PNHP

But What Have They Done Lately?

But What Have They Done Lately?

Wall Street Journal
Letter
July 7, 2008; Page A12

Benjamin Zycher’s “Drug Development Needs Private Industry” (op-ed, June 28) aims to refute my statement, which he accurately quotes, “The drug companies do almost no innovation now [italics added].” But the examples of innovation he cites date back to the 1980s or earlier. Moreover, he doesn’t tell the whole story even about these older drugs. For example, Amgen did not work out the synthesis of Epogen on its own; it licensed the basic technique from Columbia University. Nearly every top-selling drug today has progenitors dating back many years, often based on NIH-funded research in universities.

Even Mr. Zycher found that of the 35 drugs he reviewed, “private-sector research was responsible for central advances in basic science for seven.” That’s not much of a yield. (Mr. Zycher should have mentioned that the Tufts Center for the Study of Drug Development, with which he collaborated, is largely supported by the pharmaceutical industry.) Far from doing scientific innovation, the large drug companies license or otherwise acquire discoveries from universities or small biotech companies, then develop them for commercial production and sponsor the clinical research necessary for FDA approval. That’s expensive, but hardly creative in the scientific sense. As one senior executive told Journal reporter Gautam Naik (Feb. 13, 2002), “We’re not going to put our money in-house if there’s a better investment vehicle outside.”

The problem with this sequence — publicly-funded innovation handed off to the drug companies — is that the industry expects to be rewarded as though it were the source of innovation, pricing drugs as high as the traffic will bear and doing everything possible to extend its exclusive marketing rights. The only really innovative thing about this industry today is the claims of its apologists.

Marcia Angell, M.D.
Harvard Medical School
Cambridge, Mass.

Britain's NICE and social solidarity

Britain Weighs the Social Cost of High-Priced Drugs

By Joanne Silberner
NPR
July 3, 2008
Funding ‘Wonder’ Drugs
The government agency that decides what drugs the NHS will provide is the National Institute for Health and Clinical Excellence (NICE). Sir Michael Rawlins, chairman of NICE, says he knows his agency’s rulings can cause much disappointment.
Paying huge amounts of money for every new drug with the faintest hope of extending life by even a small amount would make it impossible for the NHS to provide universal care.
And Rawlins is sure that someday Americans will have to deal more directly with these same thorny questions of rationing and hope.
The United States will one day have to take cost effectiveness into account, he says. “There is no doubt about it all. You cannot keep on increasing your health care costs at the rate you are for so poor return. You are 29th in the world in life expectancy. You pay twice as much for health care as anyone else on God’s Earth.”
Social Solidarity
And then of course, he points to the millions of Americans with no access to health care because they can’t afford it.
“We have in Britain, as in most of Europe actually, a health care system based on social solidarity,” he says. “We look after each other when we’re sick. And that’s very precious to us in Britain. And I think that’s what we find so difficult about your health care system; you don’t have that.”
Cancer patient Donald Sutherland is happy with the British system, even with its limits.
“I think we’re quite patient people, albeit if we want something, we’ll make sure that we get it,” he says. “In my experience, I can only say that whenever I’ve needed the National Health Service, it’s always been there, and I’ve always had first-class treatment.”
Sutherland’s big interest is in more funding for the search for an effective treatment for lung cancer. And he doesn’t expect his fellow taxpayers to pay for a drug until there’s solid proof that there’s a benefit.
http://www.npr.org/templates/story/story.php?storyId=91996282

And…

Weighing the Costs of a CT Scan’s Look Inside the Heart

By Alex Berenson and Reed Abelson
The New York Times
June 29, 2008
(CT angiograms) were given to more than 150,000 people in this country last year at a cost exceeding $100 million. Their use is expected to soar through the next decade. But there is scant evidence that the scans benefit most patients.
And they expose patients to large doses of radiation, equivalent to at least several hundred X-rays, creating a small but real cancer risk.
Mr. (Robert) Franks has a family history of cardiac disease, and his father and two uncles died of heart attacks. But Mr. Franks… is in excellent shape.
(Mr. Franks) decided to have a nuclear stress test. When that test showed no problem, the cardiologist who conducted it said he did not need more testing.
After doing research on the Internet, (Mr. Franks) found Dr. (Harvey) Hecht, who recommended a CT angiogram. Dr. Hecht acknowledged that Mr. Franks probably did not have severe heart disease. But he said the scan would be valuable anyway because it might reassure him. And his insurance would cover the cost.
http://www.nytimes.com/2008/06/29/business/29scan.html?hp=&pagewanted=all

One of the more important reasons that the U.S. health care system is so much more expensive than those of other nations is our well documented excess use of expensive high-tech services and products. As much as 30 percent of spending is for services of little or no benefit, and often leads to adverse consequences as a direct result of the intervention or indirectly due to other interventions that this overuse may lead to.
$100,000 drugs that have a 100 percent incidence of poisoning, but have only a negligible impact on the malignancy targeted, are not the breakthrough technology that those profiting from them imply. An expensive imaging procedure that has not been demonstrated to be of benefit, but has radiation doses known to cause cancer, is another breakthrough that favorably impacts profits to the detriment of patients.
We can learn much from the National Institute for Health and Clinical Excellence (NICE), an independent organization that provides Britain’s National Health Service with “national guidance on promoting good health and preventing and treating ill health.” Sadly, much of the publicity in the U.S. on NICE has come from the opponents of a government role in health care, claiming that NICE is depriving British citizens of life-saving cures. In fact, NICE is reducing the waste of taxpayer funds by providing better guidance on how those funds should be spent.
Compare that to the United States. Mr. Franks (NY Times article above) received an expensive test that was not medically indicated, but that perhaps could provide him with reassurance, and it would add to Dr. Hecht’s income, possibly at the cost of giving Mr. Franks cancer. But it was okay because his insurance would pay for it. What?
Whether health care is paid for by a public program or a private insurance plan, we all pay for it. Excess public spending wastes our taxes, but excess private insurer spending wastes our premium dollars and further adds a surcharge in outrageous administrative costs that are tacked on to our health care bill.
A NICE-like program combined with public financing in the United States would dramatically increase the value received for health care spending for all of us, and isn’t that what social solidarity is all about?
You should go to the NICE website to familiarize yourself with this program. Not only will you be able to answer the ideologues who try to demonize this program, but, much more importantly, you will be in a position to advocate with greater confidence for an even better health care system that is more affordable for all of us.
National Institute for Health and Clinical Excellence (NICE):
http://www.nice.org.uk/

Britain's NICE and social solidarity

Britain Weighs the Social Cost of High-Priced Drugs

By Joanne Silberner
NPR
July 3, 2008

Funding ‘Wonder’ Drugs

The government agency that decides what drugs the NHS will provide is the National Institute for Health and Clinical Excellence (NICE). Sir Michael Rawlins, chairman of NICE, says he knows his agency’s rulings can cause much disappointment.

Paying huge amounts of money for every new drug with the faintest hope of extending life by even a small amount would make it impossible for the NHS to provide universal care.

And Rawlins is sure that someday Americans will have to deal more directly with these same thorny questions of rationing and hope.

The United States will one day have to take cost effectiveness into account, he says. “There is no doubt about it all. You cannot keep on increasing your health care costs at the rate you are for so poor return. You are 29th in the world in life expectancy. You pay twice as much for health care as anyone else on God’s Earth.”

Social Solidarity

And then of course, he points to the millions of Americans with no access to health care because they can’t afford it.

“We have in Britain, as in most of Europe actually, a health care system based on social solidarity,” he says. “We look after each other when we’re sick. And that’s very precious to us in Britain. And I think that’s what we find so difficult about your health care system; you don’t have that.”

Cancer patient Donald Sutherland is happy with the British system, even with its limits.

“I think we’re quite patient people, albeit if we want something, we’ll make sure that we get it,” he says. “In my experience, I can only say that whenever I’ve needed the National Health Service, it’s always been there, and I’ve always had first-class treatment.”

Sutherland’s big interest is in more funding for the search for an effective treatment for lung cancer. And he doesn’t expect his fellow taxpayers to pay for a drug until there’s solid proof that there’s a benefit.

http://www.npr.org/templates/story/story.php?storyId=91996282

And…

Weighing the Costs of a CT Scan’s Look Inside the Heart

By Alex Berenson and Reed Abelson
The New York Times
June 29, 2008

(CT angiograms) were given to more than 150,000 people in this country last year at a cost exceeding $100 million. Their use is expected to soar through the next decade. But there is scant evidence that the scans benefit most patients.

And they expose patients to large doses of radiation, equivalent to at least several hundred X-rays, creating a small but real cancer risk.

Mr. (Robert) Franks has a family history of cardiac disease, and his father and two uncles died of heart attacks. But Mr. Franks… is in excellent shape.

(Mr. Franks) decided to have a nuclear stress test. When that test showed no problem, the cardiologist who conducted it said he did not need more testing.

After doing research on the Internet, (Mr. Franks) found Dr. (Harvey) Hecht, who recommended a CT angiogram. Dr. Hecht acknowledged that Mr. Franks probably did not have severe heart disease. But he said the scan would be valuable anyway because it might reassure him. And his insurance would cover the cost.

http://www.nytimes.com/2008/06/29/business/29scan.html?hp=&pagewanted=all

Comment:

By Don McCanne, MD

One of the more important reasons that the U.S. health care system is so much more expensive than those of other nations is our well documented excess use of expensive high-tech services and products. As much as 30 percent of spending is for services of little or no benefit, and often leads to adverse consequences as a direct result of the intervention or indirectly due to other interventions that this overuse may lead to.

$100,000 drugs that have a 100 percent incidence of poisoning, but have only a negligible impact on the malignancy targeted, are not the breakthrough technology that those profiting from them imply. An expensive imaging procedure that has not been demonstrated to be of benefit, but has radiation doses known to cause cancer, is another breakthrough that favorably impacts profits to the detriment of patients.

We can learn much from the National Institute for Health and Clinical Excellence (NICE), an independent organization that provides Britain’s National Health Service with “national guidance on promoting good health and preventing and treating ill health.” Sadly, much of the publicity in the U.S. on NICE has come from the opponents of a government role in health care, claiming that NICE is depriving British citizens of life-saving cures. In fact, NICE is reducing the waste of taxpayer funds by providing better guidance on how those funds should be spent.

Compare that to the United States. Mr. Franks (NY Times article above) received an expensive test that was not medically indicated, but that perhaps could provide him with reassurance, and it would add to Dr. Hecht’s income, possibly at the cost of giving Mr. Franks cancer. But it was okay because his insurance would pay for it. What?

Whether health care is paid for by a public program or a private insurance plan, we all pay for it. Excess public spending wastes our taxes, but excess private insurer spending wastes our premium dollars and further adds a surcharge in outrageous administrative costs that are tacked on to our health care bill.

A NICE-like program combined with public financing in the United States would dramatically increase the value received for health care spending for all of us, and isn’t that what social solidarity is all about?

You should go to the NICE website to familiarize yourself with this program. Not only will you be able to answer the ideologues who try to demonize this program, but, much more importantly, you will be in a position to advocate with greater confidence for an even better health care system that is more affordable for all of us.

National Institute for Health and Clinical Excellence (NICE):
http://www.nice.org.uk/

Britain’s NICE and social solidarity

Britain Weighs the Social Cost of High-Priced Drugs

By Joanne Silberner
NPR
July 3, 2008

Funding ‘Wonder’ Drugs

The government agency that decides what drugs the NHS will provide is the National Institute for Health and Clinical Excellence (NICE). Sir Michael Rawlins, chairman of NICE, says he knows his agency’s rulings can cause much disappointment.

Paying huge amounts of money for every new drug with the faintest hope of extending life by even a small amount would make it impossible for the NHS to provide universal care.

And Rawlins is sure that someday Americans will have to deal more directly with these same thorny questions of rationing and hope.

The United States will one day have to take cost effectiveness into account, he says. “There is no doubt about it all. You cannot keep on increasing your health care costs at the rate you are for so poor return. You are 29th in the world in life expectancy. You pay twice as much for health care as anyone else on God’s Earth.”

Social Solidarity

And then of course, he points to the millions of Americans with no access to health care because they can’t afford it.

“We have in Britain, as in most of Europe actually, a health care system based on social solidarity,” he says. “We look after each other when we’re sick. And that’s very precious to us in Britain. And I think that’s what we find so difficult about your health care system; you don’t have that.”

Cancer patient Donald Sutherland is happy with the British system, even with its limits.

“I think we’re quite patient people, albeit if we want something, we’ll make sure that we get it,” he says. “In my experience, I can only say that whenever I’ve needed the National Health Service, it’s always been there, and I’ve always had first-class treatment.”

Sutherland’s big interest is in more funding for the search for an effective treatment for lung cancer. And he doesn’t expect his fellow taxpayers to pay for a drug until there’s solid proof that there’s a benefit.

http://www.npr.org/templates/story/story.php?storyId=91996282

And…

Weighing the Costs of a CT Scan’s Look Inside the Heart

By Alex Berenson and Reed Abelson
The New York Times
June 29, 2008

(CT angiograms) were given to more than 150,000 people in this country last year at a cost exceeding $100 million. Their use is expected to soar through the next decade. But there is scant evidence that the scans benefit most patients.

And they expose patients to large doses of radiation, equivalent to at least several hundred X-rays, creating a small but real cancer risk.

Mr. (Robert) Franks has a family history of cardiac disease, and his father and two uncles died of heart attacks. But Mr. Franks… is in excellent shape.

(Mr. Franks) decided to have a nuclear stress test. When that test showed no problem, the cardiologist who conducted it said he did not need more testing.

After doing research on the Internet, (Mr. Franks) found Dr. (Harvey) Hecht, who recommended a CT angiogram. Dr. Hecht acknowledged that Mr. Franks probably did not have severe heart disease. But he said the scan would be valuable anyway because it might reassure him. And his insurance would cover the cost.

http://www.nytimes.com/2008/06/29/business/29scan.html?hp=&pagewanted=all

Comment:

By Don McCanne, MD

One of the more important reasons that the U.S. health care system is so much more expensive than those of other nations is our well documented excess use of expensive high-tech services and products. As much as 30 percent of spending is for services of little or no benefit, and often leads to adverse consequences as a direct result of the intervention or indirectly due to other interventions that this overuse may lead to.

$100,000 drugs that have a 100 percent incidence of poisoning, but have only a negligible impact on the malignancy targeted, are not the breakthrough technology that those profiting from them imply. An expensive imaging procedure that has not been demonstrated to be of benefit, but has radiation doses known to cause cancer, is another breakthrough that favorably impacts profits to the detriment of patients.

We can learn much from the National Institute for Health and Clinical Excellence (NICE), an independent organization that provides Britain’s National Health Service with “national guidance on promoting good health and preventing and treating ill health.” Sadly, much of the publicity in the U.S. on NICE has come from the opponents of a government role in health care, claiming that NICE is depriving British citizens of life-saving cures. In fact, NICE is reducing the waste of taxpayer funds by providing better guidance on how those funds should be spent.

Compare that to the United States. Mr. Franks (NY Times article above) received an expensive test that was not medically indicated, but that perhaps could provide him with reassurance, and it would add to Dr. Hecht’s income, possibly at the cost of giving Mr. Franks cancer. But it was okay because his insurance would pay for it. What?

Whether health care is paid for by a public program or a private insurance plan, we all pay for it. Excess public spending wastes our taxes, but excess private insurer spending wastes our premium dollars and further adds a surcharge in outrageous administrative costs that are tacked on to our health care bill.

A NICE-like program combined with public financing in the United States would dramatically increase the value received for health care spending for all of us, and isn’t that what social solidarity is all about?

You should go to the NICE website to familiarize yourself with this program. Not only will you be able to answer the ideologues who try to demonize this program, but, much more importantly, you will be in a position to advocate with greater confidence for an even better health care system that is more affordable for all of us.

National Institute for Health and Clinical Excellence (NICE):
http://www.nice.org.uk/

Let's end the Medicare Advantage shell game

Medicare Advantage in 2008

By Marsha, Gold, Sc.D.
The Henry J. Kaiser Family Foundation
June 2008
Today, a disproportionate share of the growth in MA (Medicare Advantage) appears to reflect industry response to higher payments, the ease of establishing PFFS (private fee-for-service) plans that involve no networks, and the ability to piggyback on existing administrative structures used to market Medigap and other insurance products. It is possible that some of the PFFS growth could migrate eventually to more managed options. Lack of traction among regional PPOs (preferred provider organizations) suggests that any such migration would be most likely in local plans, as long as that option remains. The growth in local CCP (coordinated care plan) availability is moderately encouraging, but also contrasts with the relatively stagnant state of current CCP enrollment and limited national scope of offerings currently available in the CCP market through most major MA firms. While this analysis does not address this aspect, there is the possibility that PFFS itself is eroding the more managed segments of the MA market. Such erosion would run counter to the interest of some policymakers who support transitioning beneficiaries to more managed products that are presumed to more effectively manage patient care at a lower cost to Medicare.
In sum, MA plans are offering expanded choice which is potentially attractive to some beneficiaries and to some employers who offer group retiree coverage. The issue for policymakers is whether such expansion also holds long-term promise for Medicare’s financial condition and overall stability. If it does not, policymakers soon may have limited ability to alter course since continued growth in Medicare Advantage plan enrollment will generate entrenched interests and shifts in money flow that could be hard to reverse.
http://www.kff.org/medicare/upload/7775.pdf

And…

Higher Spending Relative to Medicare Fee-for-Service May Not Ensure Lower Out-of-Pocket Costs for Beneficiaries

GAO (U.S. Government Accountability Office)
Medicare Advantage
February 28, 2008
MA plans receive a per member per month (PMPM) payment to provide services covered under Medicare FFS. Almost all MA plans receive an additional Medicare payment, known as a rebate. Plans use rebates and sometimes additional beneficiary premiums to fund benefits not covered under Medicare fee-for-service; reduce premiums; or reduce beneficiary cost sharing. In 2007, MA plans received about $8.3 billion in rebate payments.
GAO found that MA plans projected they would use their rebates primarily to reduce cost sharing, with relatively little of their rebates projected to be spent on additional benefits. Nearly all plans—91 percent of the 2,055 plans in the study—received a rebate. Of the average rebate payment of $87 PMPM, plans projected they would allocate about $78 PMPM (89 percent) to reduced cost sharing and reduced premiums and $10 PMPM (11 percent) to additional benefits. The average projected PMPM costs of specific additional benefits across all MA plans ranged from $0.11 PMPM for international outpatient emergency services to $4 PMPM for dental care.
While MA plans projected that, on average, beneficiaries in their plans would have cost sharing that was 42 percent of Medicare FFS cost-sharing estimates, some beneficiaries could have higher cost sharing for certain service categories. For example, some plans projected that their beneficiaries would have higher cost sharing, on average, for home health services and inpatient stays, than in Medicare FFS. If beneficiaries frequently used these services that required higher cost sharing than Medicare FFS, it was possible that their overall cost sharing was higher than what they would have paid under Medicare FFS.
Out of total revenues of $783 PMPM, on average, MA plans projected that they would allocate about 87 percent ($683 PMPM) to medical expenses. MA plans projected they would allocate, on average, about 9 percent of total revenue ($71 PMPM) to nonmedical expenses, including administration and marketing expenses; and about 4 percent ($30 PMPM) to the plans’ profits. About 30 percent of beneficiaries were enrolled in plans that projected they would allocate less than 85 percent of their revenues to medical expenses.
As GAO concluded in its report, whether the value that MA beneficiaries receive in the form of reduced cost sharing, lower premiums, and additional benefits is worth the additional cost to Medicare is a decision for policymakers.
http://www.gao.gov/new.items/d08522t.pdf

This week, the AMA and AHIP (America’s Health Insurance Plans) have each begun intensive campaigns to influence Congress on the anticipated Medicare adjustments that will be made when the members return from their recess. The AMA wants to prevent the disastrous 10 percent reduction in physicians’ reimbursement rates, and AHIP does not want that to be paid for by a reduction in overpayments to the private Medicare Advantage plans. It is crucial that we understand what we are purchasing with these Medicare Advantage overpayments.
The Medicare Advantage plans are being paid about 12 percent more (17 percent for PFFS plans) than the costs of patients in the traditional Medicare program. Of the funds received, the plans use 13 percent for non-medical purposes including administration, marketing expenses, and profits (4 percent) or about $101 PMPM, much higher than the administrative costs of the traditional Medicare program. Obviously this is a very expensive program, so what are the beneficiaries receiving for this high cost?
Most of the extra benefits received by the Medicare Advantage enrollees are paid from rebates paid to the plans, amounting to $88 PMPM, obviously less than the $101 the plans are using for administration and profits. The GAO study further found that most of the benefit (89 percent of the rebate, or $78 PMPM) received by the Medicare Advantage beneficiaries was in the form of reduced out-of-pocket payments. Only 11 percent ($10 PMPM) was for additional benefits, a mere drop in the bucket when considering the overall benefits provided by the traditional program.
So we are paying the Medicare Advantage plans a lot of money for for administration and profits, but for what end? Merely to reduce premiums and cost sharing. The private plans waste a tremendous amount of our tax funds accomplishing this when these extra administrative costs and profits would disappear if Congress were to make the same premium and cost sharing adjustments by mere legislative fiat! What a waste!
Worse yet, why shouldn’t everyone in Medicare receive the same relief as the privileged individuals who enroll in the private plans? Congress should end this Medicare Advantage shell game and take the money they are wasting on these plans and distribute it equitably so all Medicare participants can benefit. Even if they use it now to prevent the crumbling of the physician infrastructure, that would still benefit all patients.

Let's end the Medicare Advantage shell game

Medicare Advantage in 2008

By Marsha, Gold, Sc.D.
The Henry J. Kaiser Family Foundation
June 2008

Today, a disproportionate share of the growth in MA (Medicare Advantage) appears to reflect industry response to higher payments, the ease of establishing PFFS (private fee-for-service) plans that involve no networks, and the ability to piggyback on existing administrative structures used to market Medigap and other insurance products. It is possible that some of the PFFS growth could migrate eventually to more managed options. Lack of traction among regional PPOs (preferred provider organizations) suggests that any such migration would be most likely in local plans, as long as that option remains. The growth in local CCP (coordinated care plan) availability is moderately encouraging, but also contrasts with the relatively stagnant state of current CCP enrollment and limited national scope of offerings currently available in the CCP market through most major MA firms. While this analysis does not address this aspect, there is the possibility that PFFS itself is eroding the more managed segments of the MA market. Such erosion would run counter to the interest of some policymakers who support transitioning beneficiaries to more managed products that are presumed to more effectively manage patient care at a lower cost to Medicare.

In sum, MA plans are offering expanded choice which is potentially attractive to some beneficiaries and to some employers who offer group retiree coverage. The issue for policymakers is whether such expansion also holds long-term promise for Medicare’s financial condition and overall stability. If it does not, policymakers soon may have limited ability to alter course since continued growth in Medicare Advantage plan enrollment will generate entrenched interests and shifts in money flow that could be hard to reverse.

http://www.kff.org/medicare/upload/7775.pdf

And…

Higher Spending Relative to Medicare Fee-for-Service May Not Ensure Lower Out-of-Pocket Costs for Beneficiaries

GAO (U.S. Government Accountability Office)
Medicare Advantage
February 28, 2008

MA plans receive a per member per month (PMPM) payment to provide services covered under Medicare FFS. Almost all MA plans receive an additional Medicare payment, known as a rebate. Plans use rebates and sometimes additional beneficiary premiums to fund benefits not covered under Medicare fee-for-service; reduce premiums; or reduce beneficiary cost sharing. In 2007, MA plans received about $8.3 billion in rebate payments.

GAO found that MA plans projected they would use their rebates primarily to reduce cost sharing, with relatively little of their rebates projected to be spent on additional benefits. Nearly all plans–91 percent of the 2,055 plans in the study–received a rebate. Of the average rebate payment of $87 PMPM, plans projected they would allocate about $78 PMPM (89 percent) to reduced cost sharing and reduced premiums and $10 PMPM (11 percent) to additional benefits. The average projected PMPM costs of specific additional benefits across all MA plans ranged from $0.11 PMPM for international outpatient emergency services to $4 PMPM for dental care.

While MA plans projected that, on average, beneficiaries in their plans would have cost sharing that was 42 percent of Medicare FFS cost-sharing estimates, some beneficiaries could have higher cost sharing for certain service categories. For example, some plans projected that their beneficiaries would have higher cost sharing, on average, for home health services and inpatient stays, than in Medicare FFS. If beneficiaries frequently used these services that required higher cost sharing than Medicare FFS, it was possible that their overall cost sharing was higher than what they would have paid under Medicare FFS.

Out of total revenues of $783 PMPM, on average, MA plans projected that they would allocate about 87 percent ($683 PMPM) to medical expenses. MA plans projected they would allocate, on average, about 9 percent of total revenue ($71 PMPM) to nonmedical expenses, including administration and marketing expenses; and about 4 percent ($30 PMPM) to the plans’ profits. About 30 percent of beneficiaries were enrolled in plans that projected they would allocate less than 85 percent of their revenues to medical expenses.

As GAO concluded in its report, whether the value that MA beneficiaries receive in the form of reduced cost sharing, lower premiums, and additional benefits is worth the additional cost to Medicare is a decision for policymakers.

http://www.gao.gov/new.items/d08522t.pdf

Comment:

By Don McCanne, MD

This week, the AMA and AHIP (America’s Health Insurance Plans) have each begun intensive campaigns to influence Congress on the anticipated Medicare adjustments that will be made when the members return from their recess. The AMA wants to prevent the disastrous 10 percent reduction in physicians’ reimbursement rates, and AHIP does not want that to be paid for by a reduction in overpayments to the private Medicare Advantage plans. It is crucial that we understand what we are purchasing with these Medicare Advantage overpayments.

The Medicare Advantage plans are being paid about 12 percent more (17 percent for PFFS plans) than the costs of patients in the traditional Medicare program. Of the funds received, the plans use 13 percent for non-medical purposes including administration, marketing expenses, and profits (4 percent) or about $101 PMPM, much higher than the administrative costs of the traditional Medicare program. Obviously this is a very expensive program, so what are the beneficiaries receiving for this high cost?

Most of the extra benefits received by the Medicare Advantage enrollees are paid from rebates paid to the plans, amounting to $88 PMPM, obviously less than the $101 the plans are using for administration and profits. The GAO study further found that most of the benefit (89 percent of the rebate, or $78 PMPM) received by the Medicare Advantage beneficiaries was in the form of reduced out-of-pocket payments. Only 11 percent ($10 PMPM) was for additional benefits, a mere drop in the bucket when considering the overall benefits provided by the traditional program.

So we are paying the Medicare Advantage plans a lot of money for for administration and profits, but for what end? Merely to reduce premiums and cost sharing. The private plans waste a tremendous amount of our tax funds accomplishing this when these extra administrative costs and profits would disappear if Congress were to make the same premium and cost sharing adjustments by mere legislative fiat! What a waste!

Worse yet, why shouldn’t everyone in Medicare receive the same relief as the privileged individuals who enroll in the private plans? Congress should end this Medicare Advantage shell game and take the money they are wasting on these plans and distribute it equitably so all Medicare participants can benefit. Even if they use it now to prevent the crumbling of the physician infrastructure, that would still benefit all patients.

The Doctors' Revolt

Doctors, the traditional advocates for the medical status quo, are increasingly in favor of major reforms to the U.S. health-care system.

Roger Bybee
The American Prospect
July 1, 2008

Doctors have historically been the watchdogs of the U.S. medical system, with the American Medical Association scaring New Dealers into dropping national health coverage from the Social Security Act and then the AMA shredding Harry Truman’s reform efforts in the late 1940s. But a new poll and other significant indicators suggest that doctors are turning against the health-insurance firms that increasingly dominate American health care.

The latest sign is a poll published recently in the Annals of Health Research showing that 59 percent of U.S. doctors support a “single payer” plan that essentially eliminates the central role of private insurers. Most industrial societies — including nations as diverse as Taiwan, France, and Canada — have adopted universal health systems that provide health care to all citizens and permit them free choice of their doctors and hospitals. These plans are typically funded by a mix of general tax revenues and payroll taxes, and essential health-care is administered by nonprofit government agencies rather than private insurers.

The new poll, conducted by Indiana University’s Center for Health Policy and Professionalism Research, shows a sharp 10 percent spike in the number of doctors supporting national insurance: 59 percent in 2007 compared to 49 percent five years earlier. This indicates that more physicians are eager for systematic changes, said Toledo physician Dr. Johnathon Ross, past president of Physicians for a National Health Program.

“What this means is the usual bloc of anti-reform is breaking up,” he told The Toledo Blade. “These doctors are looking in the eyes of sick [uninsured] patients every day.”

The poll results underscore mounting signs that doctors are resenting the increasingly short leash on which they are held by insurers and large hospital chains, the current masters of American medicine. And, increasingly, doctors seem to be showing support for a single-payer system that would essentially eliminate for-profit insurers and curb the power of big provider chains.

The ever-accelerating corporatization of health care is producing a seismic shift in the way that doctors look at universal health care. Doctors are experiencing an extreme and relatively sudden loss of control at the hands of insurers and hospital networks, while being snowed under by paperwork and bureaucratic battles with insurance companies over authorizations and payments.

Losing Faith in the System

Dr. Seth Foldy, a family physician and former health commissioner for the City of Milwaukee, believes that a decisive breakdown of the health-care system has changed the perspective of many doctors. “We’ve had a virtual recession over the last six years, with more people unable to get insurance and more doctors not getting paid,” he states. “There is an overall sense that the system doesn’t work, and, worse, there’s been no real effort to fix it.”

The statistics indeed suggest a major breakdown: Premiums have climbed 87 percent since 2000, and workers’ meager pay raises have been far outstripped by major increases in their share of the premiums. While the U.S. ranks 37th on a variety of quality measurements used by the World Health Organization, per-capita spending in the U.S. is twice as high as any other nation. For example, the U.S. spent $6,697 per person in 2005 compared with $3,326 in Canada. Meanwhile, the sharply escalating costs in the U.S. are leading to shrinkage of insurance coverage provided by employers. Some 47 million Americans are uninsured, with the present economic downturn certain to significantly increase those numbers.

Among the most acute symptoms of the current crisis is the rapidly declining share of employers who offer insurance to their workers. In Wisconsin, for example, 73 percent of workers had health insurance through their jobs in 1979, but by 2005, the share had plummeted to 58 percent. The Kaiser Family Foundation’s annual survey for 2007 shows that the percentage of employers offering coverage has decreased by 9 percent since 2000, mostly in firms with fewer than 50 workers.

As these trends have unfolded, coupled with growing bureaucratic control by insurers and hospital chains, many doctors have come to question whether for-profit insurers need occupy such a central role in U.S. health care.

State-level polls reinforce the just-released national survey from Indiana’s Center for Health Policy. A remarkable 64 percent of the Minnesota doctors surveyed in 2006 expressed support for a Canadian-style single-payer system that would drive insurers from their commanding role in the health system, reported Minnesota Medicine. The Minnesota poll aligned closely with a Massachusetts survey of doctors in 2004, which reflected 61 percent backing for single-payer, according to the Archives of Internal Medicine. Doctors’ views seem to be coming into closer alignment with those of the general public, of which 67 percent explicitly support a system like Canada’s or Britain’s.

This finding among the members of Minnesota’s Medical Society — an affiliate of the American Medical Association (AMA) — reflects a broader trend emerging even among the members of the AMA, traditionally the bulwark of those defending the medical status quo. In 1935, Franklin Delano Roosevelt wanted to include a national health plan in the Social Security Act. But his advisers persuaded him to omit inclusion of the health provision, fearing that it would lead the AMA to sink the entire Social Security project.

Similarly, when his successor Harry Truman outlined a plan for national health care after the 1948 election, the AMA opposed the plan despite 75 percent public support for his proposal. The AMA ignited a highly sophisticated, multilevel effort among its members and business allies to block the “socialized medicine” plan and politically crush its proponents, as professor Jill Quadagno of Florida State University outlines in her book, One Nation Uninsured. The Truman plan was soundly defeated, and the AMA succeeded in unseating health-reform champions like U.S. Reps. Andrew Biemiller of Wisconsin and Sen. Claude Pepper of Florida, both from “safe,” staunchly Democratic areas.

But the AMA faces a vastly different landscape today. Less than one-third of doctors belong to the AMA, as physicians increasingly identify with organizations based on their medical specialty. Moreover, despite the AMA’s harsh and incessant preaching against single-payer health care as “socialized medicine” and its active promotion of myths about “rationing” and “long waiting lines” in single-payer nations, the group’s own national polling has shown a dramatic shift in its members’ view of reform over the past 15 years or so. Where only 18 percent of AMA members favored single-payer reform in 1992, the figure had soared to 42 percent by 2004.

Single-payer proved more popular than more modest measures like public programs to cover the uninsured, an individual mandate to purchase insurance, or an employer mandate, according to the AMA’s 2004 Advocacy Agenda Setting Survey. Among some subgroups of the AMA, support for single-payer was even stronger, reaching 58 percent among psychiatrists. (Pediatric cardiologists showed a 70 percent level of support for single-payer in a 2003 poll of physicians published in the Annals of Internal Medicine.)

Meanwhile, members of the American College of Physicians — the nation’s second-largest doctors’ organization with 124,000 internal-medicine physicians and related specialists — voted in December 2007 to endorse the single-payer idea. The vote followed an analysis of health care in the United States and 12 other industrialized countries, after which the ACP concluded that universal coverage had been successfully attained elsewhere through single-payer or mixed public/private systems.

Ironically, the commanding role of for-profit insurers and other corporate players has produced all the dire effects that doctors were warned about as the products of “socialized medicine,” delivered instead by a system that generates immense profits. “When doctors were worried about the government looking over their shoulder, now they actually have insurers second-guessing everything we do,” says Dr. Deborah Richter, past president of Physicians for a National Health Program and now a general practitioner in Cambridge, Vermont.

“When doctors had a fear of bureaucracy, now they are being hit with different demands from every insurer,” Dr. Richter explains. “When doctors had a fear of losing income, they’re now facing declining reimbursements from the insurers.”

From Quadagno’s perspective as a sociologist who has studied the shifting contours of our nation’s health care, the complexity and failures of the current corporate-driven system are central forces behind doctors’ changing views. “One big factor is having to deal with so many companies, which creates huge paperwork and headaches,” Quadagno says. “And then doctors either have to turn away the uninsured or provide care for no compensation.”

“The stock of the private sector has gone down in doctors’ eyes, while the stock of the public sector hasn’t,” Foldy says. “Medicare is not unpopular among doctors. The concept of Medicare for all [which is how a single-payer plan is often described] is making ideological headway. And prior to the Iraq War, the VA system made great strides as a model of quality recognized by many doctors.”

Meanwhile, doctors’ perceptions of the for-profit insurance industry — which ranks about as low as Big Tobacco in the general public’s eyes — have declined as premiums soar, bureaucratic problems multiply, and the ranks of the uninsured grow. “There is much less trust that the private-sector insurance companies will be good partners in health care,” Foldy says. “Doctors are encountering a lot of problems with [insurance companies], in honesty and uprightness around timely and full payment. Doctors are facing a high denial rate when they file claims.”

Losing Control to Private Insurers

The high denial rate is the product of increasing scrutiny of claims by a mushrooming private-sector bureaucracy. As New York Times columnist Paul Krugman has noted, “Between 2000 and 2005, the number of Americans with private health insurance coverage fell by 1 percent. But over the same period, employment at health insurance companies rose a remarkable 32 percent. What are all those extra employees doing? … They are working harder than ever at identifying people who really need medical care, and ensuring that they don’t get it.”

Along with the denial of claims comes what Richter calls the incessant “second guessing” by insurance company staff. A survey by a physicians’ group called Primary Care Vermont found that doctors perceived insurers’ long-distance challenges to their judgments as a major problem requiring constant, time-consuming wrangling. “So you have an insurance clerk with a high school education saying you can’t do an MRI scan,” Richter says. “It’s a steady drip, drip, drip. That takes away from the care of the patient.”

A whole new layer of intrusion into doctors’ care of their patients has cropped up in the form of “disease-management programs,” which Richter argues are chiefly designed to generate more prescriptions for the pharmaceutical industry. “There are now disease-management program businesses, contracted by insurance companies to deal with patients with chronic illnesses like asthma, diabetes, or hypertension. These programs are now bypassing the doctor and asking the patient to request certain data or certain tests from their doctors.

In one especially troubling case, Richter recalls, “one of my patients got a letter just before the holidays from a disease-management outfit saying he had congestive heart failure. The letter spoiled his holidays because he was worried he was going to die, and when he finally came in to see me, he was mad at me for not telling him about his condition.” The patient finally calmed down when Richter showed him that he did not have the condition.

The level of bureaucratic complexity is nightmarish and ongoing, says Richter. In a single day, she deals with dozens of different insurance plans, each authorizing treatments for different conditions and each denying others. Moreover, each insurance plan has its own “formulary” — a list of approved drugs — from which doctors must prescribe in order to have the pharmaceuticals covered by insurance. “With people who are insured, you have to tailor what you do to the insurance — you have to change their prescription according to the formulary,” she says. “The new Medicare Part D makes it worse, because there are 25 to 50 different plans. In any one day, I’m dealing with 30 to 40 different formularies.”

Fighting over authorization for treatment is another major issue, says Foldy, who specializes in working with homeless psychiatric patients. “Surgeons probably hear [denial of authorization] a lot more than I do. This was even more of a problem earlier in the mid-1990s when [for-profit, insurer-owned or influenced] HMOs were more aggressive.”

The mid-1990s were a period of extreme restrictions on care, with employers viewing “managed care” as an effective means of holding down premiums. For-profit HMOs and insurers began pressuring hospitals to release patients before they were well enough to take care of themselves, as with “drive-through deliveries” where new mothers were sent home within 24 hours after giving birth.

“The [for-profit] HMOs have backed off some, and they’ve shown themselves to be failures in holding down costs,” Foldy says. When the HMOs were very rigid, employees wanted their employers to change insurance companies. “So the insurers decided that they would rather have higher premiums and happier patients. The incentives weren’t aligned right to hold down premiums.”

Heart surgeon Dr. Dudley Johnson, a renowned pioneer in open-heart surgery who now specializes in high-risk cardiac cases, has frequently encountered another form of bureaucratic resistance from insurers. Insurers are generally unwilling to refer patients outside the hospital and clinic networks with which the insurers have negotiated financial arrangements.

“In any number of cases, we’ve have to fight the insurers, even when the patients’ own doctors obviously couldn’t do the needed [specialized] surgery,” Johnson says. “Some of the patients would eventually get in. Some of them never did get clearance, even though their quality of life would be better with surgery as well as their prospects for survival.”

Doctors face severe pressures from their networks to refer only within the network, Johnson says. “If your doctor says a doctor outside your network is the best, that doctor gets in a lot of trouble. The insurers and networks are working in sync to get all the patients to come to their hospital. They have people who check the records to see to whom their doctors refer patients. So you hear doctors say, ‘I can’t write it in the chart who I’d recommend you to see.’ There’s a lot of pressure.”

Such pressures have driven physicians like Johnson to conclude that only a single-payer system can restore patient care rather than profit as the core of the health-care system. But even if the polls in Minnesota and Massachusetts reflect a broad shift toward that conclusion, single-payer advocates face the task of converting individual opinion into effective collective action.

Reform Movement Gaining Momentum

For activists like Richter, that means, first of all, helping doctors to discover that they are not alone in their alienation from the medical status quo. “Doctors are complaining but don’t realize how unhappy other doctors are,” she says. To break through this sense of isolation, Richter has given presentations on the need for single-payer reform at every hospital in the state of Vermont. The response now is markedly different from a few years back. “The crowds are bigger and the heads are nodding in agreement,” she says.

Richter readily concedes the difficulty of organizing doctors, who spend much of their time working alone and often either absorbed in building up a new practice or preparing for retirement. “They say organizing doctors is like herding cats. It’s tough to get them to join forces,” Richter admits. “I don’t see organized medicine joining to lead the fight now, but eventually they’ll get on the bandwagon.”

Quadagno is less optimistic based on her studies of the episodic upsurges for health-care reform in the U.S. and the current lineup of forces in the U.S. “Different organizations have different stances, and there isn’t any unified force,” she says. “Unions are now less unified and less powerful than in the past. And then you see the AFL-CIO’s energy going into efforts like ‘fair share’ initiatives to make Wal-Mart cover its employees rather than pushing for universal care, such as a single-payer plan.”

While pro-reform sentiment may be building among doctors, single-payer advocates will eventually face the fierce and well-funded opposition of the for-profit insurers and their allies like the drug companies (who fear that a single-payer system will bring on negotiations with the government overpricing, thereby slicing their profits). “Insurers have the capacity to do more than any doctors’ group,” Quadagno says ruefully. “I don’t think a single-payer plan can win.”

In contrast, Richter is much more optimistic based on her direct organizing experience and listening to doctors’ alienation from the fast-advancing corporatization of health care. Although she’s keenly aware of the insurer-and-pharma coalition’s influence, Richter believes that the insurers will continue to aggravate the grievances of both doctors and patients alike. For example, the insurance industry’s hiring explosion will continue to mean more exasperating fights for doctors seeking payment for their services, and for the general public trying to get its bills paid. The public’s approval rating of the insurers is likely to drop further.

Additionally, doctors are growing particularly inflamed by the trend for “medical tourism.” This term refers to the outsourcing of medical surgeries, just as major firms have been outsourcing both factory and white-collar work to low-wage nations. “More and more insurance companies are paying patients to go to places like India for hip and knee replacements, bypass surgery, and other operations,” Richter says. There were 150,000 medical-tourist operations last year. It started with cosmetic surgery, but now medical tourism has really expanded because insurers can pay just one-tenth or one-twentieth the cost they do here. Richter predicts, “That may finally bring along the surgeons,” who have been less inclined to fight for reform.

Given the enormous political clout of the medical insurers and allied health-care interests, winning single-payer health care in the United States is certain to be an arduous and lengthy fight. But the heightening conflicts between doctors and insurers and hospital chains, along with the AMA’s declining importance, has made a significant swath of the medical profession far more sympathetic to the single-payer option than advocates would have dared to dream just a few years ago.

Roger Bybee is a Milwaukee-based writer and progressive activist, who formerly edited the official labor weekly Racine Labor. He has written for a number of state and national publications and websites on issues such as health care reform and corporate globalization.

Unitarian Universalists Endorse Single-Payer Health Care

by Larry Stauber

June 30, 2008 — At their annual General Assembly in Fort Lauderdale, Florida, Unitarian Universalist (UU) delegates passed a resolution endorsing single payer universal health care.

Six resolutions, called Actions of Immediate Witness (AIW), were passed with little or no discussion during the sixth and final plenary session on Sunday.

The single payer AIW urges UU congregations all over the country to lobby their representatives to co-sponsor and pass HR676, the United States National Health Insurance Act (Expanded and Improved Medicare for All). HR676 proposes a single-payer universal health care system and currently has 90 sponsors or co-sponsors in the U.S. House of Representatives.

According to the Unitarian Universalist Association of Congregations (UUA) bylaws, Actions of Immediate Witness are resolutions “concerned with a significant action, event, or development, the timing or specificity of which makes it inappropriate to be addressed by a UUA Statement of Conscience.” They should be focused and urgent enough to require immediate action.

It was noted in the resolution that the U.S. Conference of Mayors, held recently in Miami, unanimously endorsed single payer health care.

The AIW on single payer health care was the only one to provoke any discussion.

Speaking on behalf of the resolution before a crowd of over 3,000 who attended the assembly, UU Minister the Rev. Lucy Hitchcock Seck of Miami, Florida, said “It’s time our nation, founded on promoting the common welfare, promoted healthcare for all.”

Single payer is a system in which doctors, hospitals, and pharmacists are paid out of one pot of money, usually provided by the government.

John Harky of the First Unitarian Universalist Church of Nashville, said he felt that speaking against the resolution was like speaking against apple pie. Despite that, he expressed the fear that single payer would narrow “the possibilities for universal health care coverage.” He said that supporting only single payer could peel away support for other forms of universal coverage.

Proponents of single payer insist that it is the only universal health care plan that is affordable. They say it would eliminate the high overhead typical of the private insurance sector and would give Medicare the ability to negotiate with pharmaceutical companies over drug prices, which Medicare is currently prohibited by law from doing.
It would also eliminate the “hidden costs” of health care caused by employer-based health insurance policies, which forces companies to increase the price of goods and services to cover the cost of health insurance.
It would allow doctors to reduce the cost of office administration by eliminating staff who must deal with duplicative insurance forms and who fight daily battles with their counterparts at the insurance companies.
Supporters of single payer say that other universal health care plans that have been advanced simply propagate the current chaotic, wasteful and expensive system.

The United States National Health Insurance Act would establish a national universal health insurance program. The bill would create a publicly financed, privately delivered health care system. Doctors would be paid on a fee-for-service basis as they are under Medicare. The legislation would “improve and expand” the current Medicare program. The goal of HR676 is to ensure that all Americans have access, guaranteed by law, to the highest quality and most cost effective health care services regardless of their employment, income, or health care status. One provision of the act would prohibit private health insurers from selling coverage that duplicates the benefits provided by the program.

Other AIW’s that were passed at the 2008 UU General Assembly included: Oppose a U.S. Attack on Iran; Raise the Federal Minimum Wage to $10 in 2010; Extend the Tax Credit for Wind and Solar Power; and Oppose the Florida and California Marriage Protection Initiatives.

Let’s end the Medicare Advantage shell game

Medicare Advantage in 2008

By Marsha, Gold, Sc.D.
The Henry J. Kaiser Family Foundation
June 2008

Today, a disproportionate share of the growth in MA (Medicare Advantage) appears to reflect industry response to higher payments, the ease of establishing PFFS (private fee-for-service) plans that involve no networks, and the ability to piggyback on existing administrative structures used to market Medigap and other insurance products. It is possible that some of the PFFS growth could migrate eventually to more managed options. Lack of traction among regional PPOs (preferred provider organizations) suggests that any such migration would be most likely in local plans, as long as that option remains. The growth in local CCP (coordinated care plan) availability is moderately encouraging, but also contrasts with the relatively stagnant state of current CCP enrollment and limited national scope of offerings currently available in the CCP market through most major MA firms. While this analysis does not address this aspect, there is the possibility that PFFS itself is eroding the more managed segments of the MA market. Such erosion would run counter to the interest of some policymakers who support transitioning beneficiaries to more managed products that are presumed to more effectively manage patient care at a lower cost to Medicare.

In sum, MA plans are offering expanded choice which is potentially attractive to some beneficiaries and to some employers who offer group retiree coverage. The issue for policymakers is whether such expansion also holds long-term promise for Medicare’s financial condition and overall stability. If it does not, policymakers soon may have limited ability to alter course since continued growth in Medicare Advantage plan enrollment will generate entrenched interests and shifts in money flow that could be hard to reverse.

http://www.kff.org/medicare/upload/7775.pdf

And…

Higher Spending Relative to Medicare Fee-for-Service May Not Ensure Lower Out-of-Pocket Costs for Beneficiaries

GAO (U.S. Government Accountability Office)
Medicare Advantage
February 28, 2008

MA plans receive a per member per month (PMPM) payment to provide services covered under Medicare FFS. Almost all MA plans receive an additional Medicare payment, known as a rebate. Plans use rebates and sometimes additional beneficiary premiums to fund benefits not covered under Medicare fee-for-service; reduce premiums; or reduce beneficiary cost sharing. In 2007, MA plans received about $8.3 billion in rebate payments.

GAO found that MA plans projected they would use their rebates primarily to reduce cost sharing, with relatively little of their rebates projected to be spent on additional benefits. Nearly all plans–91 percent of the 2,055 plans in the study–received a rebate. Of the average rebate payment of $87 PMPM, plans projected they would allocate about $78 PMPM (89 percent) to reduced cost sharing and reduced premiums and $10 PMPM (11 percent) to additional benefits. The average projected PMPM costs of specific additional benefits across all MA plans ranged from $0.11 PMPM for international outpatient emergency services to $4 PMPM for dental care.

While MA plans projected that, on average, beneficiaries in their plans would have cost sharing that was 42 percent of Medicare FFS cost-sharing estimates, some beneficiaries could have higher cost sharing for certain service categories. For example, some plans projected that their beneficiaries would have higher cost sharing, on average, for home health services and inpatient stays, than in Medicare FFS. If beneficiaries frequently used these services that required higher cost sharing than Medicare FFS, it was possible that their overall cost sharing was higher than what they would have paid under Medicare FFS.

Out of total revenues of $783 PMPM, on average, MA plans projected that they would allocate about 87 percent ($683 PMPM) to medical expenses. MA plans projected they would allocate, on average, about 9 percent of total revenue ($71 PMPM) to nonmedical expenses, including administration and marketing expenses; and about 4 percent ($30 PMPM) to the plans’ profits. About 30 percent of beneficiaries were enrolled in plans that projected they would allocate less than 85 percent of their revenues to medical expenses.

As GAO concluded in its report, whether the value that MA beneficiaries receive in the form of reduced cost sharing, lower premiums, and additional benefits is worth the additional cost to Medicare is a decision for policymakers.

http://www.gao.gov/new.items/d08522t.pdf

Comment:

By Don McCanne, MD

This week, the AMA and AHIP (America’s Health Insurance Plans) have each begun intensive campaigns to influence Congress on the anticipated Medicare adjustments that will be made when the members return from their recess. The AMA wants to prevent the disastrous 10 percent reduction in physicians’ reimbursement rates, and AHIP does not want that to be paid for by a reduction in overpayments to the private Medicare Advantage plans. It is crucial that we understand what we are purchasing with these Medicare Advantage overpayments.

The Medicare Advantage plans are being paid about 12 percent more (17 percent for PFFS plans) than the costs of patients in the traditional Medicare program. Of the funds received, the plans use 13 percent for non-medical purposes including administration, marketing expenses, and profits (4 percent) or about $101 PMPM, much higher than the administrative costs of the traditional Medicare program. Obviously this is a very expensive program, so what are the beneficiaries receiving for this high cost?

Most of the extra benefits received by the Medicare Advantage enrollees are paid from rebates paid to the plans, amounting to $88 PMPM, obviously less than the $101 the plans are using for administration and profits. The GAO study further found that most of the benefit (89 percent of the rebate, or $78 PMPM) received by the Medicare Advantage beneficiaries was in the form of reduced out-of-pocket payments. Only 11 percent ($10 PMPM) was for additional benefits, a mere drop in the bucket when considering the overall benefits provided by the traditional program.

So we are paying the Medicare Advantage plans a lot of money for for administration and profits, but for what end? Merely to reduce premiums and cost sharing. The private plans waste a tremendous amount of our tax funds accomplishing this when these extra administrative costs and profits would disappear if Congress were to make the same premium and cost sharing adjustments by mere legislative fiat! What a waste!

Worse yet, why shouldn’t everyone in Medicare receive the same relief as the privileged individuals who enroll in the private plans? Congress should end this Medicare Advantage shell game and take the money they are wasting on these plans and distribute it equitably so all Medicare participants can benefit. Even if they use it now to prevent the crumbling of the physician infrastructure, that would still benefit all patients.

The Doctors’ Revolt

Doctors, the traditional advocates for the medical status quo, are increasingly in favor of major reforms to the U.S. health-care system.

Roger Bybee
The American Prospect
July 1, 2008

Doctors have historically been the watchdogs of the U.S. medical system, with the American Medical Association scaring New Dealers into dropping national health coverage from the Social Security Act and then the AMA shredding Harry Truman’s reform efforts in the late 1940s. But a new poll and other significant indicators suggest that doctors are turning against the health-insurance firms that increasingly dominate American health care.

The latest sign is a poll published recently in the Annals of Health Research showing that 59 percent of U.S. doctors support a “single payer” plan that essentially eliminates the central role of private insurers. Most industrial societies — including nations as diverse as Taiwan, France, and Canada — have adopted universal health systems that provide health care to all citizens and permit them free choice of their doctors and hospitals. These plans are typically funded by a mix of general tax revenues and payroll taxes, and essential health-care is administered by nonprofit government agencies rather than private insurers.

The new poll, conducted by Indiana University’s Center for Health Policy and Professionalism Research, shows a sharp 10 percent spike in the number of doctors supporting national insurance: 59 percent in 2007 compared to 49 percent five years earlier. This indicates that more physicians are eager for systematic changes, said Toledo physician Dr. Johnathon Ross, past president of Physicians for a National Health Program.

“What this means is the usual bloc of anti-reform is breaking up,” he told The Toledo Blade. “These doctors are looking in the eyes of sick [uninsured] patients every day.”

The poll results underscore mounting signs that doctors are resenting the increasingly short leash on which they are held by insurers and large hospital chains, the current masters of American medicine. And, increasingly, doctors seem to be showing support for a single-payer system that would essentially eliminate for-profit insurers and curb the power of big provider chains.

The ever-accelerating corporatization of health care is producing a seismic shift in the way that doctors look at universal health care. Doctors are experiencing an extreme and relatively sudden loss of control at the hands of insurers and hospital networks, while being snowed under by paperwork and bureaucratic battles with insurance companies over authorizations and payments.

Losing Faith in the System

Dr. Seth Foldy, a family physician and former health commissioner for the City of Milwaukee, believes that a decisive breakdown of the health-care system has changed the perspective of many doctors. “We’ve had a virtual recession over the last six years, with more people unable to get insurance and more doctors not getting paid,” he states. “There is an overall sense that the system doesn’t work, and, worse, there’s been no real effort to fix it.”

The statistics indeed suggest a major breakdown: Premiums have climbed 87 percent since 2000, and workers’ meager pay raises have been far outstripped by major increases in their share of the premiums. While the U.S. ranks 37th on a variety of quality measurements used by the World Health Organization, per-capita spending in the U.S. is twice as high as any other nation. For example, the U.S. spent $6,697 per person in 2005 compared with $3,326 in Canada. Meanwhile, the sharply escalating costs in the U.S. are leading to shrinkage of insurance coverage provided by employers. Some 47 million Americans are uninsured, with the present economic downturn certain to significantly increase those numbers.

Among the most acute symptoms of the current crisis is the rapidly declining share of employers who offer insurance to their workers. In Wisconsin, for example, 73 percent of workers had health insurance through their jobs in 1979, but by 2005, the share had plummeted to 58 percent. The Kaiser Family Foundation’s annual survey for 2007 shows that the percentage of employers offering coverage has decreased by 9 percent since 2000, mostly in firms with fewer than 50 workers.

As these trends have unfolded, coupled with growing bureaucratic control by insurers and hospital chains, many doctors have come to question whether for-profit insurers need occupy such a central role in U.S. health care.

State-level polls reinforce the just-released national survey from Indiana’s Center for Health Policy. A remarkable 64 percent of the Minnesota doctors surveyed in 2006 expressed support for a Canadian-style single-payer system that would drive insurers from their commanding role in the health system, reported Minnesota Medicine. The Minnesota poll aligned closely with a Massachusetts survey of doctors in 2004, which reflected 61 percent backing for single-payer, according to the Archives of Internal Medicine. Doctors’ views seem to be coming into closer alignment with those of the general public, of which 67 percent explicitly support a system like Canada’s or Britain’s.

This finding among the members of Minnesota’s Medical Society — an affiliate of the American Medical Association (AMA) — reflects a broader trend emerging even among the members of the AMA, traditionally the bulwark of those defending the medical status quo. In 1935, Franklin Delano Roosevelt wanted to include a national health plan in the Social Security Act. But his advisers persuaded him to omit inclusion of the health provision, fearing that it would lead the AMA to sink the entire Social Security project.

Similarly, when his successor Harry Truman outlined a plan for national health care after the 1948 election, the AMA opposed the plan despite 75 percent public support for his proposal. The AMA ignited a highly sophisticated, multilevel effort among its members and business allies to block the “socialized medicine” plan and politically crush its proponents, as professor Jill Quadagno of Florida State University outlines in her book, One Nation Uninsured. The Truman plan was soundly defeated, and the AMA succeeded in unseating health-reform champions like U.S. Reps. Andrew Biemiller of Wisconsin and Sen. Claude Pepper of Florida, both from “safe,” staunchly Democratic areas.

But the AMA faces a vastly different landscape today. Less than one-third of doctors belong to the AMA, as physicians increasingly identify with organizations based on their medical specialty. Moreover, despite the AMA’s harsh and incessant preaching against single-payer health care as “socialized medicine” and its active promotion of myths about “rationing” and “long waiting lines” in single-payer nations, the group’s own national polling has shown a dramatic shift in its members’ view of reform over the past 15 years or so. Where only 18 percent of AMA members favored single-payer reform in 1992, the figure had soared to 42 percent by 2004.

Single-payer proved more popular than more modest measures like public programs to cover the uninsured, an individual mandate to purchase insurance, or an employer mandate, according to the AMA’s 2004 Advocacy Agenda Setting Survey. Among some subgroups of the AMA, support for single-payer was even stronger, reaching 58 percent among psychiatrists. (Pediatric cardiologists showed a 70 percent level of support for single-payer in a 2003 poll of physicians published in the Annals of Internal Medicine.)

Meanwhile, members of the American College of Physicians — the nation’s second-largest doctors’ organization with 124,000 internal-medicine physicians and related specialists — voted in December 2007 to endorse the single-payer idea. The vote followed an analysis of health care in the United States and 12 other industrialized countries, after which the ACP concluded that universal coverage had been successfully attained elsewhere through single-payer or mixed public/private systems.

Ironically, the commanding role of for-profit insurers and other corporate players has produced all the dire effects that doctors were warned about as the products of “socialized medicine,” delivered instead by a system that generates immense profits. “When doctors were worried about the government looking over their shoulder, now they actually have insurers second-guessing everything we do,” says Dr. Deborah Richter, past president of Physicians for a National Health Program and now a general practitioner in Cambridge, Vermont.

“When doctors had a fear of bureaucracy, now they are being hit with different demands from every insurer,” Dr. Richter explains. “When doctors had a fear of losing income, they’re now facing declining reimbursements from the insurers.”

From Quadagno’s perspective as a sociologist who has studied the shifting contours of our nation’s health care, the complexity and failures of the current corporate-driven system are central forces behind doctors’ changing views. “One big factor is having to deal with so many companies, which creates huge paperwork and headaches,” Quadagno says. “And then doctors either have to turn away the uninsured or provide care for no compensation.”

“The stock of the private sector has gone down in doctors’ eyes, while the stock of the public sector hasn’t,” Foldy says. “Medicare is not unpopular among doctors. The concept of Medicare for all [which is how a single-payer plan is often described] is making ideological headway. And prior to the Iraq War, the VA system made great strides as a model of quality recognized by many doctors.”

Meanwhile, doctors’ perceptions of the for-profit insurance industry — which ranks about as low as Big Tobacco in the general public’s eyes — have declined as premiums soar, bureaucratic problems multiply, and the ranks of the uninsured grow. “There is much less trust that the private-sector insurance companies will be good partners in health care,” Foldy says. “Doctors are encountering a lot of problems with [insurance companies], in honesty and uprightness around timely and full payment. Doctors are facing a high denial rate when they file claims.”

Losing Control to Private Insurers

The high denial rate is the product of increasing scrutiny of claims by a mushrooming private-sector bureaucracy. As New York Times columnist Paul Krugman has noted, “Between 2000 and 2005, the number of Americans with private health insurance coverage fell by 1 percent. But over the same period, employment at health insurance companies rose a remarkable 32 percent. What are all those extra employees doing? … They are working harder than ever at identifying people who really need medical care, and ensuring that they don’t get it.”

Along with the denial of claims comes what Richter calls the incessant “second guessing” by insurance company staff. A survey by a physicians’ group called Primary Care Vermont found that doctors perceived insurers’ long-distance challenges to their judgments as a major problem requiring constant, time-consuming wrangling. “So you have an insurance clerk with a high school education saying you can’t do an MRI scan,” Richter says. “It’s a steady drip, drip, drip. That takes away from the care of the patient.”

A whole new layer of intrusion into doctors’ care of their patients has cropped up in the form of “disease-management programs,” which Richter argues are chiefly designed to generate more prescriptions for the pharmaceutical industry. “There are now disease-management program businesses, contracted by insurance companies to deal with patients with chronic illnesses like asthma, diabetes, or hypertension. These programs are now bypassing the doctor and asking the patient to request certain data or certain tests from their doctors.

In one especially troubling case, Richter recalls, “one of my patients got a letter just before the holidays from a disease-management outfit saying he had congestive heart failure. The letter spoiled his holidays because he was worried he was going to die, and when he finally came in to see me, he was mad at me for not telling him about his condition.” The patient finally calmed down when Richter showed him that he did not have the condition.

The level of bureaucratic complexity is nightmarish and ongoing, says Richter. In a single day, she deals with dozens of different insurance plans, each authorizing treatments for different conditions and each denying others. Moreover, each insurance plan has its own “formulary” — a list of approved drugs — from which doctors must prescribe in order to have the pharmaceuticals covered by insurance. “With people who are insured, you have to tailor what you do to the insurance — you have to change their prescription according to the formulary,” she says. “The new Medicare Part D makes it worse, because there are 25 to 50 different plans. In any one day, I’m dealing with 30 to 40 different formularies.”

Fighting over authorization for treatment is another major issue, says Foldy, who specializes in working with homeless psychiatric patients. “Surgeons probably hear [denial of authorization] a lot more than I do. This was even more of a problem earlier in the mid-1990s when [for-profit, insurer-owned or influenced] HMOs were more aggressive.”

The mid-1990s were a period of extreme restrictions on care, with employers viewing “managed care” as an effective means of holding down premiums. For-profit HMOs and insurers began pressuring hospitals to release patients before they were well enough to take care of themselves, as with “drive-through deliveries” where new mothers were sent home within 24 hours after giving birth.

“The [for-profit] HMOs have backed off some, and they’ve shown themselves to be failures in holding down costs,” Foldy says. When the HMOs were very rigid, employees wanted their employers to change insurance companies. “So the insurers decided that they would rather have higher premiums and happier patients. The incentives weren’t aligned right to hold down premiums.”

Heart surgeon Dr. Dudley Johnson, a renowned pioneer in open-heart surgery who now specializes in high-risk cardiac cases, has frequently encountered another form of bureaucratic resistance from insurers. Insurers are generally unwilling to refer patients outside the hospital and clinic networks with which the insurers have negotiated financial arrangements.

“In any number of cases, we’ve have to fight the insurers, even when the patients’ own doctors obviously couldn’t do the needed [specialized] surgery,” Johnson says. “Some of the patients would eventually get in. Some of them never did get clearance, even though their quality of life would be better with surgery as well as their prospects for survival.”

Doctors face severe pressures from their networks to refer only within the network, Johnson says. “If your doctor says a doctor outside your network is the best, that doctor gets in a lot of trouble. The insurers and networks are working in sync to get all the patients to come to their hospital. They have people who check the records to see to whom their doctors refer patients. So you hear doctors say, ‘I can’t write it in the chart who I’d recommend you to see.’ There’s a lot of pressure.”

Such pressures have driven physicians like Johnson to conclude that only a single-payer system can restore patient care rather than profit as the core of the health-care system. But even if the polls in Minnesota and Massachusetts reflect a broad shift toward that conclusion, single-payer advocates face the task of converting individual opinion into effective collective action.

Reform Movement Gaining Momentum

For activists like Richter, that means, first of all, helping doctors to discover that they are not alone in their alienation from the medical status quo. “Doctors are complaining but don’t realize how unhappy other doctors are,” she says. To break through this sense of isolation, Richter has given presentations on the need for single-payer reform at every hospital in the state of Vermont. The response now is markedly different from a few years back. “The crowds are bigger and the heads are nodding in agreement,” she says.

Richter readily concedes the difficulty of organizing doctors, who spend much of their time working alone and often either absorbed in building up a new practice or preparing for retirement. “They say organizing doctors is like herding cats. It’s tough to get them to join forces,” Richter admits. “I don’t see organized medicine joining to lead the fight now, but eventually they’ll get on the bandwagon.”

Quadagno is less optimistic based on her studies of the episodic upsurges for health-care reform in the U.S. and the current lineup of forces in the U.S. “Different organizations have different stances, and there isn’t any unified force,” she says. “Unions are now less unified and less powerful than in the past. And then you see the AFL-CIO’s energy going into efforts like ‘fair share’ initiatives to make Wal-Mart cover its employees rather than pushing for universal care, such as a single-payer plan.”

While pro-reform sentiment may be building among doctors, single-payer advocates will eventually face the fierce and well-funded opposition of the for-profit insurers and their allies like the drug companies (who fear that a single-payer system will bring on negotiations with the government overpricing, thereby slicing their profits). “Insurers have the capacity to do more than any doctors’ group,” Quadagno says ruefully. “I don’t think a single-payer plan can win.”

In contrast, Richter is much more optimistic based on her direct organizing experience and listening to doctors’ alienation from the fast-advancing corporatization of health care. Although she’s keenly aware of the insurer-and-pharma coalition’s influence, Richter believes that the insurers will continue to aggravate the grievances of both doctors and patients alike. For example, the insurance industry’s hiring explosion will continue to mean more exasperating fights for doctors seeking payment for their services, and for the general public trying to get its bills paid. The public’s approval rating of the insurers is likely to drop further.

Additionally, doctors are growing particularly inflamed by the trend for “medical tourism.” This term refers to the outsourcing of medical surgeries, just as major firms have been outsourcing both factory and white-collar work to low-wage nations. “More and more insurance companies are paying patients to go to places like India for hip and knee replacements, bypass surgery, and other operations,” Richter says. There were 150,000 medical-tourist operations last year. It started with cosmetic surgery, but now medical tourism has really expanded because insurers can pay just one-tenth or one-twentieth the cost they do here. Richter predicts, “That may finally bring along the surgeons,” who have been less inclined to fight for reform.

Given the enormous political clout of the medical insurers and allied health-care interests, winning single-payer health care in the United States is certain to be an arduous and lengthy fight. But the heightening conflicts between doctors and insurers and hospital chains, along with the AMA’s declining importance, has made a significant swath of the medical profession far more sympathetic to the single-payer option than advocates would have dared to dream just a few years ago.

Roger Bybee is a Milwaukee-based writer and progressive activist, who formerly edited the official labor weekly Racine Labor. He has written for a number of state and national publications and websites on issues such as health care reform and corporate globalization.

California's Medicaid disaster

Budget deal will do real damage to health care

The choice is clear: Increase taxes or let the impact fall on children and the elderly

Editorial
The Sacramento Bee
July 1, 2008
Faced with a $17 billion deficit, the governor and state lawmakers are considering cuts that would likely drop tens of thousands of children from the Medi-Cal program, the state’s version of Medicaid.
They also are considering restricting adult eligibility requirements for Medi-Cal, hurting families trying to transition from welfare to work.
Elderly patients would also take a hit. As part of a 10 percent cut scheduled to take effect today, the state plans to reduce payments received by pharmacists who serve Medi-Cal patients. Pharmacists say it would force them to lose money on commonly prescribed drugs.
California’s budget crisis is real. It will demand deep cuts, and the state’s health care programs will have to shoulder a share of the sacrifice. But the level of cuts aimed at Medi-Cal, and the nature of those cuts, would have broad and dangerous impacts. Legislators, particularly Republicans who have taken a vow not to raise taxes under any circumstance, need to consider the consequences.
A better option would be a modest, broadly distributed levy – yes, a tax – to prop up this state’s health care program for the poor. Consider it a down payment on a once-and-future goal: a more universal system of health coverage.
http://www.sacbee.com/110/story/1051327.html

As a welfare program representing patients lacking an adequate political voice, Medicaid has been chronically underfunded. The problem is especially severe in California (where it is called Medi-Cal) with one of the lowest Medicaid reimbursement rates in the nation, and a very large population of low-income individuals who might otherwise qualify for the program. We have more uninsured individuals in California than the entire population of Massachusetts.
Further cuts in Medi-Cal funding will reduce access to providers who cannot continue to accept ever greater losses in caring for patients under this program. Changes in funding and administration of the program will eventually remove close to half a million children from this program (Health Access analysis).
There is no other immediate alternative except to increase revenues – taxes – to pay for this program. Yet the Republicans in the state legislature have vowed not to raise taxes under any circumstance, and they have the power to block the two-thirds vote required for a tax increase.
Compare this with the politics of Medicare. Congress will soon return and restore the 10 percent cut in Medicare payments to physicians that went into effect today. The public has made it quite clear that they will not tolerate political shenanigans directed against our Medicare program.
If the Medi-Cal patients were part of a Medicare program that included everyone, they would be insulated from these budget cuts since the rest of us would demand full funding of the program. One of the great advantages of a single payer national health program is that it would eliminate the welfare-stigmatized Medicaid program. All children would be covered… and so would the rest of us.

California's Medicaid disaster

Budget deal will do real damage to health care

The choice is clear: Increase taxes or let the impact fall on children and the elderly

Editorial
The Sacramento Bee
July 1, 2008

Faced with a $17 billion deficit, the governor and state lawmakers are considering cuts that would likely drop tens of thousands of children from the Medi-Cal program, the state’s version of Medicaid.

They also are considering restricting adult eligibility requirements for Medi-Cal, hurting families trying to transition from welfare to work.

Elderly patients would also take a hit. As part of a 10 percent cut scheduled to take effect today, the state plans to reduce payments received by pharmacists who serve Medi-Cal patients. Pharmacists say it would force them to lose money on commonly prescribed drugs.

California’s budget crisis is real. It will demand deep cuts, and the state’s health care programs will have to shoulder a share of the sacrifice. But the level of cuts aimed at Medi-Cal, and the nature of those cuts, would have broad and dangerous impacts. Legislators, particularly Republicans who have taken a vow not to raise taxes under any circumstance, need to consider the consequences.

A better option would be a modest, broadly distributed levy – yes, a tax – to prop up this state’s health care program for the poor. Consider it a down payment on a once-and-future goal: a more universal system of health coverage.

http://www.sacbee.com/110/story/1051327.html

Comment:

By Don McCanne, MD

As a welfare program representing patients lacking an adequate political voice, Medicaid has been chronically underfunded. The problem is especially severe in California (where it is called Medi-Cal) with one of the lowest Medicaid reimbursement rates in the nation, and a very large population of low-income individuals who might otherwise qualify for the program. We have more uninsured individuals in California than the entire population of Massachusetts.

Further cuts in Medi-Cal funding will reduce access to providers who cannot continue to accept ever greater losses in caring for patients under this program. Changes in funding and administration of the program will eventually remove close to half a million children from this program (Health Access analysis).

There is no other immediate alternative except to increase revenues – taxes – to pay for this program. Yet the Republicans in the state legislature have vowed not to raise taxes under any circumstance, and they have the power to block the two-thirds vote required for a tax increase.

Compare this with the politics of Medicare. Congress will soon return and restore the 10 percent cut in Medicare payments to physicians that went into effect today. The public has made it quite clear that they will not tolerate political shenanigans directed against our Medicare program.

If the Medi-Cal patients were part of a Medicare program that included everyone, they would be insulated from these budget cuts since the rest of us would demand full funding of the program. One of the great advantages of a single payer national health program is that it would eliminate the welfare-stigmatized Medicaid program. All children would be covered… and so would the rest of us.