Kaiser Daily Health Policy Report
February 4, 2009

(Sen. Max) Baucus also said that he does not believe a single-payer health care system is the right model for the U.S. at this time because the shift would be too big of a change and would place too much of the private sector under control of the government. He said, “We’re constituted differently than European countries” with single-payer systems, adding, “There’s more of an entrepreneurial sense” in the U.S. “So we’ve got to come up with a uniquely American result. And a uniquely American result will be a combination of public and private insurance,” Baucus said (CQ HealthBeat, 2/3).

http://www.kaisernetwork.org/Daily_reports/print_report.cfm?DR_ID=56795&dr_cat=3

And…

The Biggest Idea in Health Care

By Andy Louis-Charles
The Motley Fool
February 3, 2009

Andy Louis-Charles: Your thoughts on a single-payer system? Should health care be treated any different than police, fire, or postal services?

Uwe E. Reinhardt: Many countries with single-payer systems (Canada, Taiwan, etc.) ask that question. Those countries do view health care like fire protection and elementary and secondary education, and they structure their health system accordingly. We are rather an exception, viewing health care as basically a private-consumption good, but we don’t quite believe that either — hence the coexistence of unbridled kindness and unbridled callousness in our health system. We do not have our head straight on this issue. Other countries have.

http://www.fool.com/investing/general/2009/02/03/the-biggest-idea-in-health-care.aspx

Comment:

By Don McCanne, MD

So with Tom Daschle stepping out of the picture, Sen. Max Baucus is maneuvering to take the lead on reform by advocating for a “uniquely American result” with “more of an entrepreneurial sense” since “we’re constituted differently than European countries.”

Uwe Reinhardt quite correctly characterizes the U.S. exceptionalism as “the coexistence of unbridled kindness and unbridled callousness in our health system.” It really is time that we learn from other countries so that we can get “our head straight on this issue.”

Getting Health Reform Right: A Q&A With Jacob Hacker

RJ Eskow
The Huffington Post
February 2, 2009
Professor Hacker’s proposal, Health Care for America, is based on two simple principles: First, that both the employer-based private system and publicly-funded Medicare are essentially working for their members. Second, that every uninsured American (or legal resident) should be able to buy into a Medicare-like public program at affordable rates, with need-based subsidies.
The plan has been well-received across the center/left spectrum, even receiving a friendly review from Don McCanne, MD, a Senior Fellow with single-payer advocacy group Physicians for a National Health Program (PHNP).
http://www.huffingtonpost.com/rj-eskow/getting-health-reform-rig_b_163270.html

And…

Getting Health Reform Right: According to Jacob Hacker

By DrSteveB
Daily Kos
February 3, 2009
There is a must read interview with Jacob Hacker, the re-inventor of the individual mandate bulding blocks plan for liberals (it originally came from center-right think tanks) which is the same core as Obama/Baucus/Daschle et al, summarized on HuffPo and in full at Richard Eskow’s the Sentinel Effect blog.
As Don McCanne and other Single Payers advocates have been pointing out:
Leaving the private insurers in place perpetuates the administrative waste of those insurers and the administrative burden on the providers. Intense regulatory oversight of the private insurers would be even more imperative since they would increase their efforts to game the system through surreptitious favorable selection and other clandestine market expediencies. The public program would likely concentrate lower-income individuals initially, risking a political transformation into a welfare program. Also his plan includes features of both an employer mandate and an individual mandate, each with its own policy problems, though he does ameliorate the impact to a certain extent with some of the other features of his plan. From a single payer perspective, it would be far better to totally cut the link between financing and coverage. A system of equitable tax funding of the entire risk pool is more efficient than a system of premiums linked to the individual.
nativist posts:
I read that post, and like this author, I think Mr. Hacker is incorrect as to the effectiveness of private healthcare.
I’m surprised Don Mcanne is supposed to be onboard with the features of Hacker’s proposals. Speaking broadly, yes it’s good to have Medicare or a close clone compete against trad insurers. Perhaps half a loaf is better than none in his view.
DrSteveB posts:
Don was being polite in Jan 2007… Don is always polite with our erstwhile incrementalist reformist friends
http://www.dailykos.com/story/2009/2/3/72018/39311/226/692345

My response, as follows, was posted on both blogs (edited to under 250 words for Huffington Post):
Jacob Hacker deserves our respect, even if wrong
DrSteveB is right. I was being polite. Jacob Hacker is a highly respected political scientist who supports social justice. I have greatly admired his work.
In his proposal he was looking for a political solution to satisfy those with good employer-sponsored plans who are uncomfortable with trading them in for a public plan that has not yet been precisely defined (since any proposed public plan must clear the hurdles in Congress). In so doing he compromised on policy, trading away many of the advantages of the single payer model.
Since I wrote the comments above, the public option described by Hacker has come under intensive attack by Enzi and his fellow Republicans, by AHIP, and by the U.S. Chamber of Commerce. It has been singled out as the most important feature that the Democrats will have to trade away if they expect the Republican support and industry support that they will need.
At best, “universal” coverage will be FEHBP plans with unaffordable premiums. Obama understood that an individual mandate cannot work, though efforts are being made to require that. According to the Milliman Medical Index, an average working family is already paying $15,600 for health care. That’s average, so many are paying more. Using private plans with premiums indexed to the average costs of individuals and their families is an obsolete model of financing health care.
Health care costs are now so high that only an administratively efficient, equitably funded universal risk pool will work. It would automatically include everyone, with financing based on ability to pay. As a single payer, the program would be a single purchaser (monopsony), finally providing us with a mechanism that would ensure value in our health care purchasing.
(I’ll add here that a social insurance model using private plans would also “work,” but is a far more expensive model of reform that trades away administrative efficiency, equity and true universality. Perpetuating unfairness, waste, and leaving some out is not the definition of what works, in my book.)
Don McCanne

Getting Health Reform Right: A Q&A With Jacob Hacker

RJ Eskow
The Huffington Post
February 2, 2009

Professor Hacker’s proposal, Health Care for America, is based on two simple principles: First, that both the employer-based private system and publicly-funded Medicare are essentially working for their members. Second, that every uninsured American (or legal resident) should be able to buy into a Medicare-like public program at affordable rates, with need-based subsidies.

The plan has been well-received across the center/left spectrum, even receiving a friendly review from Don McCanne, MD, a Senior Fellow with single-payer advocacy group Physicians for a National Health Program (PHNP).

http://www.huffingtonpost.com/rj-eskow/getting-health-reform-rig_b_163270.html

And…

Getting Health Reform Right: According to Jacob Hacker

By DrSteveB
Daily Kos
February 3, 2009

There is a must read interview with Jacob Hacker, the re-inventor of the individual mandate bulding blocks plan for liberals (it originally came from center-right think tanks) which is the same core as Obama/Baucus/Daschle et al, summarized on HuffPo and in full at Richard Eskow’s the Sentinel Effect blog.

As Don McCanne and other Single Payers advocates have been pointing out:

Leaving the private insurers in place perpetuates the administrative waste of those insurers and the administrative burden on the providers. Intense regulatory oversight of the private insurers would be even more imperative since they would increase their efforts to game the system through surreptitious favorable selection and other clandestine market expediencies. The public program would likely concentrate lower-income individuals initially, risking a political transformation into a welfare program. Also his plan includes features of both an employer mandate and an individual mandate, each with its own policy problems, though he does ameliorate the impact to a certain extent with some of the other features of his plan. From a single payer perspective, it would be far better to totally cut the link between financing and coverage. A system of equitable tax funding of the entire risk pool is more efficient than a system of premiums linked to the individual.

nativist posts:

I read that post, and like this author, I think Mr. Hacker is incorrect as to the effectiveness of private healthcare.

I’m surprised Don Mcanne is supposed to be onboard with the features of Hacker’s proposals. Speaking broadly, yes it’s good to have Medicare or a close clone compete against trad insurers. Perhaps half a loaf is better than none in his view.

DrSteveB posts:

Don was being polite in Jan 2007… Don is always polite with our erstwhile incrementalist reformist friends

http://www.dailykos.com/story/2009/2/3/72018/39311/226/692345

Comment:

By Don McCanne, MD

My response, as follows, was posted on both blogs (edited to under 250 words for Huffington Post):

Jacob Hacker deserves our respect, even if wrong

DrSteveB is right. I was being polite. Jacob Hacker is a highly respected political scientist who supports social justice. I have greatly admired his work.

In his proposal he was looking for a political solution to satisfy those with good employer-sponsored plans who are uncomfortable with trading them in for a public plan that has not yet been precisely defined (since any proposed public plan must clear the hurdles in Congress). In so doing he compromised on policy, trading away many of the advantages of the single payer model.

Since I wrote the comments above, the public option described by Hacker has come under intensive attack by Enzi and his fellow Republicans, by AHIP, and by the U.S. Chamber of Commerce. It has been singled out as the most important feature that the Democrats will have to trade away if they expect the Republican support and industry support that they will need.

At best, “universal” coverage will be FEHBP plans with unaffordable premiums. Obama understood that an individual mandate cannot work, though efforts are being made to require that. According to the Milliman Medical Index, an average working family is already paying $15,600 for health care. That’s average, so many are paying more. Using private plans with premiums indexed to the average costs of individuals and their families is an obsolete model of financing health care.

Health care costs are now so high that only an administratively efficient, equitably funded universal risk pool will work. It would automatically include everyone, with financing based on ability to pay. As a single payer, the program would be a single purchaser (monopsony), finally providing us with a mechanism that would ensure value in our health care purchasing.

(I’ll add here that a social insurance model using private plans would also “work,” but is a far more expensive model of reform that trades away administrative efficiency, equity and true universality. Perpetuating unfairness, waste, and leaving some out is not the definition of what works, in my book.)

Don McCanne

Insurers overcharged Medicare for prescriptions, report finds

By David Goldstein
The Miami Herald
February 1, 2009
If you buy medicine through Medicare’s prescription drug program, you could be paying too much.
The taxpayers who finance Medicare aren’t doing too well, either.
Insurance companies involved in the Medicare prescription drug benefit have overcharged subscribers and taxpayers by several billion dollars, according to the inspector general for the Department of Health and Human Services. Eighty percent of the participating insurance companies owe the program an estimated $4.4 billion for 2006 alone.
Medicare, however, has been slow to do something about it. In fact, the agency doesn’t even know how much money the insurance companies owe taxpayers because it hasn’t begun most of the financial audits needed to determine that.
Inspector General Daniel Levinson found a number of problems. Among them:
A quarter of all bid audits done for the years 2006 and 2007 had errors that resulted in higher profits for the insurance companies, higher costs for Medicare and higher premiums or fewer benefits for the beneficiaries.
Some administrative and marketing costs also were “unreasonably high.”
Costs charged by companies in some cases were questionable because the supporting financial data was “poor” and “inadequate.”
However, none of the findings resulted in changes to the program, the inspector general found, because the bid audits are done after the contracts with the insurance companies are signed and beneficiaries are enrolled.
The insurance companies never faced penalties for their mistakes and overcharges because the bid audits don’t say whether errors are “misrepresentations” or honest mistakes.
That means problems haven’t been fixed, the inspector general said.
“Bid audits are not designed to lead to sanctions,” the report says. “However, without any consequences … their deterrent effect is limited.”
http://www.miamiherald.com/news/politics/AP/story/882606.html

The determination of the Bush administration and the Republican-controlled Congress to turn the Medicare Part D drug program over to private insurers produced no surprises. Medicare was overcharged, and the patients were overcharged.
One more consequence of electing a president and members of Congress who don’t believe in government is that appropriate oversight has been lacking. Limiting oversight to sanction-free audits long after the fact is an open invitation to abuse and wink-of-the-eye fraud.
Even if rigid oversight were introduced, these private intermediaries will always find innovative ways of shifting an excessive amount of public funds and patient funds into their own coffers. Patch one leak in the system, and they’ll punch three more into it.
Those who believe in Medicare understand that we need to fold the drug benefit into the traditional Medicare program and eliminate these wasteful, intrusive intermediaries. Now that we have elected a Congress and an administration whose members believe in government, how can we distract them from their intense conversations with the insurance and pharmaceutical lobbyists who helped elect them?

By David Goldstein
The Miami Herald
February 1, 2009

If you buy medicine through Medicare’s prescription drug program, you could be paying too much.

The taxpayers who finance Medicare aren’t doing too well, either.

Insurance companies involved in the Medicare prescription drug benefit have overcharged subscribers and taxpayers by several billion dollars, according to the inspector general for the Department of Health and Human Services. Eighty percent of the participating insurance companies owe the program an estimated $4.4 billion for 2006 alone.

Medicare, however, has been slow to do something about it. In fact, the agency doesn’t even know how much money the insurance companies owe taxpayers because it hasn’t begun most of the financial audits needed to determine that.

Inspector General Daniel Levinson found a number of problems. Among them:

A quarter of all bid audits done for the years 2006 and 2007 had errors that resulted in higher profits for the insurance companies, higher costs for Medicare and higher premiums or fewer benefits for the beneficiaries.

Some administrative and marketing costs also were “unreasonably high.”

Costs charged by companies in some cases were questionable because the supporting financial data was “poor” and “inadequate.”

However, none of the findings resulted in changes to the program, the inspector general found, because the bid audits are done after the contracts with the insurance companies are signed and beneficiaries are enrolled.

The insurance companies never faced penalties for their mistakes and overcharges because the bid audits don’t say whether errors are “misrepresentations” or honest mistakes.

That means problems haven’t been fixed, the inspector general said.

“Bid audits are not designed to lead to sanctions,” the report says. “However, without any consequences … their deterrent effect is limited.”

http://www.miamiherald.com/news/politics/AP/story/882606.html

Comment:

By Don McCanne, MD

The determination of the Bush administration and the Republican-controlled Congress to turn the Medicare Part D drug program over to private insurers produced no surprises. Medicare was overcharged, and the patients were overcharged.

One more consequence of electing a president and members of Congress who don’t believe in government is that appropriate oversight has been lacking. Limiting oversight to sanction-free audits long after the fact is an open invitation to abuse and wink-of-the-eye fraud.

Even if rigid oversight were introduced, these private intermediaries will always find innovative ways of shifting an excessive amount of public funds and patient funds into their own coffers. Patch one leak in the system, and they’ll punch three more into it.

Those who believe in Medicare understand that we need to fold the drug benefit into the traditional Medicare program and eliminate these wasteful, intrusive intermediaries. Now that we have elected a Congress and an administration whose members believe in government, how can we distract them from their intense conversations with the insurance and pharmaceutical lobbyists who helped elect them?

Waxman to push ’09 health care reform

By Sean Lengell
The Washington Times
January 30, 2009
The top House lawmaker in charge of writing health care legislation said Thursday he is committed to passing a universal health care package by the end of the year…
“This is our time, we need to move forward, we need to get this job accomplished this year and get the bill to the president,” said House Energy and Commerce Committee Chairman Henry A. Waxman at a conference sponsored by Families USA…
“The economic times which are so difficult is another reason why we need to do it right away,” he told reporters after his speech. “The health of our economy depends on a great extent on our dealing with the health of our health care system.”
But Mr. Waxman said private insurers would play a significant role in the implementation of universal health coverage, adding that relying solely on a Canadian or European-style single-payer system is unrealistic in the United States.
“Reform in the health care system to achieve universal coverage has to come by building on the system that is in place – adjusting it, improving it to fill the gaps,” he said. “I believe we must have a significant role for private insurance, but I think it’s critically important that we have a public [health care] program alternative.”
http://www.washingtontimes.com/news/2009/jan/30/waxman-to-push-09-health-care-reform/

House Majority Whip James Clyburn (D-S.C.), obviously an insider, recently confused observers of the Washington scene by stating that health care reform would be incremental. This appeared to conflict with the position of other important players – Barack Obama, Tom Daschle, Ted Kennedy, Max Baucus, Pete Stark, amongst others – who have indicated that comprehensive reform would be as expeditious as possible – presumably this year or early 2010 at the very latest. The statement by Henry Waxman seems to confirm the fact that the House of Representatives is aligned with the Senate and The White House to move forward expeditiously with comprehensive reform.
They are also aligned on the position that single payer is unrealistic, and that reform will be based on private insurance. There is still confusion as to whether there is agreement that a public option must be a Medicare-like program, or if the public option would be satisfied by a pool of FEHBP-type private plans. The Republicans, AHIP, and the USCOC have said that the former is a non-starter, so the public option may well end up being just more private insurance in disguise.
If a U.S. model based on private plans were as effective as the Swiss and Dutch systems, it would still leave about 7,600,000 individuals without insurance, which certainly tests the definition of universal. With much higher health care spending in the United States, the premiums for private plans, even with generous subsidies, certainly would test the definition of affordability. U.S.-style private plans, designed to enhance business success by creating patient barriers to care and payment for care, certainly tests the definition of social insurance.
Maybe James Clyburn did let slip the dark secret of the Washington reformers. If we were to continue with only incremental reforms, we would end up with a system that will leave many without insurance, that will leave health care unaffordable for many more, and that will leave in place an industry that takes away health care access and choice to further its own financial interests. Hmmm… Looks like another con job. Go the incremental route, but call it universal.