PNHP

Why a Single-payer Health Care System Would Be Good for Counties

Why a Single-payer Health Care System Would Be Good for Counties

by Paul Clay Sorum, MD; Professor of Medicine and Pediatrics, Albany Medical College, Albany, New York; and Chair, New York Capital District Chapter of Physicians for a National Health Program
The Journal of County Administration
October 2007

What can save counties from impending heath insurance driven financial disaster? A single-payer health care system!

“The problem for counties is the soaring health care responsibilities and costs that already consume much of their budgets. County governments have a responsibility for the health of all their residents, especially for those at the margins. Many expend substantial taxpayer dollars on Medicaid, county hospitals, nursing homes, health departments, and other health costs. They provide health insurance for their current employees and retirees. All these costs are rising faster than people’s incomes and property values. County governments desperately need, therefore, a means of fulfilling their responsibilities without causing serious financial problems for county taxpayers.

The first step of a solution is to recognize the need to provide adequate health coverage to all residents of all counties. Almost all health reformers, interest groups, and politicians agree that everyone should have health insurance. If people do not have health insurance, they do not get preventive care, they delay seeking treatment for illnesses, they use the emergency rooms more frequently than those with insurance,and counties end up paying in different ways for the unpaid and higher bills.1 The cost of the health forgone because of uninsurance has been estimated at $65 to $130 billion.2

Not everyone is willing, however, to provide coverage sufficient for people’s health needs. The number of “underinsured” is rising as employers offer reduced coverage. The barebones basic packages envisioned by the Massachusetts reforms, the donut hole in Medicare part D, the high deductible policies increasingly offered to employees–all these leave millions of people underinsured, unable to pay all the co-payments on their medications, at risk of allowing their illnesses get worse, and of going bankrupt if they get seriously injured or sick. Consumer Reports reported that in May 2007 that “29 percent of people who had health insurance were ‘underinsured,’ with coverage so meager they often postponed medical care because of costs.”3 Even the Reader’s Digest is alarmed: in its recent poll, “two-thirds of adults 21 and older said they feel they ‘can’t afford to be sick.'”4

The second step of a solution is to decide how to go about providing this adequate coverage. Reform plans fall into two categories, proposing either to utilize the private insurance companies–through tax credits or vouchers, individual mandates, employer mandates, and/or expansions of public programs for the poor–or to set up a “single-payer” system. In this issue, I will explain why private insurance companies cannot provide the solution and a single-payer system can. In the next issue, I will explain how a single payer system would work and how it can be instituted.

Private insurers add enormous costs to our already skyrocketing medical expenditures. These include both insurers’ administrative costs–the salaries of their highly-paid executives and armies of employees, their marketing expenses, and (in the case of for-profit insurers) their profits–and the billing related costs imposed on providers. In California, billing and insurance-related functions for insurers and providers represent 20-22 percent of privately insured spending in California acute care settings.5 In the US, we spent in 2001 $351 per capita on administrative costs, while the Canadians spent only $54 and the French only $48.6

The health premiums charged by private insurers are soaring, owing in part to their administrative waste and profits. Premiums have increased 78 percent since 2001, while wages increased 19 percent and inflation was 17 percent. For employment-based insurance, they averaged $12,106 for a family of four in 2007 and $4,479 for a single person.7 As a consequence, employers, especially small employers, are dropping health insurance benefits–60 percent of companies offered them in 2007 versus 69 percent in 2000, and only 45 percent of companies with 3-9 employees in 2007 versus 57 percent in 2000–and individuals have difficulty in paying on the open market for adequate insurance (especially since premiums are higher for non-employment-based insurance). Thus, in spite of the widespread conviction that people need health insurance, not only has the number of uninsured risen to nearly 47 million (15.8 percent of the population) 8, but the number who are inadequately insured is rising even faster.9 So the counties’ health burdens are increasing. Even if counties self-insure for their own employees, they may buy health administrative services and pay for health care in markets inflated by the unneeded expenses of the private insurance companies that dominate these markets.

Private health insurers must, according to the logic of the free market,contribute to uninsurance and underinsurance. As long as health insurance is a market commodity, private insurers must promise prospective enrollees as much as possible, but also reduce costs as much as possible, i.e., must spend as little as possible of their premiums on actual health care. Even if individual medical directors and other employees are virtuous and well meaning, they must avoid sick patients and deny care if their companies are to survive in the market.

Furthermore, private insurers cannot, unlike county governments, make the health of the population a top priority. They must, like other businesses, focus on short-term results, not on the long-term health of their enrollees (especially since these people are likely to change insurers and eventually switch to Medicare). In addition, in marketing their products to select groups, they fragment the population and undermine our already-fragile sense of social solidarity: they reinforce people’s short-sighted inclination to refuse to pay for those with more health needs, and fewer means, than themselves. They encourage healthy people to forget that they might one day suffer major illness and injury and that they, and the county as a whole, benefit if all county residents are as healthy as possible.

Private health insurers do not, therefore, provide the solution to the crisis in health expenses faced by county governments. But a public single-payer system, similar to but more inclusive than Medicare, is the solution with public financing but largely private delivery of health care.10 All legal residents would have an insurance card entitling them to basic but comprehensive care, i.e., access to the health services that would provide significant benefit to them. The structure of the single-payer system will be discussed in the next issue. The counties would continue to play a role in delivering health care, through their clinics and hospitals, but would no longer be burdened with paying for this care.

Critics will argue, however, that a single-payer system, an expanded Medicare for All, would not be desirable. These criticisms are found not only in the distorted charges of political candidates, but also in the serious and reasoned arguments of single-payer opponents in scholarly articles and in public forums, such as in Albany, NY, the series of four forums on “The Pros and Cons of Medicare for All” sponsored by public radio WAMC in spring 200611. It is necessary to address the three major criticisms.

First, opponents of a single-payer system assert that it would amount to “socialized medicine,” to “government run medicine,” with health care decisions made by government bureaucrats rather than by physicians. This set of charges distorts the reality of what is proposed.

* Medicare for All is not socialized medicine. In socialized systems, the physicians and other providers are government employees; in Medicare for All, they would remain as they are now, mostly private practitioners, paid not by salary but by fee for service.

* Physicians and patients in countries with national health insurance have greater freedom of decision making than do physicians in the U.S.; in Medicare for All, medicine would be macro-managed; in current managed care, medicine is increasingly micro-managed, as insurance companies strive to reduce their own costs (and thereby increase the psychological as well as financial costs to patients and providers). Second, opponents of a singlepayer system point to Canada and the United Kingdom and charge that it will result in underfunding and waiting lists.

* In fact, single-payer systems do not necessarily result in waiting lists; they are not a problem in, for example, France and Japan.

* Even if they are a problem in Canada and the United Kingdom, the extreme cases are not typical (just as the cases in the U.S. documented in, for example, Michael Moore’s movie, SiCKO, are atypical); the waiting lists involve noncritical care; and lists are being reduced through government efforts to increase capacity, even as the number of Americans without health insurance increases.12

* Not only do those of us with health insurance often face delays to getting certain services, but those without insurance or money face uncalculated waiting times.

* Even if our own capacity is strained as health coverage becomes universal, the American public, the American voters (most of whom currently have insurance) will not put up with longer waiting lists and will insist on increasing our capacity. Third, opponents charge that national health insurance will causes taxes to rise and will bankrupt the country by increasing health care expenses.

* What should interest individuals is not how much they pay for health care in income taxes, but how much they pay in all taxes–sales, property, payroll, and income–plus over-the-counter health expenses. The question is, therefore, what happens to overall costs.

* The only way to achieve universal access to comprehensive health care without increasing costs is to adopt a single-payer system. The reduction in administrative costs of insurers and providers and the elimination of marketing costs and insurance company profits would save far more money than would be spent on providing health coverage for the currently uninsured. On the national level, Hadley and Holahan estimated in 2001 that the cost of the additional health services that would be used if the uninsured were provided insurance would be $33.9 to $68.7 billion.13 Woolhandler, Campbell, and Himmelstein calculated in 1999 that reducing our administrative costs to those of Canada would have saved $209 billion14. In his critique, Henry Aaron argued for a lower figure, $159 billion, but still far more than the estimated additional costs.15 On a state level, the Lewin Group has made estimates of the cost of various plans for universal coverage in numerous states from California to Mississippi; consistently, the single-payer plans save money, the others cost money.16

We must, however, be realistic. Even if having a single-payer health care system would seem beneficial to county governments and residents across America, what would it actually look like, and would it truly be possible to institute such a system? These are the questions to be addressed in the next issue.

Endnotes

1. Ayanian JZ et al. Unmet health needs of uninsured adults in the United States. JAMA. 2000;284:2061-9. Institute of Medicine. A Shared Destiny: Community Effects of Uninsurance. Washington: National Academies Press, 2003. Ross JS, Bradley EH, Busch SH. Use of health care services by lowerincome and higher-income uninsured adults. JAMA. 2006;295:2027-36. County-level estimates of uninsured in 2000 by the US Census Bureau are available at http://www.census.gov/ hhes/www/sahie/statecntyest2000.html, accessed September 24, 2007.

2. Miller W, Vigdor ER, Manning WG. Covering the uninsured: what is it worth? Health Aff. 2004.

3. Are you really covered? Why 4 in 10 Americans can’t depend on their health insurance. Consumer Reports. August 2007. Available at http://www.consumerreports.org/cro/health-fitness/health-care/health-insurance-9-07/ overview/0709_health_ov.htm, accessed September 24, 2007.

4. Howley K. “I can’t afford to get sick”: Think your insurance has you covered? Just wait till you need it most. Reader’s Digest. April 2006: 57-70. Article and poll available at www.rd.com/healthcare, accessed September 24, 2007. A lower estimate of nearly 16 million people ages 19-64 underinsured in 2003 is given by the Commonwealth Fund: Schoen C, Doty MM, Collins SR, Holmgren Al. Insured but not protected: how many adults are underinsured? Health Aff. 2005;w5-289-302.

5. Kahn JG, Kronick R, Kreger M, Gans DN. The cost of health insurance administration in California: estimates for insurers, physicians, and hospitals. Health Aff. 2005;24:1629-39.

6. OECD Health Data. Accessed by David Himmelstein.

7. Kaiser Family Foundation. Employer Health Benefits 2007 Survey. Available at http://www.kff.org/ insurance/7672/index.cfm, accessed September 24, 2007.

8. US Census Bureau: http://www.census .gov/hhes/www/hlthins/hlthin06.html, accessed September 24, 2007.

9. See the references in notes 3 and 4 above.

10. The single-payer system most commonly proposed is described, with multiple links, on the website of the Physicians for a National Health Program: www.pnhp.org.

11. Sorum PC. The pros and cons of “Medicare for All”: a series of public forums on health reform. Health Law Journal 2007;12: 24-37. Audio available at www.wamcarts.org (click on “Archives”).

12. Canadian Institute on Health Affairs. Waiting for health care in Canada: What we know and what we do not know. 2006. Available at http://secure.cihi.ca/cihiweb/dispPage.jsp?cw_page=AR_1385_E&cw_topic=1385, accessed September 25, 2006. Statistics Canada. Access to health care services in Canada,January to December 2005. Ottawa: Minister of Industry, 2006. Available at http://cansim2.statcan.ca/cgi-Hadleywin/cnsmcgi.pgm?Lang=E&SP_Action=Result&SP_ID=2967&SP_TYP=2&SP_Sort=-0, accessed September 24, 2007.

13. Hadley J, Holahan J. Covering the uninsured: how much would it cost? Health Aff. 2003;W3:250-65.

14. Woolhandler S, Campbell T, Himmelstein DU. Costs of health care administration in the United States and Canada. N Engl J Med. 2003;349:768-75.

15. Aaron HJ. The costs of health care administration in the United States and Canada–questionable answers to a questionable question. N Engl J Med. 2003;349:801-3.

16. Available at http://www.lewin.com/ NewsEvents/Publications/. Look in the category “uninsured & safety net.” Accessed September 16, 2007.

Giuliani’s Prostate Cancer Figure Is Disputed

By JULIE BOSMAN
The New York Times
Published: October 31, 2007

In a radio advertisement playing in New Hampshire and in speeches along the campaign trail, Rudolph W. Giuliani has cited statistics to cut at the heart of his Democratic rivals’ health care proposals, which he has derided as European-style “socialist” plans that will lower the standard of care in the United States.

“I had prostate cancer five, six years ago,” Mr. Giuliani, aRepublican presidential candidate, said in a speech that has been turned into the radio commercial. “My chance of surviving prostate cancer — and, thank God, I was cured of it — in the United States? Eighty-two percent. My chance of surviving prostate cancer in England? Only 44 percent under socialized medicine.”

Mr. Giuliani’s Democratic rivals would argue that they are not advocating government-run health care in their plans to extend coverage to the uninsured. But, beyond that, the 44 percent figure that Mr. Giuliani has been citing is in dispute.

The Office for National Statistics in Britain says the five-year survival rate from prostate cancer there is 74.4 percent. And doctors also say it is unfair to compare prostate cancer statistics in Britain with those in the United States because in the United States the cancer is more likely to be diagnosed in its early stages.

“Certainly, if you intensively screen for prostate cancer, you will find early disease,” said Dr. Ian M. Thompson, chairman of the department of urology at the University of Texas at San Antonio. “And simply because you find it earlier, you will always have longer survival after the disease is diagnosed.”

Maria Comella, a spokeswoman for Mr. Giuliani, said yesterday that the 44 percent figure came from an article in City Journal, a publication of the Manhattan Institute, a conservative research organization.

“The citation is an article in a highly respected intellectual journal written by an expert at a highly respected think tank which the mayor read because he is an intellectually engaged human being,” Ms. Comella said in an e-mail message.

That article, titled “The Ugly Truth About Canadian Health Care,” was written by Dr. David Gratzer, a senior fellow at the Manhattan Institute and an adviser to the Giuliani campaign.

In an interview, Dr. Gratzer said the statistic came from the Commonwealth Fund, a nonprofit group in New York specializing in health care policy issues, but he acknowledged that it was seven years old and “crude.”

But the Commonwealth Fund said yesterday that Dr. Gratzer had misused its research by calculating a five-year survival rate based on data on prostate cancer incidence and mortality rates in the United States and Britain.

“Five-year survival rates cannot be calculated from incidence and mortality rates, as any good epidemiologist knows,” the group said in a statement.

Dr. Gratzer dismissed the Commonwealth Fund’s statement, saying the group had “an ideological bias.” Asked if Mr. Giuliani would continue to repeat the statistic, and if the advertisement would continue to run, Ms. Comella responded by e-mail: “Yes. We will.”

Gina Kolata contributed reporting.

THE CLAIM: GIULIANI’S PROGNOSIS WOULD BE WORSE IN BRITAIN and THE FACTS

The Washington Post
Wednesday, October 31, 2007; Page A06

“I had prostate cancer, five, six years ago. My chances of surviving prostate cancer — and thank God I was cured of it — in the United States: 82 percent. My chances of surviving prostate cancer in England, only 44 percent under socialized medicine.”

— Rudy Giuliani, New Hampshire radio advertisement, Oct. 29, 2007

The former New York mayor has had experience battling prostate cancer, but he’s confused about the stats, according to several experts we consulted.

THE FACTS

As factual support for the presidential candidate’s claim, his campaign cited an article by David Gratzer that appeared in the City Journal, published by the Manhattan Institute, a conservative New York think tank, slamming the Canadian and British systems of “socialized” medicine. The article provides no sources for its assertions about five-year survivability rates for prostate cancer.

Experts from the National Cancer Institute and the urology departments at Johns Hopkins University and the University of Kansas agreed that Giuliani’s figures were way out of date, if they were ever accurate at all. The latest official figures for five-year “survivability” rates for prostate cancer are about 98 percent in the United States and 74 percent in England.

More important, the survivability figures tell us little about the differences in the quality of treatment received by prostate cancer patients in the United States and Britain. Doctors in each country have different philosophies about how to treat the disease, and these differences have greatly influenced the survivability statistics.

In the United States, there has been a big emphasis since the 1990s on early screening through prostate-specific antigen (PSA) testing. Five-year survivability rates have increased simply because the slow-developing disease is being diagnosed at a preliminary stage. If the diagnosis is made early, the chance of surviving for five years is close to 100 percent. Britain is several years behind the United States in the widespread use of PSA testing.

Another way of comparing treatment of prostate cancer in the United States and Britain is to look at the mortality rates. Here the two are much closer. About 25 men out of 100,000 are dying from prostate cancer every year in both countries. The likelihood of dying from prostate cancer is roughly comparable in the two countries, despite different treatment philosophies.

J. Brantley Thrasher, chairman of the Department of Urology at the University of Kansas, said it is “impossible to say” on the basis of the statistics whether a prostate cancer patient has a better chance of surviving under a “capitalistic” or “socialistic” medical system. American doctors tend to be more “interventionist” and more likely to advocate surgery than their counterparts in Britain or Canada, where greater emphasis is put on “active surveillance.” In the United States, a patient with a good health-care plan is “more empowered to make decisions” for himself.

Maria Comella, deputy communications manager for the Giuliani campaign, sent us the following e-mail explaining the mayor’s mistake without quite acknowledging it:

“Mayor Giuliani is an avid reader of City Journal and found the passage in the Gratzer article himself. He cited the statistics at a campaign stop, and the campaign used a recording from that appearance in the radio ad. The citation is an article in a highly respected intellectual journal written by an expert at a highly respected think tank which the mayor read because he is an intellectually engaged human being.”

THE PINOCCHIO TEST

Giuliani is simply wrong when he claims that his chances of surviving prostate cancer are almost twice as high in the United States as in England, under a “socialized” medical system. We award Giuliani four Pinocchios.

To find out the winner of the Fact Checker’s first Geppetto award, and coverage of Tuesday night’s Democratic debate, visit

The serial exaggerator strikes again

By Steve Benen
The Carpet Bagger Report
Posted October 30th, 2007 at 9:15 am

At this point, it appears Rudy Giuliani is just daring the national media. Following up on yesterday’s item, the candidate who can barely go a day without making a wildly misleading exaggeration, has unveiled a new radio ad with a truly audacious whopper, even by Giuliani’s low standards.

OK, Rudy Giuliani has just released an ad claiming that the survival rate from prostate cancer is much higher in America than in Britain, thus proving the failure of socialized medicine.

The problem is that his claim is just plain false. In fact, mortality rates from prostate cancer are almost the same in America and Britain.

So, will this get as much attention as, say, the Edwards haircut or the Hillary laugh? Will it get any coverage at all? Bear in mind that health care is the central domestic issue of this election — and Rudy has just showed that he doesn’t know a thing about it.

It’s really not that complicated. Giuliani, in his campaign spot, claims that the survival rate for prostate cancer patients in the U.S. is 82%, while in England, it’s 44%. Giuliani argues that a universal-coverage system necessarily leads to worse care and more deaths.

But Giuliani doesn’t know what he’s talking about, and his claims were easily debunked.

Keep in mind, this wasn’t just an off-hand comment Giuliani made on the stump. This was a carefully crafted pitch, and put on the air. Giuliani didn’t just flub the facts in response to a voter’s question; he’s intentionally trying to deceive the public with a misleading ad.

And how has the media responded to the leading Republican candidate getting caught lying in a campaign ad? So far, by largely ignoring it.

Reader R.K. alerted me to a discussion on yesterday’s Hardball, where MSNBC’s Chris Matthews showed the ad in its entirety. Matthews and his guests then scrutinized the ad for quite a while. How many mentioned that the ad’s central claim was demonstrably false? None.

Matthews got the discussion started by saying, “Boy, that is classic Live Free or Die, self reliance, the Granite State. Perry, this is like main lining right into that psychology of New Hampshire, which is leave me alone. I don’t trust socialism. Is it going to work in these days, when people are really challenged on health care?”

Perry Bacon discussed the ad in the context of other candidates’ healthcare pitches. Jill Zuckman talked about the ad in the context of taking on Hillary Clinton. Matthews repeatedly asked whether the ad would “work,” by which he meant, win support from voters.

It didn’t occur to any of them to even question Giuliani’s central claim, better yet point out that it’s completely wrong.

As for digging into the policy details a little more, Ezra did a handful of good posts on the subject yesterday, but included a gem last night when he noted the circumstances of Giuliani’s life-saving cancer treatment.

…Giuliani’s case for the superiority of our “free market” health care system goes something like this: While on health insurance provided by New York state, he was treated, using a surgery developed by Europeans, for prostate cancer, a disease that most commonly afflicts those covered by the federal government’s single-payer health care system. Take that, Europe/national health insurance.

Yep, Giuliani is that clueless.

In an effective political system, this would be a fairly big deal. A leading candidate produces an ad (one of a small number created by the campaign) with an obvious falsehood. If reporters cared half as much about this as haircuts, cackles, and cleavage, the process might actually function.

Speaker’s conclusions on health care wrong

Letter to the Editor
Palm Beach Daily News
Sunday, November 04, 2007

I found the article on [HSA Consulting Services president] Roy Ramthun’s health-care talk in (the Oct. 24) Shiny Sheet very interesting but I must take issue with his conclusions. One of these is that “. . . liberals promote covering the uninsured, but that involves taking subsidies away from those who have coverage. They want to cover everybody first and then deal with the cost.”

I am a liberal and am very active in a national campaign with the 14,000-member Physicians For a National Health Program. What we support is Medicare for everyone. It is expressed in the Conyers Bill, HR676, and calls for covering everyone without taking subsidies away from anyone.

It is the only proposal that carefully considered costs during the preparation of the legislation. According to a thorough study published in the New England Journal of Medicine, eliminating all of the middlemen now milking the health care system would result in a saving of at least $350 billion, enough to more than cover all of the uninsured. These figures come from government sources.

As it is now, costs are rising so outrageously that the 47 million without insurance have nightmares, worried over being hit with a serious medical condition. Too many of them find reality nightmarish when they actually are hit. In the words of Dr. Marcia Angell, for years editor in chief of the New England Journal and now a Harvard Medical School professor, “We can no longer afford not to have single-payer universal health care.

DR. H. DAVID PRENSKY
Palm Beach

Expensive mediocrity

Toward Higher-Performance Health Systems: Adults' Health Care Experiences In Seven Countries, 2007

By Cathy Schoen, Robin Osborn, Michelle M. Doty, Meghan Bishop, Jordon Peugh and Nandita Murukutla
Health Affairs
November 1, 2007

This 2007 survey compares adults’ health care experiences in Australia, Canada, Germany, the Netherlands, New Zealand, the United Kingdom, and the United States. In all countries, the study finds that having a “medical home” that is accessible and helps coordinate care is associated with significantly more positive experiences. There were wide country differences in access, after-hours care, and coordination but also areas of shared concern. Patient-reported errors were high for those seeing multiple doctors or having multiple chronic illnesses. The United States stands out for cost-related access barriers and less-efficient care.

The survey asked adults about their overall health system views, confidence, access, cost burdens, and perceptions of waste and complexity. Repeating the pattern observed since 1998, U.S. adults held the most negative views and were the most likely to report affordability concerns. In contrast to the United States, public views in Canada and New Zealand have grown steadily more positive in the past decade and are now comparable to views in Australia and the United Kingdom.

http://content.healthaffairs.org/cgi/content/abstract/26/6/w717?etoc

Comment:

By Don McCanne, MD

Nothing new. This is yet another international study of health care experiences demonstrating that the United States has the most expensive and least efficient system and that we have the most negative views of all the nations studied. We have a lousy system, and we don’t like it.

The U.S. opponents of reform continue to expound on how we have the greatest health care system in the world, and none of us would ever tolerate the government controlled systems of other nations. But the truth is that their systems are less expensive, more efficient, and more appreciated by their citizens.

The first step in reform is to accept the true facts as they are. The second step is to find enough money to pay for a high-performance health care system. Fortunately, we’ve already accomplished that step since we’re currently spending enough; we merely need to make the contributions more equitable. The next step is to establish a rational system of allocating those funds, beginning with the establishment of a medical home for each and every individual residing in the United States.

With the funds we already have, a high-performance system is only a few policy steps away.

Conservative businessmen sound out single payer

Universal healthcare crosses the partisan divide

At HIGPA, surprising consensus sees coverage for everyone coming soon

By Shawn Rhea
Modern Healthcare
October 30, 2007

Liberals and conservatives may be duking it out over the issue of universal healthcare, but more than a few participants at the Health Industry Group Purchasing Association’s 2007 International Expo, held Oct. 22-24 in Palm Desert, Calif., said the outcome of the fight is a foregone conclusion: Like it or not, within the next few years the U.S. is going to have a nationwide, single-payer system.

“In one way or another, we’re going to have universal healthcare, because you can’t have a business where half of the possible customers can’t afford the product,” said Joe Flower during a HIGPA conference breakout session on the future of healthcare.

Flower, a self-dubbed healthcare futurist, consultant and author of several books on the business of healthcare, has written about the potential benefits of a single-payer system. He asserts that universal healthcare could ultimately promote efficiency; improve pricing and quality-of-service transparencies; and reduce administrative costs and health-cost-related bankruptcies.

And if those reasons don’t get the average capitalist excited about universal healthcare, Flower has noted that it could also ease the financial “burden” on big businesses by spreading the cost of healthcare across a wider pool of financial supporters who pay into the system. Also, healthier workers would mean fewer sick days and fewer sick days ultimately mean more profitable businesses.

I, for one, believe the pronouncements that universal healthcare will soon be coming to a household near you are accurate. Not because I’m naive enough to think that healthcare policymakers and politicians alike are finally seeing the moral value in having everyone — taxpayers and businesses alike — pay to ensure each citizen, regardless of income, has access to a basic level of preventive care. But because even conservative, don’t-put-your-government-paws-in-my-wallet types are acknowledging that the goal of universal healthcare can no longer be labeled a kumbaya concept trumpeted only by liberals. It seems the ire of 47 million uninsured Americans — many of them voters — is a powerful enough motivator to sway even the staunchest fiscal conservative toward accepting the idea.

Don’t believe me about conservative give on the issue? Well, let me suggest you talk to former Republican presidential candidate and conservative Pat Buchanan about universal healthcare. Buchanan and Democrat Terry McAuliffe, former chairman of both the Hillary Clinton for President Exploratory Committee and the Democratic National Committee, were the featured guests at the HIGPA conference’s debate-style dinner on Tuesday evening. Between partisan barbs the two political pundits actually agreed on an issue: It was that universal healthcare will soon be a reality in this country.

McAuliffe’s pronouncement during the dinner that universal healthcare is “going to happen, and I don’t care who the (next) president is,” was hardly a surprise to the mostly Republican audience. Buchanan’s response, however, was probably a bit more novel to the expectant crowd. “I agree,” he said. “The question that comes up now is: How are we going to pay for it — especially when Medicare and Medicaid are like Thelma and Louise going over the cliff?”

Exactly how we’re going to pay for universal healthcare is the $110 billion question, the price range mentioned by presidential candidates brave enough to put a price tag on their plans.

If, as HIGPA conference participants suggested, leaders across partisan lines are getting onboard with the idea that universal healthcare will soon be reality, it seems now would be the time for politicians and healthcare lobbyists to take off the gloves and get down to the business of creating a coverage system everyone can live with.

http://www.modernhealthcare.com/apps/pbcs.dll/article?AID=/20071030/FREE/71030003

Comment:

By Don McCanne, MD

What is remarkable about this report is how far the debate on reform has come. This was a meeting of conservative businessmen in the health industry. The debate is no longer over whether we need comprehensive reform; that is now a given. The debate has progressed to considering the financing mechanism, or, as Pat Buchanan said, “How are we going to pay for it?”

The crucial reality check was in the comment by Joe Flower, “you can’t have a business where half of the possible customers can’t afford the product.”

Over half of the nation can no longer afford to purchase reasonably comprehensive private insurance plans, and businesses are finding it increasingly difficult to do so as well. If we expect to control spending and provide health care for everyone, that doesn’t leave much of an option other than single payer national health insurance. It simply makes the best business sense.

1.8 Million Veterans Lack Health Coverage

Embargoed Until:
Tuesday, October 30, 2007
4:00 p.m. Eastern

Contacts:
Steffie Woolhandler, MD, MPH
Jeffrey Scavron, MD
Ida Hellander, MD (312) 782-6006

Harvard Study Finds Sharp Increase Since 2000

Nearly 6 Million Uninsured Americans are Veterans or their Families

Click here to read the study.

Of the 47 million uninsured Americans, one in every eight (12.2 percent) is a veteran or member of a veteran’s household, according to a study by Harvard Medical School researchers published in the December, 2007 issue of the American Journal of Public Health. 1.8 million Veterans (12.7 percent of non-elderly veterans) were uninsured in 2004, up 290,000 since 2000, the study found. An addition 3.8 million members of their households were also uninsured and ineligible for VA care.

The study is based on detailed analyses of government surveys released between 1988 and 2005. Veterans were only classified as uninsured if they neither had health insurance nor received ongoing care at Veterans Health Administration (VA) hospitals or clinics. A preliminary review by the study’s authors of 2006 data released last month (while this study was in press) shows little change in the number of uninsured veterans since 2004.

“Like other uninsured Americans, most uninsured vets are working people – too poor to afford private coverage but not poor enough to qualify for Medicaid or means-tested VA care,” said Dr. Steffie Woolhandler, an Associate Professor at Harvard Medical School who testified before Congress about the problem earlier this year. “As a result, veterans and their family members delay or forgo needed health care every day in the U.S. It’s a disgrace.”

Other findings of the study include:

* The number of uninsured veterans has increased by 290,000 since 2000, when 9.9% of non-elderly veterans were uninsured, a figure which rose to 12.7% in 2004.

* Of the 1.768 million uninsured, 645,628 were Vietnam-era veterans while 1,105,891 were veterans who served during “other eras” (including the Iraq and Gulf Wars)

* Of uninsured veterans, 56.5% were older than 44.

* Uninsured veterans had as much trouble getting medical care as other uninsured persons. 26.5% of uninsured veterans reported that they had failed to get needed care due to costs; 31.2% had delayed care due to costs; 49.1% had not seen a doctor within the past year; and two-thirds failed to receive preventive care

* Nearly two-thirds of uninsured veterans were employed.

Many uninsured veterans are barred from VA care because of a 2003 Bush Administration order that halted enrollment of most middle income veterans. Others are unable to obtain VA care due to waiting lists at some VA facilities, unaffordable co-payments for VA specialty care, or the lack of VA facilities in their communities.

“Since President Bush took office the number of uninsured vets has skyrocketed, and he’s cut eligibility, barring hundreds of thousands of veterans from care. This administration has put troops in harm’s way overseas and abandoned them and their families once they got home,” said Dr. David Himmelstein, co-author of the study and co-founder of Physicians for a National Health Program. “We need a solution that works for veterans, their families, and all Americans – single payer national health insurance.”

“I see uninsured vets in my clinic every week,” said Dr. Jeffrey Scavron, a former Navy physician now practicing in Springfield, Massachusetts. “In many cases, they’re too sick to work, but not yet sick enough for full disability which would qualify them for Medicare. Only the government can put men and woman into military service and only the government can guarantee that they are covered after they serve.” Dr. Scavron is a founding member and former president of Physicians for a National Health Program.

#

Physicians for a National Health Program is a national organization with 14,000 physician members that supports single payer national health insurance. PNHP has chapters and spokespeople across the U.S. For local contact information, write info@pnhp.org or call 312-782-6006.

Himmelstein, Woolhandler et al. “Lack of Health Insurance Coverage Among U.S. Veterans from 1987 to 2004” American Journal of Public Health, December 2007.

Primary care turnover in private plans

Primary Care Provider Turnover and Quality in Managed Care Organizations

By Mary E. Plomondon, PhD, MSPH; David J. Magid, MD, MPH; John F. Steiner, MD, MPH; Samantha MaWhinney, ScD; Blair D. Gifford, PhD; Sarah C. Shih, MPH; Gary K. Grunwald, PhD; and John S. Rumsfeld, MD, PhD
The American Journal of Managed Care
August 2007

The median primary care provider turnover rate was 7.1% (range, 0%-53.3%). After adjustment for plan characteristics, health plans with higher primary care provider turnover rates had significantly lower measures of member satisfaction, including overall rating of healthcare.

Health plans with higher provider turnover rates also had lower rates of preventive care, including childhood immunization, well-child visits, cholesterol screening after cardiac event, and cervical cancer screening.

The cost of physician turnover is extremely high, estimated at 3.4% to 5.8% of a health plan’s annual operating budget.

http://www.ajmc.com/Article.cfm?Menu=1&ID=3346

Comment:

By Don McCanne, MD

One of the most important goals of health care reform is to provide everyone with access to a primary care medical home. Not only would that enhance the quality and cost effectiveness of health care, but it would also provide each person with a long term relationship with a trusted health care professional.

The accelerating deterioration that is taking place in our primary care infrastructure threatens that goal. And private health plans are compounding that problem.

It is rare for an individual to be covered indefinitely by the same health plan. Employers often change their plans in an effort to slow the rate of premium increases. Individual employees frequently change their health plans when they have a change in employment. Young adults need new coverage when they are dropped from their parents’ plans. Since different plans use different lists of authorized providers, an individual may lose coverage of his or her primary care professional.

This study demonstrates that even maintaining the same health care coverage is not enough. A patient can lose his or her medical home merely because the insurer has a higher than average turnover in contracts with primary care professionals.

Clearly, placing a superfluous, intrusive private insurer between the patient and the primary care provider can be disruptive to the long-term coordinated care that a medical home should bring. Further, physician turnover is expensive, adding yet more waste to the administrative excesses that private insurers bring us.

Why should we want to have a choice of health plans when that will not assure us a stable choice of our physicians? Wouldn’t it be much better to switch to single payer national health insurance? Then we could always have choice of our own medical home and stay there for as long as we desire.

Zycher's dishonest report on administrative costs

Medicare for All?

Editorial
The Wall Street Journal
October 29, 2007

The frequent claim is that eliminating profits and private administrative expenses would more than pay for the cost of covering all the uninsured.

Well — no, as demonstrated in a new study by Benjamin Zycher, a senior fellow at the Manhattan Institute and a former senior economist for the Reagan Council of Economic Advisers. He estimates that the real economic costs of moving to single payer would be at least twice those of today’s semimarket patchwork.

“Administrative” costs, generally speaking, are those not directly funding medical care but instead spent to deliver insurance benefits. Sure enough, on paper Medicare’s are about 3% of outlays, compared to 11% to 14% for the private system. But Mr. Zycher notes that a more accurate measure of Medicare’s administration would include other indirect federal services, such as tax collection, which round them up by about double. Fold in the incentives for the uninsured to consume more medical services under single-payer than they do now, and those “savings” are revealed as make-believe.

Mr. Zycher also points out that the adverse effects of the increased taxation required for “Medicare for all” more than outweigh the potential efficiencies. It costs the economy more than a dollar — the bottom-rung estimate is 20% — to send a dollar to Washington, so in the end Medicare clocks in substantially above private insurance.

The analysis also offers some reality about what those supposedly wasteful private administrative expenses actually do. Underwriting — i.e., the pricing of premiums in accordance with risks and health status — is often assailed by politicians, but the administrative scrutiny leads to an efficiency. It allocates costs in proportion to benefits: You get, in other words, what you pay for.

http://online.wsj.com/article/SB119362351042074490.html

And…

Comparing Public and Private Health Insurance: Would A Single-Payer System Save Enough to Cover the Uninsured?

By Benjamin Zycher
Manhattan Institute for Policy Research
October 2007

The public discussion of prospective reform of the U.S. health-care system has focused in substantial part on the question of how to extend insurance coverage to those now uninsured, and on how to deal with the attendant increased costs for the system as a whole. Some argue that a single-payer system similar to Medicare would realize savings in administrative costs sufficient to extend insurance coverage to all of the uninsured. The central objective of this study is a comparison of the administrative and other important non-benefit costs of private health-insurance plans with those of Medicare, which is used as a prototype for a large single-payer (that is, government-financed) insurance system.

The lowest plausible assumption about the excess burden engendered by the federal tax system–20 percent–raises the true cost of delivering Medicare benefits to about 24-25 percent of Medicare outlays, or about double the net cost of private health insurance. A more realistic assumption — say, 50 percent — raises the true cost of delivering Medicare benefits to about 52 percent of Medicare outlays, or between four and five times the net cost of private health insurance.

http://www.manhattan-institute.org/html/mpr_05.htm

Comment:

By Don McCanne, MD

Normally we wouldn’t respond to a dishonest study like this since it would give it further unwarranted exposure and provide it with a limited degree of credibility merely because we thought it was worth our time to comment on it. Unfortunately, The Wall Street Journal has granted it their editorial stamp-of-approval, and the conservative and libertarian non-think tanks are gearing up to be certain that the conclusions in Zycher’s report are widely distributed. We will be hearing more about this, and we should be prepared to respond.

Although this study is presented under the guise of comparing administrative costs between Medicare and the private insurance plans, it is important to note that Zycher states that “a term perhaps more useful than ‘administrative’ costs might be ‘non-benefit’ costs.” Thus, primarily for the Medicare model, he includes much more than administrative costs.

Let’s look at how he adjusts the explicit administrative costs of Medicare. As an example, look at how he measures the amount of administration of justice in the Medicare program. He notes that Medicare spending ($356 billion for 2005) is 17.1 percent of federal non-defense spending ($2081 billion). Thus, he concludes, because of the costs of investigating Medicare fraud, Medicare consumes a prorated 17.1 percent of the government costs of the administration of justice. The dollar amount involved in this calculation alone increases the administrative costs of Medicare from 3.1 percent to 5.1 percent. Considering Dr. Zycher’s training as an economist, stating that Medicare consumes 17.1 percent of the government’s administrative costs for justice is not simply a distortion of the facts; it is a blatant lie.

The most egregious fraud in Zycher’s analysis is the cost of Medicare that “appears nowhere in government budgets,” and that is “the real economic cost of the distortions created by the tax system.”

Zycher quotes Martin Feldstein as his authority, to wit, “The traditional method of analyzing the distorting effects of the income tax greatly underestimates its total deadweight loss as well as the incremental deadweight loss of an increase in income tax rates. … The true deadweight losses are substantially greater than [prior] conventional estimates because the traditional framework ignores the effect of higher income tax rates on tax avoidance through changes in the form of compensation… and through changes in the patterns of consumption…”

This concept ignores completely the fact that government services are an integral part of our total economy, and the (greatly exaggerated) deadweight losses from taxing the private sector are more than recovered through the higher value of services provided in the public sector (certainly a pompous statement, but no more so than Feldstein’s).

It is primarily this “economic cost of the distortions created by the tax system” that leads Zycher to his conclusion that “a more realistic assumption — say, 50 percent — raises the true cost of delivering Medicare benefits to about 52 percent of Medicare outlays, or between four and five times the net cost of private health insurance.”

Another outrageous concept in Zycher’s study is his description of how the administrative services of the private insurance industry provide market “efficiency.” He indicates that cross subsidies in insurance are anti-competitive because insurers would have to charge those with fewer health care needs higher premiums than are warranted based on their use of services. The purchasers of insurance are receiving benefit from the administrative services such as medical underwriting that are used to prevent cross subsidies from the healthy sector to the sick sector. As he states, “the administrative costs borne by insurers seeking to align premiums with costs are efficient, in the sense that they provide a somewhat subtle service valued by consumers: avoidance of premiums that subsidize others.”

Imagine the possibilities of using innovative economic theory to analyze the real costs of the private insurance industry. As did Zycher, we’ll use both the administrative costs and the “non-benefit” costs.

What is the dollar value of a human body and soul? That is almost impossible to quantify, but we can get a relative estimate based on our recent tragic fires here in Southern California. Victim after victim, many of whom lost million-dollar homes and all their possessions, stated they were so fortunate to escape with their lives and their health, and all the rest of it was just “things.” A million dollar home is nothing compared to your family.

So what is the body and soul component of health care worth? It is a value that would appear nowhere in a budget. But what would that component be in an $80 office visit? Considering quality of life gained through medical care and other factors such as being able to return to work earlier, it would not be unreasonable to place that value at around $800. Or what about a $20,000 hospitalization? A marked improvement in quality of life and perhaps even prevention of premature death could easily have a value of around $200,000. The victims of the fire might suggest that even a million dollars wouldn’t cover it, but it seems fair to say, by this reasoning, that the value of medical care ministered to the body and soul can be estimated to be about ten times the cost of that care.

So how might this apply to the “non-benefit” costs of the private insurance industry? Although they insure about two-thirds of us, they pay only about one-fourth of our health care costs. Thus the private sector insurance industry has used the power of the market successfully to avoid paying for about three-fourths of our $2.2 trillion health care expenditures, shifting about $1.7 trillion to us as individuals and as taxpayers. The “non-benefit” cost to us of the care they have avoided covering is about $17 trillion! That is more than our $13 trillion GDP!

Enough of these silly games! What we need to carry on the health reform debate are the true facts and legitimate analyses of the policy implications. What we don’t need is to read more dishonest reports while the ideologues opposed to health care justice snicker in the background.

Unhappy doctors, unhappy patients

Susanne L. King, M.D.
Berkshire Eagle
10/24/2007

Have you been having trouble finding a primary care physician, or been put on a waiting list for months to see a specialist? For the 13th year in a row, Massachusetts physicians have seen a deterioration in their practice environment, according to the Massachusetts Medical Society (MMS).

For this reason, doctors are leaving Massachusetts, and the state is having trouble recruiting new physicians. The result is physician shortages in both primary and specialty care. This reduces patients’ access to care.

The factors contributing to this decline, according to the MMS, are low reimbursement rates from insurance companies, increasing costs of operating a practice, and growing administrative burdens because of insurance company demands for preauthorization for services, the complexities of billing multiple insurance companies, and the tremendous difficulties in collecting insurance reimbursements. The rising operating costs for doctors include higher costs for maintaining an office, as well as increases in malpractice liability insurance premiums. Last year the priceof professional liability insurance rose 5 percent in Massachusetts, while holding steady nationally. Doctors are frustrated, unhappy, and moving out of the state. The health care reform legislation that was recently passed in Massachusetts does not address this issue.

Physicians in Massachusetts are not alone in their dissatisfaction with the current health care system. More and more doctors across the country are joining Physicians for a National Health Program (PNHP), which advocates for single-payer health care, funded and administered by the government. PNHP membership has increased to more than 14,000 members, and is growing rapidly. Single-payer health care is not socialized medicine; physician practices and hospitals would still be private, and patients would have their choice of providers. Single-payer health care is about the administration of our health care funds, not the delivery of health care.

How would single-payer health care be beneficial for doctors? First, it would decrease the physician’s administrative burden and paperwork — one plan, one insurance form, fewer office workers. Doctors would actually get paid: no more calling insurance companies because of claim denials for unforeseen and often inexplicable reasons. Second, it would restore autonomy to doctors. I’ve been in practice long enough to remember how that felt, before the advent of managed care. Single-payer health care would allow decision-making to occur between the doctor and patient.

Pre-authorization for services has been the bane of a psychiatric practice. To be required to speak with an insurance company gatekeeper (who has neither the level of training nor the experience of a doctor), about the needs of a patient whom the reviewer has not seen or evaluated, in order to receive authorization for services, is an intrusion into the doctor-patient relationship. This intrusion raises concerns about the confidentiality of the medical information, and devalues the doctor’s judgment concerning treatment recommendations. Doctors should be making decisions with their patients about needed health care, not reviewers for profit-driven insurance companies who do not have a patient’s health care as a primary focus. Most important, single-payer health care would allow equal access to health care for every patient; this is the ethical reason for doctors to support health care reform.

Massachusetts ranks a dismal 40th in the country in reported cases of the seven most common chronic illnesses. This means we have a higher percentage of our population who have cancer, diabetes, heart disease, high blood pressure, stroke, pulmonary conditions, and mental disorders than 39 other states have. Who is going to care for all these patients if doctors keep leaving the state? The cost of these diseases in Massachusetts is $34 billion annually for treatment and lost productivity.

Doctors and patients working together, with regular visits that focus on prevention and treatment, enhance a patient’s level of functioning and prolong life for those with chronic illnesses. Insurance companies don’t like to pay for the kind of care in which doctors and patients meet frequently in this proactive model. The president of the Joslin Diabetes Center in Boston said that roughly 40 cents of every dollar spent on patient care for their diabetic patients is not reimbursed by insurance.

As a psychiatrist working with children and adolescents, many of whom have developmental disorders or serious mental illnesses, I know the need for that kind of ongoing care and treatment, and I also know how insurance companies resist paying for it. Having trained and practiced in an era before managed care, I have experienced the changes in the practice environment in Massachusetts, and witnessed the additional stresses put on hard-working doctors.

Now is the time for doctors to rise up in protest and become involved in health care reform, along with patients who are suffering from their lack of access to care, whether due to not having health insurance or not having a physician. Doctors must be involved in health care reform; their practice environment has been shaped by other forces for too long.

Susanne L. King, M.D. is a Lenox practitioner.

Health care money pits

Janet K. Seeley, M.D., Ph.D
The Coloradoan
October 30, 2007

Thirty percent of your health care dollars does not go to health care. Instead, they pour into the money pits of multiple risk pools and high administrative costs. That’s $30 of every $100 you think you are spending on health care! An affordable solution sought by the Colorado Blue Ribbon Commission for Health Care Reform (208 Commission) is impossible unless these cost drivers are controlled (www.colorado.gov/208commission).

Fortunately, the publicly funded, privately delivered (single-payer) proposal shrinks these cost drivers; the other four proposals ignore them.

The concept of risk pool is a key principal of insuring any population. The larger and healthier the group (pool), the lower the cost. Right now, the Colorado population is fractured into hundreds of risk pools. Insurance companies evaluate the risk by looking at the health history and past claims made by individuals in the group. So, the smaller the group and the higher the possibility that members will get sick, the higher each member’s premium. This is why smaller companies and individuals are faced with higher premiums. On the other hand, when a large group, such as the population of Colorado, is covered by the same financing plan, the risks are shared by healthy and sick alike, the cost is lower and health care is there when needed. This is single payer financing.

The second cost driver is administrative costs. Today’s complex mixture of private and government plans requires multiple, confusing and often duplicative levels of administration and paperwork. Imagine the crazy quilt of administrative costs for employers, individuals, insurance companies, doctors, hospitals and public programs. This extremely expensive, wasteful maze robs health care services. “Choice,” so often cited as an important feature of the U.S. system, amounts to a choice only among wasteful plans!

The patchwork of insurance and government plans in four of the 208 proposals is at least as complex as our current system and does little to curb future costs. We will all pay more with those four proposals. The single payer proposal dramatically reduces administrative costs with a public financing system to cover all Colorado residents with comprehensive, privately delivered health care. The independent Lewin Group cost analysis estimates that the single-payer plan actually saves Coloradans $1.4 billion/year in health care costs.

The single-payer proposal for Colorado health care reform solves the problem of multiple risk pools and reduces administrative costs by setting up a publicly financed trust fund. Yes, public financing means state health care taxes, but they are more than offset by the savings in current state and federal taxes for public programs, insurance premiums, high copays, deductibles and many out-of-pocket health expenses. For most of us, that would be less expensive than what we spend today. The comprehensive benefit package, including long term care, covers all Colorado residents and may be supplemented with private plans if desired. Health care delivery remains private, with your choice of provider and hospital.

So, do I think that the Single Payer 208 proposal is the only way to help Colorado meet the goals of the 208 Commission of reducing costs and covering Coloradans? It is the best one I see. Will it need improvement as it goes? Certainly.

Janet K. Seeley, M.D., Ph.D, is a Fort Collins physician and a speaker for Health Care For All Colorado. Reach her at jkseeley@webaccess.net or www.healthcareforallcolorado.org/?p33speakersbureau.

Almost 2 Million U.S. Vets Lack Health Insurance

Income levels bar many from VA health services, researcher says

By Steven Reinberg
Health Day
Posted 10/30/07

TUESDAY, Oct. 30 (HealthDay News) — Almost 2 million veterans are without health insurance, along with 3.8 million members of their households, a new study finds.

Among the 1.8 million uninsured veterans, 12.7 percent are under 65. In addition, the number of uninsured veterans has increased by 290,000 between 2000 and 2004, according to the report in the Oct. 30 online edition of the American Journal of Public Health.

“The Bush Administration has been sending Americans overseas asking them to fight for their country, and yet, when people come home, they have no guarantee of health care,” said study co-author Dr. Steffie Woolhandler, an associate professor of medicine at Harvard Medical School and a member of the advocacy group Physicians for a National Health Program. “The most basic human right of health care is being denied to our veterans, along with other Americans — and that’s a disgrace.”

“Over 1 million veterans have no health insurance and no access to veterans’ hospitals,” Woolhandler added. “I think that’s shocking to most people. It was certainly shocking to us.”

Many of these veterans were members of working families that earned too much to qualify for programs such as Medicaid or Veterans Administration care, Woolhandler said. “Yet, they earned too little to be able to afford private coverage,” she said.

Woolhandler noted that the Veterans Administration health-care system is not open to all veterans. Many uninsured veterans can’t get any VA care because the Bush Administration stopped enrollment of most middle-income veterans in 2003, she said.

“Any veteran with a service-connected disability can get access to the VA,” Woolhandler said. “That’s a minority of veterans. For everybody else, VA care is means-tested — veterans earning more than $30,000 a year will not be eligible for VA care.”

According to the U.S. Department of Veterans Affairs Web site, the financial income threshold is $27,790 for a veteran with no dependents and the range graduates upward to $38,948 for four dependents. Each additional dependent raises the annual income ceiling $1,866.

In the study, Woolhandler and her colleagues analyzed data from U.S. government surveys from 1988 and 2005. Veterans were classified as uninsured if they didn’t have health insurance or receive care at Veterans Health Administration hospitals or clinics.

A preliminary review of 2006 data shows little change in the number of uninsured veterans since 2004, Woolhandler noted.

Woolhandler’s team found that 645, 628 uninsured veterans were old enough to have served in Vietnam. More than 1 million (1,105,891) served at other times, including in Iraq and the first Gulf War — 56.5 percent were older than 44.

Among uninsured veterans, 26.5 percent said they couldn’t get medical care because of costs, 31.2 percent delayed care due to costs, and 49.1 percent hadn’t seen a doctor within the past year. In addition, two-thirds didn’t receive preventive care. Yet, almost two-thirds were employed, the researchers found.

Others reasons veterans can’t get VA care include waiting lists at VA hospitals, high co-payments for VA specialty care and a lack of a VA facility in their community, the researchers noted.

“Veterans deserve a right to health care,” Woolhandler said. “We think that every American deserves a right to health care.”

One expert thinks that the uninsured veterans are in no worse shape than the rest of the uninsured population.

“I don’t think the VA was ever supposed to be a health insurance program for all veterans,” said Greg Scandlen, the founder of Consumers for Health Care Choices. “I don’t think the VA is doing something it’s not supposed to do.”

“Veterans face the same problems as everyone else,” Scandlen said. “They don’t get any special treatment when it comes to private coverage,” he said.

Attempts by HealthDay to reach Veterans Administration officials for comment were unsuccessful.

Humana Shares Fall as UBS Challenges 2008 Forecast

By Avram Goldstein
Bloomberg News

Oct. 29 (Bloomberg) — Humana Inc., the No.2 provider of U.S.-sponsored health plans, fell the most in a month after an analyst downgraded the stock, saying the company may not reach a newly announced forecast for 2008.

Humana’s third-quarter earnings rose 90 percent, including a $69 million one-time gain before taxes, the Louisville, Kentucky-based Humana said today. Humana derives about two- thirds of its profit from the Medicare program, which pays premiums for elderly and disabled Americans to receive coordinated care and discounted drugs.

Justin Lake, an analyst at UBS Securities in New York, downgraded Humana to “sell” from “neutral,” saying the company’s 2008 enrollment forecast of at least 200,000 added Medicare customers is optimistic, and that the profitable government payments can’t last. Members of the U.S. Congress and consumer groups said the amount of profit was excessive.

“We continue to see this operating environment as temporary, and now that strong earnings/guidance are behind us, investor focus is likely to shift to potentially unsettling items,” including efforts by presidential candidates and members of Congress to trim Medicare payments, Lake said in a note to clients today.

Lake recommended investors “take advantage of current enthusiasm and sell into strength.”

Third-quarter net income climbed to $302.4 million, or $1.78 a share, from $159.2 million, or 95 cents, a year earlier, the company said in a statement. Excluding a $69 million one- time gain before taxes, profit beat analysts’ estimates, as did revenue.

Stock Turnaround

Humana fell $1.81, or 2.4 percent, to $73.75, at 4:01 p.m. in New York Stock Exchange composite trading, after being up as much as 7.9 percent earlier in the day. The company has climbed 33 percent this year, leading the six-member S&P 500 Managed Health Care Index.

“Humana’s Medicare Advantage program continues to fleece taxpayers, even as the company spends less and less on seniors’ actual health care,” said Representative Pete Stark, a California Democrat who chairs the Ways and Means health subcommittee, in an e-mail. “The company’s quarterly results confirm what I’ve been saying for years — overpayments to private plans benefit shareholders, not patients.”

Medicare will pay U.S. insurers $76.3 billion in health- plan premiums in 2007, about $9.2 billion more than the federal agency would pay for direct coverage of the same population, according to government estimates.

Analysts’ Estimates

Profit excluding some items beat the $1.49-a-share average of 16 analysts surveyed by Bloomberg. Revenue rose to $6.32 billion, surpassing the average expectation of $6.11 billion.

The 90 percent gain in third-quarter net income compared with increases of 15 percent reported for UnitedHealth Group Inc., of Minnetonka, Minnesota; 7 percent for Indianapolis-based WellPoint Inc.; and 4.3 percent for Aetna Inc. of Hartford, Connecticut.

The company, in a statement today, raised its earnings forecast for the full year 2007 to $4.75 to $4.80 a share, up from a July 18 outlook of $4.40 to $4.50.

The revised target includes a one-time third-quarter gain of 25 cents a share generated mostly by its drug plan for the elderly. Humana said the $69 million pretax gain came partly from recording as income money it had set aside earlier, and didn’t actually need, to pay to Medicare.

Forecast

Humana gave its first 2008 outlook, forecasting $5.30 to $5.50 in earnings per share, compared with the $5.19 average estimate in a Bloomberg survey.

America’s Health Insurance Plans, a trade group based in Washington, has urged Congress to leave the rates alone. Last week it paid for Advantage members to visit Capitol Hill from across the U.S. to urge lawmakers to back off.

Humana investors shouldn’t wobble under the political pressure, said Chief Executive Officer Mike McCallister during a conference call today.

“If a headline out of Washington that says they’re looking at cutting funding to Medicare Advantage bothers you, then you’re probably in the wrong stock, because it’s going to be like this the rest of our time here,” he said.

Gross Margins

In the third quarter, premium revenue in the Medicare Advantage managed-care plan grew 19 percent from a year earlier to $2.8 billion, outstripping a 15 percent enrollment gain.

Medicare Advantage plans generate annual gross margins of about $1,650 per Humana beneficiary, more than 10 times the profit from drug plans, said Carl McDonald, an analyst with CIBC World Markets in New York. Gross margin is revenue minus the cost of goods or services.

In the third quarter, Humana’s ratio of medical expenses to premiums from Medicare health plans decreased to 81.3 percent from 84.1 percent a year earlier, helped by the $69 million one- time gain.

Taxpayers should question why Medicare is rewarding Humana with a “hand-out” and “blockbuster profits” as the program plans physician-fee cuts, said American Medical Association board member Ardis Hoven in an e-mail.

The Medicare Rights Center complained that Humana will raise premiums 69 percent for its 2008 discount-drug plans for 2.1 million of its more than 3 million members and that Advantage plans are overpaid.

“Humana has exploited the Medicare market with great business skill, but its services to beneficiaries leave much to be desired,” said Bob Hayes, the president of the New York- based group.

To contact the reporter on this story: Avram Goldstein in Washington at agoldstein1@bloomberg.net .