healthcare but I don’t trust them to run Fletcher Allen, the Springfield hospital or the local doctor’s office.”

Naturally, shifting away from a patchwork of private insurance companies would cause hardship in the insurance industry. Medical billing assistants would lose positions and brokers would see declines in their income.

“The damage to the health insurance industry is the unspoken result of universal healthcare,” said Dr. Richter. “There would still be a place for one agency to administer claims and someone like Blue Cross could do a good job of that.”

The public and politicians need to rethink how they perceive the healthcare system, said Dr. Richter. Healthcare needs to be viewed as a public good like fire and police protection and not as a consumer service.

The single payer model would provide the financial stability to ensure that hospitals are properly staffed and equipped in the event that you, as a taxpayer, should ever require their services.

The majority of hospital expenses, some 84 percent of healthcare costs, are fixed, making a stable financial arrangement that much more attractive to healthcare providers. The buildings require utilities and maintenance, the hospitals need beds and linens and a staff needs to be present every hour of every day regardless of how many people use them.

“These hospitals aren’t just sitting around waiting for well-insured people to get in car accidents,” said Dr. Richter.

By ensuring that health services are funded and maintained in a consistent manner, this provides users some guarantees that services will most likely still be available when they are needed, she said.

“So we would have a much deeper infrastructure under universal healthcare,” said Jim Wuertele of St. Johnsbury.

“You would be able to do this because every patient becomes, in effect, a paying customer,” said Dr. Richter.

Containing costs under a single payer system would be the next challenge. That would involve decisions based on the level and types of coverage that the universal model would cover, said Dr. Richter.

Naturally, she said, that coverage would also determine the actual cost to administer the program.

The types of services covered would, hopefully, include those services most frequently used or in demand by the majority of the population. Some services, particularly those with unverified or unknown medical value may need to be carefully considered.

“You have some practices at the fringes of medical theory like aromatherapy,” she said.

Circumcision is another practice that is not medically necessary but is still widely practiced, said Dr. Richter. If people wanted to cover it under the plan, each operation would cost the program about $200.

“If I were looking at the budget and there was somewhere that needed cutting…” she said to many chuckles.

The final determination on what procedures were covered and which were not is something that should be democratically determined. The institution of democratic determination would provide a single payer model with something the current healthcare system lacks: public accountability.

Dr. Richter presented the two sides of the issue of whether or not to include a co-pay on the universal plan. For the very poorest of people, even a small co-pay can deter them from seeking medical assistance early on.

“But this would not deter them to the point where they die of a treatable condition because they were afraid of how much the procedure would cost their family,” she said.

At the same time, a co-pay could discourage casual abuses of the system.

“It would discourage unnecessary care,” said Dr. Richter. “You would be less likely to go to the doctor for stupid things like a cold or diaper rash if you had to pay every time you went.”

The shift to a single payer system would also provide some real economic benefits to offset some of the harm to the insurance industry. Businesses would benefit from the model in two ways.

The first would see a significant decline in the money employers pay to maintain healthcare coverage for their workers.

The second would be assurances that all of their employees do have access to some form of medical care.

“Don’t you think business would rather pay a 5.8 percent payroll tax than 8 percent of wages to cover the employer contribution to an insurance premium?” said Dr. Richter.

The payroll tax will hurt some small businesses, particularly those who currently offer minimal or no medical coverage.

The benefits for employees will be just as real as the benefits for employers, especially for people like the workers at Tivoly.

“If the hundred guys under my watch had that extra $50 a week to spend, that would be quite a bit of extra money back into the community,” said Mr. Crowe.

Mr. Bolduc commended Dr. Richter for her presentation but encouraged the forum’s participants to remain open to all sides of the debate.

“You made some very good points here tonight but my job as a legislator is to listen to all sides before making a judgment,” he said.

“I can learn a lot from the negative side if people feel it’s worth arguing against,” agreed Mr. Wuertele.

If a single payer model or some variant of it is going to be used, people need to approach their legislators and bring the issue to Montpelier, said Dr. Richter.

“This is something that needs to go before the House in January,” she said. “If we lose, we won’t go away.”

Los Angeles Times
November 10, 2003
Import Canadian Prices, Not Drugs

Re “Open Door to Drug Imports,” editorial, Nov. 6: We don’t need to import drugs from Canada. Instead, we need to import Canadian drug prices.

Medicare already has in place mechanisms to control the fees and prices of physicians, hospitals, laboratories and other providers of health-care services and products. Although it is not a perfect process, rates are set to cover expenses and provide a fair profit. The system prevents excessive payments to providers.

If a bona fide prescription benefit were to be added to the Medicare program, the same fair rules would be applied to the pharmaceutical firms. Drugs are an essential element of modern health care. It’s time to include them in Medicare under a similar regulatory process that would ensure affordability.

Our system of funding Medicare has not prevented the development of newer medical technology. Likewise, it will not prevent the development of newer pharmaceutical agents. The drug companies will always strive to earn their share of the $1.66 trillion that we are already spending on health care.

Don McCanne MD

San Juan Capistrano

*

The solution is not importing prescriptions but mandating fair-pricing practices. If a manufacturer can sell at reduced prices to Canadian pharmacies, the same prices should be available to pharmacies in the U.S.

Everyone is complaining about rising health-care costs, which stem from high drug costs, yet we turn our heads when the solution is so clear. In order to keep health insurance rates down, we have to keep drug prices down. This means that the manufacturers must be accountable for fair and equitable pricing.

Importation is a simple fix to some, without attempting to solve the problem. We have to lower the cost of medications by making the pricing the same for Canada and the U.S. Only when this happens will the costs of health care be controlled.

Charles S. Franklin

Pharmacist, La Quinta

http://www.latimes.com/news/opinion/letters/la-le-mcanne10.1nov10,1,3511530.story?coll=la-news-comment-letters

Comment: Virtually everyone agrees that access to health care is not complete unless patients have access to affordable prescription drugs. Politicians recognize this and promised us in the last election that prescription coverage would be included as a benefit under Medicare. But we are seeing that participants in the political process can use a popular mandate to advance their own nefarious ends.

If they were sincere on what we thought was their promise, we would already see significant benefits. Most importantly, Medicare beneficiaries would now have affordable access to prescription drugs. Also, the pharmaceutical industry would join the rest of the health care industry in being required to accept the fair pricing that only a regulatory environment can assure.

The free market has served to drive prices up to the maximum tolerated rather than bringing prices down through patient-friendly forces of competition. Furthermore, including prescription coverage would reduce the pressure for Medicare beneficiaries to move into private plans that have provided less value to the taxpayers than has the traditional Medicare program.

But, tragically, the process has moved to behind closed doors with only the ideologues invited in (plus the token presence of Sen. Baucus). Their goals are to protect the free-market pricing of the pharmaceutical firms, but, more importantly, to use this political opportunity to inflict near-fatal blows to Medicare, a program they hate primarily because it is a “government” program.

Through strategic leaks, we know what is happening behind those closed doors. The actual prescription benefit is largely a sham. Very few will benefit from the coverage. The administration of the benefit will be primarily by private middlemen rather than through the publicly-administered, traditional Medicare program. Measures are being included which prohibit the government from providing any regulatory input that might prevent the pharmaceutical firms from charging the maximum that the market will bear. Medicare premiums will be means-tested which will give the affluent a financial incentive to leave the traditional Medicare program. The intent is to then require the traditional program, with a concentration of high-cost, low-income enrollees, to compete with the private plans. This would result in the death spiral of the traditional program.

The political debate now centers around the privatization issue. Sen.Kennedy threatens to prevent its passage if the competition proposal is included. The House ideologues threaten to oppose it if competition is not included. Lost in this is the actual prescription coverage. It is grossly inadequate. But Sen. Kennedy believes that it should be passed because it will open the door to a program that can be repaired later. But he will not do this at the cost of destroying Medicare as a program of social insurance.

The ideologues seem to be willing to take a stand, challenging Sen. Kennedy
and colleagues to block it in the Senate. They can then take the issue to
the voters, claiming that it’s the Democrats who denied Medicare beneficiaries of their prescription benefit.

The issues are complex. But the voters need to understand them. Candidates must be confronted with a public that demands to know whether they support a
bona fide prescription program or if they are using this issue to take as word to the Medicare beast.

Medicare might be a beast, but it’s our beast.(Since this message has great urgency, please consider distributing it to those who do care about our Medicare program.)

Don McCanne

Toronto – Four prominent economists and a former director of audit operations with Canada’s Auditor General released a report today that is sharply critical of controversial “public-private-partnership” (P3) hospital proposals.  The report commends the new provincial government for rejecting the P3 model for public hospitals, including those planned for Brampton and Ottawa.

The reports’ authors are: Lewis Auerbach, Arthur Donner Phd., Douglas D. Peters Phd., Monica Townson and Armine Yalnizyan.

In an open letter to the Ministers of Health and Long-Term Care, and Public Infrastructure Renewal, the authors describe P3 hospitals as posing “ a serious threat to the public health care system.” They urge the government “to carry through with the commitment to cancel the P3 projects proposed for the Royal Ottawa and William Osler Hospitals” and to “ensure that all future investment in public hospitals accords with the principles of public financing, ownership and not-for-profit administration.”

The authors conclude that when properly accounted for, P3 hospitals “are likely to be 10% more costly than hospitals that are publicly financed, owned and operated.”

Their report concludes that there is every reason to expect that if P3 hospitals were established in Ontario, they would result in “a deterioration of hospital services, diminished accountability, an increase in two-tier care, and needless cost.” The authors note that this is turn in likely to “discourage confidence in publicly funded health care, and weaken support for the medicare model.”
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Summary & Backgrounder

FUNDING HOSPITAL INFRASTRUCTURE: WHY P3S DON’T WORK, AND WHAT WILL

Summary

A group of prominent economists and a former director with Canada’s Auditor General have written to the Honourable Ministers of Health and Long Term Care, and Public Infrastructure Renewal commending the government for having rejected the P3 model, and encouraging the government to carry through by cancelling these outstanding projects.

In support of their position, the experts have prepared a report which examines the consequences of adopting a  “public-private partnership” or “P3″ model for providing health care infrastructure and services.  It exposes the fallacies of the rationale offered for adopting this approach, and describes the significant cost premium and accountability problems associated with the P3 model.

The experts describe the consequences of adopting the P3 for public hospitals as including:

· a substantial premium that taxpayers will pay for hospital facilities and services that are likely to be 10% more costly than hospitals that are publicly financed, owned and operated;

· the likelihood that the extent and quality of services will decline in P3 hospitals as efforts are made to sustain profit margins in an environment where efficiency gains are limited;

· the accountability problems inherent to P3 projects where confidentiality is claimed for financial and business records, preventing a proper accounting for public health-care spending, and frustrating efforts to monitor P3 hospitals for compliance with the principles and objectives of the Canada Health Act;
 
· the risk that by introducing the profit motive to public hospitals, P3s will create a platform for two-tiered service because of the co-mingling in one institution of insured health care services with those provided outside the publicly funded system.

The authors also express their support for the traditional approach to funding public infrastructure. They describe the public funding model as perfectly sound so long as accounting for such investments is improved.  To this end they call upon the new Government to adopt an accrual rather than a cash method of accounting for investment in health care infrastructure so that the costs of acquiring an asset like a public hospital can be spread over its useful life. They note that with interest rates at historically low levels, and significant unemployment in the province, the time is ideal to invest in hospitals and infrastructure.

Background

In December 2001, Ontario’s Conservative government announced plans to establish two private hospitals on sites owned by the William Osler Hospital Centre (WOHC) and the Royal Ottawa Health Care Group (ROHCG).

According to a scheme it described as a “public-private partnership” or “P3”, the Government proposed that both hospitals would be privately financed, owned, and operated.  In addition to providing hospital buildings and facilities, these P3 deals would bundle all “non-clinical” services into long-term contracts with for-profit health care companies.  According to the Government, clinical care services would remain under the control of the existing hospital boards.

In making these announcements,  the Government signalled its intention to abandon the non-profit model for providing hospital services in Ontario, where for decades public hospitals have been publicly financed, owned and operated on a non-profit basis. Capital funding for hospital infrastructure was provided by grants from the provincial and federal governments, and private charitable donations.

On the eve of the recent election, both the WOHC and ROH signed “framework agreements” with the same consortium of domestic and foreign investors.  Neither the provincial government nor the hospitals were willing the disclose the details of these arrangements.  However the WOHC has indicated that in its case the P3 contract has a value of $1.28 billion, and a term of twenty-eight years.

However the framework agreements signed by the Hospitals are contingent upon provincial approvals which have not yet been granted.  Moreover, during the election campaign, the Premier indicated that he would not, if elected, carry through with these P3 initiatives.

for a copy of the full report, go to  www.policyalternatives.ca

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