PNHP

Cuba Has Better Medical Care Than the U.S.

Cuba Has Better Medical Care Than the U.S.

by Blake Fleetwood
The Huffington Post – Apr 23, 2006

Statistics don’t lie.

Figures from the World Health Organization clearly show that The United States lags behind 36 other countries in overall health system performance ranging from infant mortality, to adult mortality, to life expectancy.

20 countries in Europe and four countries in Asia have a better life expectancy than the U.S. If you are a male between the ages of 15 and 59, your chances of dying are higher in the U.S. (140 per thousand) than in Canada, 95, Costa Rica 127, Chile 134, and Cuba, 138.

The U.S. Health system looks especially dysfunctional when you consider how much money we spend per capita on healthcare — $6,000 plus per year, twice as much as any other country– and how little we get for it.

Canada spends $2,163 and boasts a life expectancy of 79.8 years, two and a half years longer than the US. Their infant mortality rate per thousand is also better than ours, as is their adult mortality rate.

Switzerland spends about 11% of its Gross Domestic Product on universal health care for all its citizens, while the U.S. (with 50 million uninsured this year) spends 15% of GDP with embarrassing results.

One grand irony, Cuba whose economy has been bankrupt for the last decade – food shortages, drug shortages, chronic unemployment, etc. — and which annually spends a miserly $185 per person on health care, has better infant and adult mortality rates than the US, and has a life expectancy nearly equal to ours.

Why has our vaunted free enterprise system – which has produced such great benefits in delivery of most goods and services — failed so completely with regard to this most fundamental need?

Simple, buyers don’t shop for health care. Sick people don’t negotiate with doctors or hospitals or drug companies. They don’t care what it costs; insurance or the government will pay. This vulnerability has been exploited and
hijacked by greedy doctors, drug companies, insurers, personal injury lawyers, HMOs, and hospitals. About 50% of health care funds never even get to doctors or hospitals — which themselves run bloated operations.

Maybe we have finally reached the “Tipping Point”. Not because people are needlessly dying, but because big business is being crippled by astronomical health costs.

US companies — with employer funded health plans — are having a hard time competing in world markets. General Motors spends more on worker health care ($1,400 per vehicle) than they spend on steel for each car they produce. “The three big auto makers are “HMOs on wheels” says Goldman Sachs analyst Gary Lapidus.

Employer funded health insurance is a relic of the past according to the growing clamor by big business. We don’t want to pay for it any more and the added costs make our products uncompetitive in world markets.

The new Massachusetts law mandating health insurance – just as the state requires auto insurance – is a bold leap into an uncertain future, but it is an ad hoc band-aid which hopefully will lead to something more.

The long-term answer is obvious. Adopt a single payer system like Canada’s. Not socialized medicine. Doctors would remain private. By cutting out the bureaucracy, needless lawsuits, and curbing greed, the US could save 50% of the monies now being squandered, more than enough to cover the 50 million uninsured, according to a General Accounting Office and Congressional Budget Office report.

Ironically, we already have a successful single-payer healthcare program. Medicare, which covers people over 65, has an administrative and overhead cost of just 2%. Compare this low figure with the $399 billion spent on administrative middleman services in the free-market sector of health care last year. The simple step of data sharing of medical records could save $140 billion per year according too a recent Federal study.

Critics charge than a single payer system would lead to a rationing of medicine and long waits. But we already ration medicine, not by need, or efficacy of the treatment, but by how much money you have. If you are rich, you can have all you want. If you are poor, unemployed, self employed, sorry. 18,000 Americans die each year for lack of care according to the Institute of Medicine.

The right says that single-payer systems have not been adequately tested. But this is an obvious pretext by for-profit interest groups. Single-payer systems have been worked for many decades in 20 countries around the world.

The facts are clear: single-payer systems work and they save money. The Germans, French, Australians, Swiss, and Canadians all benefit from universal healthcare at less than half the cost that Americans pay for an incomplete system. Our for-profit healthcare system is a gambling scheme with the explicit goal of excluding the sick.

Good luck Massachusetts. Maybe your example, big business, and growing outrage will goad the dithering federal government into action.

Someday, inevitably, America will join the civilized world and provide universal care. It should be sooner rather than later.

Via NY Transfer News Collective * All the News that Doesn’t Fit

http://www.huffingtonpost.com/blake-fleetwood/cuba-has-better-medical-c_b_19664.html

Give Canadian-style system a try

Dr. Peter Mott
Guest essayist
Rochester Democrat and Chronicle

(April 12, 2006) — If we as a nation or state try to fill in health care gaps one at a time — first to cover those with no health insurance (more than 45 million Americans), then those with partial coverage (another 50 million), we would add new costs to the ongoing ones — a huge overall increase.

Thorough studies have been made of the costs of various national or statewide health insurance options. Economists found, and the General Accounting Office confirmed, that only one would save money. A Canadian-style, single-payer plan could save $200 billion per year, while covering all citizens for all necessary health services. As in Canada, this would include preserving private hospitals and patient choice of doctors.

How does a single-payer system cut costs so dramatically? Such a system means no competing insurance corporations, no advertising, practically no billing or collecting, no stockholder profits. Usually it also means more regional health planning to avoid wasteful duplication of equipment but adding needed services. This cooperative approach is similar to the way hospitals worked together in the Rochester region during the 1960s and 1970s, making the area a model at that time.

Why isn’t the public calling for a single-payer system? Several years ago I attended a health conference in Toronto at which a full-page advertisement in the Toronto Globe and Mail was shown to participants. It listed many complaints about Canadian “Medicare” but, in small print at the bottom, it said the ad was paid for by the U.S. health insurance industry. That was typical of the propaganda we hear about Canadian health care: long waits, doctors leaving Canada. However, according to polls, the vast majority of Canadian doctors like their system, and they have had 42 years of experience since the provincial plans merged in 1964. Waiting time in Ontario did increase when the Conservative premier cut hospital budgets, fired nurses and closed hospitals to reduce costs. It is ironic that he made that effort in a province where total health costs per capita are almost half those in the United States. Moreover, total costs are rising in Canada more slowly than in America.

Here in Rochester the Interfaith Health Care Coalition has joined the New York State Health Care Campaign to push the state Senate to fund a study of our options. If such a study shows again that all options will add enormously to total costs except for the single-payer health care plan — and that kind of statewide health insurance would save billions of dollars — then only politics could prevent a simple decision. And the people should then demand to know what are those political influences, and who pays for them.

Mott, of Pittsford, is a member, Interfaith Health Care Coalition.

"The Word of Those With Whom We Do Business:" The State of Ethics in Healthcare

Apr. 2006

The prevalence of inappropriate actions in healthcare drives additional margins in the industry’s supply, delivery and financing sectors, says contributor Fred Goldstein. It is at the root of our cost explosion and our healthcare crisis, and is based on an ingrained acceptance of unethical behaviors.

I have worked in healthcare for 20 years as a hospital administrator, an HMO senior executive and, most recently, the president of a disease management company. During this time ‘fve experienced a lot of what is right with the American healthcare system. But I have also seen enough fraud, abuse and unethical behavior to sicken even the heartiest soul. This characteristic of American healthcare is far too prevalent, and it undermines our efforts to control cost, build access and–most importantly–assure quality care. In the late 1980s, I worked for two major hospital corporations that routinely “cooked” their books. At one company it was referred to as “dialing for dollars” because the divisional CFOs would call the hospital controller each month and ask for more earnings. More recently, wefve learned these facts from mainstream news sources:

  • Pharmaceutical companies have paid for and published studies in distinguished professional journals, but left out results that reflected poorly on their products.
  • Drugs have been marketed as better than another brand when in fact there have been no head-to-head studies.
  • Major pharmaceutical distributors have bought drugs through middle men and, though they have been unable to determine the authenticity of the products, re-sold them.
  • Medical device manufacturers have knowingly distributed products with fatal flaws.
  • Medical device manufacturers have paid exorbitant gconsultingh fees to surgeons who decide which products their hospitals will buy for implantation into patients.
  • Many health plans have profited not by managing care, but by ratcheting down rates to doctors and hospitals and forcing employers to pay ever higher premiums.
  • Many hospitals have illegally paid doctors to increase admissions at their facilities.
  • Nonprofit hospitals, supposedly mission-driven, have charged uninsured patients three to four times what insurance companies pay, then sued them when they couldnft pay.
  • Many doctors practice medicine based on their own beliefs, feel that evidence-based medicine is too “cookbook,” and often prescribe procedures based more on financial self-interest than clinical necessity.
  • Many doctors, hospitals and other providers have consistently and, with little fear of penalty, stolen from Medicaid and Medicare.
  • Doctors often relent when patients pressure them to provide unnecessary services, even when the physicians know the procedures are inappropriate and costly.
  • Some “disease advocacy” associations–patients with the disease in question often look to them for unbiased advice–accept large contributions from drug companies, and then do not fully disclose details about their sponsorsf contributions or their drugsf impacts.
  • Healthcare corporations invest in lobbying because it works, spinning public policy and dollars disproportionately in favor of healthcarefs strongest interests.
  • Many healthcare executive have enjoyed extraordinary compensation while fraud and abuse occurs, and is even encouraged under their watch.

    • Unethical behavior exists among healthcare organizations and professionals of all types. Organizations that try to do the right thing are often outmaneuvered by those that do not. Self-interest is often hidden behind a façade of patient concern. “We do this for the patient. If you withhold our services, you will hurt the patient.” Worse, these self serving behaviors have become so common that professional outrage has been dulled. But to save healthcare, we canft just take these acts for granted.

    The prevalence of inappropriate actions in healthcare drives additional margins in the industryfs supply, delivery and financing sectors. It is at the root of our cost explosion and our healthcare crisis. And, it is based on an ingrained acceptance of unethical behaviors. The recent movement toward transparency and quality reporting will shine a bright light on some of these practices, and should tone down the environment of opportunism. But many of these behaviors have been well known for years. I have little faith that, with so much money at stake, any reforms can be substantial enough to turn around the industry.

    This is especially true if change does not support and engage much more participation from payers and consumers. In 2005, then-Federal Reserve Chairman Alan Greenspan spoke with MBA students at Wharton. He said, “Material success is possible in this world, and far more satisfying when it comes without exploiting others.” He also said, “In virtually all our transactions, whether with customers or with colleagues, with friends or with strangers, we rely on the word of those with whom we do business. If we could not do so, goods and services could not be exchanged efficiently.”

    I am not naïve and do not expect that a plea for ethics will have much impact. I believe that a free market, with openly available information, offers a healthier path to a better society for all our citizens. Healthcare is an industry in which, perhaps above all others, we must strive for and reward integrity. However, unless we find a way back to honesty and decency in our commerce–the ethical behaviors that have been the basis of the healthiest civilizations–we wonft achieve the solutions our healthcare system needs. The common interest will continue to be exploited, our market-based system will falter and our healthcare system could well collapse.

    ________________________________________
    Fred Goldstein is founder and president of Specialty Disease Management, a disease management firm based in Jacksonville, Fla. He may be reached at fgoldstein@specialtydisease.com.

    WSJ: Government-Funded Care Is the Best Health Solution

    The Wall Street Journal
    Government-Funded Care Is the Best Health Solution By Benjamin Brewer, M.D.
    April 18, 2006

    A recently approved Massachusetts plan designed to force all residents to get health insurance was a step in the right direction, but it doesn’t go far enough.

    Under the Massachusetts approach, there will still be a maze of plans provided by any number of insurers. That multiplicity is the problem. Multiple insurers and multiple plans create layers of unneeded expense and bureaucracy related to billing, collections and the entire assembly line of middlemen between the service rendered and the payment.

    The solution that would really put health-care dollars, and providers, to their best use would be a single-payer system — namely, government-funded health coverage for all.

    It took me a while to conclude that a single-payer health system was the best approach. My fear had been that government would screw up medicine to the detriment of my patients and my practice. If done poorly, the result might be worse than what I’m dealing with now.

    But increasingly I’ve come to believe that if done right, health care in America could be dramatically better with true single-payer coverage; not just another layer — a part D on top of a part B on top of a part A, but a simplified, single payer that would cover all Americans, including those who could afford the best right now.

    For the full article:
    http://online.wsj.com/public/article/SB114528925682927634-_ZwDiTbxugmJW0cqxJ_jJ_ogY8g_20060517.html?mod=tff_main_tff_top

    Comment:

    By Don McCanne, M.D.

    Many were surprised to see this frank endorsement of single payer reform appearing in The Wall Street Journal. Perhaps even more remarkable was the decision of the editors to provide free access to this particular article, ensuring much broader distribution than most of the Journal’s subscription-only content.

    The editors have not endorsed single payer. In fact, an editorial today calls for tackling the problem of the uninsured by allowing the market to “start operating as it should.” Yet all credible economists agree that the market has no realistic answers for the uninsured who have limited income and significant health care needs. The editors of The Wall Street Journal do understand this as well, even if they remain silent on it.

    They also certainly recognize the pressing need for reform and that it needs to be a well informed process by including all options in our national dialogue. Maybe they are ready to give passive support to the democratic process, even if that means that the government will be involved.

    Alberta backs off private medicare blueprint

    Ottawa opposed Third Way strategy


    By DAWN WALTON AND BILL CURRY
    Originally Published 04/21/06

    CALGARY and OTTAWA – Bowing to public pressure at home and opposition in Ottawa, Alberta has shelved its controversial health-care reforms that would have allowed doctors to collect paycheques in both the private and public systems and patients to buy private insurance.

    An “aggressive” work-force policy to bring more health-care workers to Alberta cities and rural areas to alleviate waiting lists will be adopted rather than allowing patients to pay for certain services to speed access, the province announced yesterday.

    “The most important thing is to build a stronger public health-care system where an Albertan’s ability to pay will never influence the type of care or the design of care that they can receive,” Health Minister Iris Evans told reporters in Calgary after an all day caucus meeting.

    Both Prime Minister Stephen Harper and federal Health Minister Tony Clement had expressed concern in recent weeks that Alberta’s proposed reforms, which Premier Ralph Klein had dubbed the Third Way, could violate the Canada Health Act — something Ottawa could address by withholding transfer payments.

    Mr. Klein took the federal government to task yesterday, saying it offered no alternatives. He said those who opposed the province’s plan had confused the public about what it would mean.

    “It has always been expedient to be the protector of medicare as we know it today,” he said.

    Alberta will move ahead with a Health Care Assurance Act this spring, which is a framework for future health-care legislation. It will also call for more consultation with Albertans, which could revive the debate, Ms. Evans said.

    But that may not happen for another year as Alberta’s Progressive Conservative Party prepares to pick a new leader this fall.

    Mr. Klein said he is disappointed he will not be able to see the matter through because he will be out as premier by the end of the year.

    “It’s being postponed, but someone is going to have to deal with it,” he said. When asked what advice he had for those who take up the torch for medicare reform, he replied, “Good luck.”

    Ms. Evans insisted that the Third Way is not dead. “Far from being dead, it’s alive, and we have created an opportunity for Albertans to give us even more feedback,” she said.

    Ms. Evans, who met with Mr. Clement this week, said he left the door “slightly ajar” for more discussions about potential reforms.

    Mr. Clement could not be reached yesterday, but an official in the Prime Minister’s Office said Mr. Harper had made Ottawa’s position clear on the Third Way proposal.

    “The Prime Minister was clear in a private meeting he had with Premier Klein that anything Alberta wishes to propose to reform health care is great as long as it respects the Canada Health Act,” he said.

    The change of heart was hailed as a victory by those opposed to the Third Way.

    The province received more than 4,000 letters and 2,000 calls on the reforms — the vast majority of them expressing concern about two-tier medicine and the prospect of paying for services.

    “This is clearly a defeat for the government,” said Alberta’s New Democratic Leader Brian Mason. “. . . I think Iris Evans pushed very hard for this legislation. The Premier pushed for the legislation and the people of Alberta pushed back.”

    Harvey Voogd, co-ordinator of the Friends of Medicare, which has been lobbying against the Third Way, said dramatic reforms died when Mr. Klein’s party embarrassed him with only 55 per cent support of his leadership.

    Karl Belanger, the press secretary to federal NDP Leader Jack Layton, expressed cautious optimism: “It sounds like it could come back in a year, so we will keep pushing for a fully public health-care system.”

    Mr. Layton had demanded a federal law banning doctors from operating in both the public and private systems as the price for his continued support of the Liberal government last fall. When a deal could not be reached, the NDP joined the Bloc Québécois and the Conservatives and triggered a federal election.

    A spokesperson for federal Liberal Leader Bill Graham was pleased with the decision, adding that innovation in health must take place within the framework of a universal health-care system.

    Ms. Evans said Alberta is still looking for ways to cut costs to its health-care spending, which currently eats up more than a third of the province’s budget, but acknowledges that focusing on recruitment could cost the province even more.

    The province figures it will spend $10.3-billion on health care in 2006-07, which is $735-million or 7.7 per cent more than the government expected it would spend during the last fiscal year.

    Since 1995-96, health spending in Alberta has grown by an average of 10 per cent a year. Now, itboasts among the country’s highest per capita spending for health care.

    Alberta Health and Wellness hopes to rein in costs over three years through reforms, but it expects another 7.7 per cent hike in program spending in 2007-08, before it cuts the spending increase to 3.7 per cent in fiscal 2008-09.

    Allan Hubbard explains the president's health reform plan

    World Health Care Congress
    April 19, 2006
    Bush Administration’s Health Reform Plan Allan Hubbard, Director, National Economic Council, The White House

    Allan Hubbard: …there are three visions, but the third vision is not sustainable, the third vision being the status quo… I promise you, things are going to change, and we can go one of two ways. One way… is a single payer system, basically expand Medicare to take over everything. Medicare will set prices. They will find that it costs more than they expect, so they will cut back reimbursement. They will cut back the options that people have in terms of doctors, in terms of procedures. Eventually care will be rationed, and that’s one vision, and that’s what happened in every other country that had a single payer system… Or we can go to a consumer-directed health care system where the consumer is incentivized to be a wise consumer, incentivized to care about price, to care about quality… That is the vision of this president. We believe health savings accounts are exactly the way to go, with high deductible, low cost health insurance policies, and then… tax deductions for your contributions to your health savings accounts, which means what you pay for out-of-pocket gets the same tax advantage as what’s paid for by insurance, and then you have an incentive to be a wise consumer…

    Later…

    Stuart Altman, reading a question from the audience: You talked about consumers as a way to reduce prices and increase efficiency. What about the medical emergency situation, when the patient doesn’t have a choice about when, where, and what type of care takes place?

    Allan Hubbard: Obviously it doesn’t work there, and I think we all know that, but that’s the exception. You can only shop in a non-emergency.

    Later, in response to another question…

    Allan Hubbard: Now for the chronically ill, to be perfectly frank, that is the biggest challenge in health care. The president has two proposals on that. And when I talk about chronically ill, it’s the people who have predictably high costs year in and year out… The president’s proposals are the following – an employer provided health savings account… it will put extra money into the health savings accounts of the chronically ill… And then, secondly, the president wants to provide 500 million dollars to the Secretary of HHS to be able to award to up to ten states a year, for innovative ideas in accommodating the chronically ill. But, I want to be perfectly frank, the chronically ill is a problem that is very difficult to solve.

    http://www.worldcongress.com/events/NW600/index.cfm

    Comment:

    By Don McCanne, M.D.

    So the president’s proposal for consumer-directed health care doesn’t work for acute problems since individuals are not in a position to be informed consumers, and it doesn’t work for chronic disease since they haven’t figured out a way to pay for it.

    Since it doesn’t work for either acute or chronic problems, apparently the president’s proposal works only for those without significant medical needs. Are healthy individuals really the appropriate target for health care reform?

    Why would the administration support a reform proposal that they quite frankly concede will not work? It’s because they recognize that the status quo is not sustainable, and the only other realistic option is a single payer system. Although Hubbard drags out the canard of rationing, it is only because their bogeyman bag is otherwise relatively empty. Their real reason for opposing single payer is that their anti-government ideology overrides all other considerations and trumps reform that they know will work, merely because it is a government solution. Should reform be driven by ideology, or by health policy science?

    Allan Hubbard is right about one thing. He promises us that there will be change. He has explained why the consumer-directed nonsense cannot lead us to reform. It looks like it will have to be single payer, by default.

    Single Payer, By Default

    San Diego Physician
    February/March 2006
    Single Payer, By Default
    By Don McCanne, M.D.

    (Editor’s Note: Though Dr. McCanne’s article is not the position of the San Diego County Medical Society, it will – it is hoped – stimulate discussion.)

    Regardless of personal ideology or political persuasion, everyone in the policy community understands the strengths of the single-payer model of national health insurance. It would provide truly comprehensive coverage for absolutely everyone while putting into place mechanisms that would slow the rate of healthcare inflation.

    There is no mystery about how this would be accomplished. Coverage would be automatic for everyone, from birth on. All reasonable, beneficial health services would be included. The current, highly inequitable mechanisms of funding care would be replaced with a single, equitable system of public funding. Numerous micro-simulations and the experiences of other nations have confirmed that replacing our highly inefficient, fragmented private and public insurance systems with a single, publicly administered program would free up more than enough wasted funds to pay for the deficiencies in healthcare coverage today.

    The real task before us is to ensure that the large number of us who are healthy pay into a fund that covers care for the 20 percent of individuals who use 80 percent of health services. The most equitable method of doing that would be to establish a single risk pool. A multi-payer system might work, but it would have to be so tightly regulated that it functions as a single-payer system. Furthermore, micro-simulations have shown that multi-payer systems are the most expensive method of achieving universal coverage, whereas a single-payer system actually reduces healthcare spending.

    We’ve tried most everything else, but high costs and fragmentation grow worse. Current trends, including CDHC, will only compound the problems. Employers and patients want something done now. More voices are joining the call for a “national solution.” The nation is growing weary of waiting for someone to come up with a better solution. Since there really isn’t any, we will soon have a single-payer program of national health insurance, even if only by default. Once Americans become comfortable with it, they will be as supportive as they are of our other social insurance programs: Social Security and Medicare.

    For the full article (1200 words, single page):
    https://pnhp.org/PDF_files/singlepayerbydefault.pdf

    Comment:

    By Don McCanne, M.D.

    Reform advocates may find this single-page article to be useful as a handout to explain to others why national health insurance is inevitable.

    Private insurers' control of the marketplace (AMA report)

    (Today’s message addresses one of the most important perversities in our flawed system of funding health care. It needs to be included in every dialogue on reform. Please share this message with others who really do care about the future of health care in America.)

    American Medical Association
    Competition in Health Insurance
    A Comprehensive Study of U.S. Markets
    2005 Update

    The study’s purpose is two-fold: first, to identify problem markets where competition is diminished and second, to prompt discussion about the long-term impact of consolidated health insurance markets on the health care system. This year’s study demonstrates that competition is undermined in hundreds of markets across the country.

    Our study shows unequivocally that physicians across the country have virtually no bargaining power with dominant health insurers and that those health insurers are in a position to exert monopsony power. In 280 of the
    294 markets surveyed, one health insurer accounts for at least 30 percent of the combined HMO/PPO market.

    In terms of market concentration (HHI or Herfindahl-Hirschman Index, a measure of market concentration used by the Department of Justice), the study found the following:

    In the combined HMO/PPO product market, 95 percent (279) of the MSAs (metropolitan statistical areas) are highly concentrated (HHI>1800).

    In the HMO product market, 99 percent (290) of the MSAs are highly concentrated (HHI>1800).

    In the PPO product market, 99 percent (293) of the MSAs are highly concentrated (HHI>1800).

    While a number of large health insurers (including WellPoint and United) are posting record profits, premiums for consumers have increased without any increase in benefits. Instead, consumers are paying more out-of-pocket for their health care, through increased deductibles, co-payments and co-insurance. It is clear that patients – the ultimate consumers of health care – are not benefiting from these mergers.

    The American Medical Association (AMA) has long been concerned about the impact of consolidated markets on patient care. Today it appears that the physician’s role as patient advocate is being systematically undermined as dominant insurers impose take-it-or-leave-it contracts that directly impact the provision of care and the patient-physician relationship. This role has never been more important. Physicians have a professional and ethical obligation to their patients; health insurers’ primary legal obligation is to their shareholders.

    The AMA believes that it is time to reexamine the legal landscape that has allowed unfettered consolidation of health insurance markets. If not corrected, the imbalances in the marketplace will have serious negative long-term consequences for the health care system.

    AMA press release:
    http://www.ama-assn.org/ama/pub/category/16197.html

    Full report:
    http://www.ama-assn.org/ama1/pub/upload/mm/368/competitionstud_406.pdf

    Comment:

    By Don McCanne, M.D.

    This study provides one of the most important additions to the overwhelming body of evidence confirming the principle that private insurers should no longer control health care funding.

    This report discusses the monopsony (single buyer) power of private insurers. Through consolidation, private insurers now control the markets both as monopolies and as monopsonies.

    By using the contracting process to gain control of the providers of health care, the private insurers have gained monopolistic control of the market in which they sell their insurance products. By gaining control of patients through their restricted-panel insurance products, the private insurers have gained monopsonistic control of the market in which they purchase their health care services and products.

    Free markets promote fair pricing. Monopolistic and monopsonistic control of markets drive prices up while reducing investment in products and services.
    What better example could there be than these very expensive and highly profitable private insurance plans that are leaving patients much more exposed to the costs of health care.

    Market perversities absolutely mandate government intervention. It would require a treatise to explain why a simple increase in regulatory oversight would be totally inadequate to correct the perversities in our private insurance system. Suffice it to say that it is time for the government to take over the funding of health care through a single payer program of national health insurance.

    The government protects public employees' health benefits

    Public Employees’ Health Benefits Survive Major Threats, So Far Public-sector workers continue to receive benefits that help offset their more modest salaries compared with their private-sector peers.

    Health Affairs
    By Robert E. Hurley, Laurie Felland, Anneliese Gerland, and Jeremy Pickreign
    April 18, 2006

    State and local elected officials have shown much restraint in their approach to modifying public employees’ benefits. Despite budget pressures, few public employers indicated that they felt political pressure to make deep cuts in health benefits. Many elected officials value the contributions of public workers and expressed great concern about not making major reductions in the workforce, given the responsibilities borne by state and local government agencies. Likewise, officials themselves often have a personal stake in the benefits, including health care coverage, so preservation might be a matter of self-interest.

    http://content.healthaffairs.org/cgi/content/abstract/hlthaff.25.w195

    Comment:

    By Don McCanne, M.D.

    Many still express the view that they would prefer to continue to rely on their private individual or employer-sponsored health insurance plan rather than changing to a government program, because “the government” can’t do anything right.

    This study confirms that “the government,” as an employer, has been very effective in maintaining traditional comprehensive coverage for its own employees. Although the government uses private insurers, it has maintained a strong stewardship over these programs. Compared to the private sector, it looks like “the government” has been doing it right.

    The efficiency that would be attained by changing to a single payer system will not be discussed here other than to state that the government would have to be the steward. Based on the track record, it looks like putting “the government” in charge actually would be the right thing to do.

    UnitedHealth CEO Makes Recommendation on Pay

    By DINAH WISENBERG BRIN and VANESSA FUHRMANS
    Wall Street Journal
    Originally published April 18, 2006

    UnitedHealth Group Inc. Chairman and Chief Executive William W. McGuire said Tuesday he is recommending that the insurer, which is under scrutiny for the timing of past stock-options awards, forgo equity-based payments and grants for most senior executives.

    The company also said it posted higher-than-expected first-quarter earnings but lowered its guidance for next year. Earnings at the country’s second-biggest health insurer climbed 21% to $899 million, or 63 cents a share, in the quarter, from $743 million, or 55 cents per share, a year earlier. UnitedHealth’s acquisition of PacifiCare Health Systems Inc., which it completed late last year, and its new Medicare drug-benefit plans helped fuel profits, as a well as a 58% jump in first-quarter revenues to $17.59 billion.

    As a result, Dr. McGuire said the company now expects full-year earnings between $2.88 and $2.92 a share — a 22% to 24% increase from 2005 — compared with its earlier projection of between $2.85 to $2.90 a share.

    Dr. McGuire prefaced his discussion of the company’s performance with his first comments on the controversy over his massive financial windfall from stock options, now totaling $1.6 billion in unrealized gains. In a move that could prove to be a significant pullback from what has been an enormously generous remuneration package, Dr. McGuire said he was recommending that the company eliminate change-in-control severance payments and “noncash perquisites,” for the most senior executives, as well as capping supplemental retirement plans and eliminating further equity-based grants “for the foreseeable future.” UnitedHealth’s board will consider that idea at its next meeting in May, he said.

    Dr. McGuire’s suggestion does not restrict him or other executives from exercising options they’ve already received, and a company spokesman declined to specify what perks Dr. McGuire suggested be eliminated.

    Earlier this month, UnitedHealth said a committee of its independent directors would review the company’s options-grant practices in light of Securities and Exchange Commission scrutiny of options grants at numerous companies, including UnitedHealth.

    The Wall Street Journal reported last month that Dr. McGuire’s options grants were regularly dated just before substantial run-ups in share price and after a sharp fall.

    Monday, Comverse Technology Inc. said that after a preliminary review of its stock-option practices, it expects to restate more than five years of financial results because the grant dates used in its accounting “differed” from the actual grant date.

    Several UnitedHealth executives frequently received stock-options grants dated at or near quarterly low points in the company’s share price, raising questions about how the Minnetonka, Minn., health insurer timed options grants, the paper reported this week.

    “I and all of us at UnitedHealth Group take these concerns seriously,” Dr. McGuire said. “It is extraordinarily difficult and frustrating not to respond to media reports” about company options practices, especially those that “impugn” management, Dr. McGuire said.

    “To my knowledge, every member of management in this company believed at the time that we followed appropriate practices” for granting options executives and other employees, he said. The CEO, questioned by an analyst, wouldn’t specify whether he had received backdated stock options, saying the company didn’t want to bias the independent review committee. “We sleep with good conscience,” he added.

    By the quarter’s end, UnitedHealth had signed up about 70 million consumers, an increase of 27% over the prior year. The company said it had 4.5 million seniors using its Medicare Part D prescription drug benefit, generating $1.2 billion in revenue for the quarter. The company’s Part D plans saw their margins squeezed due to the costs of assimilating new members, but it said it expects to see margins expand by year’s end.

    Dr. McGuire was the subject of a Page One article in The Wall Street Journal today that looked at how an elite group of companies is getting rich from the nation’s fraying health-care system. Many of them are middlemen who process the paperwork, fill the pill bottles and otherwise connect the pieces of a $2 trillion industry.

    UnitedHealth directors in the late 1990s allowed Dr. McGuire the rare freedom to time his stock-option grants. In several cases the grants carried dates when the company’s share price was particularly low, allowing him to profit when it recovered.

    The Journal’s analysis of 12 options grants to Dr. McGuire from 1994 to mid-2002 found that if the options had been randomly dated, the odds of their occurring at such propitious times were about 1 in 200 million. It raised the possibility that the options grants were backdated. Backdating an options grant isn’t necessarily illegal, but civil or criminal actions could be brought if disclosure of the practice was inadequate, securities lawyers say.

    Write to Dinah Wisenberg Brin at dinah.brin@dowjones.com10 and Vanessa Fuhrmans at vanessa.fuhrmans@wsj.com11

    MORE ON MCGUIRE
    • Option grants to Dr. McGuire in 1997, 1999 and 2000 carried dates on which UnitedHealth’s stock hit its low for the year. Read more about the grants and those made to other companies’ executives in The Perfect Payday (March 18, 2006) and see charts of the option grants.

    Government-Funded Care Is the Best Health Solution

    Multiple Insurers, Multiple Plans Create Expensive, Draining Hassle

    THE DOCTOR’S OFFICE

    By BENJAMIN BREWER, M.D.
    THE WALL STREET JOUNRAL
    April 18, 2006

    A recently approved Massachusetts plan designed to force all residents to get health insurance was a step in the right direction, but it doesn’t go far enough.

    Under the Massachusetts approach, there will still be a maze of plans provided by any number of insurers. That multiplicity is the problem. Multiple insurers and multiple plans create layers of unneeded expense and bureaucracy related to billing, collections and the entire assembly line of middlemen between the service rendered and the payment.

    It took me a while to conclude that a single-payer health system was the best approach. My fear had been that government would screw up medicine to the detriment of my patients and my practice. If done poorly, the result might be worse than what I’m dealing with now.

    But increasingly I’ve come to believe that if done right, health care in America could be dramatically better with true single-payer coverage; not just another layer — a part D on top of a part B on top of a part A, but a simplified, single payer that would cover all Americans, including those who could afford the best right now. Representatives and senators in Washington should have to use the same system my patients and I do were they to vote it in.

    Doctors in private practice fear a loss of autonomy with a single-payer system. After being in the private practice of family medicine for 8 1/2 years, I see that autonomy is largely an illusion. Through Medicare and Medicaid, the government is already writing its own rules for 45% of the patients I see.

    The rest are privately insured under 301 different insurance products (my staff and I counted). The companies set the fees and the contracts are largely non-negotiable by individual doctors.

    The amount of time, staff costs and IT overhead associated with keeping track of all those plans eats up most of the money we make above Medicare rates. As it is now, I see patients and wait between 30 and 90 days to get paid. My practice requires two full-time staff members for billing. My two secretaries spend about half their time collecting insurance information. Plus, there’s $9,000 in computer expenses yearly to handle the insurance information and billing follow up. I suspect I could go from four people in the paper chase to one with a single-payer system.

    It would be simpler and better for the patient, and for me, if the patient could choose a doctor, bring their ID card with them, swipe it in a card reader at the time of service and have the doctor get paid on the spot with electronic funds transfer.

    Instead, patients have to negotiate a maze of deductibles, provider networks, out-of-network costs, exclusions, policy riders, ER surcharges, etc. Wouldn’t a card swipe be simpler? No preexisting conditions to worry about. No indecipherable hospital bills. One formulary to deal with and one set of administrative rules to learn instead of 300.

    With a single-payer system, there are concerns about waiting times for procedures and not getting access to the “best doctors.” These are real issues, but not unsolvable ones. We have these disparities now. Fact is, they are mostly a matter of geography, insurance status and personal wealth.

    A single-payer system would increase access to care for the uninsured and the underinsured, including the working poor. It would lower total health costs, in part by replacing 50 different state Medicaid programs and umpteen insurers with one system. This approach has the potential to improve quality and lower costs by improving care for chronic illnesses such as diabetes, high blood pressure and heart disease.

    Such a system of care would rely on evidenced-based interventions, that is, providing the right care at the right time to the right patients, according to generally accepted best practices, and it would reduce the disparities in access to and quality of care among ethnic groups. Better tracking of chronic diseases, outbreaks and identification of bioterrorism would also be benefits.

    There are powerful forces that oppose a single-payer system — the health insurance industry for one. The insurance industry got its share of the Medicare drug benefit pie, as did the pharma industry. It would have been better and simpler for the government to design one plan with a standard drug fee schedule that everyone could understand, as the government does with care that doctors provide to Medicare patients. But that’s not the way it happened.

    Doctors have been supportive of the idea of universal access to care, but not necessarily a single-payer system. Some fear delays in obtaining necessary testing and surgeries. What I suspect they fear most is a loss of income and the fear of the unknown.

    A single-payer system would admittedly lower fees for subspecialty care, such as radiology and cardiology. But if more doctors went into family medicine or obstetrics and fewer into subspecialties like plastic surgery, that shift might help correct the physician manpower imbalances that exist now. That wouldn’t necessarily break my heart.

    I suspect doctors would be more likely to support a single-payer system if national malpractice reform was part of the package — which it should be.

    I used to think a single-payer system would keep my income down and inject bureaucracy into my medical decision-making. But with the efficiency it could bring, it would at worst be an economic wash; more likely, the trimmed costs would more than make up for any foregone revenue. As for autonomy, I’m already struggling to maintain it amid the interference of insurers.

    On the whole, the efficiency — and equality — that a single-payer system would provide would more than compensate for its shortcomings.

    Write to Dr. Benjamin Brewer at thedoctorsoffice@wsj.com

    Insurer CEO Makes a Billion

    Rewarding Career As Patients, Doctors Feel Pinch, Insurer’s CEO Makes a Billion

    UnitedHealth Directors Strive To Please ‘Brilliant’ Chief;
    New Questions on Options
    Selling Trout for 40 cents a Pound

    By GEORGE ANDERS
    April 18, 2006
    Page A1 Wall Street Journal

    MINNETONKA, Minn. — When William McGuire switched careers in 1986, he was so restless that a pay cut of more than 30% didn’t faze him. Health maintenance organizations were booming, and Dr. McGuire wanted to help run one. So he jettisoned a six-figure income as a pulmonologist in favor of an HMO management job that paid about $70,000 a year.

    Savvy move. Today, the 58-year-old Dr. McGuire is chief executive officer of UnitedHealth Group Inc., one of the nation’s largest health-care companies. He draws $8 million a year in salary plus bonus, enjoying perks such as personal use of the company jet. He also has amassed one of the largest stock-options fortunes of all time.

    Unrealized gains on Dr. McGuire’s options totaled $1.6 billion, according to UnitedHealth’s proxy statement released this month. Even celebrated CEOs such as General Electric Co.’s Jack Welch or International Business Machines Corp.’s Louis Gerstner never were granted so much during their time at the top.

    Dr. McGuire’s story shows how an elite group of companies is getting rich from the nation’s fraying health-care system. Many of them aren’t discovering drugs or treating patients. They’re middlemen who process the paperwork, fill the pill bottles and otherwise connect the pieces of a $2 trillion industry.

    The middlemen credit themselves with keeping the health system humming and restraining costs. They’re bringing in robust profits — and their executives are among the country’s most richly paid — as doctors, patients, hospitals and even drug makers are feeling a financial squeeze. Some 46 million Americans lack health insurance.

    UnitedHealth’s main business is offering health plans to employers and Medicare beneficiaries. Bigger employers usually pay employees’ medical bills out of their own coffers and hire UnitedHealth to administer the health benefit. Smaller employers pay an annual insurance premium to UnitedHealth in exchange for having the insurer take on the risk of covering employees’ health care.

    The “risk” business has been a particular gold mine for UnitedHealth and its rivals in recent years. As health-care inflation eased, insurers still raised premiums at double-digit rates. UnitedHealth’s stock price tripled between January 2003 and January 2006, helped by acquisitions, although it has fallen back somewhat since the beginning of this year. UnitedHealth’s net income in 2005 totaled $3.3 billion, nearly four times the figure in 2001.

    UnitedHealth directors in the late 1990s allowed Dr. McGuire the rare freedom to time his stock-option grants. In several cases the grants carried dates when the company’s share price was particularly low, allowing him to profit when it recovered. The company’s options-granting practices were among several scrutinized in a page-one article in The Wall Street Journal last month and are being examined by the Securities and Exchange Commission.

    The Journal’s analysis of 12 options grants to Dr. McGuire from 1994 to mid-2002 found that if the options had been randomly dated, the odds of their occurring at such propitious times were about 1 in 200 million. It raised the possibility that the options grants were backdated. Backdating an options grant isn’t necessarily illegal, but civil or criminal actions could be brought if disclosure of the practice were inadequate, securities lawyers say. A UnitedHealth spokesman said the grants were appropriate, but the company’s board is reviewing options-granting procedures.

    The arrival of the $1 billion CEO would be a head-turner in any industry. But it’s especially controversial in health care, where “people tend to view each dollar of executive pay as money that isn’t spent on them,” says Jonathan Weiner, a health-policy expert at Johns Hopkins University. Dr. McGuire and his supporters say the U.S. would be in even worse shape if it weren’t for insurers such as UnitedHealth weeding out unnecessary treatments, bargaining with doctors and encouraging patients to seek out the highest-quality care.

    Ever since missing a stock-market windfall in the late 1980s, Dr. McGuire has pursued stock-options wealth tirelessly, as an iron-willed leader surrounded by an admiring board. He declined to discuss his pay, but current and former directors talked at length about their desire to do whatever is necessary to keep Dr. McGuire happy.

    “We’re so lucky to have Bill,” says Mary Mundinger, a UnitedHealth director who sits on the company’s compensation committee. “He’s brilliant.” She says his income gives him extra credibility in health-policy debates because it shows his success. “He needs to be compensated appropriately so that his business model has believability in the market,” says Ms. Mundinger, who is dean of the nursing school at Columbia University.

    Robert Ryan, another UnitedHealth director, notes that the company’s stock-market capitalization has climbed 112-fold since Dr. McGuire took over in 1991. “A lot of the board’s job here is to keep him motivated,” says Mr. Ryan, a retired chief financial officer of Medtronic Inc.

    Bill McGuire was born in Troy, N.Y., but moved to Texas as a boy when his father got a job as an oil-company engineer. He grew up in League City, Texas, a blue-collar town near Galveston. Friends remember him as shy, pleasant and dead-certain of his expertise in areas ranging from sports to math.

    He grew to be 6-foot-6, and as a high-school senior he was the starting center on a basketball team that nearly won the state championship. “Bill did all my scouting reports for me,” recalls Bill Krueger, who was in his first year as coach. “I’d never played our opponents before. Bill had. He remembered all the other players’ strengths and weaknesses.”

    After college, Bill McGuire attended medical school in Galveston, Texas, at the urging of family doctor Ned Dudney. Varsity athletes who go into medicine often end up as surgeons. But Dr. Dudney pegged his young friend as more of an intellectual problem-solver and pointed him toward internal medicine. “Bill liked the challenge of diagnosing the rare, complicated disease,” Dr. Dudney recalls.

    At medical school, Dr. McGuire became famous for his side income as a commercial fisherman, selling speckled trout to Galveston’s best restaurants at 40 cents a pound. The night before one exam, he slipped away to the Gulf of Mexico and spent hours catching fish.

    “It flabbergasted us,” recalls classmate Robert Hendler. “The rest of us were struggling to learn the material. Bill had it down cold. He could go fishing and still get one of the best scores on the test.”

    In the early 1980s, Dr. McGuire settled into private practice as a lung-disease specialist in Colorado Springs, Colo. Much of his job involved hospital care of the desperately sick at all hours of the day and night. In one case, Dr. McGuire — who wasn’t certified as a cardiac surgeon — reopened the chest incision of a critically ill patient in the emergency room and massaged his heart. That audacious step kept the patient alive until a surgeon arrived.

    Looking for a new challenge, Dr. McGuire joined Peak Health Plan Inc. in 1984 as its assistant medical director. He helped found a smaller health plan, CostGuard Inc., in which he took a 10% ownership stake. “Bill gave us a lot of credibility,” recalls Stephen Hyde, Peak’s CEO at the time. “I was trying to expand our provider network, and I couldn’t get doctors to come to our recruiting meetings. Bill could.”

    Within two years, both Peak and CostGuard were sold to UnitedHealth, a larger Minnesota company that had been founded in 1974, for a total of about $95 million. Dr. McGuire was irked that the company he had recently joined was suddenly sold, associates say. He earned about $1 million on his CostGuard stake but he didn’t own any Peak stock, so he missed out on bigger windfalls that Peak’s three founders collected. “Bill didn’t let me forget about it for years,” Mr. Hyde says.

    The managed-care industry in the late 1980s was experiencing booming but chaotic growth. Big corporations, instead of simply paying whatever medical bills their employees submitted, tried steering them into more restrictive HMOs to hold down runaway costs. Members streamed in so fast that many health plans’ computer systems buckled.

    Dr. McGuire moved to UnitedHealth’s headquarters in Minnesota, where he quickly became the company’s No. 2 executive. In 1988 and 1989, he performed the business world’s version of emergency surgery on a company that was stretched too thin. After he helped sell or close a half-dozen regional plans that weren’t working out, UnitedHealth became a smaller but more profitable company.

    “When we saw Bill’s talent and potential, we started providing him with some big stock options to give him some incentives,” recalls Robert Ditmore, a former UnitedHealth director in the late 1980s. By the end of 1990, Dr. McGuire had options on 229,277 shares, or 0.7% of the company.

    This was the beginning of a period when U.S. corporations began making options a big part of pay packages, seeking to align the interests of executives and shareholders. Traditionally, hired CEOs enjoyed big salaries but their puny stockholdings left them no hope of approaching the epic wealth of the Rockefellers or DuPonts.

    But as stock options took off, highflying bosses such as Dr. McGuire propelled themselves into the top ranks of their companies’ shareholder registries. As stock prices rose, these bosses became tycoons, too.

    The stock jumped 10-fold during Dr. McGuire’s first five years at the company. Directors purred. “We knew we had a really strong leader in Bill,” recalls Walter Mondale, the former presidential candidate, who was a member of the UnitedHealth board’s compensation committee in the early 1990s. “We wanted to keep him and help him with incentives.”

    During his first seven years as CEO, Dr. McGuire’s base salary more than tripled, to $1.3 million in 1998. His bonus jumped nearly as briskly for a few years. Then in 1997 and 1998, Dr. McGuire told directors that he would forgo his bonus. The company’s stock price and earnings growth had stalled amid a backlash against restrictive health plans.

    His sacrifice impressed directors. As the expiration of his contract approached in mid-1999, the directors and the CEO met repeatedly to talk about a new contract.

    Dr. McGuire at the end of 1998 had unrealized gains of $22 million on his existing options. That might have seemed like a huge sum a decade earlier. But Leonard Abramson, the founder of U.S. Healthcare Inc., netted about $900 million when he sold his company to Aetna Inc. in 1996. And dot-com mania was at its peak. CEOs of health-care start-ups such as WebMD Inc. held 5% or bigger stakes in their companies, which looked like passports to great wealth.

    In contract negotiations, Dr. McGuire pushed for more options, and directors agreed. When his contract was renewed, effective Oct. 13, 1999, he got options equivalent to 2% of UnitedHealth’s shares outstanding. That was the biggest slice Dr. McGuire had ever received. “Clearly we were aware of people getting huge gains on Internet-stock situations. That was perhaps a factor in our mind,” says director William Spears.

    The dot-coms’ onslaught proved laughably brief, but UnitedHealth kept rising. As the industry consolidated — spurred by several deals Dr. McGuire engineered — health-plan operators found it easier to raise prices. Employers rarely complained, or if they did they directed their anger at the health-care system generally.

    The better UnitedHealth fared, the more valuable Dr. McGuire’s options became. Since 2000, he has cashed out $488 million of options, yet the value of his remaining options keeps rising. The 1999 grant has proved about seven times as valuable as the company projected when it was issued.

    In Minnesota, such riches have infuriated some people. Joel Albers, a Minneapolis pharmacist, regularly impersonates Dr. McGuire at state fairs, donning a tuxedo, holding up an enlarged picture of Dr. McGuire on a stick and handing out leaflets denouncing corporate greed. Most people chuckle and walk on. But Mr. Albers says he has a serious point. He has been urging Dr. McGuire to spend his options proceeds on providing free health coverage for Minnesota’s 77,000 uninsured children.

    UnitedHealth executive John Penshorn says outsiders’ efforts to tell Dr. McGuire how to spend his money are “very parochial” because “the issues are broader than just Minnesota.” Dr. McGuire has been speaking out about national health system reform and UnitedHealth has opened advanced clinics that serve some of the nation’s poorest neighborhoods. Dr. McGuire also has set up a family foundation that gives away millions on behalf of education, science and the arts.

    Some of Dr. McGuire’s most eye-catching gifts are unrelated to health care. In January, he announced he was giving $10 million to help thousands of disadvantaged Minnesota children attend college. Dr. McGuire also has given nearly $10 million to the University of Florida for a biodiversity center that includes one of the world’s largest butterfly research institutes. An avid lepidopterist himself, Dr. McGuire discovered the brown Texas butterfly Euphyes mcguirei.

    As long as UnitedHealth stock keeps climbing, big shareholders say they aren’t likely to badger Dr. McGuire for a pay cut. “It’s hard to say what someone like that is worth,” says Tom Marsico, head of Marsico Capital in Denver, which owns about 5% of UnitedHealth’s shares. “But compared with hedge-fund managers or athletes, he’s probably doing more to improve the world.”

    Even so, UnitedHealth directors huddled several times last year to discuss whether they have showered Dr. McGuire with too many options. His 1999 employment contract obligated the company to award him further options on 2.6 million shares each year, adjusted for splits.

    “The number [of options] became larger than we were comfortable with,” says Mr. Spears, a member of the UnitedHealth compensation committee. Directors in August 2005 eliminated the options guarantee. Dr. McGuire received options last year on 1.7 million shares, down 35% from the previous year.

    But several directors say they have no desire to peel away some of the CEO’s longtime perks, such as a $139,000 travel allowance and $69,100 of financial planning last year — even though Dr. McGuire is long past the point of needing help with everyday living costs.

    “If we did reduce these things, Bill would take it as a signal that directors weren’t enthusiastic about his leadership,” says Mr. Spears. “That would be a distraction, at the very least. Bill takes these things as a benchmark of how directors feel about him.”

    During their August 2005 overhaul of Dr. McGuire’s contract, directors did eliminate an unusual provision that let Dr. McGuire choose when his options would be awarded. As this newspaper reported on March 18, option grants to Dr. McGuire in 1997, 1999 and 2000 carried dates on which UnitedHealth’s stock hit its low for the year. Mr. Spears said in March that he wasn’t aware of anything inappropriate about the options grants. (Read the March 18 article and see stock charts showing the options grants.)

    In an SEC filing April 7, UnitedHealth said a committee of independent directors will work with outside lawyers to review the company’s “current and historic stock option grant procedures.” The company said the board review was Dr. McGuire’s idea.

    Write to George Anders at george.anders@wsj.com