PNHP

Insurance industry positions itself for the fight ahead

Insurance industry positions itself for the fight ahead

By CHRIS FRATES
Politico
12/3/08

With President-elect Barack Obama showing no signs of backing off his pledge to push health care reform early in his administration, jockeying is intensifying among interest groups to position themselves for the fight ahead.

The latest to step forward: the health insurance industry.

America’s Health Insurance Plans, the industry trade group, rolled out a plan Wednesday that embraces some of Obama’s ideas and signals dissent with others.

The industry’s proposal would require individuals to carry insurance and insurers to cover pre-existing conditions. And it would strengthen the health care safety net and provide tax credits to working families to help buy insurance.

The insurers say their plan would build on the employer-based system that provides most Americans with their health insurance — also an idea Obama supports.

What it doesn’t include is a public health insurance option that would compete with private plans, a concept supported by Obama and progressive groups such as Health Care for America Now.

“We don’t see that there will be a need for an additional public option. We don’t think there will be a need to get the government in the insurance business,” said the group’s spokesman, Michael Tuffin.

The industry has begun shopping its plan on Capitol Hill, paying particular attention to the Senate, where Health Committee Chairman Sen. Edward M. Kennedy (D-Mass.) and Senate Finance Committee Chairman Max Baucus (D-Mont.) are working on legislative proposals. It also began building a grassroots army that they can mobilize when legislation starts moving.

“The insurance industry has advanced serious proposals that deserve serious analysis and consideration,” said Kennedy spokesman Anthony Coley.

But Health Care for America Now said the insurance industry’s proposal doesn’t make insurance more affordable. For instance, it doesn’t prevent companies from charging sick and elderly beneficiaries more.

“What they’re trying to do politically is to get ahead of health care reform and shape health care reform in such a way to protect their bottom line as opposed to actually fixing the problems in the health care system,” said the group’s national campaign manager, Richard Kirsch.

He criticized the industry’s plan to prevent medical bankruptcy by providing tax credits to low-income families that would cap total health care expenses instead of offering more affordable plans — a move that Kirsch put this way: “We’ll continue to let you go bankrupt, and we’ll have the government bail you out.”

The industry addresses the affordability issue by calling on Congress to reduce health care costs by 30 percent.

The nation’s largest nurses union has an idea for how to cut those costs: eliminate the insurance industry and switch to a single-payer system. About 30 percent of the system’s cost is from insurance company profits and administration costs, said Rose Ann DeMoro, executive director of the California Nurses Association/National Nurses Organizing Committee.

“It’s the Marshall Plan for insurance industry profits, because they use all the arms of government to force people to buy their failed product,” she said. “What their proposal does is privatize profits and socialize risk.”

Doctors oppose US health plan

By Rebecca Knight in Boston
Financial Times
Published: August 4 2008

The Massachusetts healthcare programme widely seen as a test case for universal health coverage in the US faces mounting opposition from doctors who say the reform is failing.

More than 250 physicians in the state have signed an open letter warning that the healthcare plan, which was signed into law in April 2006 by Mitt Romney, the former Republican governor of Massachusetts, is “already proving fiscally unsustainable”.

The landmark programme, designed to provide uniƂĀ­versal health insurance, requires all uninsured people to purchase private insurance or face a fine or tax penalty.

The doctors’ discontent with the plan, and their support for a single-payer system — whereby payments to healthcare providers would all be made by one administrative body like Britain’s National Health Service, rather than individual insurers — could send a strong signal to other states considering similar reform measures.

Healthcare is one of the main issues on the presidential campaign trail. Both candidates have called for radical reform of the $2,300bn (€1,477bn, £1,172bn ) healthcare system, although neither supports mandatory insurance payments.

In the letter, the Massachusetts doctors say the state-subsidised insurance offered to low-income families is too expensive and that “few can afford premiums for even the skimpiest coverage”. The doctors also warn that funding the plan in future will be hard because it deepened the state’s “dependence on private insurance, [so] can only add coverage by adding costs”.

The Massachusetts plan is an example of “the same reform being tried over and over”, according to Dr Rachel Nardin, assistant professor of neurology at Harvard Medical School, who wrote the letter. “This kind of incremental reform is very popular because it’s politically feasible: it allows the current stakeholders to stay in play,” she said. “But there are a lot reasons why it can’t work.”

A growing number of US doctors favour switching to a national healthcare plan. According to an earlier survey in the journal Annals of Internal Medicine, 59 per cent of doctors said they backed legislation to establish a national health insurance programme, a rise of 10 per cent from 2002.

Copyright The Financial Times Limited 2008

Unemployed and uninsured

By Marie Cocco
Denver Post
Viewpoints
12/03/2008

Here is a number easily understood by even the math-phobic: Every 1 percent increase in the unemployment rate leads to another 1.1 million Americans becoming uninsured — and causes still another million more children and adults to become eligible for state health insurance programs.

This means that over the past 10 months, as the hemorrhage of jobs began to push the national unemployment rate toward its October level of 6.5 percent, about 3 million Americans were thrown off the insurance rolls or had their incomes fall so much that they became eligible for Medicaid or the State Children’s Health Insurance Program.

These estimates by the Kaiser Commission on Medicaid and the Uninsured do not bewilder as much as do the tallies associated with the various federal bailouts and guarantees of banks and other institutions at the core of the financial crisis. Those are in the hundreds of billions — actually, we’re into the trillions when you count up each form of taxpayer backing — to shore up this or that part of the teetering financial system.

But before long, if unemployment climbs as predicted to 8 percent or 9 percent next year, the worsening economic crisis will deepen the health insurance crisis. And the combination of job losses and the loss of insurance that is inevitably connected to them is likely to be an awful lot like the crisis of the early 1990s — the last time the political system tried to fix the confused, costly and crumbling health insurance system.

The recession of the early ’90s led the Clinton administration to attempt universal health care.

Though the Clinton plan is consistently derided as a failure, in truth, President-elect Barack Obama’s campaign pledge to build a universal system based on the current, employer-based method of delivering insurance is in good measure modeled upon it. And that is the problem.

Look only to the Detroit automakers’ current economic straits for the reasons why. The car companies’ unionized workers still count on a model health insurance safety net — but even this has been scaled back repeatedly in successive contracts.

Last year, the United Auto Workers Union and the Big Three entered into a deal to create a separate trust fund to bear the cost of retiree health benefits. The fund is jointly financed by the union and the companies, and a substantial part of the money is coming from current workers’ forgoing promised wage hikes.

Year after year, employers demand health benefit cuts in contract talks, or impose them unilaterally where there is no union.

In a 2008 survey, the Kaiser Family Foundation found that 40 percent of firms that offer insurance said they are “somewhat likely” or “very likely” to increase the amount their workers contribute to insurance in the coming year, a cost shift that includes higher premiums and co-payments.

Yet the average annual worker contribution toward premiums for a family policy already has more than doubled in the past nine years. During the same period, middle-class incomes have been largely stagnant.

With employers quickly shedding workers, is there any doubt that more health benefit cuts are coming for those lucky enough to keep their jobs?

And when recovery comes, does anyone think American business is going to abandon its argument that health costs represent a competitive disadvantage in the global marketplace? They won’t, because it’s accurate. And that’s largely because other countries have universal, taxpayer-funded health care systems.

These are the immutable truths of the health care conundrum. They haven’t changed much in two decades. Costs are driven inexorably higher by continual advances in care as well as an aging population that needs more of it.

Employers can’t cope unless they scale back coverage, shift costs to workers or eliminate benefits altogether.

States have become insurers of last resort — but right now they face crippling budget shortfalls that threaten this safety net.

Using this compromised system as the basis for health insurance revision is folly — more so now than it was in the Clinton era, when more employers still were covering their workers.

Tightening regulation of the insurance industry and creating a new, government-based plan to make coverage available to those who cannot afford to buy it from private insurers — the essence of Obama’s campaign proposal — would only add another layer of complexity and, eventually, cost.

Only a single, government-financed system can eliminate the administrative waste, unfairness and economic burden of our current health insurance scheme.

Timidity is no longer an option.

Marie Cocco’s e-mail address is mariecocco@washpost.com.

http://www.denverpost.com/opinion/ci_11130276http://www.denverpost.com/opinion/ci_11130276

UnitedHealth puts a price on your rights

UnitedHealth to Insure the Right to Insurance

By Reed Abelson
The New York Times
December 2, 2008
For these economically uncertain times, the UnitedHealth Group has a “first of its kind” product: the right to buy an individual health policy at some point in the future even if you become sick.
Called UnitedHealth Continuity, the product is not actual medical insurance, but is aimed at people who may have insurance now but are worried they may lose it — and may not be able to obtain replacement insurance on their own. They may expect to retire early, for example, before they qualify for Medicare. Or they are worried about the possibility of losing their job and their health coverage.
People who are already sick will generally not be eligible for the new product. Those who do pass a medical review, will pay 20 percent each month of the current premium on an individual policy to reserve the right to be insured under the plan at some point in the future.
http://www.nytimes.com/2008/12/03/business/03insure.html?ref=business

One of the many reasons that there is a push for comprehensive reform is that, in most states, individuals who have medical problems are denied the opportunity to purchase insurance on their own. This is one of the more serious flaws in insurance markets since this defeats the primary purpose of insurance – providing individuals with health care needs affordable access to health care.
Those crafting reform would address this problem by including guaranteed issue in their reform proposals. Insurers would be required to offer coverage to those with health care needs, but this would work only if it were coupled with an individual mandate for everyone to purchase coverage, otherwise premiums would skyrocket because of a concentration of high-cost individuals in the insurance risk pools.
There are still those who would prefer to see private sector solutions in the insurance marketplace. In this new product, UnitedHealth Continuity, the private insurance industry is demonstrating the thinking behind market solutions to our health insurance problems. A public sector approach would automatically include everyone forever, making health care a right. In a plan that only the innovative private marketplace sector could devise, the UnitedHealth Group, without providing any insurance benefit whatsoever, has created a way of selling us the the right to health care at some time in the future, but a right that you can purchase only if you are healthy and don’t need care.
Besides the most obvious flaw of selling a right that everyone should have, there is another policy flaw in this proposal. Those who purchase this right and remain healthy would have a full range of insurance options and might well choose other options that may be more appropriate. Those who develop medical problems in the interim would have no choice but to enroll in this plan, only to find that premiums would be unaffordable because of the concentration of other high-cost individuals in the program.
Even with guaranteed issue, an individual mandate, and a regulated marketplace, the private insurance industry will continue to innovate to enhance the business success of their industry. With chants of “health care is a right” in the background, the insurance industry has provided us with yet another innovation in which they can sell to us our right without providing any service or product, merely the option to purchase coverage in the future.
Would someone explain once again why momentum is building in Washington, D.C. to keep this industry in charge of our health care financing? With a single payer national health program, we would play by our rules, not theirs.

UnitedHealth puts a price on your rights

UnitedHealth to Insure the Right to Insurance

By Reed Abelson
The New York Times
December 2, 2008

For these economically uncertain times, the UnitedHealth Group has a “first of its kind” product: the right to buy an individual health policy at some point in the future even if you become sick.

Called UnitedHealth Continuity, the product is not actual medical insurance, but is aimed at people who may have insurance now but are worried they may lose it — and may not be able to obtain replacement insurance on their own. They may expect to retire early, for example, before they qualify for Medicare. Or they are worried about the possibility of losing their job and their health coverage.

People who are already sick will generally not be eligible for the new product. Those who do pass a medical review, will pay 20 percent each month of the current premium on an individual policy to reserve the right to be insured under the plan at some point in the future.

http://www.nytimes.com/2008/12/03/business/03insure.html?ref=business

Comment:

By Don McCanne, MD

One of the many reasons that there is a push for comprehensive reform is that, in most states, individuals who have medical problems are denied the opportunity to purchase insurance on their own. This is one of the more serious flaws in insurance markets since this defeats the primary purpose of insurance – providing individuals with health care needs affordable access to health care.

Those crafting reform would address this problem by including guaranteed issue in their reform proposals. Insurers would be required to offer coverage to those with health care needs, but this would work only if it were coupled with an individual mandate for everyone to purchase coverage, otherwise premiums would skyrocket because of a concentration of high-cost individuals in the insurance risk pools.

There are still those who would prefer to see private sector solutions in the insurance marketplace. In this new product, UnitedHealth Continuity, the private insurance industry is demonstrating the thinking behind market solutions to our health insurance problems. A public sector approach would automatically include everyone forever, making health care a right. In a plan that only the innovative private marketplace sector could devise, the UnitedHealth Group, without providing any insurance benefit whatsoever, has created a way of selling us the the right to health care at some time in the future, but a right that you can purchase only if you are healthy and don’t need care.

Besides the most obvious flaw of selling a right that everyone should have, there is another policy flaw in this proposal. Those who purchase this right and remain healthy would have a full range of insurance options and might well choose other options that may be more appropriate. Those who develop medical problems in the interim would have no choice but to enroll in this plan, only to find that premiums would be unaffordable because of the concentration of other high-cost individuals in the program.

Even with guaranteed issue, an individual mandate, and a regulated marketplace, the private insurance industry will continue to innovate to enhance the business success of their industry. With chants of “health care is a right” in the background, the insurance industry has provided us with yet another innovation in which they can sell to us our right without providing any service or product, merely the option to purchase coverage in the future.

Would someone explain once again why momentum is building in Washington, D.C. to keep this industry in charge of our health care financing? With a single payer national health program, we would play by our rules, not theirs.

The policy lesson of BC/BS of Michigan

Blue Cross Blue Shield of Michigan Answers Attorney General

MarketWatch
December 1, 2008
Blue Cross Blue Shield of Michigan provided more than 300 pages of detailed financial and membership information today to Michigan Attorney General Mike Cox to answer his request for further information about Michigan’s individual health insurance market. The information confirms growth of Michigan’s individual health insurance market and escalating financial losses suffered by BCBSM, the state’s last-resort insurance carrier, in its individual line of business.
BCBSM has warned policy makers and regulators over the past 16 months that because of Michigan’s 30-year-old regulatory structure — which allows all other carriers to dump high-risk individuals into BCBSM’s insurance pool without limit or regulation — uncontrollable financial losses on individual policies will escalate and lead to BCBSM’s entire business becoming financially unstable in the near future.
“Michigan’s individual health insurance market is set up to fail financially,” said Mark Bartlett, BCBSM executive vice president and chief financial officer. “It’s a hard truth, especially if you oppose reforming the market, but it is the truth. Unless comprehensive reform is achieved this year, the financial situation will grow into a crisis that threatens health care, the economy and the health insurance safety net for millions of Michigan residents.”
http://www.marketwatch.com/news/story/Blue-Cross-Blue-Shield-Michigan/story.aspx?guid=%7B5379FA18-BBBE-4084-A40A-AB5CFFB0BDAD%7D

The individual health insurance market in the United States has presented a policy challenge to those attempting to craft a health care financing system that includes everyone.
In most states, insurers marketing individual plans have slowed the increase in their premiums by selling exclusively to healthy individuals. This is important because it takes only a modest number of individuals with health care needs to drive up premiums to ever less affordable levels.
Now that the momentum is building for truly universal coverage, the policy makers crafting reform are faced with the problem of how to cover those with greater needs largely left out of the individual market. One solution has been to establish high risk pools, but the success with such efforts has been almost negligible. Blue Cross Blue Shield of Michigan provides us with a real life experiment of how disastrous that approach can be. They have been warned that they are at risk of losing their status as a licensee of the Blue Cross and Blue Shield Association.
That brings us back to the fundamental problem that has been stated repeatedly in these messages. If everyone were to be included in the risk pools for private plans, and if the coverage were adequate to prevent financial hardship for those with health care needs, then the private insurance industry is no longer capable of providing us with health plans that have affordable premiums.
The solution? One single, universal risk pool. A single payer national health program: a new and improved Medicare for all.

The policy lesson of BC/BS of Michigan

Blue Cross Blue Shield of Michigan Answers Attorney General

MarketWatch
December 1, 2008

Blue Cross Blue Shield of Michigan provided more than 300 pages of detailed financial and membership information today to Michigan Attorney General Mike Cox to answer his request for further information about Michigan’s individual health insurance market. The information confirms growth of Michigan’s individual health insurance market and escalating financial losses suffered by BCBSM, the state’s last-resort insurance carrier, in its individual line of business.

BCBSM has warned policy makers and regulators over the past 16 months that because of Michigan’s 30-year-old regulatory structure — which allows all other carriers to dump high-risk individuals into BCBSM’s insurance pool without limit or regulation — uncontrollable financial losses on individual policies will escalate and lead to BCBSM’s entire business becoming financially unstable in the near future.

“Michigan’s individual health insurance market is set up to fail financially,” said Mark Bartlett, BCBSM executive vice president and chief financial officer. “It’s a hard truth, especially if you oppose reforming the market, but it is the truth. Unless comprehensive reform is achieved this year, the financial situation will grow into a crisis that threatens health care, the economy and the health insurance safety net for millions of Michigan residents.”

http://www.marketwatch.com/news/story/Blue-Cross-Blue-Shield-Michigan/story.aspx?guid=%7B5379FA18-BBBE-4084-A40A-AB5CFFB0BDAD%7D

Comment:

By Don McCanne, MD

The individual health insurance market in the United States has presented a policy challenge to those attempting to craft a health care financing system that includes everyone.

In most states, insurers marketing individual plans have slowed the increase in their premiums by selling exclusively to healthy individuals. This is important because it takes only a modest number of individuals with health care needs to drive up premiums to ever less affordable levels.

Now that the momentum is building for truly universal coverage, the policy makers crafting reform are faced with the problem of how to cover those with greater needs largely left out of the individual market. One solution has been to establish high risk pools, but the success with such efforts has been almost negligible. Blue Cross Blue Shield of Michigan provides us with a real life experiment of how disastrous that approach can be. They have been warned that they are at risk of losing their status as a licensee of the Blue Cross and Blue Shield Association.

That brings us back to the fundamental problem that has been stated repeatedly in these messages. If everyone were to be included in the risk pools for private plans, and if the coverage were adequate to prevent financial hardship for those with health care needs, then the private insurance industry is no longer capable of providing us with health plans that have affordable premiums.

The solution? One single, universal risk pool. A single payer national health program: a new and improved Medicare for all.

It's Time for a Real Debate on National Health Insurance

Editor’s note: This article from May, 1993 is important because it includes a quote from pollster Celinda Lake saying the more working Americans learn about the Canadian (single payer) system, “the higher the support goes.” In contrast, a proposal for a system based on competing private insurers was found “laughable.”

Public Health

by Jeff Cohen and Norman Solomon
May 12,1993
Page 78

When a coalition of groups concerned about health care held a loud public protest in midtown Manhattan on May 12 [1993], they didn’t set up their picket line outside a hospital or W insurance company headquarters or government agency.

Instead, they gathered in front of the New York Times building, and their demand was simple: “Stop rationing health care news!” The protesters are angry over the fact that the newspaper’s reporting routinely downplays a popular proposal-endorsed by 12 of New York City’s 14 members of Congress-to overhaul the American health system: a singlepayer system of publicly-financed health care.

Poll after poll has shown that most Americans favor tax-financed national health insurance. But at the New York Times and other national media, proponents are kept at the periphery of the health care debate. They include 58 members of Congress who, on March 3 [1993], introduced a bill-“The American Health Security Act”-to establish a Canadian-style, single-payer system.

In a single-payer system, private insurance companies are basically removed from health care. Instead, the government pays all health care providers, and controls fees and costs. As in Canada, consumers would choose their own doctors-but almost never receive a hospital or doctor bill. Insurance deductibles and co-payments are also eliminated.

By eliminating administrative waste and insurance company profits, the shift to a single-payer system would cut $67 billion per year from our country’s medical bill, according to the General Accounting Office-and $39 billion yearly in bureaucracy, according to the Congressional Budget Office. Of every health-care dollar spent in the U.S., 22 cents goes to administrators; in Canada, that figure is 10 cents.

A single-payer system has been endorsed by health care activists, seniors groups, labor unions and a number of regional dailies-including the Atlanta Journal-Constitution and St. Louis Post-Dispatch. A recent Times-Mirror poll found 41 percent of U.S. doctors in support.

After conducting extensive focus groups on health care, pollster Celinda Lake discovered that the more people are told about the Canadian system, “the higher the support goes.” In contrast, according to Lake, working Americans found the managed competition idea “laughable.”

But much of the national news coverage in recent weeks has been promoting Bill Clinton’s managed competition plan as the smart, new, “politically viable” option.

News reports trumpet the “consensus” behind managed competition: big insurance companies, most doctors, conservative Republican think tanks, George Bush, conservative Democratic think tanks, Hillary Rodham Clinton-and the wise men from the “Jackson Hole Group” who’ve been meeting in Wyoming for years to discuss “health care reform.”

In national media discourse, managed competition seems easier to tout than explain. Since no other country has ever tried such a system, it remains a complicated, untested theory.

The plan leaves the largest insurance companies in the center of the picture; after the federal government defines a minimum package of benefits, health care partnerships or superHMOs organized by insurance firms would “compete” to offer health packages. Meanwhile, giant “Health Insurance Purchasing Cooperatives” would be formed so that employers and consumers could search for the best deal. Between these behemoths would be the government, “managing the competition,” grading the medical providers and trying to restrain costs.

To the protesters outside the New York Times headquarters, the news tilt toward managed competition is explained by the clout of insurance companies and medical industry firms- which are major media advertisers. And, as it happens, four members of the New York Times board of directors are also directors of major insurance companies; two are directors of pharmaceutical companies.

While it’s far-fetched to hunt for a conspiracy, the imprint of the insurance industry is all over the managed competition idea. The Jackson Hole study group that originated the scheme is made up of big insurance companies like Prudential, Metropolitan Life, Aetna and Cigna, plus hospital and pharmaceutical interests. Insurers were important early contributors to Clinton’s presidential campaign, and donated $850,000 to the Democratic Party (and even more to the Republicans) for the 1992 elections.

Critics dismiss managed competition as a bureaucratic hoax that should be renamed the “Insurance Industry Preservation Act.” They warn that the freedom to choose one’s own doctor would be eroded. They say it’s absurd to leave “reform” to the Jackson Hole group of special interests who profit from the inefficient status quo.
Managed competition was the subject of a lengthy MacNeil-Lehrer NewsHour discussion on May 5 [1993]. The panel was made up of three government officials-a congressman, a governor and a state health commissioner-who said the Clinton approach would lower costs, and a fourth panelist, Dr. Steffie Woolhandler, who argued it would increase costs and bureaucracy. (Woolhandler founded Physicians for a National Health Program, representing thousands of doctors who support a single-payer system.)

Near the end of the discussion, anchor Robert MacNeil offered Woolhandler the last word “since you’re in the minority”-to which she responded: “Robert, I’m not in a minority. Polls are showing two-thirds of the American people support government-funded national health insurance.”

MacNeil then rephrased his question: “If this [managed competition] is the program that has a political consensus and the other one that you advocate [single-payer] is considered impossible politically at the moment, why are you then against the one that is viable?”

Because it won’t “provide Americans with the care they need,” the doctor replied.

But she could have offered another response: If much of the public supports national health insurance, and it’s not debated seriously in Washington or the national media because of the power of special interests like the insurance lobby, what does that say about the health of our democracy?

That is an issue journalists should be exploring.

It’s Time for a Real Debate on National Health Insurance

Editor’s note: This article from May, 1993 is important because it includes a quote from pollster Celinda Lake saying the more working Americans learn about the Canadian (single payer) system, “the higher the support goes.” In contrast, a proposal for a system based on competing private insurers was found “laughable.”

Public Health

by Jeff Cohen and Norman Solomon
May 12,1993
Page 78

When a coalition of groups concerned about health care held a loud public protest in midtown Manhattan on May 12 [1993], they didn’t set up their picket line outside a hospital or W insurance company headquarters or government agency.

Instead, they gathered in front of the New York Times building, and their demand was simple: “Stop rationing health care news!” The protesters are angry over the fact that the newspaper’s reporting routinely downplays a popular proposal-endorsed by 12 of New York City’s 14 members of Congress-to overhaul the American health system: a singlepayer system of publicly-financed health care.

Poll after poll has shown that most Americans favor tax-financed national health insurance. But at the New York Times and other national media, proponents are kept at the periphery of the health care debate. They include 58 members of Congress who, on March 3 [1993], introduced a bill-“The American Health Security Act”-to establish a Canadian-style, single-payer system.

In a single-payer system, private insurance companies are basically removed from health care. Instead, the government pays all health care providers, and controls fees and costs. As in Canada, consumers would choose their own doctors-but almost never receive a hospital or doctor bill. Insurance deductibles and co-payments are also eliminated.

By eliminating administrative waste and insurance company profits, the shift to a single-payer system would cut $67 billion per year from our country’s medical bill, according to the General Accounting Office-and $39 billion yearly in bureaucracy, according to the Congressional Budget Office. Of every health-care dollar spent in the U.S., 22 cents goes to administrators; in Canada, that figure is 10 cents.

A single-payer system has been endorsed by health care activists, seniors groups, labor unions and a number of regional dailies-including the Atlanta Journal-Constitution and St. Louis Post-Dispatch. A recent Times-Mirror poll found 41 percent of U.S. doctors in support.

After conducting extensive focus groups on health care, pollster Celinda Lake discovered that the more people are told about the Canadian system, “the higher the support goes.” In contrast, according to Lake, working Americans found the managed competition idea “laughable.”

But much of the national news coverage in recent weeks has been promoting Bill Clinton’s managed competition plan as the smart, new, “politically viable” option.

News reports trumpet the “consensus” behind managed competition: big insurance companies, most doctors, conservative Republican think tanks, George Bush, conservative Democratic think tanks, Hillary Rodham Clinton-and the wise men from the “Jackson Hole Group” who’ve been meeting in Wyoming for years to discuss “health care reform.”

In national media discourse, managed competition seems easier to tout than explain. Since no other country has ever tried such a system, it remains a complicated, untested theory.

The plan leaves the largest insurance companies in the center of the picture; after the federal government defines a minimum package of benefits, health care partnerships or superHMOs organized by insurance firms would “compete” to offer health packages. Meanwhile, giant “Health Insurance Purchasing Cooperatives” would be formed so that employers and consumers could search for the best deal. Between these behemoths would be the government, “managing the competition,” grading the medical providers and trying to restrain costs.

To the protesters outside the New York Times headquarters, the news tilt toward managed competition is explained by the clout of insurance companies and medical industry firms- which are major media advertisers. And, as it happens, four members of the New York Times board of directors are also directors of major insurance companies; two are directors of pharmaceutical companies.

While it’s far-fetched to hunt for a conspiracy, the imprint of the insurance industry is all over the managed competition idea. The Jackson Hole study group that originated the scheme is made up of big insurance companies like Prudential, Metropolitan Life, Aetna and Cigna, plus hospital and pharmaceutical interests. Insurers were important early contributors to Clinton’s presidential campaign, and donated $850,000 to the Democratic Party (and even more to the Republicans) for the 1992 elections.

Critics dismiss managed competition as a bureaucratic hoax that should be renamed the “Insurance Industry Preservation Act.” They warn that the freedom to choose one’s own doctor would be eroded. They say it’s absurd to leave “reform” to the Jackson Hole group of special interests who profit from the inefficient status quo.
Managed competition was the subject of a lengthy MacNeil-Lehrer NewsHour discussion on May 5 [1993]. The panel was made up of three government officials-a congressman, a governor and a state health commissioner-who said the Clinton approach would lower costs, and a fourth panelist, Dr. Steffie Woolhandler, who argued it would increase costs and bureaucracy. (Woolhandler founded Physicians for a National Health Program, representing thousands of doctors who support a single-payer system.)

Near the end of the discussion, anchor Robert MacNeil offered Woolhandler the last word “since you’re in the minority”-to which she responded: “Robert, I’m not in a minority. Polls are showing two-thirds of the American people support government-funded national health insurance.”

MacNeil then rephrased his question: “If this [managed competition] is the program that has a political consensus and the other one that you advocate [single-payer] is considered impossible politically at the moment, why are you then against the one that is viable?”

Because it won’t “provide Americans with the care they need,” the doctor replied.

But she could have offered another response: If much of the public supports national health insurance, and it’s not debated seriously in Washington or the national media because of the power of special interests like the insurance lobby, what does that say about the health of our democracy?

That is an issue journalists should be exploring.

Alain Enthoven responds on reform of the Dutch system

The Quote of the Day for November 28, 2008 briefly discussed the JHPPL article by Pauline Vaillancourt Rosenau and Christiaan J. Lako, “An Experiment with Regulated Competition and Individual Mandates for Universal Health Care: The New Dutch Health Insurance System.” The authors referred to the Dutch reform as “Enthoven-inspired.”
Alain C. Enthoven, Ph.D. is the Marriner S. Eccles Professor of Public and Private Management, emeritus, at Stanford University, and a core faculty member at CHP/PCOR. Known as the “father of managed competition,” he was one of the founders of the Jackson Hole Group, a national think-tank on healthcare policy.
Professor Enthoven provides this response to the November 28 Quote of the Day message:

Don’t leap to unfounded conclusions too quickly in this complex and important subject.
In 1977-8, when I designed and proposed Consumer Choice Health Plan, a plan for universal health insurance based on regulated competition in the private sector, I observed that, in the United States, there were many alternatives to inflationary uncoordinated fee-for-service which dominates our scene. They were mainly prepaid multi-specialty group practices (PGPs), also other multi-specialty group practices, all proven to be able to reduce and manage costs, as well as physician-created individual practice associations some of which were and are being successful in managing and reducing costs. So the main idea was to subject inflationary uncoordinated fee for service to competition to produce value for money from organized alternatives that were reducing costs, and ultimately to replace uncoordinated fee for service almost entirely. Unfortunately, the USA has not created market conditions favorable to efficient economical health care (most employers do not even offer PGPs as a choice), so these systems have not been able to prove themselves on a national scale. And Medicare has remained dominated by fee for service, and it is a huge strain on Federal finances. In smaller regional situations, however, competing multi-specialty group practices have been proved to be far less costly than fee for service when embedded in a competition model. Perhaps the best example is the public employee’s Employee Trust Funds in the State of Wisconsin. The state employees plan is a good model of managed competition. Employees are offered a variety of choices and the state pays approximately the low priced plan. They have some excellent multi specialty group practices with their own insurance plans, and some group health cooperatives which are similar. The great majority of employees have chosen HMOs. And the costs in Madison, the state capitol where the market is dominated by public employees are far less than they are on the east coast of Wisonsin dominated by fee for service (a difference of approximately $4000 per family per year.)
Unfortunately, the Dutch have no prepaid group practices or even multi specialty group practices. Their insurance companies are selling what we call “preferred provider insurance” which is a variation of fee for service solo practice. For several reasons, they have not been able or willing to become highly selective in their provider networks. For one, many prices are still regulated by government. For another, they lack public quality measures that the insurers could use to select narrower networks. So, as I told the Dutch leaders in a 2006 lecture, they have implemented only half of the managed competition concept. They need integrated delivery systems as we have in America. I suggested to the Minister of Health that after studying American integrated delivery systems, they get to work on starting some in Holland. That will take time. Nothing can change the whole health care system in a short time. So many Dutch people have been over here studying American integrated delivery systems, including the Minister of Health and his team. They need to find some doctors who are interested in the project and then fund some startups. That would put a lot of pressure on the insurance companies to innovate in more economical health care.
It is interesting to note that the British have several teams studying American integrated delivery systems. The process started in 2002 when a famous British doctor and his wife, a former Kaiser Permanente executive, published an article in the British Medical Journal called “More For their Dollar: A comparison of California’s Kaiser Permanente and the British National Health Service.” They found that after making appropriate price and other adjustments, that Kaiser costs were similar to the NHS and for that, Kaiser members got far more for their dollar than the NHS, including such things as much more prompt access to advanced technologies, aggressive outreach for cancer prevention, etc. That was met with a storm of debate. But when the dust settled, their conclusion proved unshakeable. British scholars found, for example, that members 65 and over in the UK spent 3.5 times as many days in hospital as did similar people in Kaiser in California. Their follow up studies found that the essential ingredient was far superior integration of medical practices. My editorial accompanying the 2002 article was entitled “Competition Made them Do It.”
So in my view, it would be a serious error to leap to the conclusion that the Dutch model is a flop. It is a work in progress. The Dutch health care model does get good ratings in international surveys and their costs remain far below ours in America. Whether we are talking Holland or the USA, costs will not be contained and quality not improved, until we replace uncoordinated fee for service with efficient organized delivery systems that use information technology to measure and improve results, that accept responsibility for managing costs and quality. The good news is that when given a responsible choice, most consumers choose the efficient organized delivery systems. So the change does not need to be forced on an unwilling population (as, unfortunately, many employers tried in the 1990s.)
Alain Enthoven
Quote of the Day, “Lessons from the Netherlands,” Nov. 28, 2008:
https://pnhp.org/news/2008/november/lessons_from_the_net.php
Quote of the Day, “Feachem’s Kaiser study not credible,” June 1, 2004:
https://pnhp.org/news/2004/june/feachems_kaiser_stu.php

We share with Alain Enthoven the concern over our very high and ever increasing spending for a mediocre health care system that leaves so many out. We have disagreed with him (sometimes obnoxiously so) on the best approach to return value and high performance to our health care delivery system. He supports “universal health insurance based on regulated competition in the private sector,” whereas we support a publicly administered and publicly financed single payer national health program.
Enthoven discusses prepaid multi-specialty group practices (PGPs) and physician-created individual practice associations (IPAs) as examples of integrated systems that can manage and control costs. Although there are several variations, Kaiser Permanente can serve as a proxy for the concept of an integrated health care delivery system.
We certainly have no problem with integrated health care delivery systems. In fact, we have included them in our models of single payer reform, though with the primary function of delivering health care, rather than in a risk-beariing insurance role. Arnold Relman, a single payer supporter, has stressed the importance of not only reforming health care financing, but also the importance of using multi-specialty, not-for-profit organizations to deliver health care.
It seems that where we part with Prof. Enthoven is over the role of competition. I think that we all agree that physicians, hospitals, and other health care providers competing based on the quality of their services would be beneficial in the health care marketplace. Competing on price is quite another issue.
Most economists agree that price competition plays almost no role for individuals who must access the system for health care. So most of the discussion of price competition has been in the choice of insurance products. We agree with Enthoven that our existing, dysfunctional, fragmented, multi-payer system in the USA “has not created market conditions favorable to efficient, economical health care.”
Enthoven seems to concede that the Dutch model is not yet a model for the United States since it relies on “preferred provider insurance” (PPOs). He considers the Dutch reform to be a work in progress, still requiring the transformation of the health care delivery system into “integrated delivery systems.”
Imagine maybe four competing integrated health care delivery systems within a metropolis, again using Kaiser Permanente as a proxy. Each one would have its own exclusive professionals, hospitals and other facilities to provide the full range of health care services, including the most advanced technological services. Would each one have an organ transplant service? What about the suburban and rural sectors served by these integrated systems? Would each integrated system provide a primary care outpost, four in each community, duplicating services in these outreach areas? Could one metropolis support four very costly, duplicative, integrated health delivery systems?
The point is that integrated delivery systems are an important part of our entire health care delivery system, but they can never serve as an exclusive single financing model to herd us into systems competing on price (and quality), with no other place to turn for health care.
In one paragraph above, Enthoven mentions the comparison of Kaiser Permanente with the British National Health Service, citing a study that was done by Richard Feachem, et al. Enthoven states that their study “met with a storm of debate… but when the dust settled, their conclusion proved unshakeable.” Feachem’s flawed study is a diversion from the important issues discussed here, but the dust never did settle. A critique of Feachem’s study can be found at the link above, and nothing more will be said about it here (Quote of the Day, June 1, 2004).
Prof. Enthoven raises a red flag that our policy makers need to take heed of. He attributes the failure of the Dutch to achieve their goals of reform to the fact that, to date, the insurers are selling only “preferred provider insurance.” That is currently the predominant form of private insurance in the United States. It forms the basis of the competing private insurance plans that we will be required to purchase under the current leading proposals for reform. Although some choices are nominally HMOs, in fact they are functionally PPOs in disguise. True HMOs such as Kaiser Permanente are not available to the majority of us.
We should listen to Prof. Enthoven and reject PPOs. We can obtain our care from any accessible integrated health delivery system, if we so choose. But let’s adopt a system that actually will slow the growth in health care costs while providing a mechanism for improving the allocation of our health care dollars: a single payer national health program (even if that is not Prof. Enthoven’s preferred model of reform).

Alain Enthoven responds on reform of the Dutch system

The Quote of the Day for November 28, 2008 briefly discussed the JHPPL article by Pauline Vaillancourt Rosenau and Christiaan J. Lako, “An Experiment with Regulated Competition and Individual Mandates for Universal Health Care: The New Dutch Health Insurance System.” The authors referred to the Dutch reform as “Enthoven-inspired.”

Alain C. Enthoven, Ph.D. is the Marriner S. Eccles Professor of Public and Private Management, emeritus, at Stanford University, and a core faculty member at CHP/PCOR. Known as the “father of managed competition,” he was one of the founders of the Jackson Hole Group, a national think-tank on healthcare policy.

Professor Enthoven provides this response to the November 28 Quote of the Day message:

Don’t leap to unfounded conclusions too quickly in this complex and important subject.

In 1977-8, when I designed and proposed Consumer Choice Health Plan, a plan for universal health insurance based on regulated competition in the private sector, I observed that, in the United States, there were many alternatives to inflationary uncoordinated fee-for-service which dominates our scene. They were mainly prepaid multi-specialty group practices (PGPs), also other multi-specialty group practices, all proven to be able to reduce and manage costs, as well as physician-created individual practice associations some of which were and are being successful in managing and reducing costs. So the main idea was to subject inflationary uncoordinated fee for service to competition to produce value for money from organized alternatives that were reducing costs, and ultimately to replace uncoordinated fee for service almost entirely. Unfortunately, the USA has not created market conditions favorable to efficient economical health care (most employers do not even offer PGPs as a choice), so these systems have not been able to prove themselves on a national scale. And Medicare has remained dominated by fee for service, and it is a huge strain on Federal finances. In smaller regional situations, however, competing multi-specialty group practices have been proved to be far less costly than fee for service when embedded in a competition model. Perhaps the best example is the public employee’s Employee Trust Funds in the State of Wisconsin. The state employees plan is a good model of managed competition. Employees are offered a variety of choices and the state pays approximately the low priced plan. They have some excellent multi specialty group practices with their own insurance plans, and some group health cooperatives which are similar. The great majority of employees have chosen HMOs. And the costs in Madison, the state capitol where the market is dominated by public employees are far less than they are on the east coast of Wisonsin dominated by fee for service (a difference of approximately $4000 per family per year.)

Unfortunately, the Dutch have no prepaid group practices or even multi specialty group practices. Their insurance companies are selling what we call “preferred provider insurance” which is a variation of fee for service solo practice. For several reasons, they have not been able or willing to become highly selective in their provider networks. For one, many prices are still regulated by government. For another, they lack public quality measures that the insurers could use to select narrower networks. So, as I told the Dutch leaders in a 2006 lecture, they have implemented only half of the managed competition concept. They need integrated delivery systems as we have in America. I suggested to the Minister of Health that after studying American integrated delivery systems, they get to work on starting some in Holland. That will take time. Nothing can change the whole health care system in a short time. So many Dutch people have been over here studying American integrated delivery systems, including the Minister of Health and his team. They need to find some doctors who are interested in the project and then fund some startups. That would put a lot of pressure on the insurance companies to innovate in more economical health care.

It is interesting to note that the British have several teams studying American integrated delivery systems. The process started in 2002 when a famous British doctor and his wife, a former Kaiser Permanente executive, published an article in the British Medical Journal called “More For their Dollar: A comparison of California’s Kaiser Permanente and the British National Health Service.” They found that after making appropriate price and other adjustments, that Kaiser costs were similar to the NHS and for that, Kaiser members got far more for their dollar than the NHS, including such things as much more prompt access to advanced technologies, aggressive outreach for cancer prevention, etc. That was met with a storm of debate. But when the dust settled, their conclusion proved unshakeable. British scholars found, for example, that members 65 and over in the UK spent 3.5 times as many days in hospital as did similar people in Kaiser in California. Their follow up studies found that the essential ingredient was far superior integration of medical practices. My editorial accompanying the 2002 article was entitled “Competition Made them Do It.”

So in my view, it would be a serious error to leap to the conclusion that the Dutch model is a flop. It is a work in progress. The Dutch health care model does get good ratings in international surveys and their costs remain far below ours in America. Whether we are talking Holland or the USA, costs will not be contained and quality not improved, until we replace uncoordinated fee for service with efficient organized delivery systems that use information technology to measure and improve results, that accept responsibility for managing costs and quality. The good news is that when given a responsible choice, most consumers choose the efficient organized delivery systems. So the change does not need to be forced on an unwilling population (as, unfortunately, many employers tried in the 1990s.)

Alain Enthoven

Quote of the Day, “Lessons from the Netherlands,” Nov. 28, 2008:
https://pnhp.org/news/2008/november/lessons_from_the_net.php

Quote of the Day, “Feachem’s Kaiser study not credible,” June 1, 2004:
https://pnhp.org/news/2004/june/feachems_kaiser_stu.php

Comment:

By Don McCanne

We share with Alain Enthoven the concern over our very high and ever increasing spending for a mediocre health care system that leaves so many out. We have disagreed with him (sometimes obnoxiously so) on the best approach to return value and high performance to our health care delivery system. He supports “universal health insurance based on regulated competition in the private sector,” whereas we support a publicly administered and publicly financed single payer national health program.

Enthoven discusses prepaid multi-specialty group practices (PGPs) and physician-created individual practice associations (IPAs) as examples of integrated systems that can manage and control costs. Although there are several variations, Kaiser Permanente can serve as a proxy for the concept of an integrated health care delivery system.

We certainly have no problem with integrated health care delivery systems. In fact, we have included them in our models of single payer reform, though with the primary function of delivering health care, rather than in a risk-beariing insurance role. Arnold Relman, a single payer supporter, has stressed the importance of not only reforming health care financing, but also the importance of using multi-specialty, not-for-profit organizations to deliver health care.

It seems that where we part with Prof. Enthoven is over the role of competition. I think that we all agree that physicians, hospitals, and other health care providers competing based on the quality of their services would be beneficial in the health care marketplace. Competing on price is quite another issue.

Most economists agree that price competition plays almost no role for individuals who must access the system for health care. So most of the discussion of price competition has been in the choice of insurance products. We agree with Enthoven that our existing, dysfunctional, fragmented, multi-payer system in the USA “has not created market conditions favorable to efficient, economical health care.”

Enthoven seems to concede that the Dutch model is not yet a model for the United States since it relies on “preferred provider insurance” (PPOs). He considers the Dutch reform to be a work in progress, still requiring the transformation of the health care delivery system into “integrated delivery systems.”

Imagine maybe four competing integrated health care delivery systems within a metropolis, again using Kaiser Permanente as a proxy. Each one would have its own exclusive professionals, hospitals and other facilities to provide the full range of health care services, including the most advanced technological services. Would each one have an organ transplant service? What about the suburban and rural sectors served by these integrated systems? Would each integrated system provide a primary care outpost, four in each community, duplicating services in these outreach areas? Could one metropolis support four very costly, duplicative, integrated health delivery systems?

The point is that integrated delivery systems are an important part of our entire health care delivery system, but they can never serve as an exclusive single financing model to herd us into systems competing on price (and quality), with no other place to turn for health care.

In one paragraph above, Enthoven mentions the comparison of Kaiser Permanente with the British National Health Service, citing a study that was done by Richard Feachem, et al. Enthoven states that their study “met with a storm of debate… but when the dust settled, their conclusion proved unshakeable.” Feachem’s flawed study is a diversion from the important issues discussed here, but the dust never did settle. A critique of Feachem’s study can be found at the link above, and nothing more will be said about it here (Quote of the Day, June 1, 2004).

Prof. Enthoven raises a red flag that our policy makers need to take heed of. He attributes the failure of the Dutch to achieve their goals of reform to the fact that, to date, the insurers are selling only “preferred provider insurance.” That is currently the predominant form of private insurance in the United States. It forms the basis of the competing private insurance plans that we will be required to purchase under the current leading proposals for reform. Although some choices are nominally HMOs, in fact they are functionally PPOs in disguise. True HMOs such as Kaiser Permanente are not available to the majority of us.

We should listen to Prof. Enthoven and reject PPOs. We can obtain our care from any accessible integrated health delivery system, if we so choose. But let’s adopt a system that actually will slow the growth in health care costs while providing a mechanism for improving the allocation of our health care dollars: a single payer national health program (even if that is not Prof. Enthoven’s preferred model of reform).

Single-payer is path to universal coverage

By Dr. Taro Adachi
Baltimore Sun
Letter to the Editor
Nov. 25, 2008

http://www.baltimoresun.com/news/opinion/letters/bal-ed.le.letters25n10nov25,0,3920952.story

The concept of the health insurance industry guiding the terms for a national health care plan would be worth a laugh if it wasn’t so dangerous (“Insurers propose health care terms,” Nov. 20).

Leaders of America’s Health Insurance Plans have suggested that, in exchange for agreeing to accept all customers regardless of health conditions, they want a federal requirement that everyone buy coverage. But we have already seen such plans consistently fail on a state level.

The Massachusetts health care plan, which was supposed to create universal coverage, has left hundreds of thousands of people uninsured because the premiums and out-of-pocket expenses are too costly for many to afford.

Other states have tried similar plans but have also failed to achieve universal coverage as a result of annual increases in insurance premiums that make the subsidies many people need to afford care prohibitively expensive.

Mandates requiring people to purchase health insurance are unrealistic when the cost makes health insurance unaffordable.

Health insurance premiums have significantly risen every year, hurting both employers and consumers. This trend would not end under the industry’s current proposal. Instead, we would continue to pay profit-seeking insurers more while we get less care.

We must face the fact that the health insurance industry is a market failure and encourage our political leaders to see that a true single-payer national health system is not only politically feasible but necessary.

The writer is a member of Physicians for a National Health Program.