PNHP

“Revitalizing Medicare: Shared Problems, Public Solutions”

“Revitalizing Medicare: Shared Problems, Public Solutions”

By Michael Rachlis, Robert G. Evans, Patrick Lewis, & Morris L. Barer
Tommy Douglas Research Institute

“The implementation of Medicare thirty years ago was a major fork in the road for Canadian health care.Ê We could have continued to drift, as we were doing, down the road taken by the United States.Ê The road has led, as some foresaw, to ‘the most expensive and… most inadequate system in the developed world…’ (Marcia Angel, former editor, New England Journal of Medicine).Ê Instead, following the trail blazed by Tommy Douglas in Saskatchewan, we established Medicare.

“Medicare has been a great success.Ê It has achieved its primary purpose – protecting people from the financial consequences of illness and injury – and has done it for considerably less than the price paid by our American neighbours.Ê At a deeper level it has become an integral component of our national identity.”

Comment from PNHP Board member Dr. Don McCanne:Ê “This report provides a precise, accurate description of the current status of the Canadian health care system with special attention given to its problems.Ê It is must reading for those of us that have to respond to criticisms of the Canadian system as we advocate for health care justice in the United States.”

The full report is available at:
http://www.tommydouglas.ca/papers/medicare.pdf

COSATU STATEMENT ON THE HIGH COURT CASE BY PHARMACEUTICAL COMPANIES

COSATU Communications Department – 2001-01-15
Ê
The democratic parliament passed the Medicines and Related Substance Control Amendments Act in 1997 as means to facilitate access to cheap medication. This was in view of the exorbitant cost of medicines in South Africa, especially in the case of HIV/AIDS related drug.

The act allows for parallel importation of generic drugs and issuing of compulsory license. From its inception, the legislation was strenuously opposed by opposition parties and the pharmaceutical companies on the grounds of protecting intellectual property rights. The Act has been in limbo due to the court challenge brought by the pharmaceutical companies which is now due to be heard in March 2001 in the Pretoria High Court.

COSATU regards the court case by the pharmaceutical companies as a serious stumbling bloc to the transformation of the health care system. It is also tantamount to profiteering at the expense of the health of the majority of South Africans who currently face prohibitively expensive cost of drugs. COSATU reaffirms its support to the Medicines and Related Substance Control Amendment Act particularly the objective to ensure cheaper drugs.

The drug company’s patents cannot be allowed to hold at ransom the health of our nation. COSATU therefore calls for the acceleration of the court case. Further, COSATU calls on the democratic forces to mobilise against this contemptuous action by the pharmaceutical companies.

PNHP Comments on AAFP Reform

Lanny Copeland, MD
Chair, Task Force on Universal Coverage
American Academy of Family Physicians
2512 Westgate Blvd, #6
Albany, GA 31707

American Academy of Family Physicians
Attn: Health Care Coverage
11400 Tomahawk Creek Parkway
Leawood, Kansas 66211-2672

Dear Dr. Copeland,

Physicians for a National Health Program (PNHP) applauds the efforts of the AAFP Task Force on Universal Coverage in coming up with a draft proposal that is thoughtful, innovative, and bold.

We find the “guidelines” to be especially relevant and on target. In addition, we are extremely pleased that this proposal is truly for universal coverage, not for incremental steps or merely reducing the numbers of the uninsured.

The following comments on the Draft Proposal have been put together by family physicians in PNHP who have many years of caring for the uninsured and advocating for health care reform.� Some, like me, have worked with the uninsured in community and migrant health centers for over 20 years.� Other authors have worked in inner city hospitals and clinics or other parts of our tattered “safety net” for the sick poor.

While these comments come from a family physician perspective, they represent the views of our organization as a whole. PNHP has 9,000 members and includes physicians from every state and specialty, and a growing number of medical students determined to work for a system better for their future patients.
We hope that our comments will help improve the proposal. We have also e-mailed a copy of our comments to unicov@aafp.org.

We would be pleased to meet with you to discuss these comments or, more generally, strategies to promote real health care reform over the coming period. The struggle for universal health care is going to be a long and hard one and we share your belief that family physicians should play a leading role.

Sincerely,

Bob LeBow, MD
Coordinator, PNHP Family Practice Working Group
Past President, PNHP
Medical Director, Terry Reilly Health Services
Boise, Idaho
Phone: (208) 466-7869
E-mail: Rlebow@micron.net

Comments on the American Academy of Family Physicians’ (AAFP) Draft Health Care Coverage Proposal

Executive Summary:

* The AAFP Task Force deserves much credit for a proposal that is truly universal.
* PNHP agrees that the U.S. health care system is fundamentally flawed and has fragmented funding and delivery systems.
* The draft proposal’s support for the concept of balancing individual needs and community resources is appropriate. The U.S. already spends over $4,000 per capita for health care, more than enough to provide care to all.
* The draft proposal’s support for tax-based financing of health care is appropriate. However, PNHP would support expanding tax-based financing to cover all medically necessary care, including the draft proposal’s “middle tier” of care. A separate “middle tier” of services would perpetuate disparities in access to care and fragmentation in the funding and delivery of care.
* PNHP agrees that “all people” in the U.S. should be covered, regardless of legal status.
* PNHP agrees that administrative costs should be minimized (see below).
* The draft proposal preserves a role for private insurance for a “middle tier” of benefits. In addition to perpetuating fragmentation, it sharply limits administrative savings (to less than 10% of the savings possible). It also perpetuates fraud and abuse as private insurers evade payment and attempt to shift costs to patients and government. PNHP suggests that the role of private insurance should be limited to “extra” services that are not medically necessary, such as private hospital rooms and cosmetic surgery. Sale of parallel private insurance that duplicates benefits for medically necessary care should be proscribed.
* Thus, PNHP suggests the proposal cover “all medically necessary” health care, not just “basic” and catastrophic coverage.
* PNHP feels that all federal programs should be comprehensively included in the plan, especially Medicare and the VA, in order to improve benefits for seniors and veterans, and to allow for more effective cost-containment mechanisms system-wide (e.g. globally budgeting hospitals – which also reduces overhead).
* PNHP agrees that no co-payments should be charged for primary and preventive services, but encourages AAFP to eliminate co-pays for all medically necessary care. Co-pays do not control costs, are expensive to administer, and reduce access to health care for the poor and the sick.
* Finally, PNHP believes that AAFP should ban or place a moratorium on investor-owned, for-profit health care providers. Investor-ownership pits physicians against patients; care for patients against shareholder profits (every dollar spent on clinical services is a “loss” to the profit-seeking entity).

On the Findings:

* We agree wholeheartedly with the “findings,” especially as to the Task Force’s conclusion that the insurance-based “philosophy” based on risk-avoidance is fundamentally flawed and must be changed, and that the degree of fragmentation of our current financing and delivery system is a significant barrier to addressing the problems. We also agree that system-wide change is needed, that the goal must be truly universal coverage, and that the “social good” concept is valid.

* As regards the four conceptual approaches, the “employer mandate” model as outlined resembles the solution recently proposed by Karen Davis, President of the Commonwealth Fund. We believe that this option would be very costly and perpetuate systems that are increasingly failing and expensive.

* The “individual mandate” approach again does little to reform our broken system. It leaves control over health care in the hands of the private insurance industry, and (given our experience with the uninsured) is totally unrealistic to reach those most in need.

* PNHP has always been a supporter of single-payer (“one risk pool”) as the fair-est, most equitable and cost-effective way to finance universal coverage. We realize there are political challenges to this solution because of the opposition of the powerful HMO/insurance and pharmaceutical lobbies. However, we believe that by educating and mobilizing the public that these special interests can overcome. Also, these industries cynically use their vast resources (garnered from our health care premiums) to oppose any and all reforms, so pursuing a less comprehensive strategy does not confer any real advantage. Finally, with HMO premiums rising in the double digits, belying the myth of HMO “efficiency,” the possibility of gaining business support for the most cost-effective reform (“one risk pool”) is a distinct possibility.

* “Single Purchaser”- or vouchers- would do nothing to cure the ills of our present system. Cherry-picking andinsurance company control (based on the pricing of the product) would continue to prevail.

On the Guidelines:

Question: Are these the guidelines that we should follow in developing a plan for universal coverage?

Overall, with a few exceptions, yes. PNHP agrees that:

* (a) the current U.S. health system is fundamentally flawed, and that we as a society have a moral imperative to provide ethical care to individuals while providing responsible stewardship of community resources;
* (c) a uniform, outcome-based package of health services will be available to all, though we have a problem with the word “basic” (see below);
* (d) we will fund only evidence-based, high-quality, and cost-efficient health care services;
* (f) the system should balance the needs of the individual patient with the greater good of the community as a whole, and there need to be fiscal limitations;
* (g) sufficient funds for public health, research, and education are available to meet the nations’ needs;
* (h) administrative costs should be minimized.

On (b) and (e) – and we will elaborate later – PNHP has a problem with the concept of “basic health services” as it applies in the draft proposal. We feel that the lack of coverage for the “in between” or “middle tier” services (specialist and hospital services not covered in the “catastrophic” part) are the weak point of this proposal. We will address this item below.

Program Elements and Fiscal Implications:

Question: What do you think of the overall approach and of the individual elements?

* PNHP strongly supports changing the source of funding from an employment-based system to a tax-based one. Current incentives in employment-based funding are based on costs rather than on the genuine health needs of employees. Small employers and the self-employed are also unduly penalized. A tax-based system would be simpler, more equitable, and easier to administer. Universal coverage would be much more difficult to attain without a tax-based system.

* Element I: “Basic health services”: This is the part of the proposal with which PNHP has the greatest problem, especially given our members’ extensive experience dealing with health care for the uninsured. Our comments are elaborated in several points below.

* PNHP agrees fully that there should be no co-payments or deductibles for “basic” services. We also advise that there be no co-payments for all medically necessary services, not just “basic” care. As the Rand study and other studies have shown (Rasell, “Cost Sharing in Health Insurance: A Re-examination,” NEJM April 27, 1995) co-payments are true barriers to care – especially preventive care. We have seen patients delay or defer needed care, or not fill a prescription, because of co-payments and means-tested nominal fees (as low as $5 – $10). Patients often feel ashamed to come in when they can’t pay a minimum charge – yet we would all agree that our poor, sick patients are the very ones we want to see most.

* The draft proposal defines “basic” as those “services…that most people need at some point in their lifetime”: Would this also include the care our poor uninsured patients need, such as a cardiac catheterization, surgery to correct a prolapsed uterus or repair a torn knee ligament, neurological evaluation and treatment for a complex seizure disorder, cataract surgery, etc.? We’re afraid our most vulnerable patients would continue to fall through the cracks.

* Those of us who have worked in the “safety net,” e.g. in community and migrant health centers, feel that we’re fairly well able to cover the primary (or “basic”) health care needs of our patients, but when it comes to secondary care, which in the proposal seems to be defined as specialist care short of something catastrophic, we usually have to beg, borrow, and steal (so-to-speak) to get care for our patients. We don’t see our patients as being able to go out on the market and purchase a plan or insurance to cover these “middle tier” needs, especially when they have multiple pre-existing conditions. Should we leave these patients (and their “in-between” needs) at the mercy of the for-profit insurance industry? We believe that this approach won’t achieve the AAFP’s goal of universal coverage. It will leave millions of patients underinsured, resulting in predictably delayed care, with larger expenses – and totally avoidable patient suffering — in the long run. It will perpetuate multi-tiered care, where one patient will get a needed hip replacement, while the next patient, who is poor and without “middle tier” coverage, is sent home with a walker.

* PNHP believes that it makes more sense to cover all medically necessary care with a seamless, comprehensive benefit package. While the for-profit HMO/insurance and pharmaceutical industries will oppose this reform (as they do all reforms – witness the $30 million television advertising campaign the drug companies recently ran opposing a prescription drug benefit in Medicare), we believe physicians should place the interests of our patients first.

* As family physicians, we are trained to look at patients holistically. We don’t see a patient’s chronic mental illness as part of “catastrophic” coverage, their “pap” smear as “basic” and their congestive heart failure as “middle tier”. We take care of the whole person during a visit. It’s contrary to the philosophy of family medicine (and an administrative nightmare – see below) to create arbitrary categories.

* Should a plan cover all people as described above?: Absolutely. The plan should apply to all people in the U.S., including those who are undocumented. We have a commitment as physicians to care for every person when they need care. For public health reasons and to reduce the threat of treatable conditions becoming catastrophic it also makes sense to cover everyone.

* The draft proposal defines “basic” as services “most people” would need. What about the “basic” care people with rare conditions need to prevent complications? One of us has three patients with Fabry’s disease, a fairly rare genetic disorder with severe consequences. Would they be excluded from new treatments (which could be expensive) as they become available? If they have a heart attack at age 40, their treatment would be covered under catastrophic coverage, but what about their “middle tier” medical care until then? There are hundreds of similar examples. We believe it would be simpler, and more ethical, to cover “all medically necessary services,” and have an administrative body (with representatives from the NIH, the CDC, the public and the medical profession) define a seamless benefits package and meet periodically to evaluate new treatments and technology.

* Would the individual’s financial participation – through co-payments, for example – discourage appropriate utilization of basic health services or simply discourage inappropriate utilization?: As we noted above, the medical literature and our experience show that such payments do discourage appropriate utilization and lead to delayed care. If we want appropriate access to primary care and (especially) prevention, co-payments are a mistake. We feel there should be less worry about inappropriate utilization. In primary care, those “inappropriate utilization” episodes are opportunities for prevention and improved continuity of care. Education with better patient information (a public health approach) is the path to take, not co-payments, to discourage inappropriate utilization.

* What process should be used to define basic benefits? We have already discussed the problems with both the definition and use of a “basic benefits” approach to health care reform. We gave some examples (above) which highlighted the vagueness and ambiguity of the “what most people need” criterion for basic benefits. The definition of “catastrophic” and “middle tier” care is just as problematic. Is all inpatient care considered catastrophic? How about a hernia repair as an outpatient? Colonoscopy for someone with positive stool hemoccults? An infertility work-up? Arthroscopy or an MRI ordered by an orthopedist for an injured knee? Would people who could not afford to buy private insurance (i.e. because of a low wage job or pre-existing conditions) for this “in-between” category be denied these kinds of procedures?

* It is more profitable for an insurer to cherry-pick patients in subtle ways than to provide care, even if rates are risk-adjusted. Also, insurers will exploit the arbitrary nature of the definition of “middle tier” to shift costs to patients and the government. This part of the draft proposal leaves the health system wide-open to continued fraud and abuse.

* PNHP feels we need to cover “all medically necessary” measures that are proven to be effective, not just “basic benefits” with a catastrophic caveat as this plan proposes. Otherwise, we will find ourselves in a quagmire of ambiguity, with little or no improvement from our current fragmented systems of health care financing and delivery. Moreover, the proposal could be interpreted as very self-serving for family practitioners, as it seems to indicate that the basic coverage would ensure payment for primary care practitioners, but (generally) not specialists. What if a gastroenterologist does EGD instead of a family practitioner? Would that be covered by the “basic” plan?

* As regards administrative savings, the savings projected by Lewin are tiny ($7.8 billion, less than ten percent of the $100 billion in administrative savings projected under single payer by the GAO and the CBO). These savings could be much greater, and the system much more effective and seamless, if everyone didn’t have to re-enter the insurance market to buy their “in-between” or “middle-tier” insurance.

* Another part of the administrative waste in this proposal is that it maintains the Medicaid and CHIP programs to assure that this group has the “in-between” coverage. If the benefits package was seamless, these programs could be largely eliminated, increasing the administrative savings that could be used for clinical care. The sub-question of “Should physician payments be reduced to reflect lower administrative costs?”: Yes, without a doubt, as long as the administrative office/etc. costs are truly diminished. It is doubtful that this would be the case if multiple systems of payment (many private insurance plans, basic plan, Medicaid, CHIP, Medicare, CHAMPUS) are retained.

Element 2: The Oversight Body:

What model of public/private oversight would be appropriate?: Oversight is critical at both the federal and state level. There should be representation from the public, public health, physicians, government agencies such as the CDC and the NIH, allied health professionals, and academic health centers. There should be substantial (perhaps half) representation that is non-medical, from the public. It could be modeled like a utility regulatory board, with decision-making authority, not just advisory status. And it should be empowered with setting and enforcing global budgets. PNHP is opposed to oversight by investor-owned interests, because that would be like “the wolf guarding the henhouse.”

Element 3: Programs left in place:

Should some existing federal programs…remain as separate programs…or should these programs be eliminated? [And status of Medicaid] …as part of the universal coverage plan?

* PNHP believes that all federal programs should be folded into any proposal for universal coverage. The administrative savings could be increased if there were integration of the government health programs into the AAFP health plan, but probably only if the AAFP plan were expanded to cover “medically necessary and effective” treatment instead of “basic” and catastrophic services.

* There would be public resistance to integrating government programs into the AAFP proposal if the beneficiaries were offered worse benefits. Similarly, people in comprehensive private health plans might also object. As mentioned above, PNHP feels that the AAFP proposal should be upgraded to include a more comprehensive set of benefits, thus facilitating inclusion of people from federal programs as well as private plans. Also, allowing patients to choose and stay with their physicians is a major advantage of this proposal over existing health plans, but only if it includes choice and coverage of specialty care as well as primary care. Secure, comprehensive coverage that allows choice of physician would be attractive to the public and could be used to “sell” the program (for-profit HMOs would of course be opposed as they hope to expand their profits and share of the Medicaid/Medicare market).
* There have been many complaints from people about the current CHAMPUS and Indian Health Service programs. They seem to be insufficient and could probably be integrated into the AAFP plan without much complaint, and with added benefit to the people in these plans. The same could apply for the VA. To retain their usefulness for their beneficiaries, these programs could offer “extra” services not covered in the AAFP plan, such as social services, long-term care and rehabilitation, home visits by health teams, etc.

* The Medicaid program should be integrated into the AAFP plan, again with expanded benefits. Why duplicate bureaucracies, especially one like Medicaid with a separate bureaucracy in every state and beneficiaries who cycle in and out of the program, sometimes on a monthly basis? Continuity of care would be better with a seamless benefits package. Also, there wouldn’t be the administrative nightmare of trying to determine which care is covered by Medicaid vs. the “basic” plan. Conversely, a Medicaid agency could be maintained to deal with “extra” benefits not covered under the AAFP plan, be it eyeglasses, durable medical equipment, transportation, etc., and these benefits could vary from state to state.

* PNHP believes Medicare should be included in any universal coverage plan. Medicare is in sore need of improved benefits. Shouldn’t we be addressing the problems of Medicare if we’re really interested in improving access for everyone? We see Medicare patients every day who postpone care, take medications every other day instead of every day, and cut corners because they can’t afford the care we prescribe for them. Seniors spend close to 25% of their total income on health care despite Medicare. Can we ignore this? Can we really talk about “universal coverage and access” unless we deal with Medicare? Yes, it’s a big political football, but the public supports Medicare, and it already has a funding mechanism. The AAFP plan is much superior to Medicare with regard to primary care, especially with respect to co-payments. But Medicare largely covers the “middle tier” care not in the current proposal. Integrating Medicare into “one risk pool” (such as a more comprehensive and seamless AAFP plan) or vice versa would also allow for more effective cost-containment (and administrative savings) system-wide.

* Consolidation of federal and state programs would allow increased administrative savings, much in excess of the Lewin estimate – savings that could be used to fund clinical health care. As a point of reference, the outgoing CEO of Aetna recently confirmed that administrative costs in the U.S. health system are about 25 percent of all health care costs (although we’re tempted to think that if he admits to 25 percent, the truth is probably closer to 35 percent). We could cut that by half or more if we truly rationalized our payment system. Additional optional services could remain at the discretion of each state or program.

Element 4: Catastrophic Coverage:

Yes, in the absence of a truly comprehensive and seamless plan, there should be catastrophic coverage. One of the great inequities of our current system is the incredible financial burden a family must endure if they should be so unlucky to have a catastrophic health event. This burden currently applies in the U.S. not only to the uninsured, but to the underinsured as well. People in other countries shake their heads in disbelief that we tolerate such a situation.

* Should co-payments for catastrophic coverage be uniform or means-tested?
Neither. Co-payments and deductibles should be eliminated, especially in the case of chronic or catastrophic illness. Co-payments in these cases penalize the sick at the worst possible time in their lives. Not only are the patients too sick to work, but family members may also have to reduce their working hours to act as unpaid caregivers.

* Should catastrophic protection be provided in this way? PNHP feels strongly that there should be no out-of-pocket expenses for any necessary and effective medical care. Our experience with our low-income patients tells us that cost sharing is a burden. Even means-tested and capped out-of-pocket expenses are a major obstacle to access for families with little disposable income. Also, co-pays are administratively unwieldy and do not control health care costs.

Element 5: The “in-between” or “middle tier” services:

We gave examples in the section on “basic” coverage on how ambiguous and difficult the distinction of “middle tier” services would be. In addition, maintaining a separate tier covered by private insurers opens the door to fraud and abuse, as insurers “cherry pick” the healthy and cost shift expenditures for the sick onto patients and the government. Why perpetuate a system that is broken? Why keep a large portion of medical services under the old fragmented payment system with multiple tiers of care? The affluent will buy expensive plans; those who cannot afford them will scrape by with bare bones coverage, millions will continue to go without contrary to the goal of “universal coverage”. What will insurers charge a person with angina to cover their “middle tier” of health care – and what lengths will they go to to deny coverage for any services they actually use. Finally, as we pointed out above, if we only endorse “basic” (primary) care as part of the plan, we family physicians could be perceived as self-serving

* [As an employer]… how likely would you be to offer…coverage [for non-covered]…services? The link between employment and insurance is a historical accident that should not be maintained. This is a major flaw in the AAFP draft proposal, and should be remedied in the final version. Private employers pay for private insurance for less than half (43%) of Americans, and millions of Americans are uninsured because of the unfortunate link between insurance and employment. As family physicians, we know all too well the devastation caused by lack of insurance in our low-income patients – despite the fact that they are working two or three jobs.

* Those of us involved in purchasing insurance for our employees would try to price a plan, but it would be the same kind of game we play now, more or less at the mercy of the insurance companies, with ever more complex co-payments and deductibles. Once a plan is purchased, the insurer then denies paying for care, creating problems that are time consuming to resolve for us and our employees (and creates hassles for their physicians). With the basic and catastrophic parts in effect, why perpetuate the agony, increased complexity, and costly overhead of a “middle tier”?

* Besides sharply limiting administrative savings, maintaining a separate “middle tier” limits effective cost containment. As much as the guarantee of rising costs and a slice of the health care spending pie pleases insurers (and presumably this part of the proposal is intended to fend off their opposition) the HMO/insurers and drug companies will oppose the plan just as fiercely as they have other reforms.

* PNHP suggests that the AAFP have Lewin price out what it would cost to fund the “middle tier” through taxes as part of a unified system that would allow for improved continuity of care and fewer barriers to access. Administrative savings would be vastly increased, and cost-containment much more effective system-wide. The overall cost of a unified system should be much lower and help avoid fragmentation of care and administrative nightmares.

* Is it appropriate to leave to individuals whether to seek coverage for this tier of benefits? Should the plan incorporate individual accountability for patients’ own health behaviors?

Part I: “Individual fiscal responsibility” is a concept that should have no place in the reform of health care. Health care is most ethically viewed as a social responsibility and a human right. The concept of the “irresponsible health care consumer” is a myth perpetuated by entrepreneurs and MBA’s seeking to profit off the $1 trillion U.S. health care “market.” As physicians, we need to debunk the myth of the patient as “greedy consumer” and the physician as “self-serving provider”. Our relationship with our patients is not the same as the widget salesman to their customer – and we must not allow it to be reduced to that. A large measure of what needs to be accomplished in reform is to restore physicians’ professionalism and eliminate the notion that a sick patient receiving care is somehow a “loss.” Health care is a social “good.” By putting forth a proposal for reform that is inclusive and comprehensive, and explicitly rejecting a corporate model of health care, the AAFP will be taking a large step in the right direction.

Part II: We affluent physicians often gripe about smokers, drinkers, drug-abusers, etc. Yet those of us with more experience realize that discriminating against people is a slippery slope. What about a physician (one of us) who bicycles in New York City or travels in malaria-infested rural West Africa? Or a person who does ice climbing or Class V rapids in a kayak? And how can we discriminate between a genetically-based mental illness and substance abuse? We should not include this type of “health behavior accountability,” but provide the kind of educational, preventive, and rehabilitative services to help deal with these behaviors.

Element 6: The financing strategy

PNHP fully agrees with tax-based financing as the most equitable and efficient way to fund health care. The requirement that all employers participate will meet with resistance from some established business groups (e.g. the Chamber of Commerce), but others are likely to show renewed interest in health care reform. With HMO premiums rising 15-30% at many businesses this year, and the growing hassle and cost of managing employee health benefits, business can’t afford to reject a proposal that will reduce their long-term costs out-of-hand.

The amount that employers and employees contribute could be changed over time. Gradually shifting more of the tax burden to income taxes (and having employers increase wages to account for their reduced contribution) would be one way to make the tax burden more progressive. PNHP supports either method.

One item that appears not to have been discussed in the proposal is the effect of the current tax-free benefit in present employer-paid health insurance. This benefit has been estimated to be a $100 billion subsidy from the government – i.e., money that would have been paid in taxes otherwise. The government could re-direct this money to pay for added services if this factor hasn’t already been taken into account.

Element 7: State Administration:

What do you think of the fund distribution and the state administration provisions of this plan? PNHP feels that state-by-state (or maybe regional) administration makes sense as long as there are national guidelines to be followed and public oversight. We support negotiated fees (by the state or regional body) with the possibility of increased payments in areas where there is a shortage of physicians.

Psst. The real scoop on Patient Assistance Programs

ZNET commentary, December 26, 2000
By Dorothy Guellec

Drug companies are giving away medications if you know how to ask. This is the best-kept secret because it is not widely known. All of the top 30 pharmaceutical companies make prescriptions available free, and these programs are horribly underutilized. PHRMA, an industry trade group, told me that 2.8 million prescriptions nationwide (not including samples) valued at about $500 million were given away in 1998.

Getting prescriptions to the people who need them is vital nowadays. Costs are rising and, contrary to the mainstream media stories, few older citizens can just hop on a bus and go to Canada for a prescription every 30 days. There are several vehicles physicians can and should use to make sure needy patients get prescriptions. “We have a responsibility to care for the poor,” said Herbert Rakatansky, MD, chair of the AMA Council on Ethical and Judicial Affairs.

I spoke with Bob Huber at Pfizer on December 9th, 2000. He told me that after the merger with Warner Lambert this summer, the combined companies’ projected earnings for this next fiscal year would be $30 billion and of that, $5 billion would go for research and development. I asked about the other $25 billion, but he just laughed.

Of the patient population most dependent on medications – those older than 65-31% lack coverage for prescription drugs. Seniors who have coverage typically use 21 prescriptions a year. About 45% of the elderly have incomes at 200% or less of the poverty line. That’s $16,000 to $18,000 a year before taxes. The average senior citizen today has 2 to 2 ½ chronic conditions, and a drug just for one chronic condition can cost between $500 and $3,000 a year if bought in the U.S. Of course one could always go to India and purchase a copycat for 1/50th the price. Trying to understand the regulations is very tricky as the pharmaceutical companies are not forthcoming, just the opposite. The drug companies will not discuss criteria; believe me I’ve tried. Patient-advocacy groups say they have seen families with incomes of $50,000 or more get free prescriptions.

Most programs require the patients to apply through their doctors. The doctors are not informed because generally it falls to the sales reps to promote the programs. In today’s climate, with the average doctor allowing 10 minutes per patient, one can understand why doctors are not aware of these benefits. To qualify, applicants must show they have no coverage for outpatient prescription drugs; that their income must be low enough that paying for medicine would pose a hardship; and that they do not qualify for Medicaid. In reality the doctor writes a two-sentence letter to the pharmaceutical company without any other documentation. Most companies supply three months at a time on a case-by-case basis.

The corporate drug programs are underutilized. I see this as political not philanthropic. They want to keep it a secret. They do it so they can tell Congress, “We give away medicine for free,” but then, they don’t tell anybody about it and make it very hard for people to apply. After researching this program for hours, I came up with one article from the Wall St. Journal and a few stories from local mid-western papers. Actually the Journal article described the program as being “difficult to apply for.”

This isn’t true. Every company has guidelines and some require lengthy paperwork, but not uniformly. There is a non-profit organization called the Medicine Program that can help to simplify the process in some cases, but I would advise patients to first try on their own. Dan Hogg of the Medicine Program said, “We just serve as the patient’s advocate.” For $5, refundable if you do not qualify for the free drugs, this non-profit organization will help with the paperwork and get them to the right pharmaceutical company. Most pharmaceutical programs look at income and expenses and do not count assets, which can often disqualify people from government programs. Last year Glaxo Wellcome gave away $28 million in drugs, it fills more than 14,000 free prescriptions each month.

The Medicine Program’s website is www.themedicineprogram.com. It appears strange that they claim to be non-profit with a com., and not org, but buyer beware I guess.

Physicians should be aware that a large number of people might have difficulty affording a drug without insurance coverage. Doctors are obligated in my opinion, to advocate for their patients. They should get involved and help to access medications. Some physicians feel that there are limits to their obligations. One said, “While physicians have a responsibility to help care for medically indigent patients in a variety of ways, using their own financial resources to make that happen is above and beyond the call of duty.” Doctors, however, agreed that their implied social contract calls on them to help needy patients. I wonder if they feel that ensuring that patients obtain prescription drugs is part of that contract.

Handing out free samples from the manufacturers is the easiest option, but the industry opposes this – I wonder why. Of course it’s not a long-term solution for patients with chronic conditions. A more viable option is the patient assistance programs. If physicians cannot keep on top of what pharmaceutical companies offer, then its up to the patients . Can’t lose anything by asking. Pfizer Inc. is relies on the physician’s word not the patient’s tax forms.

Libby Overly was working as a home health social worker in Alabama when she recognized that the personal database she’d developed to navigate the patient assistance programs might encourage doctors to access them as well.

With the help of Richard J. Sagall, MD, she created Need Meds, an online database of companies and the free drugs they offer. Patients can also access a Directory of Drug Patient Assistance Programs by PhRMA a trade group for the pharmaceutical industry. It is a handy directory of 33 companies who provide drugs to physicians for patients who otherwise could not afford them. Of course ultimately society has the responsibility to make sure that people have access to all the health care they need.

The prestigious AARP devoted their November publication “Bulletin” to the array of problems that their sample of 11,000 members might encounter. Not once did they mention the Prescription Assistance Program. What is one to think? It is obvious that the top honchos do not want all the members of AARP asking their doctors for free medicines. A psychiatrist on a listserv wrote “many of my patients are provided medications through pharmaceutical company patient assistance programs.these provide for 2-3 month supply of meds for uninsured, low income patients. I rarely have had any patient turned down and have never had a patient taken off the program, unless of course they obtained insurance. My routine and the routine of many doctors in my clinic is to begin a patient on samples and then, once you find that the medication is working for the patient, transition them to the patient assistance program.” The natural question to wonder about is why is this doctor so well informed, and most of the others are not? Is it not incumbent upon them to know about these programs? Maybe it’s the fault of the drug reps., but if the reps can only see the nurses, or have 5 minutes with a doctor to explain a new medication, when can they promote patient assistance programs?

It finally and logically falls to the media, and the pharmaceutical companies themselves, to promote these programs vigorously. I did a very thorough search and spoke with lots of so-called informed people – they never heard of free medications from 33 of the leading companies. There are about 980 pharmaceuticals amongst all the companies, and new ones are being added all the time.

Anyone reading this is encouraged either to email me, or to insist that the doctor or someone on his or her staff research the availability of the medication. The chances are that there is at least one non-generic (expensive) drug that is available free of charge.

Dorothy Guellec
guellec@purvid.purchase.edu
Tel 914 271-5644
Fax 914 271-6188

USA Today Letter to the Editor

USA TODAY
December 20, 2000
Page 12A

Some health-insurance woes can be avoided.

The health insurance industry told the public and employers that they could provide medical care for less money, and many purchasers of medical-care insurance bought into that (”HMO: What happens after the Band-Aids run out?” Cover Story, News, Dec. 8).

What the insurance companies didn’t tell people about were the long waits for appointments, crowded waiting rooms, shortened hospital stays, delayed or limited specialist services and even actual denial of services and procedures.

Now that the insurers have squeezed the hospitals and doctors as much as they can, they are raising premiums. Medical costs are rising as medical technology improves and as the population ages and needs more medical care; but the insurance industry has cost burdens that can be avoided. Medicare operates at an administrative overhead of less than 3%. The time has come to get rid of the health-insurance industry, its multiple, redundant administrations, costly marketing, obscene executive salaries and the need for corporate profits.

By eliminating these expenses, this country could afford Medicare for all through a proven single-payer system. There would be a single set of rules to abide by. Everyone would have medical coverage, and patients would be able to choose any doctor or hospital they wanted to use.

Melvin H. Kirschner, M.D.
Family Practice
Van Nuys, Calif.

Dear Santa, Universal Healthcare this year, please?

By Joan Retsinas
The Progressive Populist

Dear Santa,

It’s time for my annual letter to you. Fresh from giving thanks for all the bounties of prosperity at Thanksgiving, I am compiling my wish list for more bounties. That is the schizoid nature of this season: gratitude followed by greed.

But I’m unabashedly making my same old request: universal health insurance — a one-card system that gives every American access to our wonderful doctors and hospitals (thank you for the wonderful doctors and hospitals). European countries have this. I want it too.

I know. I know. I’ve asked you for this before. In 1935. In 1946. In 1950. In 1965. Eight years ago. And each time I semi-graciously acknowledged that the time wasn’t right. In 1935 Social Security was a big enough holiday gift — the greediest citizen couldn’t expect you to tack on health insurance too. In 1946 you gave hospitals a mammoth boost with Hill Burton legislation — thanks to you, Congress pored millions of dollars into hospital construction throughout the nation. It was too much to expect, as some senators did, that you could give us a health insurance package too. In 1950 I put it on my wish list — you got President Truman to talk about it. But no go. In 1965 you gave us a partial gift — universal health insurance, but only for the disabled and elderly. Again, I’m grateful, but still want more. As for 1992, maybe the whole shebang — health insurance for everybody — was just too much to ask for. Greedy aspirants generally get coals in their stockings, don’t they? But it has been eight years, and I’m weighing back in with the same old same old.

This time you are my last recourse. I’ve given up on the new President — neither the Democratic nor the Republican candidate promised universal health insurance during their campaigns, and they promised lots of other goodies. Senator Bill Bradley, the only Presidential candidate to float a detailed proposal for national health insurance, didn’t survive the primaries. Congressional solons are not waxing hysterical about the persistent pool of people without insurance. Why should they? Our elected leaders all have health insurance by virtue of being in Congress. And all are wealthy enough to buy insurance on their own if their constituents dump them — a rare occurrence in American politicaldom.

So, Santa, I’m bringing my cause to you.

I know that most Americans have dropped “health care” from their annual wish lists. In a post-voting poll, a sample of voters named their key desire (aside from character, which the pollsters took off the table). Most (24%) want to save Social Security (though it is in no imminent danger); 23% care about education; 16% care about abortion; 13% about taxes, 12% about the economy (which — thank you — is roaring along superbly). Only 11% put “health care” at the top of their wish list; and some of them are asking you for prescription drug coverage.

But the 43 million of us who lack insurance are a tenacious lot. In general, we haven’t been especially good or especially bad this year — certainly not bad enough to end up waiting in hospital emergency rooms, hoping on the one hand that we are sick enough for somebody to look at us, hoping on the other hand that we aren’t truly that sick. We don’t deserve our plight. Most of us work, earning just enough to fall into that oxymoron category, “the working poor.” Either we have the bad fortune to work for employers who don’t offer health insurance as a fringe benefit. Or we can’t afford to buy the insurance that our employers do offer.

Santa, you have dropped “health care stuffers” into our holiday stockings in past year. We have COBRA, which lets us, or our families, buy insurance at our employer’s group rates if we leave the job. That helps — thank you — but few people can afford to pay even the group rates, especially people who have lost their jobs. Medicaid now enrolls children, and, in some states, their parents, whose income falls above strict Medicaid levels. That too helps. We have special funds to pay for breast cancer treatment for uninsured women diagnosed with breast cancer — again, thank you.

Those stocking stuffers, though, don’t suffice. We still want the whole shebang — a “health insurance card,” like the Medicare card all Americans get when they reach age 65. You can take back COBRA, Medicaid, and the special programs for special populations. We won’t need them anymore.

Sincerely,

An Ever-Believing Virginia

Joan Retsinas is a sociologist who writes about health care in Providence, Rhode Island.

Op-Ed by Bob LeBow, MD, Medical Director at Terry Reilly Health Services in Nampa, Idaho

People without health insurance suffer many indignities–long waits in overcrowded emergency rooms, the inability to pay for a needed prescription, and the scorn of those who think they are just looking for a handout. But they should not have to suffer untimely deaths. And, families should not be split by the lack of health insurance.

Unfortunately, I’ve seen that happen far too often. At our clinics, we see many families where health insurance is the dividing line between those who get care and those who go without. More than half of the people we treat — about 17,000 patients a year at our four community and migrant health centers in and around Nampa, Idaho — have no insurance at all. They either can’t get it through their employers, can’t afford it because of low pay, or they don’t qualify for Medicare or Medicaid.

Our clinics — known collectively as Terry Reilly Health Services – – offer medical, dental, and mental health care to anyone in the community, regardless of their ability to pay. But for some, the shame of being without insurance and lacking the money to pay for care outweighs the fear of disease and death.

A few years ago, a woman in her late 20s came to our clinic in Homedale, seeking prenatal care. She was two-to-three months pregnant and had no health insurance. Her husband had a green card, and both her children were eligible for Medicaid since they had been born in the U.S. But she was undocumented and ineligible for Medicaid pregnancy coverage.

We charge $500 for prenatal care and delivery, and we try to collect as much of that as possible. We explained to this woman that we would expect $50 a month from her. Maybe that was too much, because she did not come back. That is, until she came to our affiliated hospital, worried because her baby had not moved in two days. She was two weeks past her due date. We determined that her baby, weighing 12 pounds, was dead. The mother also had untreated gestational diabetes, which probably contributed to her infant’s death. An obstetrician performed an emergency Caesarean section to remove the dead child. During the operation, fluid from the amniotic sac traveled to the mother’s lungs and she died on the operating table.

Two untimely and tragic deaths could have been avoided if the mother only would have had gotten appropriate care. Another woman I treated died too young, as well. She was a single mother in her late 20s. She came to our walk-in clinic with the hallmark symptoms of bacterial endocarditis, an infection that can send clots from a heart valve and quickly kill someone. We hospitalized her immediately, but a clot broke off and caused a stroke. Although we did all we could, sadly, she died. Her mother came in three weeks later for care, and mentioned that her daughter — whom I recognized as our patient — had recently died. When I asked if her daughter had delayed care, the mother conceded that she had put off seeing a physician because of her lack of health insurance. Ironically, the young woman had recently been promoted to assistant manager at the convenience store where she worked, and was awaiting approval of her health insurance application.

Now, her mother will have to care for her two young grandchildren. Other patients put off getting the medications they need to survive, and get sicker. Some people with chronic illnesses such as diabetes or asthma go for months without absolutely crucial therapies because they can’t afford them. Once, I had to call a woman and convince her to bring her 17-year- old son back for his asthma prescriptions. She told me that they had left the clinic humiliated when our desk clerk had inadvertently asked for our token $8 fee for the office visit. It had been a hurdle for them to come in because they knew they did not have the money to pay for the visit, much less the additional cost for the medications.

This young man eventually got his medication. But some of my patients have not been so fortunate. Many Americans, including local and national leaders are unaware that so many people are going without necessary medical care because they don’t have health coverage. The uninsured as a group may be invisible but their problems are not. Let’s start working toward resolving the problems of delayed care and lost dignity?

Foundation for Taxpayer and Consumer Rights: Health Coverage Proposal By Hospitals, HMOs and Families USA Falls Short of Real Fix

SANTA MONICA, Calif., Nov. 20 /U.S. Newswire/ — The following was released today by the Foundation for Taxpayer and Consumer Rights:

The Foundation for Taxpayer and Consumer Rights (FTCR) said today that the health coverage expansion model expected to be announced today by the Health Insurance Association of America, Families USA and the American Hospital Association falls short of a systemic fix to the uninsured problem because it leaves in tact unreasonable insurance overhead and profit expenditures, as well as abusive industry practices.

The model supposedly provides states additional funds to broaden Medicaid eligibility; allows states to expand CHIP eligibility; and offers tax credits to employers who provide coverage, which could be used to cover part or all of the cost of premiums that are often
too expensive for low-income workers. The participants believe half the uninsured currently will be covered by the plan.

“Keeping excessive HMO profits in the health care system means uninsured will continue to be kept out,” said Jamie Court, executive director of FTCR. “Giving insurers and HMOs control over health insurance coverage reform is like turning cancer research
over to the tobacco industry. Insurers have realized that if they do not get on board with expanding health insurance coverage, then genuine universal health insurance initiatives will roll over them by redirecting the roughly twenty cents of every health premium
dollar spent on HMO overhead and profit toward additional coverage. The proposed model does nothing to address HMO profiteering and protect the taxpayer and patient from insurer price gouging. It seems insurers will only sign onto expanding coverage if it leaves in tact their right to charge as much as they like and do whatever they want with premium dollars. HMOs would have been on board with a universal health coverage solutions decades ago if it simply meant more profits from more customers and did not include controlling unreasonable industry prices, expenditures and practices, such as cherry picking. This is not a long term solution, but a taxpayer-funded expansion of a failed and costly corporate medicine model.”

A Letter to the Los Angeles Times, October 26, 2000

Los Angeles Times
October 26, 2000
Letters

Saul Isaac Harrison, M.D.:
“This physician appreciates your Column One about Europe’s single-payer health care systems costing less and being more effective than my beloved country’s free-enterprise disease-care nonsystem. Our political talk bad-mouths superior single-payer systems as ‘big government’ and ‘socialist.’ If our free-enterprise approach costs lives, suffering and money, isn’t that evil?”

The Column One article, “Europe’s Cheaper Rx for Health,” is available at:
http://www.latimes.com/news/nation/20001021/t000100535.html

HEALTH CARE CHOICES by Marty Jezer

From the Brattleboro (VT) Reformer, 10/20/00

Health insurance has been an issue of political contention – as well it should be.

The Republicans want to go back to the days of competition between insurance companies and no community rating. I remember those days well. I was working in the building trades and my company gave us health insurance as a benefit. Then the wife of one of our workers got cancer. The Prudential agent informed us that Prudential was canceling our insurance. Feeling apologetic, he bought us breakfast.

Vermont ultimately instituted community rating. Insurance companies can no longer “cherry pick” the healthiest Vermonters. They now have to insure everyone who can pay the premium. Republicans, from Ruth Dwyer down, want to put an end to this, and give the insurance companies the right to turn down potential customers with pre-existing health conditions that might cost them money.

The alternative, they suggest, is a special pool for at-risk people. The private insurers get the healthy clients (and healthy profits); the public assumes the cost of providing health care services for those who need it most. When this cost escalates, as it most surely will, the GOP will, I am sure, use that as evidence of public sector inefficiency.

Some Republicans talk about personal responsibility. Those who have unhealthy lifestyles — who smoke, over-eat, have unprotected sex, etc., ought to pay higher premiums, they say. That sounds good, especially to people who are smug and, at the moment, healthy. But many diseases involve a genetic predisposition: a tendency to obesity, heart disease, diabetes, some cancers, etc. run in families. Should fat people pay a higher premium rate? How about people who sky-dive, ski, or cross the street and risk getting hit by a car? The idea is unworkable — and it’s socially divisive. Better that the community share individual risk and pay a fair rate, common for all.

At the other end of the debate is single-payer. Many Democrats favor it and it’s the centerpiece of the Progressive platform. Every western democracy has a single-payer system in one form or another. It’s neither new nor experimental.

For a brief period, I lived part of each year in Montreal. While I was insured by Blue Cross my then partner, who taught in Montreal, was insured under Quebec’s single-payer system. Our child was born under that system. Critics of single-payer talk about government control of health care. The facts are: we chose our own doctors, chose our own hospital, and even had a private birthing room. Because Quebec emphasizes prevention, we were also able to attend free birthing classes. We never had to pay a bill for these services. In the single-payer system, the health care providers bill the government. There are no bills, no premiums, no deductibles, and no co-payments. Patients aren’t overwhelmed with confusing paperwork.

Instead of premiums, deductibles, and co-payments, Canadians pay for their health care through taxes. Because there are no marketing and sales promotion costs, no advertising costs, lower administrative costs (because there is almost no paperwork), Canadian health care is delivered at a much lower cost per capita than our health care. In Canada, health costs have been stabilized at about 9% of the national economy compared to about 14% in the United States. Single-payer mandates that all Canadians have access to health care, no matter where they live. This means flying health care providers in and out of the far North. Even with that added cost, health care delivery is cheaper than it is in our densely-populated country.

In most health categories, including infant mortality, Canada has a better record than the United States. Critics point out that some Canadians come to the United States for health care service, and this is true. Patients cross the border for elective surgery (surgery not based on medical need) which is not given priority in Canada. In some cities, there is overcrowding, but American cities have that problem too. In border areas, patients come to the U.S. for cat-scans and other high-tech procedures. This happens because in areas of low population density, it is cheaper to pay American hospitals that have the expensive technology than it is to buy the technology and use it rarely. But the Canadian patients using American facilities are still covered by their single-payer insurance.

I was jogging on Mount Royal in Montreal one day when I felt a pain in my chest. I went to the first doctor’s office I could find and, without first asking for my insurance credentials (the receptionist assumed I had a Quebec health care card), a doctor checked my heart and concluded, correctly, that I had pulled a muscle. When it came time to pay, the doctor (who had no need to employ an in-house insurance administrator) didn’t want to deal with my Blue Cross insurance because the paper work was complicated. I offered to pay cash. She waved me away. “I deal with patients, not bills,” she said tartly. To be sure, many American doctors would have given me gratis service in that situation. But American doctors do have to deal with insurance forms and billing procedures — and that is wasted money which patients subsidize by inflated premiums and higher medical costs.

Single-payer insurance eases the administrative burden for health care providers. It allows businesses, school boards, and local governments to get out of the insurance business — big savings to them. (Workers could get the insurance benefit in the form of higher pay). Every Vermonter would have a health insurance card. We’d pay higher taxes but would pay no premiums, deductibles, or co-payments. When we see a doctor or go to a hospital, we’d show our card. The health care provider would bill the single-payer entity. End of transaction. End of paperwork. End of financial worry.

Dr. Dynasaur, Medicare and Veteran’s health care are single-payer systems. They work! Why can’t single-payer work for us all?

Marty Jezer is a free-lance writer who lives in Brattleboro, Vermont. He welcomes comments at mjez@sover.net.

Copyright (c) 2000 by Marty Jezer

Despite Economic Boom, Number of Uninsured Drops Only 4 Percent

42.6 Million Americans Lack Health Coverage, Including 10 Million Children

Despite the longest economic boom in history, the number of Americans without health insurance dipped just 4 percent last year, from 44.3 to 42.6 million, according to data released today by the Census Bureau. While minorities make up 48 percent of the uninsured, 90 percent of the drop was in non-hispanic whites, according to an analysis by Physicians for a National Health Program.

“This discouraging data proves once again that we cannot grow our way out of the health care crisis,” said Dr. Steffie Woolhandler, Associate Professor of Medicine at Harvard. “The market is still leaving 42.6 million Americans (nearly one in every six persons) behind, up 5.2 million since 1992.”

The 42.6 million uninsured include over 20 million women and 10 million children — the same number of children uninsured when the Children’s Health Insurance Program was enacted.

“The strategies of the last decade to address the problem of the uninsured have failed,” said Dr. Quentin Young, National Coordinator of Physicians for a National Health Program. “Meanwhile, we’re already spending more than twice as much per capita on healthcare as any nation that guarantees universal coverage.”

“When I think of the uninsured, I think of my patients who have died because they couldn’t get care,” said Dr. Deb Richter, a family practitioner in Montpelier, Vermont and President of Physicians for a National Health Program. “A four percent fall in the number of uninsured is a drop in the bucket — people are still dying and will continue to die until we make health care a right” (1).

In sixteen states, the percentage of uninsured Americans increased in the last year: Alaska, Colorado, Florida, Hawaii, Idaho, Kansas, Kentucky, Louisiana, Nebraska, New Mexico, North Carolina, Ohio, Oregon, South Carolina, Utah, and Washington. In six states, more than one out of every five persons is uninsured: New Mexico (25.8%), Texas (23.3%), Louisiana (22.5%), Arizona (21.2%), Nevada (20.7%), and California (20.3%)(2). The number of states with less than 10% of the population uninsured has dwindled from eleven in 1992 to just six in 1999.

“Hispanic Americans have the highest rates of uninsurance” noted Dr. Olveen Carrasquillo of Columbia University. “Hispanics are working but employers don’t provide coverage — that hasn’t changed.”

“Moreover, it’s a myth that the majority of Americans have insurance paid for by private employers,” continued Dr. Carassquillo. “Excluding workers with insurance paid for by the government or by the employees themselves, fewer than half of Americans (43%) have insurance paid by a private employer.

Private employers pay for an even smaller share of total health spending, just over one-fifth (21.2%)” (3).

“These may be the best of times for the economy, but they are among the worst of times for health care,” noted Dr. David Himmelstein of Harvard.

“Double digit premium increases are back, medical bills cause half of all bankruptcies, and nobody expects a substantial reduction in the number of uninsured anytime soon. In fact, between premium increases and/or a cooling of the economy, we’re likely to see more than 50 million uninsured in the next few years. It’s time to reopen debate over comprehensive national health insurance.”

######

Notes:

(1) Mortality rates are 20 percent higher in the uninsured. “Health Insurance and Mortality: Evidence from a National Cohort” Franks, Clancy, and Gold, JAMA, August 11, 1993.

(2) If you use the three year moving average, Texas still ranks last in the percentage of its population that lacks coverage (Census Bureau Release).

(3) “Private Employers Role in Providing Health Insurance: A Reappraisal” Carrasquillo et al, New England Journal of Medicine, January 13, 1999.

PNHP DATA UPDATE – September 2000

Uninsured and Underinsured
About 20% of poor children lacked health insurance in 1999, about the same percentage as in 1997, despite the enrollment of 2 million children in the Children�s Health Insurance Plan (CHIP). The percentage of low-income children with private coverage fell from 47% in 1997 to 42% in 1999, while the percentage with Medicaid/CHIP increased from 29% to 33%, according to a study by the Center for the Study of Health System Change. About 11 million children lacked coverage in 1999 (Center for the Study of Health System Change, 4/00).

The percentage of low-income parents without health insurance rose from 31% in 1997 to 35% in 1999. Researchers attribute the climb to welfare cuts and the lack of employer-sponsored coverage for low-wage workers (Center for the Study of Health System Change, 4/00).

Nearly one million low-income adults in 15 states lost Medicaid coverage between 1996 and 1999, mostly as they moved from welfare to work. In a majority of states, a person working full time for $5.15 per hour exceeds the Medicaid income eligibility requirements. In Louisiana, Virginia, and Texas the Medicaid income limits for a three-person family are $3,168, $4,572, and $4,728 (Families USA 6/20/00).

Hispanics Lack Health Coverage

More than 11.2 million Hispanics are uninsured, including 3.4 million children. Hispanics make up 11.7% of the population but more than 25% of the uninsured. One-third of Hispanics have no health insurance coverage, twice the national average. Only 43% of Hispanics have employer-sponsored health insurance, compared to 63% of Americans overall. 9 million uninsured Hispanics are in working families. Among those who are uninsured, 43% reported they went without needed care and 67% reported problems with medical bills. (Working Without Benefits: The Health Insurance Crisis Confronting Hispanic Americans, Commonwealth Fund, 2/00).

Uninsured Hispanic children with asthma are six times more likely to forego standard medical treatment than non-Hispanics; diabetes-related end-stage renal disease is up to six times more prevalent among Hispanics than among non-Hispanic whites; uninsured Hispanic women with breast cancer are twice as likely to be diagnosed at a late stage compared to non-Hispanics; and uninsured Hispanic men with prostate cancer are four times more likely to be diagnosed at a late stage than non-Hispanic men (Latino Community at Great Risk, White Paper of the ACP-ASIM, 3/00)

The percent of low-income adults who are uninsured varies by state from 21% in Minnesota to 50% in Texas. One-fourth of low-income adults aged 55-64 are uninsured. (Urban Institute, 5/18/00).

Currently-insured persons of any race who have experienced a recent gap in coverage are two to three times more likely go without needed care and to have problems paying medical bills than those with continuous coverage. Rates of access/cost problems among those with gaps in coverage are nearly as high as those of the long-term uninsured (Schoen and DesRoches, Uninsured and Unstably Insured: The Importance of Continuous Insurance Coverage,” Health Services Research, 4/00)

108 million Americans, 26 million of whom are children, lack dental coverage, according to a report released by U.S. Surgeon General Dr. David Satcher. Tooth decay is the most common chronic childhood disease; more than 33% of low-income children have at least one untreated decayed tooth compared to 17% of children above the poverty line. Tooth decay goes untreated among nearly half of all poor African Americans and Latinos. Some 100 million people lack access to fluoridated water (Los Angeles Times, 5/26/00).

The uninsured are two to three times less likely to seek medical care when they experience serious symptoms than people who have insurance. Researchers asked people about their response to 15 serious health problems, such as a mass in the breast, blurred vision, and chest pain. The appearance of serious symptoms prompted 45% of people with insurance to seek medical treatment, compared to 24% of the uninsured. The uninsured were also more likely to think about getting care but not follow through; 33% compared to 13% of people with insurance. (Archives of Internal Medicine, 5/7/00).

30% of Americans aged 55 to 64 rate their health as “fair” or “poor.” Of these, more than half (53%) say they cannot pay their medical bills, 20% are uninsured, 40% rate their insurance as fair or poor, and 40% say they went without needed care in the last year (Commonwealth Fund, “Risks for Midlife Americans,” 1/27/00).

Seniors Lack Prescription Drug Coverage

31% of Medicare beneficiaries lack prescription drug coverage, and most of those with private coverage face growing restrictions on benefits. Three of four Medicare HMOs cap drug benefits at or below $1,000 a year, while 1/3 limit benefits to $500 or less. Medigap policies with drug coverage are costly and often cover only 50% of drug costs up to $2,500 (or occasionally 50% up to $6,000).

Beneficiaries without drug coverage average five fewer prescriptions per year than those who have coverage. The disparity is even greater among seniors in poor health who lack coverage – they report filling 11 fewer prescriptions per year than their insured counterparts. Less than half of all Medicare beneficiaries with incomes below the federal poverty level are covered by Medicaid, which covers prescription drugs (“Medicare and Prescription Drugs,” Kaiser Family Foundation, 3/00).

In the past six years, prices of the 50 drugs used most frequently by the elderly rose an average of 30.5%, double the rate of inflation. In the past year, prices for 16 of the drugs rose at least three times the rate of inflation (Families USA, New York Times, 4/26/00).

10% of Medicare beneficiaries lacking drug coverage report they did not fill a prescription last year because they could not afford it. Seniors without drug coverage buy one-third fewer drugs but pay nearly twice as much out-of-pocket as those with coverage (Familes USA Report, USA Today, 4/26/00).

Increasing risk of out-of-pocket costs is associated with higher subsequent mortality among elderly Americans, according to a study of over 3,700 seniors. Compared with the low-risk group, seniors in the high-risk group had an adjusted hazard ratio of 1.4. (Clancy et al, Arch Fam Med, 2000;9:251-257).

Pennsylvania seniors without prescription drug coverage pay an average of 113% more for medications than large purchasers pay, according to Public Citizen. A survey of prices of the 10 most commonly prescribed drugs at 98 pharmacies found that uninsured seniors are paying between 48% (Pepcid) and 231% (Zocor) more for each drug. Public Citizen conducted similar surveys in several other states. See www.citizen.org./congress/drugs/statereports (Public Citizen Press Release, 4/19/00).

Women without drug coverage pay an average of 114% more for the five most commonly prescribed outpatient medications taken by breast cancer patients (Worcester Telegram and Gazette, 4/27/00).

Costs

Health insurance premiums will rise an average of 9.2% in the California Public Employees Retirement System (CalPERS) next year. Prescription drug co-pays will also double from $5 to $10 for brand-name medications. CalPERS is one of the largest purchasers of health care, with 1.1 million members (Managed Healthcare Market Report, 5/31/00).

Almost half of the 1.3 million Americans who filed for bankruptcy in 1999 did so at least in part because of medical bills. A study by Harvard law professor Elizabeth Warren of bankruptcy filings found that nationwide, 326,441 bankruptcies last year were due to illness or injury, whi
le another 267,575 listed “substantial medical bills.” The majority of the bankruptcies were among people who had medical coverage. The impact of medical bills falls most heavily on single women and seniors; 71 of every 10,000 single American women filed for bankruptcy last year (Norton�s Bankruptcy Advisor, Washington Post, 2/25/00).

Large employers� health benefits costs will increase about 12% on average in 2000, and most expect double-digit increases to continue over the next few years, according to a Towers Perrin survey of 228 Fortune 1000 companies (Employee Benefit Plan Review, March 2000). Workers� share of premiums averaged $145 a month in 1999, up from $122 in 1996, according to the Center for the Study of Health System Change (Physicians Financial News, 5/00)

Single Payer Would Save Money in Maryland

A single-payer system in the state of Maryland could provide health care for all residents and save $345 million on total health care spending in the first year, according to a study by the D.C.-based consulting firm Lewin, Inc. The study also found that a highly regulated “pay or play” system (in which employers either provide their workers with coverage or pay into a state insurance pool) would increase costs by $207 million.

Editors� note: The pro-business Lewin group probably underestimated the administrative savings from single payer and overestimated the administrative savings (and hence understated the costs) of their “pay or play” model. Data from hospitals in Hawaii, where there are only 3 major insurers, suggest that if you have more than one payer, there are few administrative savings. However, single-payer systems in Canada, the U.K., Sweden and other countries have garnered administrative savings substantially larger than assumed by Lewin. Hence, the estimate by Lewin that single-payer universal coverage would cost $550 million less to implement in the first year than “pay or play” is conservative.

Medicare spending on home health care dropped 45% in the last two years, from $17.5 billion in 1997 to $9.7 billion in 1999, according to data from the Congressional Budget Office. Some hospitals report keeping patients longer or readmitting patients more frequently. Home care agencies are shunning patients with chronic, long-term conditions (stroke, diabetes, blindness) in favor of patients needing just a few weeks of care (New York Times, 4/21/00).

An 18 year-old Oregon cystic fibrosis patient awaiting a lung-liver transplant has been denied coverage by the Oregon Health Plan. The plan covers both transplants separately, but won�t cover the combined procedure because it “appears nowhere on the list.” The case has gone to court (Portland Oregonian, 6/13/00).

Medical and Socioeconomic Inequality

The current U.S. poverty level—— $17,050 for a family of four—- is based on a formula created in the 1960�s, when food consumed more of a family�s income than housing and health care. An updated measure of poverty would increase the number of Americans under the poverty line by about 5.5 million people, to 14.8% of the population (Twohey, National Journal, 4/15/00).

Of the 100 largest economies in the world, 49 are nations and 51 are private corporations (Modern Healthcare, 4/24/00).

Middle-aged blacks are four times more likely than whites in the same age group to suffer or die from a stroke, according to the Centers for Disease Control. Middle-aged Hispanics, Asians, American Indians and Alaska natives also are at higher risk of death from stroke (AP, Philadelphia Inquirer, 2/1//00).

Blacks are half as likely as whites to undergo surgery for glaucoma, although the disease is four times more prevalent in black Americans, according to a study of Medicare claims data. The gap has narrowed since the late 1980�s, but still persists (Archives of Opthalmology, AP, 2/15/00).

Nearly half of black (43%) and Latino (48%) Medicare recipients report that they are not in good health, compared to about 25% of whites (Healthcare Trends Report, 3/00).

A record 1.7 million people are currently imprisoned in the U.S. The proportion of the population behind bars has doubled since 1985. Black unemployment – currently at a low of 7.9% – would be as high as 9.4% if prisoners weren�t excluded from employment calculations (Wall Street Journal, 2/1/00).

Over 16% of the nation�s inmates are estimated to have mental illness or substance abuse problems (Baltimore Sun, 3/1/00). As we go to press, New York State Chief Judge Judith S. Kaye announced plans to divert up to 10,000 addicted, non-violent criminals into court-supervised drug treatment as an alternative to incarceration (New York Times, 6/23/00).

The infant mortality rate for African-Americans in Iowa is 20 per 1,000 live births, compared to 5.9 per 1,000 for births to white women (Des Moines Register, 6/1/00)

U.S. teen pregnancies have dropped 17% in the past decade, but at 84 per 1,000 girls aged 15-19, the rate is still the second highest in the industrialized world, just behind Russia. The U.S. teen birth rate (54 births per 1,000 girls) also the second highest, after Armenia. Japan and most Western-European countries report birth rates under 10 births per 1,000 girls. Many of the countries with low pregnancy and birth rates provide more sex education and offer free contraceptives, according to researchers at the Alan Guttmacher Institute (2/24/00).

The U.S. ranks 24th in disability-adjusted life expectancy at birth, according to the World Health Organization. Japan ranks first (74.5 years), followed by Australia (73.2), France (73.1) and Sweden (73.0). The U.S., which spends the most on health, ranked poorly (70 years) because “the bottom 2.5% of Americans have healthy life expectancies characteristic of sub-Saharan Africa in the 1950�s.” War-torn Sierra Leone was at the bottom, with only 25.9 years of healthy life expectancy. The full report is on-line at www.who.org. (Chicago Tribune, 6/5/00).

Pharmaceuticals, Inc

Drug companies have contributed $38.3 million to Congressional campaigns in the last decade, with an increasing share (about 2/3) going to Republicans. (See chart next page.) Sen. Orrin Hatch (R-Utah) received $169,000 from drug companies this year (more than any other Senator), including a $14,000 donation and the use of a company airplane from Schering-Plough. The giant drug manufacturer is seeking patent extension for its allergy drug, Claritin. Two other Senators favoring patent extension – Republican John Ashcroft (R-MO) and Democrat Robert Torricelli (D-NJ) – have received recent $50,000 donations from Schering-Plough (Center for Responsive Politics, 6/00).

Drug companies spent an all-time high of $83.6 million on lobbying last year, employing 297 lobbyists, or “one for every two members of Congress.” In 1997 and 1998 their lobbying exceeded $70 million each year (“Prescription Drugs,” www.opensecrets.org, Center for Responsive Politics).

They�re not citizens, and they�re not for better Medicare.
Citizens for Better Medicare (CBM), a drug company front group anchored by the Pharmaceutical Research and Manufacturers of America (PhRMA), the drug industry�s lobbying group, is working overtime to defeat a Medicare prescription drug plan. Their campaign includes over $65 million in TV, radio, and print ads, a massive direct mail campaign, computer-generated telephone push-polls (which make the recipient think they are voting by pushing buttons on their phone when actually the purpose is to influence their opinion), tel
ephoning seniors to urge them to oppose “big government” and then patching them through to their Congressperson, and phone cards for grandchildren to call their grandparents to ask them to fight “price controls.” The campaign, directed by Tim Ryan, former marketing director for PhRMA, is primarily targeting the U.S.– Canadian border states, where seniors have been taking trips to Canada to buy cheaper medications. (Public Citizen, 6/00).

The CEO�s of the top 10 drug companies averaged $20 million in annual compensation in 1998, including stock options. Together they hold $1 billion in stock options (Public Citizen Press Release, 4/19/00).

Drug companies are overcharging Medicare and Medicaid at least $1 billion a year for cancer, AIDS, and other drugs that are administered by physicians. Companies report artificially inflated wholesale prices—-which the Health Care Financing Administration uses to set reimbursement rates—-and then sell the drugs to physicians at deep discounts. Companies being investigated include Bayer AG, Abbott Laboratories, SmithKline Beecham, Glaxo Wellcome, and Bristol-Myers Squibb (Wall Street Journal, 5/10/00).

Medicaid would have saved $27.8 million (34%) on two popular medications if the government received the same discounts as HMOs, as required by federal law. The drug companies claim that HMOs are “repackagers” that sell the medications under their own brand names, hence exempt from the federal law (AP, 2/28/00).

Two U.S. and two German drug companies have agreed to plead guilty and pay $33 million in fines for conspiring to limit vitamin supplies and fix prices worldwide. New York-based Nepera Inc. was fined $4 million and two of its executives were sentenced to prison terms; Reilly Industries of Indianapolis was fined $2 million; and Degussa-Huls was fined $13 million in a niacin (vitamin B3) price-fixing scheme. Merck KgaA was fined $14 million for price fixing vitamin C. Hoffman-LaRoche and BASF AG were previously fined $725 million in the conspiracy (New York Times, 5/6/00).

This is competition? Schering-Plough and Merck are teaming up to extend the patent life of their most profitable medications. The patent rights for Schering-Plough�s Claritin will expire in two years, but the patent on Merck�s asthma drug Singulair does not expire until 2010. The companies have announced that they plan to combine the drugs into one medication, effectively making Claritin off limits to generic manufacturers for another eight years. Similarly, they plan to combine Merck�s cholesterol-reducing drug Zocor with Schering-Plough�s experimental exe- timibe, another cholesterol medication (AP, 5/24/00). In another move to extend a profitable patent, Pharmacia is seeking FDA approval for a combination of its glaucoma drug Xalatan (patent expires in 2011) and the generic, timolol (New York Times, 4/23/00).

Some Medications Are “Unsafe at Any Speed”

The FDA pulled Parke-Davis� Rezulin off the market in March after it was linked to at least 90 cases of liver failure, including 63 deaths and seven organ transplants. Critics charge that Rezulin should never have received “fast-track” approval; at least two FDA scientists raised warnings about the drug prior to approval (Los Angeles Times, 3/23/00).

Janssen�s heartburn drug Propulsid has been linked to 80 deaths, including 19 in children, and hundreds of heart rhythm abnormalities, since being approved in 1993. The company is “voluntarily” pulling the drug off the market but not for several months (Pittsburgh Post-Gazette, 4/27/00).

American Home Products is under investigation for allegedly hiding heart valve problems caused by its diet drug Redux, the “fen” in the fen-phen weight loss combination. The drug was pulled from the market in 1997; a $3.75 billlion class action suit is pending settlement in Philadelphia (Wall Street Journal, 5/16/00).

Several other medications, all approved since 1997, have been removed from the market in the last 30 months. They include: Raxar (grepafloxacin) for causing heart arrhythmias; Duract (bromfenact) for causing liver toxicity; Posicor (mibefradil) for causing heart arrhythmias; and Trovan (trovafloxin) for liver toxicity (Public Citizen, 6/00).

Sparky�s not safe either: The FDA has received reports that 1,000 dogs have died and another 7,000 had bad reactions to Pfizer�s doggy arthritis drug Rimadyl. One consumer group has started the Be Aware of Rimadyl�s Known Side-effects (BARKS) campaign. Pet drugs are a $3 billion business worldwide (American Healthline, 3/13/00).

Public Research, Private Profits

The best-selling glaucoma drug Xalatan was developed by a Columbia University researcher, Dr. Laszlo Bito, with $4 million in grants from the National Institutes of Health. Pharmacia bought the rights to Xalatan for $150,000. Today, the key ingredient for Xalatan, latanaprost, is made at a laboratory in Hungary at a total cost of about $5 million per year. Xalatan generated $507 million in sales for Pharamacia last year, and sales are projected to increase to $750 million by 2002. Pharmacia spent 40% of its revenues on marketing and administration last year, more than twice what it spent on research. Pharmacia and Monsanto merged last year.

A 1995 study by MIT found that, of the 14 new drugs the industry identified as the most medically significant in the preceding 25 years, 11 had their roots in studies paid for by the government. A 1997 study commissioned by the National Science Foundation determined that of the most significant scientific research papers cited in medicine patents, one-half were paid for with U.S. public funds and only 17% were funded by industry (the rest were funded by foreign sources) (New York Times, 4/23/00).

Drug Marketing and Doctors

Drug companies spend more than twice as much on “marketing and administration” as they do on research and development ($26.4 billion last year). At Pfizer, for example, overhead and marketing make up 39% of expenses, compared with 17% for R&D. (WSJ, 7/6/00). Drug companies spend between $8,000 and $13,000 per physician in promotions annually. Physicians who have regular interactions with sales representatives are more likely to have “non-rational” prescribing habits, according to a review of 29 recent studies. Physicians interact with drug sales representatives an average of four times per month (Wynia, JAMA, 1/19/00).

In 1999 the industry spent more than $6.2 billion to detail products to physicians (American Medical News, 4/10/00) Drug manufacturers spent $1.9 billion in direct-to-consumer advertising last year, and a total of $6.1 billion on advertising and marketing (excluding sales representatives� salaries). They employ 70,000 U.S. salespeople at a cost of an additional $7 billion a year. (Congress Daily, 4/10/00, Wall Street Journal, 7/6/00)

The new editor of the New England Journal of Medicine, Jeffrey Drazen, M.D. was cited by the FDA last year for making “false and misleading” statements about the asthma drug, levalbuterol. Drazen received $7,000 from the drug�s maker, and has ties to another 20 drug firms (USA Today, 5/31/00). “Academic researchers should be able to own substantial stock in a company or accept sizeable consultant fees and still accept research support,” according to Drazen. (California Healthline, 5/26/00).

Th
e New England Journal of Medicine apologized for violating its own financial conflict-of-interest policies nine times since 1997 in “choosing experts to review drug therapies.” For example, the journal published a favorable review of hair-loss treatments by Dr. Vera Price, who received $1.7 million in research funding between 1994 and 1999 from Merck and Pharmacia Upjohn. One of the articles cited was by new editor Dr. Jeffrey Drazen. (Los Angeles Times, 2/24/00).

Corporate Money and Care

Group and staff-model HMOs had only 10.2% of total HMO enrollment last year, down from 40.2% in 1990. For-profit HMOs� share of total HMO enrollment grew from 12% in 1981 to 64.2% in 1999 (Healthcare Trends Report, January 2000).

Administrative costs at HMO�s averaged 16.4% in the third quarter of 1999. Put another way, the “loss ratio” was 83.6% (American Medical News, 2/21/00).39% of physicians say they “sometimes” exaggerate a patient�s illness to avoid early hospital discharge, list inaccurate diagnoses on bills or report non-existent symptoms, according to a survey of 720 physicians. 29% of physicians report that gaming the system is necessary to provide high quality care. Transplant physican Dr. John Fung at the University of Pittsburgh Medical Center said “we do it because we think it is right. We do it for the patients.” (Wynia et al, JAMA, 4/11/00; ABC News.com)

CEO Pay Tops $40 Million at HMOs

HMO executives at 17 for-profit HMOs received $42 million in pay and $87 million in stock options last year. Executive pay was up 14% despite a 15% decline in average stock price at the 17 firms. The most highly paid HMO executive last year was Cigna�s Chairman Wilson Taylor, who received $7.5 million in compensation, excluding stock options. William McGuire, M.D., CEO of United Healthcare, was second highest paid with $4.8 million in compensation in 1999, followed by Edward Hanway (Cigna, $3.9 million), Greg Wolf (Humana, $3.7 million), and Leonard Schaeffer (Wellpoint, $3.3 million) (Managed Healthcare Market Report, 5/15/00).

Aetna�s former CEO, Richard Huber, received $3.6 million in severance pay, plus an office and an assistant for 88 weeks. Huber was forced to resign in February after the firm�s stock dived 50%. Aetna�s new CEO is William Donaldson, the former chair of the New York Stock Exchange. Aetna plans to split into two companies, one to focus on its health insurance business, the other on financial services and international insurance (Hartford Courant, 3/13/00).

Leonard Abramson, former CEO of U.S. Healthcare, resigned from Aetna�s Board of Directors in June. Abramson has been receiving $3 million a year from Aetna as part of Aetna�s 1996 purchase of U.S. Healthcare, a deal that paid Abramson $967 million and the company jet. Last year, Aetna also paid a communications firm owned by Abramson�s daughter $7 million in fees and his son-in-law $150,000 for unspecified reasons (New York Times, 2/26/00, Wall Street Journal, 3/23/00, Wall Street Journal, 6/7/00).

Oxford is paying four departing executives more than $7 million in payments and loan forgiveness (Hartford Courant, 3/21/00).

The for-profit dialysis firm Fresenius, formerly National Medical Care (NMC), was fined $385 million in civil penalties and $101 million in criminal penalties for Medicare fraud. The fines were the largest in a five-year anti-fraud campaign involving health care companies that has recovered more than $2 billion for the Medicare Trust Fund. The largest previous settlements were $379 million from psychiatric hospital chain National Medical Enterprises (now Tenet); $325 million from a laboratory unit of SmithKline Beecham; and $255 million from First American Health Care, a laboratory business based in Georgia.

NMC pled guilty to criminal conspiracy to defraud Medicare in three units �LifeChem Inc. Labs, NMC Homecare, and NMC Medical Products. The units were accused of billing for disputed intravenous feeding of dialysis patients and unnecessary blood tests, and violating anti-kickback laws by providing payments, yacht trips, and bear-hunting excursions in Alaska to attract potential customers for its blood-testing business. Three former Fresenius officials have been indicted in federal court in Boston. Two others have pled guilty and await sentencing (Washington Post, New York Times, 1/20/00)

A study of the nation�s 3,000 kidney dialysis centers revealed “major shortcomings,” according to the U.S. General Accounting Office (GAO). Medicare has issued warnings against 481 facilities, but only kicked three centers out of the program in the past seven years. More than 40% of centers have not been inspected for three years or more, and quality lapses threaten patient care, including medication overdoses and exposure to disinfectants or viruses from reused equipment (USA Today, 6/26/00 and GAO).

Pediatric Guidelines Unsafe

The pediatric inpatient guidelines sold by Milliman and Robertson are “dangerous,” according to Dr. Thomas Cleary, head of pediatric infectious diseases at the University of Texas-Houston Medical School. “Kids might die because of these guidelines,” Cleary recalls saying when he was shown the guidelines in 1998. That didn�t stop the company from listing him as a “contributing author,” and attempting to portray the guidelines as the result of medical school research. Cleary and Dr. William Riley, a pediatric endocrinologist, are suing the firm and a colleague for using their names. Riley is especially outraged that the guidelines recommend that children with diabetic coma be released after one day – a recommendation “so clearly outside of any reasonable approach to the standard of care as to be wholly reckless.” Cleary told the New York Times that there is at least one risky recommendation on each page of the 400-page document, published in December 1998 under the euphemistic title “Pediatric Health Status Improvement and Management” (New York Times, 3/14/00).

For several years, Cigna omitted information about smoking hazards in its quarterly publication “Well-Being” sent to employees at Philip Morris� tobacco and beer operations. Cigna agreed to “remove or edit pieces Philip Morris found objectionable,” such as advice that asthmatics should avoid smoke. The practice was uncovered during a lawsuit filed in Minnesota against cigarette makers (Wall Street Journal, 2/4/00).

Aetna issued a formal apology for “selling policies in the 1850�s that reimbursed slave owners for financial losses when their slaves died,” noting that “slave policies were legal before slavery was abolished.” (Philadelphia Inquirer, 3/10/00).

Actor Christopher Reeve, paralyzed five years ago in a horseback riding accident, urged medical school graduates in New Jersey to beware the current “profit-driven” and “corrupt” health system. “The people you�ll work for – hospitals, HMOs and insurance companies – are big on doing the least for patients, whereas you�ve studied to do the most.” Reeve urged the UMDNJ– New Jersey Medical School graduates to “never forget the compassion, caring, and generosity of spirit that made [them] want to be doctors.” (Bergen Record, 5/22/00).

The Supreme Court ruled unanimously in June that patients
cannot sue HMOs for giving doctors financial incentives to ration care, even if such incentives result in mistreatment. However, they left open the possibility that health plans may be liable for not disclosing such arrangements, according to attorneys active in lawsuits against HMOs.

Justice David H. Souter wrote for the court that “no HMO organization could survive without some incentive connecting physician reward with treatment rationing.” “Since the provision of profit is what makes the HMO a proprietary organization,” allowing federal lawsuits on the basis of financial incentives “would be nothing less than elimination of the for-profit HMO” (The case is Pegram vs. Herdrich, 98-1949, www.supct.law.cornell.edu/supct/; New York Times, 6/13/00).

Blue Cross and Blue Shield plans in New York, Maine, New Mexico and Wisconsin are converting to for-profit status. Indiana�s Anthem, a giant for-profit insurer, bought the Maine Blue Cross and Blue Shield plan for $100 million. Anthem has also purchased or merged with Blues plans in Kentucky, Ohio, New Jersey, Connecticut, and New Hampshire (Consumers Union Update, 5/31/00).

Kaiser says it will end its policy of forcing its San Diego-area psychiatrists to prescribe medication for patients they haven�t seen. Kaiser psychiatrists were expected to prescribe medications based upon the recommendations of social workers. Dr. Thomas Jensen was fired by the HMO for refusing to comply and took Kaiser to court. Kaiser officials defended the policy, saying that “it allowed Kaiser�s psychiatrists to see more patients by eliminating a potentially duplicative initial interview” (Physicians Financial News, 5/00, Los Angeles Times, 4/12/00).

Hospitals and Nursing Homes, Inc.

Columbia/HCA Healthcare will pay the federal government $745 million to partially settle charges that the company “systematically defrauded” Medicare. Some of the company�s practices included “upcoding,” improperly bundling unnecessary tests with simple blood tests, reporting marketing expenses as “community education,” and billing for home care services for ineligible patients. The settlement is the largest ever obtained by the Justice Department. Criminal charges against Columbia for defrauding Medicare and engaging in illegal financial relationships with doctors are still pending and the company could face hundreds of millions of dollars in additional fines (Wall Street Journal, 5/19/00). A week after it was ordered to repay the government $745 million, the company announced that it is changing its name to “HCA – The Healthcare Co.” The Nashville-based company owns 200 hospitals and 80 outpatient surgery centers in 24 states (New York Times, 5/26/00).

Jay Jarrell, former president of Columbia/HCA�s southwest division, was sentenced to 33 months in jail and fined $10,000 for his role in defrauding Medicare. Jarrell and former Columbia executive Robert Whiteside were convicted last July of six counts of conspiracy and defrauding Medicare (AP, 12/23/99).

Three former executives of the Allegheny Health, Education, and Research Foundation were charged with liquidating $52 million in charitable endowments. (Pittsburgh Post-Gazette, 3/16/00).

Allegheny Health Systems, which went bankrupt and was sold to Tenet, was not the only struggling hospital in Pennsylvania. About 60% of Philadelphia-area hospitals lost money in 1999, according to a report by the Pennsylvania Health Care Cost Commission. Increases in uncompensated care and low occupancy rates were cited as some of the reasons (Philadelphia Inquirer, 6/9/00).

Beverly Enterprises, the nation�s largest nursing home chain, agreed to pay a $170 million civil settlement, a $5 million criminal fine, and sell 10 of its nursing homes to settle Medicare fraud charges. The company�s California subsidiary, Beverly-California, pled guilty to criminal fraud. Beverly is required to sell 10 homes that engaged in false billing practices or face Medicare exclusion for those homes. The company has 550 remaining facilities. Investigators accused Beverly of bilking the government of $460 million between 1992 and 1998 by exaggerating nursing costs and submitting phony documents. A Justice Department official commented that some long-term care firms have “incorporated defrauding Medicare as part of their business strategy.” (Washington Post, 2/4/00)

One in ten nursing homes are in bankruptcy. Maryland-based Integrated Health Services, one of the nation�s largest nursing home companies with 400 homes and 45,000 patients, filed for Chapter 11 bankruptcy in February. The company reported assets of $3.6 billion and debts of $4.1 billion, which analysts attributed to an overly aggressive acquisition strategy and the Balanced Budget Act cuts. The firm is also the subject of a Medicare fraud investigation (Baltimore Sun, 2/3/00).

Vencor, Inc. owes the government $1.3 billion as a result of Medicare fraud (including the triple damages provided by law). It�s unclear how much the agency can recoup as the company is in Chapter 11 bankruptcy (Washington Post, 3/14/00).

Also in bankruptcy are Sun Healthcare Group and Mariner Post-Acute Network. The four large bankruptcies account for collective liabilities of $10.6 billion (Modern Healthcare, 3/20/00).

Medicare HMOs

HHS investigators uncovered $4.7 million in “questionable administrative costs” at nine Medicare HMOs. One insurer charged Medicare for $249,283 on food, gifts, and alcohol; four HMOs billed Medicare $106,490 for sporting events and theater tickets (including $25,057 to lease a luxury box at a sports arena); another HMO spent $37,303 on wine, flowers, and other gifts.

Administrative costs are as high as 32% of premiums at Medicare HMOs, according to an HHS study of 232 Medicare HMOs. The HHS report recommends a 15% cap on administrative spending (USA Today, 2/4/00).

Medicare HMOs Drop 1.6 Million Seniors Since 1998

Medicare HMOs are dumping coverage for another 935,000 seniors, in addition to the 730,000 seniors they dropped in the previous two years. Aetna announced it will end coverage for 355,000 seniors in 11 states next year. Cigna is cutting coverage for 104,000 seniors in its HMOs. Other major HMOs dropping seniors include Foundation Health Systems, Oxford Health Plans, Sierra Health Systems, and Pacificare. In the last two years, Medicare HMOs have pulled out of 400 counties in 33 states, discontinuing coverage for 1 of every 9 beneficiaries in HMOs. About 6.2 million seniors, or 16%, are in HMOs (New York Times, 6/3/00, 7/25/00, Washington Post, 6/29/00).

Kaiser announced its D.C. plan will not accept any more senior enrollees after August 8. Kaiser does not want to be “flooded” by the 50,000 seniors whose coverage is being discontinued at the end of the year by three area HMOs (Washington Post, 7/8/800).HMOs overbilled Medicare for $4.2 million in premiums for patients who are dead, according to a report by HHS. About $1.2 million of the overpayments have been recovered (AP, 3/2/00).

Humana agreed to pay Medicare $14.5 million to settle charges of overbilling between 1990 and 1998. The government accused Humana of falsely classifying thou
sands of seniors, mostly from south Florida, as eligible for both Medicare and Medicaid to collect extra payments (Wall Street Journal, 6/7/00).

Presidential Candidates� Health Proposals

Governor George W. Bush�s health care proposals include: converting Medicare into an HMO voucher program; promoting medical savings accounts; a $2,750 tax deduction for caring for an elderly dependent at home; 100% tax-deductibility of long-term care insurance; partial prescription drug coverage for seniors (see below); tax credits up to $1,000 for a low-income individual, or $2,000 for a low-income family, to buy insurance.

According to Jonathon Gruber, an economist at MIT, even generous tax-credits costing $13 billion a year would only reduce the ranks of the uninsured by 4 million, leaving 40 million Americans uninsured. Vouchers would increase Medicare�s costs (as Medicare HMOs have done) and leave tens of millions of seniors without secure coverage; 1.6 million seniors (out of a total of 6.2 million who enrolled) have been dumped by Medicare HMOs in the last three years. Benefits have plummeted and premiums have increased dramatically for the remaining enrollees.

Vice President Al Gore�s proposals include: expanding the Children�s Health Insurance Program (CHIP) to children up to 250% of poverty; allowing parents of uninsured families to buy into CHIP or Medicaid with a 25% tax credit; and partial prescription drug coverage for some seniors (see below).

Gore�s proposals would expand access modestly but leave tens of millions of Americans (including children and seniors) uninsured and underinsured. Most of his proposed new government spending would be funneled through private insurance.

Ralph Nader�s proposals include: not-for-profit single-payer national health insurance including medication coverage, eliminating price-gouging by pharmaceutical companies, and strengthening health and safety regulations at work and for medications and other consumer products. Nader also supports increasing NIH research into cancer and other diseases.

Nader�s proposals would put the U.S. in the ranks of other industrialized countries that assure health care.

Medicare Prescription Drug Proposals

As we go to press, Congress is still divided on prescription drug coverage for Medicare. None of the proposals so far would provide full coverage to all seniors, or take advantage of Medicare�s buying power to command discounts. In the U.K, 92% of seniors report having no out-of-pocket drug costs and 7% of seniors spend less than $50 a month on medications (see chart, page 15).

The Republican plan would give Medicare enrollees the option of purchasing private drug coverage – despite the fact that insurance companies say they won�t sell it because “those most likely to have high drug expenses would be most likely to buy it,” according to Chip Kahn of the Health Insurance Association of America. Republicans say they would also direct the U.S. trade representative to negotiate with other countries to “eliminate price controls” on drugs in Canada and Europe. The Republican plan would also pay insurers a subsidy of 30% of their total drug costs � making insurers and the drug industry the major beneficiaries of the plan (New York Times, 6/12/00).

The Democrats� drug proposals would give Medicare enrollees the option of purchasing drug coverage (at premiums starting at $25 per month and going up to $50 per month). This coverage would be administered by Medicare and have defined benefits. The benefits would include a 50% co-pay and have a cap of $4,000 to $6,000, above which no cost-sharing would be required (Families USA, 7/00) Unfortunately, millions of seniors would continue to lack adequate coverage.

Legislative Update

Rep. John Tierney (D-MA) introduced a bill making states eligible for nearly $4 million in grants to assist them in developing plans for universal coverage. States with approved plans would also receive federal Medicare and Medicaid waivers and one-time implementation grants of $10 million plus $3 per capita (States� Right to Innovate in Health Care Act of 2000, HR-4412, see www.thomas.loc for details).

Sen. Paul Wellstone (D-MN) introduced legislation promoting a state-by-state approach to universal coverage (S. 2888). States would have a maximum of five years to design and implement their plans (including possible single-payer programs as well as Medicaid expansions or other failed solutions). States could receive matching federal funds for up to five years. The bill would limit cost sharing by family income, with families under 150% of poverty limited to paying 0.5% of family income for health care, and middle and upper-income family cost-sharing capped at 5% and 7% of family income, respectively. The bill lacks restrictions on for-profit delivery systems (Wellstone Press Release, 7/19/00, see www.thomas.loc).

Rep. Barbara Lee (D-CA) introduced legislation in May to create a United States Health Service (HR-3000). “The USHS would be owned and controlled by the public and administered primarily at the local level.” Lee picked up the struggle from her predecessor, Rep. Ron Dellums. (Legislation is available on the www.thomas.loc web site).

Eighteen states have bills pending to mandate drug discounts. Maine passed a law in May that allows the state to negotiate drug prices on behalf of more than 300,000 residents and to impose price limits starting in July, 2003 if negotiations with manufacturers fail to significantly reduce prices (AP, 5/12/00).

Massachusetts passed similar, though weaker, legislation last year to allow the state to negotiate discounted prices for the uninsured, state employees, and Medicaid recipients (Wall Street Journal, 12/13/99).

California started a program in February giving people on Medicare access to the same discounts as the state gets for its Medicaid patients (LA Times, 2/14/00).

The Governors of Maine, New Hampshire, and Vermont announced plans to create a regional pool for drug purchases for the estimated 30% of the tristate population that lacks drug coverage (Bangor Daily News, 7/18/00).

Public Opinion

It�s old, but we hadn�t seen it! A 1998 survey by Zogby, the Republican polling firm, found that 51% of Americans would favor a “government-run health care plan that covers everyone in the same way, like the system used in Canada. It would be paid for through taxes and cover all necessary medical costs.” Despite the negative descriptors, e.g. “government-run,” “covers everyone in the same way,” “taxes,” only 38% were opposed (Fairness and Accuracy in Reporting, 2/17/00).

Public hostility to HMOs grew for the fifth straight year, according to a Harris Poll. The phone survey of 1,000 adults found that 59% believe that HMOs compromise the quality of medical care, up from 39% in 1995 (Harris Poll press release, 7/19/00).

International Update

Health care costs are 14% of GDP in the U.S., or $4,270 per person in 1998, compared to an average of 8% of GDP, or $2,000 per person, among the 23 countries of the Organization for Economic Cooperation and Development (OECD). The U.S. ranks in the bottom half of OECD countries in life expectancy and infa
nt mortality (Anderson et al, Health Affairs, 5/00).

The Alberta legislature passed a controversial bill (Bill 11) in May allowing the province to contract with private, for-profit facilities for outpatient surgery. The bill passed despite repeated public protests and national opposition. Canada�s Health Minister Allan Rock said “Bill 11 is not the direction in which we should be heading to strengthen our publicly-funded healthcare system. We have grave reservations about investing public funds in private, for-profit facilities” (Allan Rock press release, 5/11/00).

While budget cuts have affected public perceptions of the Canadian health system, three recent articles on hospital and surgical care find that the system held up and even improved in some areas during the mid-1990�s.

In Manitoba, median waiting times for most procedures remained stable or fell between 1991 and 1996. However, cataract surgeons who operate in both public and private facilities had much longer waits than surgeons without private practices, suggesting that some surgeons may prolong waits for public patients in order to increase their private practices (“Waiting times for Surgical Procedures,” DeCoster et al, Medicare Care, 1999;37:187-205).

A study of the 1992 budget cuts on Manitoba�s teaching hospitals revealed that few beds were closed, and spending per case actually rose. In addition, when expenditures on new hospital programs and expansions were accounted for, the hospitals� budgets fell less than 1% between 1991/92 and 1993/94. During the period studied, “the provincial hemodialysis program was expanded, a new Psychiatric Health Center was opened, pediatrics was consolidated at one teaching hospital, and the eye surgery program was consolidated at one center, with an expansion in cataract surgery. Each of these involved additional program funding to specific hospitals” (“The Unintended and Unexpected Impact of Downsizing: Costly Hospitals become More Costly” Shanahan et al., Medicare Care, 1999;37:123-134).

A study of hospital bed closures in Winnipeg since 1992-1993 found that about the same number of patients were cared for in 1995/96 as in 1991/92. However, there was a large increase in the number of high-profile surgical procedures, such as angioplasty, coronary artery bypass, and cataract surgery. Mortality and readmission rates did not increase, and there was a decrease in waiting time for nursing home placement (“Monitoring the Impact of Hospital Downsizing on Access to Care and Quality of Care,” Brownell et al., Medicare Care, 1999;37:135-150).

India is considered one of the next big export markets for managed care. Legislation opening the insurance market to competition and allowing foreign investors to hold up to 26% ownership passed recently after several years of discussion. (Employee Benefit Review Plan, 3/00).

Articles of Note:

Angell M. “The Pharmaceutical Industry – To Whom is it Accountable?” NEJM, June 22, 2000.

Gerth J, Stolberg SG, “Medicine Merchants: Drug Companies Profit from Research Supported by Taxpayers” New York Times, April 23, 2000.

Gaffney D, Pollack A, Price D, and Shaoul Jean. “The Politics of the Private Finance Initiative and the New NHS” BMJ 24 July, 1999, 249-253.

Marmor T and Sullivan K, “Canada�s Burning: Media Myths about Universal Coverage,” Washington Monthly July/August 2000. pgs 15-20.

Powell Ian. “Intellectual Origins and Principles of the Internal Market in New Zealand,” New Zealand Medical Journal, 24 March, 2000, 101-104. Enthoven�s pro-market ideology hits New Zealand.

Turshen M. Book review of Disinvesting in Health: The World Bank�s Prescription for Health Mohan Rao, editor. Journal of Public Health Policy, Vol 20, No. 4, 242-243. A collection of articles on the devastating impact of health privatization in India.

Waitzkin H. “How the U.S. Exports Managed Care to Other Countries” Monthly Review, May, 2000.

New Books:

Dying for Growth: Global Inequality and the Health of the Poor. Ed. Kim, Millen, Irwin, and Gershman. Common Courage Press, 608 pages, $29.95, paper (207) 525-0900.

Understanding Health Policy: A Clinical Approach. Second edition. T. Bodenheimer and K. Grumbach. Appleton and Lange, $34.95 paper (800) 423-1359.

The Second Sickness: Contradictions of Capitalist Healthcare. Revised and Updated Edition, January, 2000. Howard Waitzkin. Rowman & Littlefield, $25.95 paper, $69.00 hardback (800) 273-5720.

National Health Reform American Style: Lessons from the Past Norbert Goldfield, ACPE, $34 (813) 287-2000.

Clear Answers: The Economics and Politics of For-Profit Medicine (in Canada). Kevin Taft and Gillian Steward. The University of Alberta Press, Duval House Publishing, Parkland Institute, 128 pages, $9.95 paper (780) 492-8558.