PNHP

CRS on the health insurance market

CRS on the health insurance market

The Market Structure of the Health Insurance Industry

By D. Andrew Austin and Thomas L. Hungerford
Congressional Research Service
November 17, 2009
Evidence suggests that health insurance markets are highly concentrated in many local areas. Many large firms that offer health insurance benefits to their employees have self-insured, which may put some competitive pressure on insurers, although this is unlikely to improve market conditions for other consumers. The exercise of market power by firms in concentrated markets generally leads to higher prices and reduced output — high premiums and limited access to health insurance — combined with high profits. Many other characteristics of the health insurance markets, however, also contribute to rising costs and limited access to affordable health insurance. Rising health care costs, in particular, play a key role in rising health insurance costs.
Health costs appear to have increased over time in large part because of complex interactions among health insurance, health care providers, employers, pharmaceutical manufacturers, tax policy, and the medical technology industry. Reducing the growth trajectory of health care costs may require policies that affect these interactions. Policies focused only on health insurance sector reform may yield some results, but are unlikely to solve larger cost growth and limited access problems.
http://www.fas.org/sgp/crs/misc/R40834.pdf
About the Congressional Research Service:
http://www.loc.gov/crsinfo/whatscrs.html

The Congressional Research Service (CRS) has an outstanding reputation for authoritative, objective and nonpartisan analyses, providing Congress with the analytical support it needs to address the most complex public policy issues facing the nation.
In this 65 page report to Congress on the market structure of the health insurance industry, CRS concludes that “policies focused only on health insurance sector reform may yield some results, but are unlikely to solve larger cost growth and limited access problems.”
The conclusions are certainly no surprise. Every reasonable economist agrees that free market principles do not apply to health care. Yet where is Congress on this? They are moving forward with a proposal that relies heavily on the market of private health plans.
Don’t the members of Congress read their own reports? They need to read this one!

Reform 2.0

By Michael J. Klag
Johns Hopkins Public Health Magazine
Fall 2009

I have to find a new doctor.

Last month, my primary care physician wrote me a letter. He said he was leaving private practice. He’s an outstanding physician—a doctor’s doctor whom I’ve known since he was a medical student. His reason for closing up shop? The sheer frustration of getting paid by private insurance companies.

When a physician of his stature and skills departs private practice for a reason like that, it is an indictment of our health care system—that is, if we had a health care system. We all know the U.S. has great physicians and the world’s best medical technology. But the best health care system? Not in the least. Our crazy patchwork quilt is an accident of history and one that we need to fix. It fails us in so many ways, from its gross inefficiencies to the fact that it has left 47 million Americans without health insurance.

The evidence of our ailing health care system is pretty clear: Despite spending twice as much (more than $7,100 per capita) as the rest of the industrialized countries, we have poor health outcomes. Our life expectancy is below many other industrialized countries’ and perhaps more significantly our life expectancy has improved less than that of nearly all industrialized countries in the last 20 years. On some health status indicators the U.S. is near the top, on many near the middle and on some near the bottom. Not very good value for the extra money we spend. Where does the money go? Some of it is lost to in- efficiency. We all know you get 10 pieces of mail for every procedure or hospital visit and almost certain confusion about what you’re supposed to pay. In addition, our fee-for-service model encourages utilization of resources, especially expensive technology. Lastly, systems that emphasize primary care have lower costs and better outcomes than those that don’t, but we have created incentives that push physicians away from primary care and into increasing specialization.

We have inherited a system that doesn’t work and desperately needs to be fixed.

This was the challenge that President Barack Obama vowed to address. Six months ago, his administration’s leadership on health care looked like our best chance in a generation for genuine reform. However, the political compromises that have been made thus far make it clear this historic opportunity will probably increase the number of Americans with insurance coverage but not reduce growth in costs.

To put things in perspective, let’s look back on another historic opportunity that our government did embrace. Almost half a century ago, our government committed to improving the health and economic welfare of older people in the U.S. by creating Medicare. And Medicare has been a tremendous success. Before it was instituted, 29 percent of those 65 and older lived in poverty. After Medicare, that proportion fell to about 10 percent because it provided health insurance coverage to all Americans over age 65. Since then, the health status of older people has improved markedly. Even its critics admit that Medicare’s administrative costs are a fraction of those of private insurers.

Medicare is not perfect, of course. Despite its warts, however, Medicare has been a success and a huge benefit to our older population. Now, we need to take that kind of step for the rest of Americans.

As I write this, I am not sure what the outcome of health care reform efforts will be. The sausage will go through the grinder, and we’ll get, in my view, a suboptimal solution. Far from  wallowing in disappointment, however, I’m moving on and so should our country. President Obama’s reforms can serve as the foundation  for the more comprehensive fix that’s needed. Call it Reform 2.0.

If we want true health care reform, we need a single-payer system. In this system, the government would act as administrator, paying for all patient visits, prescription drugs, medical procedures, and so on. Instead of thousands of different insurance companies, HMOs and others with all of their separate forms and billing contacts, doctors, hospitals and others would deal with a single administrator—eliminating waste in our system. At a large hospital, this would dramatically reduce overhead costs, allowing hundreds of people to be retrained so that their talents could be directed to ways that would have greater societal benefit than paper shuffling.

Those of you shaking your heads and saying it can’t be done should know that it has been done—repeatedly. Korea in the 1980s and Taiwan in the 1990s, for example, revamped their health care systems. They have multiple insurers but all follow the same rules. Korea’s and Taiwan’s leadership (including many of our alumni) scrutinized health care programs around the world and chose a system that works best. It is not socialized medicine. The hospitals and providers do not work for the government, they work for private organizations. They just don’t have to deal with the time-sapping, unnecessary administrative burdens of our inefficient system.

Every system is perfectly designed to obtain the results it produces. Ours produces poor outcomes, inadequate access and great inefficiency. It places tremendous burden on both providers and payers and drives great doctors like mine to other careers. As hard as it is, we must completely reform our system. Otherwise we risk bequeathing to the next generation the same problems we struggle with today.

http://magazine.jhsph.edu/2009/fall/departments/open_mike/index.html

Study Canada, not Germany

Letter to the Editor
San Francisco Chronicle, Dec. 2, 2009

In “Lessons on health care from Europe” (Nov. 29), Carolyn Lochhead points to lessons to learn from the “private,” multi-payer health care systems in Germany, Switzerland and the Netherlands.

She is right that we can learn from others. Unfortunately, she draws the wrong lessons. Switzerland and Germany have social insurance. For-profit insurance for medically necessary care is banned. Private insurers are tightly regulated by the government, and plans that enroll healthier patients must financially compensate those enrolling sicker patients. And while all European and other systems deliver health care according to need and not ability to pay, the multi-payer varieties have much higher administrative costs than single-payer ones.

In the Netherlands, the recently introduced for-profit insurance applies only to a small portion of services, and the results are mixed at best. As money is diverted from care to advertising, health care needs go unmet, and costs are steadily rising, as is popular discontent.

We should study the impressive achievements of publicly financed, privately delivered single-payer systems in Canada or Taiwan.

CLAUDIA CHAUFAN
San Francisco

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/12/02/EDFQ1AT7RP.DTL#ixzz0YYsNqdFY

An Early Holiday Gift for the Big Pharma

By Stephen Sokol, M.D.
African House Calls Blog
Thursday, November 26, 2009

Well it is now the holiday season and we all look forward with gratitude for what we have to a wonderful season with family and friends-the true gifts of this time.

Our friends at “Big Pharma” evidently have been so excited that they could not wait and decided to give themselves an early gift by raising prices this year so far a whopping 8.9% despite the fact that the Consumer Price Index (CPI) has fallen 1.3%.

It would seem that after careful reflection they were very uneasy about the 8 billion dollars that they promised President Obama in yearly price reductions over the next 10 years if the government would not start negotiating prices for medicare or other government programs. A bit like going into the local store when they have those end of year sales-10% off the 25% mark-up.

The usual argument is heard round the corporate tables. If we do not do this, why then research and development (R&D) of those vital lifesaving drugs will stop and we will all suffer unspeakable consequences. Let’s take a closer look at this claim, as who would be so selfish and un-American as to want to be responsible for all that misery.
The ten biggest pharmaceutical companies had total sales of 269 billion dollars in 2008. Of this only 42 billion (15%) went for R&D. The vast majority of R&D money comes from the National Institutes of Health, our tax dollars at work. The other 30% comes from foreign laboratories. Additionally the vast majority of these drugs were “me too” products that added nothing to health care. Of the 667 new drugs approved from 2000-2007 only 75 (11%) were either new important additions or a significant improvement on an existing product. “Big Pharma” made 49 billion in profits (18%) in 2008. Now that’s good business as the average for all Fortune 500 companies was a paltry 0.9%.

To ensure it’s place “in the sun”, “Big Pharma” spent 55 billion for lobbying, political contributions, front groups as “patient advocacy”and” independent” think tanks.
Education is a major part of this money. Hundreds of “detailers” scurry around the country to educate doctors that their drug is the best and has the least side effects. As part of this process free meals are given, meetings are sponsored and gifts with the drug name inscribed are distributed. For the consumer ads and free first prescription offers abound on television and on the Internet. While researching this Blog entry, I have bumped into Lipitor at least 5 times.

One of the most fascinating aspects of this (for me) is the creation of new disease entities to expand a particular drug’s market. We now have “Social Phobia Disorder” and that can be treated. A few years back, those folks were just shy and considered normal. Up to 7% of American children now have Attention Deficit Hyperactivity Disorder and are medicated with who knows what long term effects. Years back they were considered variations of normal and sent out to the playground to “run of some steam”. Interestingly in Great Britain, the estimate is only 1%. We now have children as young as 3-4 being labelled as Bipolar and treated again with unknown long term effects on the developing brain. Turns out that the physician that did the studies was funded by the very pharmaceutical firm that manufactures the medication.

And so in this season of joy and gratitude, we should all reflect on our health care chaos, realizing that all too many of our fellow citizens and other folks that we invited here have no regular means of getting help when they are ill. We must change this. Then this season will have a real meaning.

http://sas-africanhousecalls.blogspot.com/2009/11/early-holiday-gift-for-big-pharma.html

Flashback: Republicans Opposed Medicare In 1960s By Warning Of Rationing, ‘Socialized Medicine’

By Igor Volsky
The Wonk Room, Think Progress
Jul 29th, 2009

Tomorrow is the the 44th anniversary of Medicare, a government-sponsored health care program that provides health coverage to virtually all of the nation’s elderly and a large share of people with disabilities. While Medicare is not without its problems, it has dramatically improved access to health care, allowed seniors to live longer and healthier lives, contributed to the desegregation of southern hospitals, and has become one of the most popular government programs.

At the time, conservatives strongly opposed Medicare, warning that a government-run program would lead to socialism in America:

Ronald Reagan: “[I]f you don’t [stop Medicare] and I don’t do it, one of these days you and I are going to spend our sunset years telling our children and our children’s children what it once was like in America when men were free.” [1961]

George H.W. Bush: Described Medicare in 1964 as “socialized medicine.” [1964]

Barry Goldwater: “Having given our pensioners their medical care in kind, why not food baskets, why not public housing accommodations, why not vacation resorts, why not a ration of cigarettes for those who smoke and of beer for those who drink.” [1964]

Bob Dole: In 1996, while running for the Presidency, Dole openly bragged that he was one of 12 House members who voted against creating Medicare in 1965. “I was there, fighting the fight, voting against Medicare . . . because we knew it wouldn’t work in 1965.” [1965]

Despite Medicare’s success and the unrealized fears of its detractors, Republican lawmakers are still regurgitating the claim that Medicare would create a “Soviet-style model” of health care. As Rep. Roy Blunt (R-MS), chairman of the GOP Health Solutions Group, explained during a recent radio interview, “you could certainly argue that government should have never have gotten in the health care business…Government did get into the health care business in a big way in 1965 with Medicare, and later with Medicaid, and government already distorts the marketplace.”

Over the years, Republicans proposed numerous schemes to slash funding or privatize Medicare. Most notably, in 1995, under the leadership of then House Speaker Newt Gingrich (R-GA), Republicans proposed cutting 14% from projected Medicare spending over seven years and forcing millions of elderly recipients into managed health care programs or HMOs. The cuts were to ensure that Medicare is “going to wither on the vine,” Gingrich explained. Similarly, during the 2008 Presidential campaign, Sen. John McCain (R-AZ) proposed cutting $1.3 trillion from Medicare and Medicaid.

But while Republicans have sought to undermine the program, seniors have benefited from it. Since 1965, “the health of the elderly population has improved, as measured by both longevity and functional status.” In fact, according to a study from Health Affairs, life expectancy at age 65 increased from 14.3 years in 1960 to 17.8 years in 1998 and the chronically disabled elderly population declined from 24.9 percent in 1982 to 21.3 percent in 1994.”

Prior to Medicare, “about one-half of America’s seniors did not have hospital insurance,” “more than one in four elderly were estimated to go without medical care due to cost concerns,” and one in three seniors were living in poverty. Today, nearly all seniors have access to affordable health care and only about 14 percent of seniors are below the poverty line.

Moreover, a recent survey from the Commonwealth Fund, found that “elderly Medicare beneficiaries reported greater overall satisfaction with their health coverage, better access to care, and fewer problems paying medical bills than people covered by employer-sponsored plans.” In fact, Medicare is so popular that most Americans support expanding Medicare coverage to Americans aged 55 to 64. According to a recent Kaiser Family Foundation poll, “over half of Americans (53 percent) “strongly” support such a proposal and an additional 26 percent say they support it somewhat, totaling 79 percent backing.”

http://wonkroom.thinkprogress.org/2009/07/29/medicare-44/

Health study accurate [on 45,000 deaths annually], had no assumptions

Letter to the Editor
Orlando Sentinel
November 28, 2009

Congressman Cliff Stearns in his My Word column Tuesday (“Use facts in health-care debate”) repeats misinformation spread by a conservative think-tank about our study that found that nearly 45,000 Americans die annually because they lack health insurance.

The study was based on a survey conducted by the National Center for Health Statistics (not by us, as Stearns claims) of more than 9,000 people. They were interviewed, examined by a doctor and given blood tests. They were then followed for up to 12 years to see who lived and who died.

After taking into account many factors, including age, race and baseline health status, we found that the uninsured had 40 percent higher odds of dying.

Contrary to Stearns’ statements, our analytic approach requires no assumptions about health coverage in the intervening years, although we know that being uninsured one year predicts being uninsured the next.

The study’s methods have previously been accepted by the Institute of Medicine of the National Academy of Sciences. The article underwent extensive review by other scientists and was published in the world’s leading public-health journal.

Like the other 17,000 doctors who are members of Physicians for a National Health Program, we believe that every sick person deserves our care.

We also believe the private health-insurance industry cannot control costs or provide Americans with the coverage they need; hence, we support a single-payer, Medicare-for-all approach to health reform.

Unfortunately, U.S. Rep. Alan Grayson has not endorsed this approach.

He did, however, cite our findings accurately in his My Word column on Nov. 18.

Steffie Woolhandler, Professor of medicine, Harvard University Medical School
David U. Himmelstein, Associate professor of medicine, Harvard University Medical School

MedPAC on variation in service use

Report to the Congress: Measuring Regional Variation in Service Use

MedPAC (Medicare Payment Advisory Commission)
December 2009

In this paper, we present data on the difference between regional variation in Medicare spending and regional variation in the use of Medicare-covered services. Regional variation in Medicare spending per beneficiary reflects many factors, including differences in beneficiaries’ health status, Medicare payment rates, service volume (number of services), and service intensity (e.g., MRI versus simple X-ray). In contrast, regional variation in the use of Medicare services reflects only differences in the volume and intensity of services that beneficiaries with comparable health status receive.

… raw per capita spending is 55 percent higher for beneficiaries in the area at the 90th percentile than for beneficiaries in the area at the 10th percentile.

Service use in higher use areas (90th percentile) is about 30 percent greater than in lower use areas (10th percentile).

… the correlation between rate of growth in adjusted spending from 2000 to 2006 and the level of service use in an MSA is slightly negative.

Regional variation in service use is not equivalent to regional variation in Medicare spending. The two should not be confused.

http://www.medpac.gov/documents/Dec09_RegionalVariation_report.pdf

Comment:

By Don McCanne, MD

This paper is an important addition to the work of John Wennberg and his colleagues at Dartmouth on regional variation in spending in the Medicare program. It separates the variation in use of services by individuals with comparable health status from other factors that influence spending, especially Medicare payment policies.

The differences are important because they lead to different policy solutions. Policies to ensure adequate but not excessive volume and intensity of services are separate from, though must be integrated with, policies that establish proper levels of spending for services that Medicare beneficiaries should be receiving.

The complexities of these interdependent policies that would improve spending can be mastered only with a concerted effort by public agencies. The private insurance industry has no capability to create and apply the essential policies that would transform our health care delivery system into the efficient, affordable system that we desperately need.

MedPAC, the Medicare Payment Advisory Commission, currently provides advice to Congress on proposals to improve spending policies in the Medicare program. Congress is free to reject that advice and often does, more for political reasons than for reasons based on sound policy.

The health care reform proposal before Congress includes provisions to reduce the often perverse politics of Medicare financing by creating a commission, sometimes referred to as MedPAC-on-steroids, with much greater power to enforce its recommendations on spending.

The problem with the proposal is that the recommendations would be limited to the Medicare program alone. Unless the revisions applied to the other five-sixths of our population, it would be difficult to establish policies that would improve the overall use of health care services. Although reform of our financing system is essential, we may not get very far if we don’t have policies that would improve the structure of the health care delivery system.

We really do need an improved Medicare for all. We need to jettison the wasteful, ineffectual private insurers and get on with reform that will use our health care dollars to pay for an efficient health care system that serves all of us well.

MedPAC on variation in service use

Report to the Congress: Measuring Regional Variation in Service Use

MedPAC (Medicare Payment Advisory Commission)
December 2009
In this paper, we present data on the difference between regional variation in Medicare spending and regional variation in the use of Medicare-covered services. Regional variation in Medicare spending per beneficiary reflects many factors, including differences in beneficiaries’ health status, Medicare payment rates, service volume (number of services), and service intensity (e.g., MRI versus simple X-ray). In contrast, regional variation in the use of Medicare services reflects only differences in the volume and intensity of services that beneficiaries with comparable health status receive.
… raw per capita spending is 55 percent higher for beneficiaries in the area at the 90th percentile than for beneficiaries in the area at the 10th percentile.
Service use in higher use areas (90th percentile) is about 30 percent greater than in lower use areas (10th percentile).
… the correlation between rate of growth in adjusted spending from 2000 to 2006 and the level of service use in an MSA is slightly negative.
Regional variation in service use is not equivalent to regional variation in Medicare spending. The two should not be confused.
http://www.medpac.gov/documents/Dec09_RegionalVariation_report.pdf

This paper is an important addition to the work of John Wennberg and his colleagues at Dartmouth on regional variation in spending in the Medicare program. It separates the variation in use of services by individuals with comparable health status from other factors that influence spending, especially Medicare payment policies.
The differences are important because they lead to different policy solutions. Policies to ensure adequate but not excessive volume and intensity of services are separate from, though must be integrated with, policies that establish proper levels of spending for services that Medicare beneficiaries should be receiving.
The complexities of these interdependent policies that would improve spending can be mastered only with a concerted effort by public agencies. The private insurance industry has no capability to create and apply the essential policies that would transform our health care delivery system into the efficient, affordable system that we desperately need.
MedPAC, the Medicare Payment Advisory Commission, currently provides advice to Congress on proposals to improve spending policies in the Medicare program. Congress is free to reject that advice and often does, more for political reasons than for reasons based on sound policy.
The health care reform proposal before Congress includes provisions to reduce the often perverse politics of Medicare financing by creating a commission, sometimes referred to as MedPAC-on-steroids, with much greater power to enforce its recommendations on spending.
The problem with the proposal is that the recommendations would be limited to the Medicare program alone. Unless the revisions applied to the other five-sixths of our population, it would be difficult to establish policies that would improve the overall use of health care services. Although reform of our financing system is essential, we may not get very far if we don’t have policies that would improve the structure of the health care delivery system.
We really do need an improved Medicare for all. We need to jettison the wasteful, ineffectual private insurers and get on with reform that will use our health care dollars to pay for an efficient health care system that serves all of us well.

Boston University Medical Student Iyah Romm's Testimony in Support of Single Payer

Massachusetts Joint Comittee on Public Health
October 20, 2009
Boston, MA

Thank you, Madame Chair and Members of the Committee for the opportunity to testify this morning. My name is Iyah Romm, and I am a medical student at Boston University School of Medicine. I also serve as a national leader of the American Medical Student Association (AMSA), where I am the New England Regional Director and Co-Chair of the Health Care for All Steering Committee.

In my capacity as a medical student and AMSA leader, I am here today to offer the perspective of a large cohort of physicians-in-training regarding the broken health care system in which we are training, and which we will inherit. With respect to this system, AMSA believes the following:

1. Health care is a fundamental human right and is the single greatest moral imperative for our generation. We, even in the Commonwealth, are woefully failing to ensure quality, affordable, health care to all of our residents.

2. Medicine and the entire health care sector must serve the public good over private industry profits.

3. The best solution to our health care crisis is a single-payer system of publicly funded, publicly accountable, privately delivered, quality, affordable health care for all.

With 62,000 members, AMSA is the oldest and largest independent association of physicians-intraining in the US and has a rich history of advocacy on issues affecting our current and future patients. In fact, AMSA was borne from a seminal moment in the history of our health care system – the establishment of America’s own single payer system, Medicare. As an organization of future physicians, AMSA is committed to advancing a legislative agenda that reflects this history and basic principles.

While Chapter 58 reform has resulted in modest improvements in health insurance coverage, health care costs are spiraling out of control – even in Massachusetts.1 Despite a health insurance market dominated by not-for-profit insurers, premiums are expected to increase by 7-12 percent next year. In 2008, Massachusetts had the highest family coverage premiums in the country – $13,788 on average. These costs are being deflected onto the residents of the Commonwealth and are overwhelming state, municipal, family, and individual budgets and livelihoods. Public services are being slashed resulting in difficult choices and erosions of coverage.2 The long-term sustainability of “universal coverage” in Massachusetts is in peril. Clearly we cannot allow this trend of misprojection to continue at the expense of our patients and our friends, our neighbors, our sisters, and our fathers.

The individual mandate is a unique element of Chapter 58; many other components have been implemented previously in other states on differing scales. As we have seen in those other states, including but not limited to Maine, Minnesota, and Oregon, coverage has increased following reform. But these expansions in coverage have fallen short of the elusive goal of universality and true access for all3 – each time sabotaged by lack of financial sustainability. The culprit? Continued reliance upon commercial insurance markets as the gateway to care and the false hope of competition as a means of “bending the cost curve.”

By definition, incremental reforms explicitly limit access if not decrease the quality of coverage through many ‘crowd-out’ mechanisms to prevent the collapse of the private insurance sector – a necessary sequela of universal health care. Three years after implementation of Chapter 58, we have yet to see anticipated significant gains in coverage or affordability. In 1987, 7% of Massachusetts residents were uninsured – today, the sum is 3%, at best. Moreover, many Bay State residents struggle with skyrocketing premiums seemingly unhindered by the enhanced “competition” fostered by Chapter 58 and the Connector. And without comprehensive reform, the number of uninsured – and number of individuals qualifying for hardship exemption – will continue to rise unchecked. If I were to lose my university-provided insurance, I would be forced to spend exorbitant sums for minimal coverage.

Incremental reforms have focused on the crisis of uninsurance rather than the ultimate goal of ensuring access to quality, affordable health care. Expansions in health insurance coverage do not guarantee concurrent expansions in access. Through high deductibles and other cost-sharing mechanisms, commercial insurers continue to erect financial barriers to care. Indeed, despite purported universal coverage, one in six Massachusetts residents was unable to pay his or her medical bills last year. The result? Many Commonwealth residents are still forced to forego medically necessary care. Such practices by private insurance companies render expansions in coverage meaningless – and ultimately more costly. These are the patients that my peers and I do not see on our primary care rotations; rather, they still present unnecessarily in the Emergency Department with preventable conditions.

Recent funding cuts have torn gaping holes in our ‘safety net,’ with those clinics and hospitals committed to the underserved suffering under massive budget shortfalls – including Boston Medical Center where I study. In the hospital, I see how these shortfalls have resulted in staff reductions that ultimately threaten the quality and availability of care. And we have begun down the slippery slope of tiering coverage with, for example, the recent benefit restrictions imposed on legal immigrants.

Single payer is the only responsible health care reform option. The vast majority of our seniors are satisfied with Medicare; in fact, many patients anxiously await Medicare eligibility because of the program’s guarantee of both coverage and access. Labor unions and advocacy organizations across the Commonwealth support a single payer system, as do the majority of health care providers.4 These groups — these constituencies — recognize that single payer is the best system in which to guarantee quality, affordable, health care for all. Across the country, politicians, policy-makers, and citizens are looking to Massachusetts as a beacon of hope on health care reform. The private insurance industry has had eight decades to lead change, to shift from a world predicated upon a race to the bottom to culture of innovation and care. But their time has passed. Your Committee has the opportunity to truly provide that light. I hope you will offer the leadership necessary to reform our system and to address one of our greatest moral failures of the last fifty years. Only a single payer system can provide the change we need – simplifying payment, eliminating unnecessary bureaucracy, and investing the subsequent savings into a solitary goal, providing care to all. The math is simple, the morality pure, and the passion indefatigable. As a future physician, this is the type of system in which I aspire to practice medicine.

Thank you very much for the opportunity to share this perspective.

1. Steinbrook, R. Health Care Reform in Massachusetts — Expanding Coverage, Escalating Costs. N Engl J Med 2008 358: 2757-2760
2. Sack K. Massachussetts Faces Costs of Big Health Care Plan. NYT, 2009.
3. Long S, Masi P. An update on health reform in Massachusetts, fall 2008. Health Aff (Millwood). 2009;28(4):w578–87
4. McCormick D et al. Single-Payer National Health Insurance: Physicians’ Views Arch Intern Med. 2004;164(3):300-304.

Boston University Medical Student Iyah Romm’s Testimony in Support of Single Payer

Massachusetts Joint Comittee on Public Health
October 20, 2009
Boston, MA

Thank you, Madame Chair and Members of the Committee for the opportunity to testify this morning. My name is Iyah Romm, and I am a medical student at Boston University School of Medicine. I also serve as a national leader of the American Medical Student Association (AMSA), where I am the New England Regional Director and Co-Chair of the Health Care for All Steering Committee.

In my capacity as a medical student and AMSA leader, I am here today to offer the perspective of a large cohort of physicians-in-training regarding the broken health care system in which we are training, and which we will inherit. With respect to this system, AMSA believes the following:

1. Health care is a fundamental human right and is the single greatest moral imperative for our generation. We, even in the Commonwealth, are woefully failing to ensure quality, affordable, health care to all of our residents.

2. Medicine and the entire health care sector must serve the public good over private industry profits.

3. The best solution to our health care crisis is a single-payer system of publicly funded, publicly accountable, privately delivered, quality, affordable health care for all.

With 62,000 members, AMSA is the oldest and largest independent association of physicians-intraining in the US and has a rich history of advocacy on issues affecting our current and future patients. In fact, AMSA was borne from a seminal moment in the history of our health care system – the establishment of America’s own single payer system, Medicare. As an organization of future physicians, AMSA is committed to advancing a legislative agenda that reflects this history and basic principles.

While Chapter 58 reform has resulted in modest improvements in health insurance coverage, health care costs are spiraling out of control – even in Massachusetts.1 Despite a health insurance market dominated by not-for-profit insurers, premiums are expected to increase by 7-12 percent next year. In 2008, Massachusetts had the highest family coverage premiums in the country – $13,788 on average. These costs are being deflected onto the residents of the Commonwealth and are overwhelming state, municipal, family, and individual budgets and livelihoods. Public services are being slashed resulting in difficult choices and erosions of coverage.2 The long-term sustainability of “universal coverage” in Massachusetts is in peril. Clearly we cannot allow this trend of misprojection to continue at the expense of our patients and our friends, our neighbors, our sisters, and our fathers.

The individual mandate is a unique element of Chapter 58; many other components have been implemented previously in other states on differing scales. As we have seen in those other states, including but not limited to Maine, Minnesota, and Oregon, coverage has increased following reform. But these expansions in coverage have fallen short of the elusive goal of universality and true access for all3 – each time sabotaged by lack of financial sustainability. The culprit? Continued reliance upon commercial insurance markets as the gateway to care and the false hope of competition as a means of “bending the cost curve.”

By definition, incremental reforms explicitly limit access if not decrease the quality of coverage through many ‘crowd-out’ mechanisms to prevent the collapse of the private insurance sector – a necessary sequela of universal health care. Three years after implementation of Chapter 58, we have yet to see anticipated significant gains in coverage or affordability. In 1987, 7% of Massachusetts residents were uninsured – today, the sum is 3%, at best. Moreover, many Bay State residents struggle with skyrocketing premiums seemingly unhindered by the enhanced “competition” fostered by Chapter 58 and the Connector. And without comprehensive reform, the number of uninsured – and number of individuals qualifying for hardship exemption – will continue to rise unchecked. If I were to lose my university-provided insurance, I would be forced to spend exorbitant sums for minimal coverage.

Incremental reforms have focused on the crisis of uninsurance rather than the ultimate goal of ensuring access to quality, affordable health care. Expansions in health insurance coverage do not guarantee concurrent expansions in access. Through high deductibles and other cost-sharing mechanisms, commercial insurers continue to erect financial barriers to care. Indeed, despite purported universal coverage, one in six Massachusetts residents was unable to pay his or her medical bills last year. The result? Many Commonwealth residents are still forced to forego medically necessary care. Such practices by private insurance companies render expansions in coverage meaningless – and ultimately more costly. These are the patients that my peers and I do not see on our primary care rotations; rather, they still present unnecessarily in the Emergency Department with preventable conditions.

Recent funding cuts have torn gaping holes in our ‘safety net,’ with those clinics and hospitals committed to the underserved suffering under massive budget shortfalls – including Boston Medical Center where I study. In the hospital, I see how these shortfalls have resulted in staff reductions that ultimately threaten the quality and availability of care. And we have begun down the slippery slope of tiering coverage with, for example, the recent benefit restrictions imposed on legal immigrants.

Single payer is the only responsible health care reform option. The vast majority of our seniors are satisfied with Medicare; in fact, many patients anxiously await Medicare eligibility because of the program’s guarantee of both coverage and access. Labor unions and advocacy organizations across the Commonwealth support a single payer system, as do the majority of health care providers.4 These groups — these constituencies — recognize that single payer is the best system in which to guarantee quality, affordable, health care for all. Across the country, politicians, policy-makers, and citizens are looking to Massachusetts as a beacon of hope on health care reform. The private insurance industry has had eight decades to lead change, to shift from a world predicated upon a race to the bottom to culture of innovation and care. But their time has passed. Your Committee has the opportunity to truly provide that light. I hope you will offer the leadership necessary to reform our system and to address one of our greatest moral failures of the last fifty years. Only a single payer system can provide the change we need – simplifying payment, eliminating unnecessary bureaucracy, and investing the subsequent savings into a solitary goal, providing care to all. The math is simple, the morality pure, and the passion indefatigable. As a future physician, this is the type of system in which I aspire to practice medicine.

Thank you very much for the opportunity to share this perspective.

1. Steinbrook, R. Health Care Reform in Massachusetts — Expanding Coverage, Escalating Costs. N Engl J Med 2008 358: 2757-2760
2. Sack K. Massachussetts Faces Costs of Big Health Care Plan. NYT, 2009.
3. Long S, Masi P. An update on health reform in Massachusetts, fall 2008. Health Aff (Millwood). 2009;28(4):w578–87
4. McCormick D et al. Single-Payer National Health Insurance: Physicians’ Views Arch Intern Med. 2004;164(3):300-304.

CBO report on premiums

An Analysis of Health Insurance Premiums Under the Patient Protection and Affordable Care Act

Congressional Budget Office
November 30, 2009

The analysis looks separately at the effects on premiums for coverage purchased individually, coverage purchased by small employers, and coverage provided by large employers.

Nongroup Policies

Average premiums per policy in the nongroup market in 2016 would be roughly $5,800 for single policies and $15,200 for family policies under the proposal, compared with roughly $5,500 for single policies and $13,100 for family policies under current law.

The majority of nongroup enrollees (about 57 percent) would receive subsidies via the new insurance exchanges, and those subsidies, on average, would cover nearly two-thirds of the total premium, CBO and JCT estimate.

Employment-Based Coverage

By CBO and JCT’s estimate, the average premium per policy in the small group market would be in the vicinity of $7,800 for single policies and $19,200 for family policies under the proposal, compared with about $7,800 and $19,300 under current law. In the large group market, average premiums would be roughly $7,300 for single policies and $20,100 for family policies under the proposal, compared with about $7,400 and $20,300 under current law.

Those figures do not include the effects of the small business tax credit on the cost of purchasing insurance. A relatively small share (about 12 percent) of people with coverage in the small group market would benefit from that credit in 2016. For those people, the cost of insurance under the proposal would be about 8 percent to 11 percent lower, on average, compared with that cost under current law.

http://www.cbo.gov/ftpdocs/107xx/doc10781/11-30-Premiums.pdf

Comment:

By Don McCanne, MD

For most individuals and families, the Senate health care reform bill will have very little impact on the premiums to be paid for health plans. There are three important exceptions:

* Premiums in the individual market will increase significantly because the plans will be required to provide an actuarial value of 60 percent, higher than the average value in the current individual market.

* About 57 percent of individuals eligible for coverage in the exchange will receive subsidies which will more than offset the premium increases. Note that most individuals are not eligible for coverage in the exchange and would not receive these subsidies.

* Although there will be little change in premiums for small group plans, about 12 percent of people in the small group market will benefit from a small business tax credit designed to encourage small business owners to offer coverage to their employees.

The really bad news in this report is that, on average, premiums for group plans will continue to increase at the same intolerable rates that they would have if we did nothing. This CBO analysis demonstrates that, in 2016, the family premium alone for employer-sponsored coverage, not including deductibles and other out-of-pocket costs, would be over $20,000 for a large group plan, whether or not the proposed legislation is enacted. That is quite a hit for a hard-working family with a $60,000 income.

The only hope for premium relief is for innovative insurance products that would reduce costs for those who don’t need health care, but would increase even more the costs for those who do. This demonstrates why focusing on premium relief has been a misguided endeavor. We have been diverted from the the much more important goal of relieving the financial burden of those who actually need health care.

We can achieve that goal by improving Medicare, funding it equitably, and using its monopsonistic powers to provide us with greater value in our health care purchasing. Had we done that when the Clintons were proposing their flawed model of reform, our national health expenditures would be about 20 percent less than they currently are.

It’s tragic that we would be starting from an inflated baseline, but we can still achieve that level of efficiency in the future if we dumped the highly flawed proposal before Congress and adopted the much more humane system of an improved Medicare for all.

Obama's Privatized Health Care Propaganda Tour.

Public's Favorite Option, Single Payer, Wasn't on Baucus or Kennedy's

Allison Kilkenny
The Huffington Post, June 11, 2009 

The public finally got a look at Senator Kennedy’s behemoth 615-page health care bill, a document so gargantuan that Huffington Post put out an SOS to readers to help the editors read it. During the lead-up to the health care war, Kennedy promised Americans that the conversation about their health industry would be a national one, unlike the debacle the first time when the Clintons tried to take on private health care. No more secrecy, Teddy promised. Except, this time the negotiations are — once again — happening behind closed doors, and the public’s favorite option, single-payer, isn’t represented at the table.

Kennedy has depicted this secret operation as essential to negotiations, but the popular single-payer option has been almost entirely shut out of the debate (59% of Americans believe the government should provide national health insurance). Meanwhile, according to The New York Times, lobbyists from “AARP, Aetna, the A.F.L.-C.I.O., the American Cancer Society, the American Medical Association, America’s Health Insurance Plans, the Business Roundtable, Easter Seals, the National Federation of Independent Business, the Pharmaceutical Research and Manufacturers of America, and the United States Chamber of Commerce,” are all present at the Kennedy meetings.

You’d think single-payer advocate House Judiciary Chair John Conyers has the plague these days from the way his associates on the hill are dodging him. Conyers has been criticizing his fellow politicians for sabotaging the single-payer option.

“There is some notion that universal single-payer healthcare is off the table. Well, that raises a very important question. If you take the most popular healthcare reform measure and take it off the table, heaven knows what it is, I guess, you think you’re left with. This is the most popular form, and it would be very unlike the party in the majority now to determine that the most popular system would not even be examined. I am asking for a hearing in every committee, every committee, and if they will let us into the Senate, as well.”

Conyers, who — once again represents what the majority of Americans actually want — has been forced to chase the back of the health care bus like a crazed dog ever since March when he was not invited to President Obama’s Health Care Summit. Ultimately, Obama invited him when Conyers threatened to take his case to the president himself.

Why does one of the only politicians truly representing a populist desire need to grovel, beg, and holler to be included in the Kennedy-Obama closed-door meetings?

One reason may be that men like Max Baucus are permitted to aid in health care reform. Baucus is a human version of a NASCAR race car except all his corporate logos advertise pharmaceutical companies. Great Falls Tribute reports that Baucus “received more campaign contributions from the pharmaceutical and health insurance industries than any other sitting Democrat in the House or Senate, receiving $183,750 from health insurance companies and $229,020 from drug companies during that period.” It’s self-explanatory why a man who makes a living sucking from the teat of private health care wouldn’t be the most enthusiastic advocate of single-payer representatives being included in negotiations.

Others, like President Obama argue that the single-payer option isn’t (his favorite word) “pragmatic.”

“If I were starting a system from scratch, then I think that the idea of moving towards a single-payer system could very well make sense…We don’t want a huge disruption as we go into health care reform where suddenly we’re trying to completely reinvent one-sixth of the economy.”

But now is precisely the moment when the system needs to be reinvented and purged of pharmaceutical and health insurance lobbyists. America’s health care system is already a global embarrassment. The World Health Organization (WHO) reports the U.S. health care system rates 37th in the world in terms of quality and fairness. WHO Director-General Dr. Gro Harlem Brundtland says: “The main message from this report is that the health and well- being of people around the world depend critically on the performance of the health systems that serve them. Yet there is wide variation in performance, even among countries with similar levels of income and health expenditure. It is essential for decision- makers to understand the underlying reasons so that system performance, and hence the health of populations, can be improved.”

Dr. Julio Frenk, Executive Director for Evidence and Information for Policy at WHO says: “It is especially beneficial to make sure that as large a percentage as possible of the poorest people in each country can get insurance…Insurance protects people against the catastrophic effects of poor health. What we are seeing is that in many countries, the poor pay a higher percentage of their income on health care than the rich.”

The message seems lost on the US government. Secret meetings with healthcare lobbyists, a 600+ page, dense bill offered without a summary cover page, killing the popular single-payer option? Kennedy’s bill appears to be extremely undemocratic.

President Obama has promised to bring his message to the people soon. Starting in the Midwest, he’ll try to convince the American people that his public-private hybrid health care is best for the nation. The single-payer option seems to already be a thing of the past. Instead of listening to what the majority of Americans want, Obama and associates are trying to convince the American people that a partially privatized system is best for them. This is the opposite of democracy. It’s a privatized health care propaganda tour.

Cross-posted from Allison Kilkenny’s blog, this article ran under the title “Density and Secrecy Will Defeat Democracy in Kennedy’s Health Care Bill” on Huffington Post

http://www.huffingtonpost.com/allison-kilkenny/density-and-secrecy-will_b_214292.html