PNHP

Insurers can’t survive on 20% of the premiums?

Insurers can’t survive on 20% of the premiums?

States Ask for Phase-In on Insurance Change

By Robert Pear
The New York Times
September 22, 2010

State insurance regulators told the White House on Wednesday that health insurance markets in some states would be disrupted unless President Obama gave insurers a temporary dispensation from one major provision of the new health care law.

The provision requires insurance companies to spend at least 80 cents of every premium dollar on medical care, rather than administrative expenses, executive salaries and profits.

State officials said they feared that some companies would withdraw from the individual insurance market next year because they could not meet the 80 percent requirement.

Kevin M. McCarty, the Florida insurance commissioner and vice president of the National Association of Insurance Commissioners, said the new law was causing “a paradigm shift” in the insurance industry, and he predicted: “Some companies’ business plans simply will not be successful. There will be some casualties. They either have to adjust their business plans or perish.”

http://www.nytimes.com/2010/09/23/business/23states.html

And…

Distribution of National Health Expenditures, by Type of Service, 2008

Kaiser Slides

30.7% – Hospital care
21.2% – Physician and clinical services
10.0% – Prescription drugs
5.9% – Nursing home care
2.8% – Home health care
12.9% – Other personal health care
16.5% – Other health spending

http://facts.kff.org/chart.aspx?ch=857

CMS, Office of Actuary, National Health Statistics Group:
http://www1.cms.gov/NationalHealthExpendData/downloads/tables.pdf

It is mind-boggling to think that 21 percent of our national health expenditures (NHE) are directed to physicians and clinical services, whereas many private insurers are now protesting that they cannot survive on 20 percent of the funds which they control – the insurance premiums that they collect.

Taking a closer look at those numbers, one-fifth of all health expenditures go to physicians and clinical services, whereas these insurers who are having difficulties complying with an 80 percent medical loss ratio are consuming over one-fifth of the funds used only for benefits covered by their plans – not one-fifth of the NHE. In fact, 30.9 percent of private insurance premiums do go to physicians and clinical services.

Since these numbers are more comparable, let’s look at them to see the value that we are receiving.

Physicians make most of the decisions on what care their patients receive, thus they are controlling much of spending of the insurance premiums. Not only are they making these spending decisions, they are also providing their professional expertise and clinical skills for which they are compensated – 31 percent of the premium dollars. In a sense, the physicians are making the business decisions of health care spending as an uncompensated additional service – decisions which are very important for the patients’ health.

What about these insurers who need more than 20 percent of the premiums for their own intrinsic needs? They are using two-thirds as much of the premiums as physicians are receiving, but for what? It’s not for making decisions on how the funds will be spent; physicians are doing that. Do they really need that much just for claims processing? What other important services do they provide? Taking away our choices by establishing restrictive provider networks? Why should we be paying for a detrimental service that we don’t even want?

What’s the solution? What will give us greater value? Shall we pay these insurers half again as much and throw out the doctors and have the insurers take over the practice of medicine? Or shall we throw out the insurers and replace them with public stewards who can provide better administrative services at a small fraction of the cost?

What will the White House decide? Let the insurers have as much as the physicians are receiving? Right now they’re listening to the whining of the insurers, and single payer advocates are still not welcome.

GlaxoSmithKline's research priorities are for blockbusters, not patients

Products at Risk

Gregory D. Curfman, M.D., Stephen Morrissey, Ph.D., and Jeffrey M. Drazen, M.D.
Editorial, The New England Journal of Medicine
September 19, 2010

In this issue of the Journal, we publish the results of a clinical trial investigating step-up control in adult patients with asthma whose disease was not well controlled by low-dose inhaled glucocorticoids. This study, which compared the utility of treating such patients with inhaled tiotropium bromide, inhaled salmeterol, or higher doses of inhaled glucocorticoids, was conceived and implemented by the National Heart, Lung, and Blood Institute’s Asthma Clinical Research Network (ACRN). The study constitutes comparative effectiveness research, in which the products of a number of different companies are compared in a well-defined clinical setting. Simply put, the companies’ products are put “at risk” in a trial to determine whether the various treatments are superior or noninferior to one another.

The study design, a three-way crossover, required that the investigators have active drug and placebo for tiotropium and salmeterol. As is common is such situations, the investigators took a mature version of the study protocol to the manufacturers of these drugs and asked them to supply active drug and matching placebo inhalers. Boehringer Ingelheim (the manufacturer of tiotropium) agreed to provide the materials, but GlaxoSmithKline (the manufacturer of Salmeterol) refused. Because of Glaxo’s refusal, the investigators had to spend $900,000 from the National Institutes of Health (NIH) — and therefore from taxpayers — to repackage the active drug and to create a visually identical placebo for use in the trial. The NIH deserves credit for providing the funds to obtain the Glaxo drug when the company declined. In the end, the study results provided the truth — that tiotropium is not inferior to salmeterol for this indication.

Many drug companies realize that it is in their best interest to provide these materials, not only because the research that is completed by an independent group may show findings in their favor, but also because it is part of their responsibility to the community to allow their products to be tested against the competition by legitimate third parties. They recognize that their mission, like GlaxoSmithKline’s stated goal, is “to improve the quality of human life” rather than to simply increase market share.

The most precious commodity that drug manufacturers possess is the trust of their research subjects, and to maintain this trust they need to be willing to put their products at risk. When they refuse to provide their drugs to legitimate investigators, the researchers will get their studies done without company help. It will take more time and cost more money, but in the end, the research will be done and the company will be perceived as having acted in its own self-interest rather than having worked to enhance the health of the community.

http://www.nejm.org/doi/full/10.1056/NEJMe1010348

Comment:

By Don McCanne, MD

Everyone agrees, or should agree, on the need for more comparative effectiveness research. We need more information about which medications provide greater benefit to patients, and which ones provide greater value – lower costs without compromises in therapeutic benefit.

During the process of creating the Patient Protection and Affordable Care Act (PPACA), it was not only the private insurance industry that was given carte blanche by the White House, but it was also the pharmaceutical industry. The representatives of both industries professed to supporting solutions that would benefit the American patient, and, in return, they were given legislation that will infuse hundreds of billions of dollars into their own coffers.

GlaxoSmithKline now gives us a hint of their sincerity. Although they state that their mission is “to improve the quality of human life,” it is clear that increasing market share is a much higher priority for them. They will not participate in a study that potentially could dent the sales of a blockbuster product.

The pharmaceutical firms and the private insurance industry got a great deal from President Obama and Congress, and patients got a bad deal. We desperately need to set aside the health care financing structure of PPACA, and enact a program that would benefit patients first – an improved Medicare for all.

GlaxoSmithKline’s research priorities are for blockbusters, not patients

Products at Risk

Gregory D. Curfman, M.D., Stephen Morrissey, Ph.D., and Jeffrey M. Drazen, M.D.
Editorial, The New England Journal of Medicine
September 19, 2010

In this issue of the Journal, we publish the results of a clinical trial investigating step-up control in adult patients with asthma whose disease was not well controlled by low-dose inhaled glucocorticoids. This study, which compared the utility of treating such patients with inhaled tiotropium bromide, inhaled salmeterol, or higher doses of inhaled glucocorticoids, was conceived and implemented by the National Heart, Lung, and Blood Institute’s Asthma Clinical Research Network (ACRN). The study constitutes comparative effectiveness research, in which the products of a number of different companies are compared in a well-defined clinical setting. Simply put, the companies’ products are put “at risk” in a trial to determine whether the various treatments are superior or noninferior to one another.

The study design, a three-way crossover, required that the investigators have active drug and placebo for tiotropium and salmeterol. As is common is such situations, the investigators took a mature version of the study protocol to the manufacturers of these drugs and asked them to supply active drug and matching placebo inhalers. Boehringer Ingelheim (the manufacturer of tiotropium) agreed to provide the materials, but GlaxoSmithKline (the manufacturer of Salmeterol) refused. Because of Glaxo’s refusal, the investigators had to spend $900,000 from the National Institutes of Health (NIH) — and therefore from taxpayers — to repackage the active drug and to create a visually identical placebo for use in the trial. The NIH deserves credit for providing the funds to obtain the Glaxo drug when the company declined. In the end, the study results provided the truth — that tiotropium is not inferior to salmeterol for this indication.

Many drug companies realize that it is in their best interest to provide these materials, not only because the research that is completed by an independent group may show findings in their favor, but also because it is part of their responsibility to the community to allow their products to be tested against the competition by legitimate third parties. They recognize that their mission, like GlaxoSmithKline’s stated goal, is “to improve the quality of human life” rather than to simply increase market share.

The most precious commodity that drug manufacturers possess is the trust of their research subjects, and to maintain this trust they need to be willing to put their products at risk. When they refuse to provide their drugs to legitimate investigators, the researchers will get their studies done without company help. It will take more time and cost more money, but in the end, the research will be done and the company will be perceived as having acted in its own self-interest rather than having worked to enhance the health of the community.

http://www.nejm.org/doi/full/10.1056/NEJMe1010348

Comment:

By Don McCanne, MD

Everyone agrees, or should agree, on the need for more comparative effectiveness research. We need more information about which medications provide greater benefit to patients, and which ones provide greater value – lower costs without compromises in therapeutic benefit.

During the process of creating the Patient Protection and Affordable Care Act (PPACA), it was not only the private insurance industry that was given carte blanche by the White House, but it was also the pharmaceutical industry. The representatives of both industries professed to supporting solutions that would benefit the American patient, and, in return, they were given legislation that will infuse hundreds of billions of dollars into their own coffers.

GlaxoSmithKline now gives us a hint of their sincerity. Although they state that their mission is “to improve the quality of human life,” it is clear that increasing market share is a much higher priority for them. They will not participate in a study that potentially could dent the sales of a blockbuster product.

The pharmaceutical firms and the private insurance industry got a great deal from President Obama and Congress, and patients got a bad deal. We desperately need to set aside the health care financing structure of PPACA, and enact a program that would benefit patients first – an improved Medicare for all.

A universal pharmacare plan that saves billions

Imagine a plan to provide all Canadians with prescription drug coverage.

By Michael McBane
The Hill Times, September 20, 2010

OTTAWA—Imagine a plan to provide all Canadians with prescription drug coverage. Imagine such a plan would cost Canadians billions less than we are currently spending on prescription drugs. Finally, imagine a federal government that actually believed in medicare and in expanding it to include prescription drugs. Well, two out of three is a good start.

Last week the Canadian Centre for Policy Alternatives and l’Institut de recherche et d’informations socioéconomiques released a groundbreaking study showing that a national drug insurance plan could save Canadians up to $10.7-billion a year.

Prof. Marc-André Gagnon’s study, The Economic Case for Universal Pharmacare, finds Canadians could save between 10 per cent and 42 per cent—up to $10.7-billion—of total drug expenditures. And it shows current federal pharmaceutical policies are a total failure: many Canadians do not have equitable access to medicines; Canada is the world’s third most expensive country for brand-name drugs; the cost of artificially high prices for new brand-name drugs far exceeds any benefits; and the whole system is unsustainable because we currently cannot control the growth of drug costs.

Current federal policies deliberately inflate drug prices in order to attract jobs in the pharmaceutical industry and R&D spending. The study shows that the cost of these policies far exceeds the benefits to Canadians from having a domestic pharmaceutical industry. After he left office, Brian Mulroney was awarded a gold medal by the brand-name drug industry in recognition of this multi-billiondollar benefit to them.

The so-called “innovative” pharmaceutical industry in Canada claims that its investment in research and development justifies high drug prices for new drugs. But the fact is, a whopping 59 per cent of the gross expenditures of patented drug companies on pharmaceutical R&D in Canada are tax subsidies and come indirectly from the public purse. The brand-name drug industry in Canada spends three times more money on marketing and promotion than it does on R&D. In Canada, the R&D-to-sales ratio is a pathetic 7.5 per cent. France’s R&D-to-sales ratio is twice that of Canada and their prices are at least 10 per cent lower.

As the Gagnon Report says, Canada’s health research and innovation strategy is irrational: it is organized around large public subsidies for private sector R&D, but net company R&D funding is marginal.

In light of these important findings, it is time to change our failed industrial polices. It is not credible for the Harper government to claim that prescription drugs are a provincial responsibility. The federal government has extensive and exclusive responsibilities for pharmaceuticals including: drug safety, drug approvals, drug advertising, drug pricing, and drug patents. Further, it administers six drug insurance plans (First Nations and Inuit, RCMP, military, veterans, prisons, and public servants).

The federal government’s industrial policy results in: (a) artificially inflated prices for new drugs through the Patented Medicines Prices Review Board; (b) regulations that further delay access to cheaper generic drugs; (c) negotiations with the European Union for a further extension of patent monopolies for brand-name drugs; (d) systematic violations of the prohibitions on direct-to-consumer advertising of prescription drugs, resulting in false advertising and higher sales of higher-priced versions of existing medicines. Finally, if all this isn’t bad enough, Ottawa then offloads about 96 per cent of the resulting excessively high drug bills onto provinces, territories, employers and the sick.

The Gagnon Report puts a price tag on how much waste, public subsidies, and profiteering in the pharmaceutical industry is costing Canadian taxpayers and consumers. The report documents the failed federal industrial policies as well as the disastrous health policy consequences. At least eight million Canadians are suffering as a result of federal pharmaceutical policy because they are denied access to affordable prescription drugs.

The report’s conclusion is that Canadians cannot afford not to have universal pharmacare because it will save money and cover everyone in the country, regardless of where they live or work.

You can’t claim, as the Fraser Institute does, to be concerned about rising healthcare expenditures and then let the 800-pound gorilla in the healthcare system (the pharmaceutical industry) do whatever it wants.

It’s time for the federal government to change an industrial policy that is an economic failure, and that causes so much pain and suffering.

Read the study, The Economic case for Pharmacare, at www.PharmacareNow.ca. It is a game changer.

Michael McBane is the national coordinator of the Canadian Health Coalition in Ottawa.

http://pharmacarenow.ca/wp-content/uploads/2010/09/HillTimesOp-Ed.pdf

GlaxoSmithKline’s research priorities are for blockbusters, not patients

Products at Risk

Gregory D. Curfman, M.D., Stephen Morrissey, Ph.D., and Jeffrey M. Drazen, M.D.
Editorial, The New England Journal of Medicine
September 19, 2010

In this issue of the Journal, we publish the results of a clinical trial investigating step-up control in adult patients with asthma whose disease was not well controlled by low-dose inhaled glucocorticoids. This study, which compared the utility of treating such patients with inhaled tiotropium bromide, inhaled salmeterol, or higher doses of inhaled glucocorticoids, was conceived and implemented by the National Heart, Lung, and Blood Institute’s Asthma Clinical Research Network (ACRN). The study constitutes comparative effectiveness research, in which the products of a number of different companies are compared in a well-defined clinical setting. Simply put, the companies’ products are put “at risk” in a trial to determine whether the various treatments are superior or noninferior to one another.

The study design, a three-way crossover, required that the investigators have active drug and placebo for tiotropium and salmeterol. As is common is such situations, the investigators took a mature version of the study protocol to the manufacturers of these drugs and asked them to supply active drug and matching placebo inhalers. Boehringer Ingelheim (the manufacturer of tiotropium) agreed to provide the materials, but GlaxoSmithKline (the manufacturer of Salmeterol) refused. Because of Glaxo’s refusal, the investigators had to spend $900,000 from the National Institutes of Health (NIH) — and therefore from taxpayers — to repackage the active drug and to create a visually identical placebo for use in the trial. The NIH deserves credit for providing the funds to obtain the Glaxo drug when the company declined. In the end, the study results provided the truth — that tiotropium is not inferior to salmeterol for this indication.

Many drug companies realize that it is in their best interest to provide these materials, not only because the research that is completed by an independent group may show findings in their favor, but also because it is part of their responsibility to the community to allow their products to be tested against the competition by legitimate third parties. They recognize that their mission, like GlaxoSmithKline’s stated goal, is “to improve the quality of human life” rather than to simply increase market share.

The most precious commodity that drug manufacturers possess is the trust of their research subjects, and to maintain this trust they need to be willing to put their products at risk. When they refuse to provide their drugs to legitimate investigators, the researchers will get their studies done without company help. It will take more time and cost more money, but in the end, the research will be done and the company will be perceived as having acted in its own self-interest rather than having worked to enhance the health of the community.

http://www.nejm.org/doi/full/10.1056/NEJMe1010348

Everyone agrees, or should agree, on the need for more comparative effectiveness research. We need more information about which medications provide greater benefit to patients, and which ones provide greater value – lower costs without compromises in therapeutic benefit.

During the process of creating the Patient Protection and Affordable Care Act (PPACA), it was not only the private insurance industry that was given carte blanche by the White House, but it was also the pharmaceutical industry. The representatives of both industries professed to supporting solutions that would benefit the American patient, and, in return, they were given legislation that will infuse hundreds of billions of dollars into their own coffers.

GlaxoSmithKline now gives us a hint of their sincerity. Although they state that their mission is “to improve the quality of human life,” it is clear that increasing market share is a much higher priority for them. They will not participate in a study that potentially could dent the sales of a blockbuster product.

The pharmaceutical firms and the private insurance industry got a great deal from President Obama and Congress, and patients got a bad deal. We desperately need to set aside the health care financing structure of PPACA, and enact a program that would benefit patients first – an improved Medicare for all.

The case for universal pharmacare in Canada: New report shows Canada could save $10.7 billion with single payer national health insurance for pharmaceuticals

The Economic Case for Universal Pharmacare: Costs and Benefits of Publicly Funded Drug Coverage for all Canadians

By Marc-André Gagnon with the assistance of Guillaume Hébert
From The Canadian Centre for Policy Alternatives and Institut de recherche et d’informations socio-économiques

Executive summary

A public drug insurance plan should form an integral part of a country’s pharmaceutical policies. The plan must tie together social programs designed to provide a minimum of well-being for all citizens, health policies designed to optimize public health, industrial policies aimed at attracting foreign investment, intellectual property policies, and tax policies designed to ensure greater fairness in redistributing wealth.

A drug insurance plan that includes a drug assessment process can also help distinguish between drug products in order to ensure the quality, safety, and cost-effectiveness of prescription drugs. A drug insurance plan is not only a way to compensate for or reimburse drug expenses, but also a way to control costs through efficient pharmaco-economic assessment of new drugs and by developing bargaining power when dealing with powerful transnational drug companies.

The complexity of these various aspects of Pharmacare must be considered in order to determine the best drug insurance plan to meet the common goals of a community.

As far back as 1964, the Royal Commission on Health Services recommended that a universal drug insurance plan be established for all Canadians. The National Health Forum, under JeanChrétien in 1997, recommended universal drug coverage. The Romanow Commission in 2002 recommended catastrophic drug coverage as a first step towards universal Pharmacare. But the National Pharmaceuticals Strategy, implemented since 2004, has failed to achieve even catastrophic drug coverage for all Canadians.

The lack of political enthusiasm for Pharmacare can mainly be explained by fears of the escalating costs such a plan is expected to entail. But this argument, which also predominates in the media, is completely lacking in substance.

The sound economic analysis included in this report shows that the rational implementation of universal Pharmacare, with first-dollar coverage for all prescription drugs, would not only make access to medicines more equitable in Canada and improve health outcomes, but also generate savings for all Canadians of up to $10.7 billion in prescription drugs. Canadians cannot afford not to have universal Pharmacare.

Click here to download the report (2.23MB)

Universal pharmacare touted as way to save billions

André Picard, Public health reporter
Globe and Mail, Monday, Sep. 13

Creating a national pharmacare program could slash more than $10.7-billion off Canada’s $25-billion-a-year drug bill, according to a new study that dismisses out-of-hand the notion that a public drug plan is unaffordable.

“Canadians cannot afford not to have universal pharmacare,” said Marc-André Gagnon, an assistant professor in the School of Public Policy at Carleton University in Ottawa.

The report, being released Monday in Ottawa, argues that Canada’s jumbled assortment of public and private plans and wildly varying drug policies across jurisdictions is inefficient, costly and inequitable.

But, above all, it says Canada pays too much for drugs – between 16 and 40 per cent more than other industrialized countries – in a bid to attract pharmaceutical investment.

In fact, the vast majority of the purported savings – $10.2-billion – would come from adopting a drug-purchasing policy based on market competition and the assumption prices would drop 37 per cent. That would likely provoke a backlash from the pharmaceutical industry and may be politically unpalatable, researchers concede. However, in a number of other scenarios presented in the study, Prof. Gagnon shows, even without purchasing drugs at that lower price, a national program would still deliver net savings of ranging from $2.6-billion to $4.5-billion.

The report suggested that doing rigorous drug reviews and price negotiations, as done in New Zealand, could generate annual savings of $9.3-billion. Savings from cheaper administration costs, eliminating federal tax subsidies to insurance plans and eliminating multiple private plans would produce more than $1.4-billion in savings, for a total of about $10.7-billion.

He said consumers would be better served by a national drug pricing and purchasing system and drug policies aimed at improving access and affordability rather than the current approach where the desire to attract investment in the pharmaceutical sector inflates prices.

The 120-page paper, prepared for the Canadian Centre for Policy Alternatives, argues that countries with national pharmacare programs, such as the U.K., France, Australia, New Zealand and Sweden, all have lower drug prices.

Prof. Gagnon said there is no question that drug spending has risen sharply – an average of 10.5 per cent a year since 1985. This demonstrates that it is virtually impossible to control costs with the current system. It has also created a “perception that pharmacare program would eventually place an untenable burden on public finances,” he said.

The reality though is that costs have increased twice as quickly in private drug plans as in public plans – in large part because they do not have bulk purchasing power. Administrative costs are also higher in private plans compared to public plans – eight per cent versus two per cent.

The report suggested that rigorous drug reviews and price negotiations could generate annual savings of $9.3-billion. Savings from cheaper administration costs, eliminating federal tax subsidies to insurance plans and eliminating multiple private plans would produce more than $1.4-billion in savings, for a total of about $10.7-billion.

Prof. Gagnon said one of the most troubling aspects of Canada’s current regime is that it is inequitable. Public drug plans cover those over the age of 65 and recipients of social assistance, while others tend to depend on private plans offered through their employers.

However, there are big gaps. As many as eight million Canadians do not have adequate coverage for prescription drugs, according to the paper. That lack of access can often translate into higher medical costs.

Prof. Gagnon concedes that a universal pharmacare program would increase prescription drug use – an estimated 10 per cent overall. But it is argued that those additional costs would be more than offset by cost savings that come from adopting other policies.

A major impediment to creating a national pharmacare program is that health is a provincial responsibility. But the study argues that pharmacare does not need to be a federal program but a national one, where provinces and territories agree to a common set of standards to “ensure coherence.”

The way to create a cost-effective plan, Prof. Gagnon said, is to adopt the best practices from existing plans.

B.C., in particular, is held-up as a model. The province has the lowest per capita drug costs, its residents use the least medication per capita and they pay the lowest unit prices for their drugs. That is because B.C. has aggressively used policy like therapeutic substitution – where the drug plan pays for the cheapest equivalent drug, usually a generic.

Currently, prescription drug prices are established by the Patented Medicines Prices Review Board, based on the median price in seven other countries. In the paper,
Prof. Gagnon argues that while that process ensures consistency, it also keeps drug prices artificially high because its formula includes the four countries with the most expensive prices in the world.

http://www.theglobeandmail.com/news/politics/universal-pharmacare-touted-as-way-to-save-billions/article1704881/

The case of the missing drug plan

Editorial
Globe and Mail
Tuesday, Sep. 14, 2010

Canadians are used to broken promises about how their governments will make drugs cheaper and more widely available. Some may therefore find a radical solution enticing, touted in a new study: the creation of a national public pharmacare program. But nationalization is the wrong approach. Instead, Canadians should expect results soon, especially if they hold health ministers, meeting in St. John’s this week, to account for their latest commitments.

Although we aspire to provide good public health care in Canada, we already have a two-tier system: much psychological and dental care, and 55.5 per cent of drug expenses, are paid privately, either out of pocket or through private plans. This squeezes the working poor and the self-employed, who do not have employer-provided plans but who make too much money to qualify for public subsidies.

So some may take heart from a new study for the Canadian Centre for Policy Alternatives, promising more coverage and national savings of up to $10.7-billion if a national public plan is created.

Such a plan would, however, result in costs governments are ill-equipped to handle, and effectively result in a transfer of taxpayer funds to richer Canadians currently covered by private plans. Meanwhile, all drug costs, regardless of who pays, are increasing, at a rate of 10.5 per cent a year since 1985.

A hint of a better path comes from the study itself; it suggests the largest share of savings would likely come not from nationalization but from “the cancellation of the industrial policies artificially inflating drug costs.”

Ontario and B.C. have already begun to innovate, with cuts to the prices it will pay for generic drugs, savings that should benefit private plans too. Fresh off these reforms, they promised at the health ministers’ meeting to take the lead on a “pan-Canadian purchasing alliance” for drugs and medical supplies.

The provinces need to act fast to overcome their jurisdictional concerns and implement the plan. For the savings, once achieved, should be directed back to vulnerable Canadians, by helping to fund a national catastrophic drug plan.

Catastrophic drug care – life-preserving medication that is expensive and not covered by existing plans – holds a special place of shame in Canadian politics. A 2003 first ministers’ meeting ended with a vow that governments would “take measures, by the end of 2005-06, to ensure that Canadians, wherever they live, have reasonable access to catastrophic drug coverage.”

Yet almost nothing has been done. The federal government has lost interest and the provinces have largely let the issue drop. With the recession, ongoing price increases, and high prices for new cancer drugs in particular, Canadians are more vulnerable to unnecessary financial hardship and risks to their health.

Solving the drug needs of all Canadians won’t come with one policy change. But a catastrophic drug plan, funded in part through other savings in the drug system, is within reach. Governments have promised much; they should be able to deliver this one, crucial, thing.

http://www.theglobeandmail.com/news/opinions/editorials/the-case-of-the-missing-drug-plan/article1707598/

The pros and cons of universal Pharmacare

Eliminating waste and inefficiency would cut the cost of many drugs, but a fully private system would cover more new medications faster

By Marc-Andre Gagnon
Vancouver Sun, September 16, 2010

The current system for buying prescription drugs in Canada is a hybrid system of multiple public and private drug plans. This system is totally dysfunctional, for many reasons. The diversity of drug plans means that Canadians are covered for their drugs according to which province they live in, or where they work, but not necessarily according to their medical needs.

Patients with inadequate coverage, mostly self-employed or unemployed workers, are often unable to benefit from optimal treatments. More than three million Canadians admitted not filling a prescription in the last year because of costs they couldn’t afford.

Another reason the system is broken is that Canadians pay way too much for their drugs.

Canada is the world’s second most expensive country for retail prices of prescription drugs. Another problem is that Canada has the fastest rising drug costs among Organization for Economic Cooperation and Development countries: more than 10 per cent per year. Countries with universal Pharmacare, like France, the United Kingdom, Sweden, Australia and New Zealand, pay less for their drugs, and their costs increase at a much lower rate.

The main reason prescription drugs are so expensive in Canada is because of the importance of private insurers. This private coverage is totally inefficient, and the administration fees are much higher for private than for public plans (eight per cent as compared to two per cent).

Public plans have the resources for pharmaco-economic assessment in order to make sure that, if a drug is reimbursed, patients will get some bang for their bucks.

Another reason drugs are so expensive is because of suboptimal therapeutic choices. Drug companies spend about $30,000 per physician in Canada to influence their prescribing habits.

Among the provinces, British Columbia has benefited for many years from its Therapeutics Initiative and its proactive capacity to produce clinical guidelines and develop among physicians the culture of evidence-based medicine.

Because of this, not only do British Columbians have the best therapeutic choices and the best health outcomes in Canada, but on average they pay 8.2 per cent less per capita for their drugs.

Simply by eliminating the waste inherent in private insurance and by improving therapeutic choices, the implementation of universal Pharmacare could save Canadians $2.9 billion per year (around 12 per cent of total costs).

Another major reason our drugs are so expensive is that, in addition to our patent policy, we have industrial policies that artificially inflate the prices of brand-name drugs.

Canada is always aiming to be the world’s fourth most expensive country for its brand-name drugs as a way to support its pharmaceutical sector. By implementing universal Pharmacare and by eliminating these policies, we could save $10.7 billion per year (around 43 per cent of total costs).

Considering that in Canada, the pharmaceutical sector is responsible for around 50,000 jobs (direct and indirect) and that each job is paid an average of $80,000 a year, it means that Canadians benefit from around $4 billion in spinoffs from this sector.

The total costs of industrial policies that artificially inflate the costs of drugs to support the pharmaceutical industry are thus higher than total spinoffs that Canadians receive from this sector. Paraphrasing John Maynard Keynes, Canadians would be better off hiring people to dig holes and refill them.

I am confident, however, that ways can be found to use this money more efficiently, for
example, by improving health care and by supporting R&D through public funding.

Marc-Andre Gagnon is an assistant professor with the School of Public Policy and Administration, Carleton University. This article is based on his study — The Economic Case for Pharmacare — recently released by the Canadian Centre for Policy Alternatives ( www.policyalternatives.ca).

© Copyright (c) The Vancouver Sun

http://www.vancouversun.com/health/pros+cons+universal+Pharmacare/3532240/story.html

Private insurers stealing from HSA accounts

Wrangling over ‘wrapping': Insurers raise rates for employers who use cost-cutting plan

By Jay Greene
Crain’s Detroit Business
September 19, 2010

Some health insurers in Southeast Michigan are beginning to charge higher premiums to employers who offer high-deductible employee health plans and then “wrap” the plans by buying gap insurance or giving workers subsidies to cover the deductibles.

The reason? Insurers say usage of health care services is going up because employees bear little or no responsibility for health care costs.

“Often, employers go the high-deductible route and then cover the deductible by funding an employee’s (health savings account) to a point where the employee no longer has any skin in the game,” said Steve Selinsky, director of sales and marketing with BeneSys, a Troy-based third-party administrator of insurance services.

Wrapping refers to when employers increase their health plan deductible, which lowers premium costs, and then reimburse employees for all, or a part, of their health expenses falling under the increased deductible.

This differs from the original concept of high-deductible plans, in which employees were responsible for deductibles of up to $5,000, but typically $1,000-$2,500, and so had a financial incentive to eliminate unnecessary care and seek lower-cost, higher-quality treatments. John Dunn, vice president of middle- and small-group sales for Blue Cross, said Blue Cross data shows that there is a 4 percent to 8 percent difference in utilization and expenses between those plans that are wrapped and those that are not.

He said Blue Cross in January will start charging employers that wrap between 4 percent and 8 percent more to account for the expected higher utilization.

Don Whitford, vice president of sales with Priority Health, said the health plan earlier this year began charging higher rates — 12 percent to 18 percent more — for companies that wrap their high-deductible health plans.

(Jon Clement, vice president of finance of Health Alliance Plan) said HAP decided five years ago to price its high-deductible plans to assume a higher utilization rate that would accommodate employer decisions to wrap their plans.

http://www.crainsdetroit.com/article/20100919/FREE/309199985/wrangling-over-8216-wrapping-insurers-raise-rates-for-employers

Comment: 

By Don McCanne, MD

As more employers are moving to high-deductible health plans to take advantage of the lower premiums, private insurers, being the market innovators that they are, were not going to stand by as they watch potential premium dollars move into health savings accounts or other options such as flexible spending accounts or health reimbursement arrangements.

From the insurers’ perspective, the high deductible is for the purpose of creating financial barriers to health care access. If the patient is forced to pay a significant amount out of pocket – the deductible – before insurance coverage kicks in, then the patient is going to forgo health care, much of it beneficial, simply because it is too expensive. Since it is less likely that the deductible threshold would be met, that reduces the chances of the insurer having to pay out any benefits at all.

The rationale of the health savings accounts, which pay health care costs before the deductibles are met, is that patients would be better shoppers since they are using their own funds from the accounts which they own, achieving the same purpose as the deductibles alone. In theory, the health savings accounts are funded by the premium savings – savings that reduce insurer revenues.

Now the insurers contend that the accounts allow patients to be spendthrifts. They insist that patients are much more likely to spend the funds if they come from a delegated savings account than they would if they came from other personal savings or current income. They are using this as an excuse to recover the premium discount for the high-deductible plans – in essence, reaching into the health savings accounts and stealing the employees’ own funds (though indirectly through higher premiums paid by the employee in payroll deductions or forgone wage increases).

Although this is yet one more addition to the litany of reasons that high-deductible plans with health savings accounts are a highly flawed method of financing health care, it is much more a further indictment of the private insurance industry which will always find a way to make another buck off of our health misfortunes.

An improved Medicare for all would eliminate these thieves.

'Don't undermine Medicare,' panel to tell lawmakers Sept. 23

Economists and health professionals to testify at congressional briefing Thursday to sound alarm on Deficit Commission proposals to weaken or gut Medicare program

FOR IMMEDIATE RELEASE
Sept. 21, 2010

Contact:
Margaret Flowers, M.D., margaret@pnhp.org
Mark Almberg, Physicians for a National Health Program, (312) 782-6006, mark@pnhp.org

Media Advisory

What:
A congressional briefing to examine proposals being floated by members of the National Commission on Fiscal Responsibility and Reform and others to weaken the Medicare program, including hiking the age of eligibility to 67 or 70, increasing co-pays and deductibles, using means testing to reduce benefits, or replacing the program altogether with private vouchers.

The panelists will discuss the strengths of the present Medicare program, including its role in reducing poverty and health disparities, and why it should be strengthened. They will also argue that improving and extending the Medicare program to cover everyone is the most practicable way to provide truly universal, comprehensive and affordable care with effective cost control.

When: Thursday, Sept. 23, 2:30 p.m. to 4 p.m.

Where: Longworth House Office Building, Room 1334, Washington

Who:
Tsung-Mei Cheng, distinguished health economist and expert on comparative health systems at Princeton University
Olveen Carrasquillo, M.D., nationally recognized authority on health disparities, minority health, health services research, health policy, access to care and national health insurance, board member, Physicians for a National Health Program
Michele Evermore, legislative advocate, National Nurses United
The Honorable Raúl M. Grijalva (Honorary Host), co-chair Congressional Progressive Caucus
The Honorable Lynn Woolsey (Honorary Host), co-chair Congressional Progressive Caucus

Why:
With more than 50 million uninsured Americans, 45,000 deaths a year due to lack of health insurance, and 62 percent of personal bankruptcies linked to medical debt, it is clear that programs like Medicare serve a vital function and that even more thoroughgoing health care reform is needed and must be part of any economic recovery plan.

Sponsored by the Leadership Conference for Guaranteed Health Care, a coalition of doctors, nurses and other health care providers; labor unions; nonprofit agencies; reform advocates and faith-based organizations working to achieve comprehensive, high quality, and affordable health care coverage for everybody in the United States. The coalition specifically advocates for a publicly funded and privately delivered national health care system structured around a single-payer financing mechanism. Co-sponsors of this event include Physicians for a National Health Program, National Nurses United, Healthcare-Now, Progressive Democrats of America, All Unions Committee for Single Payer-H.R. 676, Labor Campaign for Single Payer, RESULTS, Prosperity Agenda, Code Pink, Gray Panthers, Social Security Works and Economic Experts of Color.

‘Don’t undermine Medicare,’ panel to tell lawmakers Sept. 23

Economists and health professionals to testify at congressional briefing Thursday to sound alarm on Deficit Commission proposals to weaken or gut Medicare program

FOR IMMEDIATE RELEASE
Sept. 21, 2010

Contact:
Margaret Flowers, M.D., margaret@pnhp.org
Mark Almberg, Physicians for a National Health Program, (312) 782-6006, mark@pnhp.org

Media Advisory

What:
A congressional briefing to examine proposals being floated by members of the National Commission on Fiscal Responsibility and Reform and others to weaken the Medicare program, including hiking the age of eligibility to 67 or 70, increasing co-pays and deductibles, using means testing to reduce benefits, or replacing the program altogether with private vouchers.

The panelists will discuss the strengths of the present Medicare program, including its role in reducing poverty and health disparities, and why it should be strengthened. They will also argue that improving and extending the Medicare program to cover everyone is the most practicable way to provide truly universal, comprehensive and affordable care with effective cost control.

When: Thursday, Sept. 23, 2:30 p.m. to 4 p.m.

Where: Longworth House Office Building, Room 1334, Washington

Who:
Tsung-Mei Cheng, distinguished health economist and expert on comparative health systems at Princeton University
Olveen Carrasquillo, M.D., nationally recognized authority on health disparities, minority health, health services research, health policy, access to care and national health insurance, board member, Physicians for a National Health Program
Michele Evermore, legislative advocate, National Nurses United
The Honorable Raúl M. Grijalva (Honorary Host), co-chair Congressional Progressive Caucus
The Honorable Lynn Woolsey (Honorary Host), co-chair Congressional Progressive Caucus

Why:
With more than 50 million uninsured Americans, 45,000 deaths a year due to lack of health insurance, and 62 percent of personal bankruptcies linked to medical debt, it is clear that programs like Medicare serve a vital function and that even more thoroughgoing health care reform is needed and must be part of any economic recovery plan.

Sponsored by the Leadership Conference for Guaranteed Health Care, a coalition of doctors, nurses and other health care providers; labor unions; nonprofit agencies; reform advocates and faith-based organizations working to achieve comprehensive, high quality, and affordable health care coverage for everybody in the United States. The coalition specifically advocates for a publicly funded and privately delivered national health care system structured around a single-payer financing mechanism. Co-sponsors of this event include Physicians for a National Health Program, National Nurses United, Healthcare-Now, Progressive Democrats of America, All Unions Committee for Single Payer-H.R. 676, Labor Campaign for Single Payer, RESULTS, Prosperity Agenda, Code Pink, Gray Panthers, Social Security Works and Economic Experts of Color.

Private insurers stealing from HSA accounts

Wrangling over ‘wrapping’: Insurers raise rates for employers who use cost-cutting plan

By Jay Greene
Crain’s Detroit Business
September 19, 2010
Some health insurers in Southeast Michigan are beginning to charge higher premiums to employers who offer high-deductible employee health plans and then “wrap” the plans by buying gap insurance or giving workers subsidies to cover the deductibles.
The reason? Insurers say usage of health care services is going up because employees bear little or no responsibility for health care costs.
“Often, employers go the high-deductible route and then cover the deductible by funding an employee’s (health savings account) to a point where the employee no longer has any skin in the game,” said Steve Selinsky, director of sales and marketing with BeneSys, a Troy-based third-party administrator of insurance services.
Wrapping refers to when employers increase their health plan deductible, which lowers premium costs, and then reimburse employees for all, or a part, of their health expenses falling under the increased deductible.
This differs from the original concept of high-deductible plans, in which employees were responsible for deductibles of up to $5,000, but typically $1,000-$2,500, and so had a financial incentive to eliminate unnecessary care and seek lower-cost, higher-quality treatments. John Dunn, vice president of middle- and small-group sales for Blue Cross, said Blue Cross data shows that there is a 4 percent to 8 percent difference in utilization and expenses between those plans that are wrapped and those that are not.
He said Blue Cross in January will start charging employers that wrap between 4 percent and 8 percent more to account for the expected higher utilization.
Don Whitford, vice president of sales with Priority Health, said the health plan earlier this year began charging higher rates — 12 percent to 18 percent more — for companies that wrap their high-deductible health plans.
(Jon Clement, vice president of finance of Health Alliance Plan) said HAP decided five years ago to price its high-deductible plans to assume a higher utilization rate that would accommodate employer decisions to wrap their plans.
http://www.crainsdetroit.com/article/20100919/FREE/309199985/wrangling-over-8216-wrapping-insurers-raise-rates-for-employers

As more employers are moving to high-deductible health plans to take advantage of the lower premiums, private insurers, being the market innovators that they are, were not going to stand by as they watch potential premium dollars move into health savings accounts or other options such as flexible spending accounts or health reimbursement arrangements.
From the insurers’ perspective, the high deductible is for the purpose of creating financial barriers to health care access. If the patient is forced to pay a significant amount out of pocket – the deductible – before insurance coverage kicks in, then the patient is going to forgo health care, much of it beneficial, simply because it is too expensive. Since it is less likely that the deductible threshold would be met, that reduces the chances of the insurer having to pay out any benefits at all.
The rationale of the health savings accounts, which pay health care costs before the deductibles are met, is that patients would be better shoppers since they are using their own funds from the accounts which they own, achieving the same purpose as the deductibles alone. In theory, the health savings accounts are funded by the premium savings – savings that reduce insurer revenues.
Now the insurers contend that the accounts allow patients to be spendthrifts. They insist that patients are much more likely to spend the funds if they come from a delegated savings account than they would if they came from other personal savings or current income. They are using this as an excuse to recover the premium discount for the high-deductible plans – in essence, reaching into the health savings accounts and stealing the employees’ own funds (though indirectly through higher premiums paid by the employee in payroll deductions or forgone wage increases).
Although this is yet one more addition to the litany of reasons that high-deductible plans with health savings accounts are a highly flawed method of financing health care, it is much more a further indictment of the private insurance industry which will always find a way to make another buck off of our health misfortunes.
An improved Medicare for all would eliminate these thieves.