PNHP

Will primary care survive?

Will primary care survive?

Primary Care – Will It Survive?

By Thomas Bodenheimer, M.D.
The New England Journal of Medicine
August 31, 2006

The American College of Physicians recently warned that “primary care, the backbone of the nation’s health care system, is at grave risk of collapse.”

And indeed, primary care is facing a confluence of factors that could spell disaster. Patients are increasingly dissatisfied with their care and with the difficulty of gaining timely access to a primary care physician; many primary care physicians, in turn, are unhappy with their jobs, as they face a seemingly insurmountable task; the quality of care is uneven; reimbursement is inadequate; and fewer and fewer U.S. medical students are choosing to enter the field.

Even as primary care spirals further into crisis, studies have demonstrated that a primary care-based health care system has the potential to reduce costs while maintaining quality. The hospitalization rates for diagnoses that could be addressed in ambulatory care settings are higher in geographic areas where access to primary care physicians is more limited. States with a higher ratio of generalist to population have lower per-beneficiary Medicare expenditures and higher scores on 24 common performance measures than states with fewer generalist physicians and more specialists per capita.

Serious effort is required to develop a national primary care payment policy. Public policy on primary care does not exist; the fortunes of primary care are dictated not by the health care needs of the country but by a specialty-rich, quantity-based reimbursement system. Few legislators, particularly among those responsible for the trend-setting Medicare program, are aware that primary care is struggling. An educational campaign is needed – to explain the nature and causes of the threats to primary care’s survival; to provide well-documented information on the benefits of primary care, focusing on the potential for a strong primary care-based system to control health expenditures; and to offer concrete proposals for reforming both primary care at the microsystem level and the payment scheme at the macrosystem level.

Whoever takes up the cause of primary care, one thing is clear: action is needed to calm the brewing storm before the levees break.

Primary Care – Will It Survive? By Thomas Bodenheimer, M.D.
http://content.nejm.org/cgi/content/full/355/9/861

Also, Primary Care – The Best Job in Medicine? By Beverly Woo, M.D.
http://content.nejm.org/cgi/content/full/355/9/864

Comment:

Don McCanne, MD

“Crisis” is a word that has been thrown around lately to describe many of the trends that are resulting in higher health care costs, but without an improvement in coverage and access. When it comes to the deterioration that is taking place within our primary care infrastructure, “crisis” is not an adequate term. It’s much worse.

Both of the articles above provide an excellent, brief description of the status of primary care. The issue is of such great importance that the editors of the NEJM have provided free access to both of these articles.
They should be downloaded to be used in your health reform advocacy activities. Particularly valuable are the four graphs (two in each article) that can be downloaded as PowerPoint slides.

We need immediate macrosystem reform. We need single payer now!

How VA Hospitals Became The Best

No longer a nation’s shame, veteran care is acing competitors

By DOUGLAS WALLER
Time Magazine
Sunday, Aug. 27, 2006

Most private hospitals can only dream of the futuristic medicine Dr. Divya Shroff practices today. Outside an elderly patient’s room, the attending physician gathers her residents around a wireless laptop propped on a mobile cart. Shroff accesses the patient’s entire medical history–a stack of paper in most private hospitals. And instead of trekking to the radiology lab to view the latest X-ray, she brings it up on her computer screen. While Shroff is visiting the patient, a resident types in a request for pain medication, then punches the SEND button. Seconds later, the printer in the hospital pharmacy spits out the order. The druggist stuffs a plastic bag of pills into what looks like a tiny space capsule, then shoots it up to the ward in a vacuum tube. By the time Shroff wheels away her computer, a nurse walks up with the drugs.

Life in a big-name institution like the Mayo Clinic? Not hardly. Shroff, 31, a specialist in internal medicine, works at the Veterans Affairs hospital in Washington, where the vets who come for the cutting-edge treatment are mostly poor.

If you’re surprised, that’s understandable. Until the early 1990s, care at VA hospitals was so substandard that Congress considered shutting down the entire system and giving ex-G.I.s vouchers for treatment at private facilities. Today it’s a very different story. The VA runs the largest integrated health-care system in the country, with more than 1,400 hospitals, clinics and nursing homes employing 14,800 doctors and 61,000 nurses. And by a number of measures, this government-managed health-care program–socialized medicine on a small scale–is beating the marketplace. For the sixth year in a row, VA hospitals last year scored higher than private facilities on the University of Michigan’s American Customer Satisfaction Index, based on patient surveys on the quality of care received. The VA scored 83 out of 100; private institutions, 71. Males 65 years and older receiving VA care had about a 40% lower risk of death than those enrolled in Medicare Advantage, whose care is provided through private health plans or HMOs, according to a study published in the April edition of Medical Care. Harvard University just gave the VA its Innovations in American Government Award for the agency’s work in computerizing patient records.

And all that was achieved at a relatively low cost. In the past 10 years, the number of veterans receiving treatment from the VA has more than doubled, from 2.5 million to 5.3 million, but the agency has cared for them with 10,000 fewer employees. The VA’s cost per patient has remained steady during the past 10 years. The cost of private care has jumped about 40% in that same period.

Vets still gripe about wading through red tape for treatment. Some 11,000 have been waiting 30 days or more for their first appointment. The Iraq and Afghanistan wars could stress the system, although for the moment VA officials say the agency can accommodate the new patients. That’s because older vets, especially those from the World War II and Korean War eras, are dying of natural causes at the rate of about 600,000 a year, whereas the Iraq and Afghanistan wars have so far created a little more than 550,000 new vets.

On the other hand, because advances in body armor and field medicine have enabled soldiers to survive battlefield injuries that in earlier conflicts meant death, many of the new patients are arriving at VA hospitals with severe wounds. In response, the VA has set up four polytrauma centers around the country. Dawn Halfaker, a former Army captain who lost her right arm in Iraq, says negotiating the bureaucracy to get treatment for all her medical needs has been frustrating at times. She had to wait eight months for an appointment at the Washington hospital to get her teeth cleaned. Even so, she says, the care “is not as bad as I thought it would be.”
PAGEBREAK
The roots of the VA’s reformation go back to 1994, when Bill Clinton appointed Kenneth Kizer, a hard-charging doctor and former Navy diver, as the VA’s under secretary for health. Kizer decentralized the VA’s cumbersome health bureaucracy and held regional managers more accountable. Patient records were transferred to a system-wide computer network, which has made its way into only 3% of private hospitals. When a veteran is treated, the doctor has the vet’s complete medical history on a laptop. In the private sector, 20% of all lab tests are needlessly repeated because the doctor doesn’t have handy the results of the same test performed earlier, according to a 2004 report by the President’s information technology advisory committee.

Another innovation at the VA was a bar-code system, as in the supermarket, for prescriptions–a system used in fewer than 5% of private hospitals. With a hand-held laser reader, a nurse scans the bar code on a patient’s wristband, then the one on the bottle of pills. If the pills don’t match the prescription the doctor typed into the computer, the laptop alerts the nurse. The Institute of Medicine estimates that 1.5 million patients are harmed each year by medication errors, but computer records and bar-code scanners have virtually eliminated those problems in VA hospitals.

Private hospitals, which make their money treating people who come to them sick, don’t profit from heavy investments in preventive care, which keeps patients healthy. But the VA, which is funded by tax dollars, “has its patients for life,” notes Kizer, who served in his post until 1999. So to keep government spending down, “it makes economic sense to keep them healthy and out of the hospital.” Kizer eliminated more than half the system’s 52,000 hospital beds and plowed the money saved into opening 300 new community clinics so vets could have easier access to family-practice-style doctors. He set strict performance standards that graded physicians on health promotion.

As the reforms produced results, veterans began “voting with their feet,” says Dr. Jonathan Perlin, who just resigned as the VA’s health under secretary. Hundreds of thousands abandoned private physicians and enrolled in the lower-cost and higher-quality VA care. But that created a new problem. The VA’s budget from Congress (currently about $30 billion annually) couldn’t cover the influx. By January 2003, with hundreds of thousands waiting six months or more for their first appointment, the VA began limiting access to only vets with service-related injuries or illness or those with low income.

Veterans’ groups understandably want the health-care system expanded to accommodate vets with higher incomes and no service-related ailments. Tom Bock, commander of the American Legion, has another idea: allow elderly vets not in the system who are drawing Medicare payments to spend those benefits at a VA facility instead of going to a private doctor, as is now required by Medicare. “It’s a win-win-win situation,” he argues. Medicare, which pays more than $6,500 per patient annually for care by private doctors, could save with the VA’s less expensive care, which costs about $5,000 per patient. The vets would receive better service at the VA’s facilities, which could treat millions more patients with Medicare’s cash infusion.

But conservatives fear such an arrangement would be a Trojan horse, setting up an even larger national health-care program and taking more business from the private sector. Congress has no plans to enlarge the scope of veterans’ health care–much less consider it a model for, say, a government-run system serving nonvets. But it’s becoming more and more “ideologically inconvenient for some to have such a stellar health-delivery system being run by the government,” says Margaret O’Kane, president of the National Committee for Quality Assurance, which rates health plans for businesses and individuals. If VA health care continues to be the industry leader, it may become more difficult to argue that the market can do better.

$145,000 for an additional year of life

The Value of Medical Spending in the United States, 1960 -2000
By David M. Cutler, Ph.D., Allison B. Rosen, M.D., M.P.H., Sc.D., and Sandeep Vijan, M.D.
The New England Journal of Medicine
August 31, 2006

According to virtually any commonly cited value of a year of life, we found that if medical care accounts for about half the gains in life expectancy, then the increased spending has, on average, been worth it. However, the current trends are a cause for concern. There has been a sharp increase in the cost per additional year of life gained during the past two decades, primarily among the elderly. Analyses focused on spending and on the increase in life expectancy beginning at 65 years of age showed that the incremental cost of an additional year of life rose from $46,800 in the 1970s to $145,000 in the 1990s. The former amount certainly reflects a good value, but the latter fails to meet many cost-benefit criteria. Furthermore, it appears that although the rate of increase in spending had stabilized, if not declined, by 2000 for the newborn and 15-year-old groups, this rate is substantially outpacing the rate of increase in life expectancy in older age groups. If this trend continues in the elderly, the cost effectiveness of medical care will continue to decrease at older ages.

In conclusion, although medical spending has increased substantially during the past 40 years, the money spent has provided good value. However, temporal trends suggest that the value of health care spending is decreasing over time, particularly for older age groups. We need to continue tracking trends in health care spending and its benefits to ensure that resources are allocated wisely. Such efforts should focus on specific diseases in order to provide a more detailed picture of the value of health care both within disease categories and across a spectrum of common diseases over time. Also, the United States should modify its system of tracking the health sector to include a measure of population health in addition to spending, so that policymakers and the public have an informed picture of the benefits obtained for the money spent.

http://content.nejm.org/cgi/reprint/355/9/920.pdf

Comment:

Don McCanne, MD

Identifying the acceleration in cost trends is the first step. The second is to identify which spending is providing value. The final step is to direct spending away from expensive services with no benefit and toward health care services that do provide value. This process would be much simpler under a single payer health insurance system, whereas it is almost impossible with our current fragmented method of funding care.

Price transparency solves what problem?

Reveal health care costs
USA TODAY
Editorial
August 30, 2006

Traditional insurance, whether government- or employer-based, shields patients from the true costs of care. If someone else is paying most of the bill, patients have little incentive or ability to demand lower prices. Hospitals and doctors face little pressure to publicize their fees or to lower them.

Faced with rising costs, however, employers are pushing workers to shoulder a larger share with higher premiums, deductibles and co-pays. Plans combining low premiums, high deductibles and employee-funded health savings accounts are gaining popularity. Because those plans force people to spend more of their own money, they have more incentive to shop around. But they can’t do that without better data.

The medical industry has paid lip service to transparency but has been slow to act. Allen Hubbard, director of President Bush’s National Economic Council, warned hospital executives in March that the administration would urge Congress to require better disclosure unless voluntary efforts start soon.

Opposing view

Transparency or fig leaf?
By Steffie Woolhandler and David Himmelstein

Nearly 47 million Americans are uninsured, and millions more have coverage so skimpy that a major illness would bankrupt them. Yet President Bush apparently thinks Americans are too well-insured.

He’s pushing health savings accounts – a plan to make the sick pay thousands from their own pockets before insurance kicks in. And the fig leaf for his soak-the-sick scheme is “transparency.” Just make hospitals and doctors post their prices, he says, and the market will magically cut health costs.

The president’s scheme will drive millions more into medical poverty, but it won’t hold down costs.

Insured Americans already pay bigger co-payments and deductibles than do people in any other nation. Yet our health costs are far higher than anywhere else.

Steep out-of-pocket costs have little impact on overall spending. They discourage preventive care such as immunizations but don’t affect the real cost driver – expensive illnesses that afflict only 20% of Americans each year but account for 80% of spending.

Huge corporations like General Motors have tried for years to hold down health benefit costs by using their market muscle (and the kind of price and quality information Bush touts). They’ve failed. If GM can’t bargain down costs, will Mrs. Smith succeed?

Transparency won’t cut costs, but national health insurance would. A single-payer system could save $300 billion annually on health bureaucracy…

USA TODAY view:
http://www.usatoday.com/news/opinion/2006-08-29-medical-costs_x.htm

Opposing view:
http://www.usatoday.com/news/opinion/2006-08-29-medical-costs-oppose_x.htm

Comment:

By Don McCanne, MD

All too often in the debate on reform we see advocates lead with policy solutions and extrapolate backwards to the problem that is being addressed. The debate over price transparency certainly exemplifies this.

The solution is to have patients bear more of the costs of health care. The obvious problem solved is that we can reduce health care spending by making access to care truly unaffordable. But no, the backward argument is that we can make patients more thrifty shoppers by making them reach into their own pockets.

Insurance innovations have already evolved to the point that patients are exposed to costs, yet spending remains out of control. That leads to the next backwards extrapolation: patients who are responsible for most of the spending are accepting too much care because they are not presented in advance with a full itemization of the prices and fees that they will face in the care of their complex acute and chronic medical problems. The problem is so straightforward that Allen Hubbard is going to sic Congress on the providers if they don’t start to provide in advance the reams of itemized charges that the patient will face. It doesn’t matter that such lists are impossible to provide since health care is a dynamic process, and it is impossible to know which diagnostic and treatment decisions will be made along the way.

The problem is not the lack of price transparency. Americans are already very concerned about the affordability of health care. Patients are not jockeying for the right to be the price negotiator for their own care; they understand that they are impotent purchasers in the health care marketplace.

They want something done about the true drivers of health care costs. What they still don’t realize is that they want to be part of a public monopsony that can negotiate health care value for them: a single payer program of national health insurance.

Physician Group Decries 1.3 Million Rise in Uninsured

FOR IMMEDIATE RELEASE
August 29, 2006

Contacts:
Steffie Woolhandler, M.D. (617) 497-1268
Nicholas Skala (312) 782-6006
Olveen Carrasquillo, M.D. (917) 882-7997 cell
Don McCanne, M.D. (949) 493-3714

Uninsured Ranks Swell as Private Coverage Deteriorates

Middle-Class Losing Coverage at Fastest Rate

14,000 Doctors: “National Health Insurance is the Only Solution”

CHICAGO — Responding to newly-released data from the U.S. Census Bureau showing that the number of uninsured Americans increased by 1.3 million in 2005, members of Physicians for a National Health Program (PNHP) condemned the sharp increase in the number of uninsured and called for a national health insurance program to provide comprehensive coverage to all Americans.

The number of uninsured rose from 45.3 million in 2004 to 46.6 million in 2005 (15.9 percent of the population), the fifth straight year of increases. The number of uninsured has increased by 6.8 million since 2000. The number of uninsured children rose from 7.9 million in 2004 to 8.3 million (11.2 percent of all kids) in 2005, despite continued expansions of the Medicaid and SCHIP programs.

“Virtually all of the people who lost their coverage were solidly middle-class, full-time working American citizens,” said PNHP co-founder Dr. Steffie Woolhandler, Associate Professor of Medicine at Harvard Medical School. “Additionally, there are the tens of millions more whose insurance is so skimpy they’d be bankrupted if they got sick. The mainstream of America is suffering.”

The Physicians’ group noted that the large increase in the number of uninsured Americans was a result of the continued erosion of employer-based coverage. A million full time workers lost their coverage between 2004 and 2005 (in 2005, 21.5 million of the uninsured worked full-time). The proportion of Americans covered by employer-based coverage continues to plummet, from 63.6 percent in 2000, to 59.8 percent in 2004, and 59.5 percent in 2005.

Almost all the rise in the uninsured was in families with incomes over $50,000 per year; there was a modest decline in the number of uninsured poor, those families with incomes under $25,000 per year (partly due to the expansion of public coverage to another 857,000 people). The number of uninsured people making between $50,000 and $75,000 per year rose the fastest, by 600,000 people, to 8.3 million (14.1 percent of this income group). Additionally, the number of uninsured making over $75,000 rose by 800,000, to 8.7 million.

“The number of uninsured is going to continue to climb as long as health care costs continue to rise unchecked,” said Dr. Don McCanne, senior health policy fellow for PNHP. “We can no longer afford the waste and inefficiency, the high overhead and outrageous executive salaries of the private insurance industry.”

Hispanics continue to be hardest hit among minorities. The number of uninsured Hispanics increased from 13.5 million in 2004 to 14.1 million in 2005. 32.7 percent of all Hispanics are uninsured, compared with 19.6 percent of Blacks (7.2 million people), 17.9 percent of Asians (2.3 million people), and 11.3 percent of non-Hispanic whites.

“Lack of coverage among Hispanics is the greatest health disparity issues for the Latino population” said Dr. Olveen Carrasquillo, Director of the Center for Health of Urban Minorities at Columbia University. “Band-aid solutions are clearly failing the Latino community and are no longer tolerable. Already, eleven Latino Congressmen have signed on to The National Health Insurance Act (HR 676) and a growing list of Latino organizations and groups are calling for such reforms. Most recently, the National Hispanic Medical Organization, representing 36,000 licensed Hispanic physicians in the U.S., expressed their support for National Health Insurance.”

The doctors’ group said that the only solution to the rising number of uninsured and underinsured is a single-payer national health insurance program, publicly financed but delivered by private doctors and hospitals. Such a program could save more than $400 billion annually in administrative waste, enough to provide high-quality coverage to all and halt the erosion of the current private system. On Monday, the California Assembly voted 43-30 in favor of a statewide single-payer program.

“The mainstream of American is now experiencing the human suffering that results from being uninsured. It makes any illness a potential economic and social catastrophe,” said Dr. Woolhandler. “The Administration’s proposed reforms fail to address the systemic problems of the health system. Health savings accounts and schemes like the Massachusetts plan will only intensify the failure. By contrast, the experience of other industrialized nations teaches us that high-quality, comprehensive care can be provided to all our citizens without increasing health spending. A single-payer national health insurance system has emerged as only solution to the nation’s health system debacle.”

###

Physicians for a National Health Program is an organization of 14,000 American physicians advocating for non-profit national health insurance. PNHP has chapters and spokespersons across the country. For contacts, call (312) 782-6006

Pros and cons of single-payer health care

By Nancy Remsen
Burlington Free Press
August 30, 2006

MONTPELIER — Vermont’s total health care bill would decrease by about $51 million if all residents except those on Medicare were covered under one state-financed health care plan, an Emory University researcher reported Tuesday to the Vermont Commission on Health Care Reform.

Supporters of a single-payer plan for all Vermonters have long argued it would produce significant administrative savings. This new analysis suggested reduced paperwork and processing at hospitals might shrink administrative expenses from 23.5 percent to 17 percent of total spending. Administrative expenses for doctors could drop from 27 percent of gross spending to 20 percent.

If such a statewide health plan were financed using a payroll tax, the rate would have to be 13.5 percent. That would raise $1.6 billion, the portion of the $2.7 billion total cost of a state health care plan that wouldn’t be covered by the state’s government-funded Medicaid program, said Kenneth Thorpe, researcher and consultant hired by the Legislature a year ago to assist with the analysis of health care options.

“The change in who pays for health care would be substantial,” Thorpe said Tuesday during a briefing on his research.

Employers who provide health insurance could pay less under a payroll-tax plan, especially if workers paid a share of the payroll tax, he said. Employers who don’t offer insurance — 9,282 mostly small businesses — would be hit with a new tax that would collectively cost them $388 million or more, depending on how the cost was split with workers.

John Tracy, co-chairman of the Legislature’s health reform commission, said Thorpe had provided analysis of just one option for organizing and financing health care. “There will be more,” Tracy said. “When you make a business decision, you have to look at all the options.”

Thorpe said he would look at other ways to pay for a statewide health insurance program and analyze their economic impacts. His next report is due in December.

Duane Marsh, president of the Vermont Chamber of Commerce, said he didn’t think the commission was considering all the options. He rejected the suggestion that a government-run and financed health care program would cost less in the long term. He said he believes high-deductible health insurance plans would encourage individuals to make better health care choices. Fewer mandates for coverage would make private insurance less expensive, too, he said.

“I would like Dr. Thorpe to see how that kind of system would work,” Marsh said.

Dr. Deborah Richter, longtime advocate for a single state-financed health insurance program, cheered Thorpe’s report as the start of an important conversation.

“This model would be a whole lot easier to practice under,” said Richter, a primary care physician with a practice in Cambridge. Vermont doesn’t have as many health insurance companies as other states, but those in business here offer dozens of plans. Richter said, “There is a huge amount of administrative complexity to what we do.”

Cornelius Hogan, who co-wrote a book with Richter about the state’s health care choices, also applauded the analysis of administrative savings, but criticized the selection of a payroll tax as an option to pay for a state-financed plan.

A payroll tax of 10 percent or more is a “non-starter,” Hogan said. “They ought to be looking at scenarios that take the burden off businesses.”

Craig Fuller, consultant for Business Resource Services, noted the impact of the payroll tax on workers. “The winner is the highly paid employee,” Fuller said, noting these people likely work for employers already providing insurance. They could pay less under the plan.

“The losers are the low-paid workers,” who would now pay a portion of their salary for health insurance, Fuller said. That wouldn’t be an easy sell in the Legislature.

“We waste an inordinate amount of time talking about this,” Fuller said of a single-payer health care system. The remedy for the problem of rising health care costs, he said, is to deal with obesity, chronic diseases and inappropriate utilization of expensive treatment.

Contact Nancy Remsen at 651-4888 or nremsen@bfp.burlingtonfreepress.com

Transparency or fig leaf?

By Steffie Woolhandler and David Himmelstein
Posted 8/29/2006 8:45 PM ET

Nearly 47 million Americans are uninsured, and millions more have coverage so skimpy that a major illness would bankrupt them. Yet President Bush apparently thinks Americans are too well-insured.

He’s pushing health savings accounts — a plan to make the sick pay thousands from their own pockets before insurance kicks in. And the fig leaf for his soak-the-sick scheme is “transparency.” Just make hospitals and doctors post their prices, he says, and the market will magically cut health costs.

The president’s scheme will drive millions more into medical poverty, but it won’t hold down costs.

Insured Americans already pay bigger co-payments and deductibles than do people in any other nation. Yet our health costs are far higher than anywhere else.

Steep out-of-pocket costs have little impact on overall spending. They discourage preventive care such as immunizations but don’t affect the real cost driver — expensive illnesses that afflict only 20% of Americans each year but account for 80% of spending.

A patient having a heart attack can’t comparison shop among hospitals, bargain for discount clot-buster drugs, or second-guess the doctor’s advice. And when steep deductibles make people delay care, the heart damage gets worse and the bill goes up.

Huge corporations like General Motors have tried for years to hold down health benefit costs by using their market muscle (and the kind of price and quality information Bush touts). They’ve failed. If GM can’t bargain down costs, will Mrs. Smith succeed?

Transparency won’t cut costs, but national health insurance would. A single-payer system could save $300 billion annually on health bureaucracy by eliminating paperwork and exorbitant CEO incomes. It could avoid the duplication of transplant facilities that raises costs and worsens quality. It would also reduce unnecessary surgery and other harmful procedures.

Most important, national health insurance would guarantee comprehensive coverage and close the health gap with Canada and other nations where people live longer than we do.

Drs. Steffie Woolhandler and David Himmelstein teach at Harvard Medical School and co-founded Physicians for a National Health Program.

Reveal health care costs

USA Today Editorial
Posted 8/29/2006 8:42 PM ET

No sensible consumers would purchase a new car or refrigerator without knowing the price, or without asking a few questions about reliability.

Yet they’ll undergo cardiac surgery or a hip replacement with little thought of the actual cost of treatment, and with virtually no information about their hospital’s track record with that procedure.

Patients who try to ask about price are unlikely to get a straight answer. “It depends” is how most hospitals will reply because they have sliding scales of fees based on a patient’s insurance, discounts negotiated by health plans, and potential complications in treatment. Bills are incomprehensible.

Unlike restaurants, hospitals don’t list prices on a menu. Perhaps it’s time they did.

Traditional insurance, whether government- or employer-based, shields patients from the true costs of care. If someone else is paying most of the bill, patients have little incentive or ability to demand lower prices. Hospitals and doctors face little pressure to publicize their fees or to lower them.

Faced with rising costs, however, employers are pushing workers to shoulder a larger share with higher premiums, deductibles and co-pays. Plans combining low premiums, high deductibles and employee-funded health savings accounts are gaining popularity. Because those plans force people to spend more of their own money, they have more incentive to shop around. But they can’t do that without better data.

The medical industry has paid lip service to transparency but has been slow to act. Allen Hubbard, director of President Bush’s National Economic Council, warned hospital executives in March that the administration would urge Congress to require better disclosure unless voluntary efforts start soon.

While hospitals and doctors are dragging their feet, the government and insurers are taking steps to make health care costs more transparent:

* Last week, Bush signed an executive order requiring four federal agencies to compile and release information about the quality and price of health care provided to people they cover.

* In June, Medicare started posting on its website how much it pays for 30 medical procedures in each of the nation’s counties, along with data on how many of the treatments each hospital performed last year. In general, the more experience a facility has with a procedure, the better the outcome for the patient, studies show.

* Aetna, which covers 30 million beneficiaries, will make physician-specific information on fees, clinical quality and efficiency available to its members in seven states.

Critics of transparency say patients can’t shop for bargains when they’re ill, it’s difficult to determine what constitutes high quality care, and it’s a diversion from doing something to help the uninsured.

True, patients on their way to the hospital in an ambulance are in no position to haggle, but most medical services aren’t emergencies. With the right tools, patients can find better values. More honesty about price and quality can lower costs and achieve better outcomes.

Mercury News Quotes PNHP Senior Health Policy Fellow Dr. Don McCanne

San Jose listed No. 2 in household income
City Also Ranked 4th in Number of People Living in Poverty
By Jessie Mangaliman
Mercury News

San Jose residents had the second-highest income in the country, pulling down a median of $70,921 last year, according to U.S. Census Bureau reports released Tuesday.

Who makes the most among large cities? The good people in the Dallas suburb of Plano, Texas, where the median household income last year was $71,560, just $639 more than households in San Jose.

And the two cities share something else: Plano, a city of 250,000, has the lowest poverty rate in the country; San Jose is No. 4 on the list contained in an American Community Survey report from the government agency. The survey offers new details for the first time on income and poverty in counties and cities as small as 65,000.

Among smaller cities, Pleasanton households were No. 1, earning a median income of $101,022; Livermore was No. 3, with households making $96,632.

But economists and other experts cautioned that the earnings may not be as rosy as they seem — and can be deceptive.

“If people are paying a lot more for rent, for mortgage,” said Deborah Reed, an economist with the Public Policy Institute, “how much do they really have?”

“It costs a lot more to live here than other places,” she said, “so income doesn’t go as far.”

Adjusted for housing costs, poverty levels in San Jose and San Francisco are likely to be higher, she said.

A second census report showed that overall, median household income in the United States rose slightly and so did the number of uninsured. But the poverty rate was unchanged nationally, the first time in four years that it did not go up, according to the Current Population Survey, a national economic measure, released Tuesday.

Unlike the American Community Survey report, this report looks at data over time and can offer a look at trends across the country.

The figures suggest little or no change in the national picture, but advocates for the poor and the uninsured said the fact there was no change was upsetting.

“The lack of news is the news,” said Jean Ross, executive director of the California Budget Project, a non-profit policy institute based in Sacramento. “We’re not moving forward.”

Said Ross, “We’re not making the kind of progress we want to see in good times.”

The CPS report showed that there were 46.6 million uninsured in the United States in 2005, up slightly from 45.3 million. The same report showed that California tied for fourth with Oklahoma on the list of states with the highest percentage of residents without health insurance.

Dr. Don McCanne, senior health policy fellow for the Physicians for a National Health Program, an advocacy group that supports a national health insurance system, echoed similar sentiments.

“It’s terrible news,” said McCanne, a physician in San Juan Capistrano. The numbers, he said, indicate that efforts to reduce levels of uninsured made little difference.

“The problem is actually continuing to get worse. People die as a result.”

——————————————————————————–
Contact Jessie Mangaliman at jmangaliman@mercurynews.com or (408) 920-5794.

Sen. Kuehl's single payer bill passes!

KUEHL’S HEALTHCARE BILL, SB 840, PASSES CALIFORNIA ASSEMBLY
Senator Sheila Kuehl

FOR IMMEDIATE RELEASE
08/28/06

On Monday, August 28th, Senate Bill 840, authored by State Senator Sheila Kuehl (D-23), passed out of the California State Assembly on a preliminary vote of 43-30 (final vote expected to be 44-31).

SB 840 provides a concrete plan for covering every California resident with comprehensive health insurance, saves the state of California, businesses and working families nearly $8 billion in the first year, and guarantees our right to choose our own doctor. The bill will now return to the State Senate for concurrence and is expected to reach the Governor’s desk by September 1st.

SB 840 provides comprehensive medical, dental, vision, hospitalization and prescription drug coverage to every California resident. This broad coverage is made possible through a streamlined claims and reimbursement system that is projected to save billions of dollars in administrative costs. SB 840 allows California to use its purchasing power to negotiate bulk rates for prescription drugs and durable medical equipment, such as wheelchairs, thus realizing an additional $2 billion in savings, SB 840 preserves the status of healthcare providers, hospitals and pharmacies as private, competitive businesses.

The plan is funded by drawing in current public spending and replacing all premiums, co-pays and deductibles paid to insurance companies with premiums paid to the system. As amended, the bill creates a blue ribbon panel of health, finance and technical experts to lay out the mechanics for an affordable premium structure using information gathered in available funding studies.

“The growing cost of health insurance is bankrupting our businesses and working families. Our health care system is being decimated to pay for insurance company waste”, says State Senator Kuehl. “SB 840 is the right solution for California’s broken health care system. It covers everyone, it contains costs and it improves quality – most important, it guarantees your right to choose your own doctor.”

“This plan provides security and savings to every California family, helps businesses by reducing their health insurance costs, and saves the state almost a billion dollars”, said Speaker Fabian Nunez. “The Governor should sign this historic bill.”

“Right now we have a broken system that leaves too many Californians in medical or financial jeopardy and a system that hinders economic growth”, said President Pro Tem Senator Don Perata. “SB 840 is responsible, it’s achievable and it’s what we need to do to fix the health care system in California.”

Comment:

By Don McCanne, MD

SB 840 has already been passed by the California State Senate. It will return there for concurrence in an amendment calling for a commission to establish the mechanics of a premium structure, and then will move on to Gov. Schwarzenegger’s desk.

1,272,000 more people without health insurance

Income, Poverty, and Health Insurance Coverage in the United States: 2005
U.S. Census Bureau
August 2006
Current Population Reports

Health Insurance Coverage in the United States

Highlights (selected)

* In 2005, 46.6 million people were without health insurance coverage, up from 45.3 million people in 2004.

* The percentage of people without health insurance coverage increased from
15.6 percent in 2004 to 15.9 percent in 2005.

* The percentage of people covered by employment-based health insurance decreased between 2004 and 2005, from 59.8 percent to 59.5 percent.

* While the number of people covered by government health programs increased between 2004 and 2005, from 79.4 million to 80.2 million, the percentage of people covered by government health insurance remained at 27.3 percent.
There was no statistical difference in the number or the percentage of people covered by Medicaid (38.1 million and 13.0 percent, respectively) between 2004 and 2005.

* The percentage and the number of children (people under 18 years old) without health insurance increased between 2004 and 2005, from 10.8 percent to 11.2 percent and from 7.9 million to 8.3 million, respectively. With an uninsured rate at 19.0 percent in 2005, children in poverty were more likely to be uninsured than all children.

http://www.census.gov/prod/2006pubs/p60-231.pdf

Comment:

By Don McCanne, MD

It just keeps getting worse.

Particularly disconcerting is the fact that the only glimmer of hope in recent years had been the increased enrollment of children in Medicaid and SCHIP. But today’s report shows that the number of uninsured children increased by 361,000 between 2004 and 2005, concentrated amongst those living in poverty.

Have we no shame?

Gladwell's "The Risk Pool"

The Risk Pool
By Malcolm Gladwell
The New Yorker
August 28, 2006

“(UAW president Walter) Reuther and his brain trust had a theory of capitalism,” Nelson Lichtenstein, the Reuther biographer, says. “It was: If we force G.M. to pay extra (for employee benefits), we can create an incentive for G.M. to join our side (in broadly collectivizing risk beyond individual employers).” Reuther believed, in other words, that when American corporations reached the point where they couldn’t make their business more efficient without making it less profitable, when their dependency ratios soared to unimaginable heights (ratio of those covered by benefits to the active workforce), when they got tens of billions behind in their health-care obligations, when the cost of carrying thousands of retirees forced them to stare bankruptcy in the face, they would come around to the idea that the markets work best when the burdens of benefits are broadly shared. It has taken half a century, but the world may finally be catching up with Walter Reuther.

http://www.newyorker.com/fact/content/articles/060828fa_fact

Comment:

Don McCanne, MD

Segregating risk pools creates problems. General Motors has one of the largest health benefit programs in the nation, and if any entity could gain an advantage by controlling its own risk pool, surely General Motors could. Yet everyone is aware that the costs of General Motors’ health benefits are so high that their products have become less competitive with other vehicles produced in the international market.

Malcolm Gladwell’s article describes one important reason for General Motors’ problem. By maintaining their own segregated risk pool, G.M. experienced the impact of a large growth of individuals dependent on their health benefits program without a commensurate increase in their active labor force. A single national risk pool would have diluted this impact through the fundamental insurance principle of spreading the risk as widely as possible.

There is an even more important reason for General Motors’ health benefit difficulties. There are very serious structural problems with the U.S. health care system which have resulted in very high health care costs. Even though General Motors has the largest private health benefits program, it is still not large enough to function as a monopsony that would be able to demand restructuring that would ensure greater efficiency and health care quality.

The structural flaws include the administratively wasteful, fragmented insurance system, the deteriorating primary care infrastructure, the lack of a system to reduce waste on non-beneficial high-tech excesses, and the lack of a comprehensive mechanism to improve health care pricing. Establishing a single risk pool through a national health insurance program would create a monopsony that would allow us to demand greater health care value. No, that isn’t taking advantage of market forces, but then what has the health insurance market done for us lately?