PNHP

And now (trumpets please): Managed Consumerism!

And now (trumpets please): Managed Consumerism!

Managed Consumerism In Health Care
James C. Robinson
Health Affairs
November/December 2005

The future of market-oriented health policy and practice lies in “managed consumerism,” a blend of the patient-centric focus of consumer-driven health care and the provider-centric focus of managed competition. The optimal locus of incentives will vary among health services according to the nature of the illness, the clinical technology, and the extent of discretion in utilization. A competitive market will manifest a variety of comprehensive and limited benefit designs, broad and narrow contractual networks, and single-and multispecialty provider organizations.

After having tried every alternative, it is to be hoped that a market-oriented health care system will do the right thing and combine the best elements of the demand-side approach embodied in consumerism with the best elements of the supply-side approach embodied in managed competition.

http://content.healthaffairs.org/cgi/content/abstract/24/6/1478

And…

Which Way For Competition? None Of The Above By Robert A. Berenson

Despite growing documentation that the conditions needed to support competition in health care do not exist, consumer-directed health care has been offered as the new market-based solution to cost inflation.

Consumer-directed care threatens important societal values-in particular, the goal of establishing relationships between patients and clinical professionals based on trust.

http://content.healthaffairs.org/cgi/content/abstract/24/6/1536

Comment: It is astounding to watch the extent to which market-oriented policy analysts go to preserve the concept that costs must be controlled by private competition. The alleged “moral hazard” of traditional indemnity insurance allowed access to beneficial health services, resulting in increased costs from ever expanding diagnostic and therapeutic options. To slow the increase in costs, supply-side managed competition was introduced, and everyone was unhappy with the restrictions imposed. The current trend is to shift to demand-side consumer restraints that reduce access to care by the inhumane approach of making it unaffordable. The explosion in personal financial hardship for those with heath care needs will soon demonstrate that this model won’t work.

Now Berkeley professor Jamie Robinson recommends that we combine these two failed experiments (and CDHC has already failed – but we’re waiting for more pain to be shared before we all agree) into one model: managed consumerism!

Just one example of his concept: He categorizes clinical interventions into patient-preference sensitive, provider-supply sensitive, both, or neither, and then defines the optimal benefit and network designs for each of these four categories as “medically necessary,” “moral hazard,” “supplier-induced demand,” and “discretionary care.” These categories are valid, but the inference that we can combine managed competition and consumer directed mechanisms into a single competitive market that moves patients and providers into and out of these categories based on changing need, thereby achieving the highest quality at the lowest cost… well, the fumes of the Berkeley weed must have drifted into his office.

Supporters of market competition give lip service to quality, but their models are really all about controlling costs. Their models fail because they do not address the most important issue: the large numbers of the healthy must pay for the smaller numbers of the sick. No competitive market model will ever resolve that dilemma, and they know it. That is why they always include in their models public funding, whether it be tax credits, Medicaid, Medicare, SCHIP, catastrophic reinsurance, or whatever. 60% of health care is already funded through our tax system, and that will only increase.

Let’s dump this silly game of market-competition Scrabble, and lets’ get on with enacting a system that will actually benefit patients while controlling costs: single-payer national health insurance.

PNHP Members Urge Gov. Romney on Single-Payer

Physicians for a National Health Program
Massachusetts Chapter
46 Highland Ave.
Cambridge

Governor Mitt Romney
State Capitol
Boston, MA 02133

November 3, 2005

Dear Governor Romney, Speaker DiMasi and Senate President Travaglini:

We urge you to abandon your ill-conceived proposals for health care reform and to adopt, instead, a single payer program of universal coverage for the Commonwealth.

As physicians and health professionals, we witness the heavy toll of unnecessary suffering endured by patients who delay care and even forego vital treatment due to costs. While the uninsured bear the heaviest burden, many with insurance also find care unaffordable due to co-payments, deductibles and restrictions on coverage. Reforms should address the grave problems of both groups.

Your plans to loosen regulations on health insurance, allowing ever-skimpier coverage, would perpetrate a cruel hoax. Such cut-rate policies would cost families thousands of dollars yet offer miserly care and little protection from financial ruin in the face of serious illness. Many who currently enjoy adequate coverage would doubtless be forced into plans with gaping holes and onerous restrictions on choice. If there is one thing worse than being uninsured it’s paying dearly for worthless coverage.

Your view that we can achieve universal coverage by forcing people to buy themselves insurance ignores the most basic facts about who is uninsured. Only 12.4% of the 748,000 uninsured in our state are both young enough to qualify for low-premium plans (under age 35) and affluent enough (family incomes greater than 499% of poverty) to readily afford them. Yet even this 12.4% figure may be too high if insurers are allowed to charge higher premiums for persons with health problems; only half of uninsured persons in those age and income categories report that they are in “excellent health” (The statistics in this paragraph were obtained by analyses of data that the Census Bureau collected on Massachusetts residents in March 2005).

Proposals to raid the existing free care pool in order to partially subsidize cut-rate policies would actually worsen the plight of many who are currently uninsured. Under such reforms, patients now eligible for free or low-cost services would often face greater restrictions on care and higher out-of-pocket costs. The only real winners would be the private insurers who would surely gain millions from the sale of near-useless policies.

Replaying Dukakis’ failed employer mandate, i.e. making employers pony up more money for coverage, will not lead to universal coverage. As Dukakis found, relentlessly rising health costs quickly stir rebellion among powerful employers, making the program unsustainable.

While we welcome the expansion of Medicaid as a stopgap measure to cover more poor families, we know that this strategy ultimately leads to a dead end. Inevitably, the next economic downturn will bring a flood of additional families pushed onto the Medicaid rolls just as state tax revenues fall. As in the past, Medicaid will be cut when the need is greatest.

In contrast, a single payer reform would create a stable long-term financing mechanism for health care. It could cut costs by streamlining health care paperwork, making universal, comprehensive coverage affordable. The Commonwealth’s three largest private insurers spend more than $1.3 billion annually on billing, marketing, high executive salaries and other administrative costs. That’s ten times as much overhead per enrollee as Canada’s national health insurance program. And hospitals and doctors spend billions more fighting with insurers over payments for each aspirin tablet, x-ray and doctor’s visit. If we cut bureaucracy to Canada’s levels we could save at least 14% of current health expenditures, enough to cover all of the uninsured in Massachusetts and to improve coverage for the rest of our patients as well.

And single payer is popular. Sixty-two percent of Massachusetts doctors support it (according to a recent study in the Archives of Internal Medicine), joining the Massachusetts Nurses Association and dozens of other labor, seniors and consumer groups.

We recognize that a single payer reform threatens the multi-billion dollar insurance industry, and would force down the high profits enjoyed by drug companies. But such interests must not be placed ahead of the health of the people of Massachusetts. Only a single payer system can assure universal and comprehensive coverage at an affordable price. The people of the Commonwealth deserve no less.

Sincerely,

[This letter was signed by nearly 300 Massachusetts doctors.]

Fact Sheet on the Uninsured and Proposed Health Reforms
Physicians for a National Health Program — Massachusetts Chapter

1- According to data from the U.S. Census Bureau, which surveyed 3,550 Massachusetts residents in March, 2005: 748,101 Massachusetts residents — 10.6% of the population — were uninsured in 2004. This survey uses in-person interviews with interviewers available for many languages. It is considered the standard national source of data on the uninsured. Politicians’ claims that there are fewer uninsured are based on telephone surveys conducted by the state that miss the thousands of uninsured families without telephones (or with only cell phone) and many who do not speak English.

2- According to the Census Bureau data most of the uninsured have low incomes.

17% (126,155 people) had incomes below poverty ($9,310 for a single person)
26% (193,380 people) were near poor (100% -199% of poverty)
18% (136,100 people) were lower middle class (200% -299% of poverty).
10% (73,590 people) had incomes 300% -399% of poverty.
6% (45,016 people) had incomes 400%-499% of poverty
Only 23% (173,858 people) had incomes at least 5 times poverty

Hence, few could afford even the stripped down coverage that has been proposed by Governor Romney and Speaker DiMasi. Given the very high costs of housing and heating in Massachusetts, only people in the top income group could reasonably pay the $2400 annual per person premiums that Governor Romney hopes private insurance plans will agree to offer

3- Even these income figures overstate the numbers likely to find coverage they can afford. Older persons and those with chronic conditions will surely find premiums far higher than $2400. Only 65,305 (8.7% of the total who are uninsured) of the uninsured are between 18 and 35 years old and have family incomes above five times poverty. Another 27,124 (3.6% of the uninsured) are children living in higher income families. Thus, overall, only 92,429 people (12.3% of the uninsured) are likely to qualify for and be able to afford the low-premium coverage.

4- The Governor’s proposed $2400 annual policy is sure to provide only the skimpiest of coverage. At present no such policy is available in Massachusetts and the Governor and Blue Cross have refused to release details about their proposed policy. In New Hampshire (where health costs are lower) a policy costing $2484 is available (through ehealthinsurance.com) for a single 30 year old non-smoking woman, offering the following coverage:

$1000 deductible before insurance pays anything
20% co-payment on covered services for the next $5000
Inpatient mental health — capped at $2500 each year ($10,000 lifetime cap for combined inpatient and outpatient) — patient pays everything else
Outpatient mental health — 50% of charges (including drugs), maximum $40 per day
No coverage at all for: routine preventive or gynecologic exams or maternity care

Such coverage would neither pay for routine preventive care nor protect people from huge unpaid bills if they were to become seriously ill (or even pregnant). In essence, the Governor would require people to pay $2400 per year for virtually worthless coverage.

5- The Governor and legislative leaders falsely imply that many of the uninsured are currently “free riders” on the system. Only the poor and near poor are generally eligible for free care at present. While some of the lower middle class can qualify for partial subsidies from the state’s free care pool, they pay a hefty portion out-of-pocket. Many hospitals vigorously pursue payment from uninsured higher-income people, often charging much higher prices than health insurers pay, and referring unpaid bills to collection agencies.

1 in 5 Health Care Dollars Used for Insurance Paperwork

1 in 5 Health Care Dollars Used for Insurance Paperwork

Study Suggests that National Heath Insurance Could Save Enough to Provide Coverage for All

PRESS RELEASE
EMBARGOED UNTIL: Thursday, Nov. 10, 2005 9:30 a.m.

Contacts:
James G. Kahn, M.D. (415) 407-5809
Steffie Woolhandler, M.D. (617) 312-0970
Don McCanne, M.D. (949) 493-3714
Nicholas Skala (312) 782-6006

The Cost Of Health Insurance Administration In California: Estimates For Insurers, Physicians, And Hospitals

Billing and insurance paperwork consumes at least one-fifth of California’s privately-insured health spending (currently estimated $26 billion), according to a new study published today in Health Affairs. If the state adopted a universal single-payer insurance system, the state would save from $18 to $21 billion per year by eliminating this paperwork, the author estimates.

Projected nationally, these figures indicate that approximately $230 billion of health spending was devoted to insurance administration in 2005, with estimated savings of between $161 billion and $184 billion from reduced billing, marketing and other insurance paperwork tasks.

Researchers led by University of California, San Francisco professor James G. Kahn analyzed administrative expenses at hospitals, doctors’ offices and private insurance companies, separating billing and insurance costs from other administrative tasks such as quality improvement efforts.

Using conservative estimates, they found that:

* Private insurers spent 8 percent of their premiums on billing, marketing and other financial activities.
* Physician offices spent 14 percent of revenues and hospitals 7 to 11 percent of revenues on these activities.
* Overall, 21 percent of private health spending went to billing-related tasks, and an additional 13 percent of spending went to non-billing administrative functions.
* Only 66 percent went to medical care.

The study provides strong validation of a controversial New England Journal of Medicine study by Harvard researchers Drs. David Himmelstein and Steffie Woolhandler. That 2003 study found that health care bureaucracy accounted for 31 percent of U.S. health spending — about $400 billion — vs. 16.7 percent in Canada. The Harvard group’s figures included several categories of administrative overhead costs that were not assessed in the California study, e.g. administrative spending by nursing homes, private employers and home health agencies, as well as health industry profits. The Harvard researchers estimated that national health insurance could streamline the health payment system, saving $286 billion in 2003, $6940 for each uninsured American.

A February 2005 study by the Lewin Group, a Virginia-based consulting firm, found that a single-payer plan would save California $344 billion over 10 years, even while providing coverage to all state residents.

Dr. Kahn commented “These estimates confirm the very significant resources consumed by insurance administration in our current fragmented health care financing system. The costs to providers — physicians most of all — are especially high. The potential for savings with simplified financing is huge.”

According to Dr. Steffie Woolhandler, a Harvard Associate Professor and expert on health care administration: “This study offers further proof that hundreds of billions of health care dollars are wasted each year on useless paperwork, CEOs’ incomes and insurance company profits. The money squandered is more than enough to cover the uninsured and to eliminate exclusions, co-payments and deductibles that often bankrupt even insured families in the face of serious illness. But only national health insurance can slash health care bureaucracy. Computerized billing — the strategy pushed by the Bush administration — can’t do the job; 80% of medical billing is already computerized yet bureaucratic costs continue to rise.”

“Only national health insurance can squeeze the bureaucratic waste out of health care and use the savings to give patients the care they need,” said Dr. Don McCanne, a retired California physician and Senior Health Policy Fellow at Physicians for a National Health Program. “Americans spend twice as much per capita on health care as Canadians who have universal coverage. The administrative savings of national health insurance would make high-quality, comprehensive coverage with no waits for care affordable.”

###

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

Landmark study: Much administrative waste really is caused by private insurers

The Cost Of Health Insurance Administration In California: Estimates For Insurers, Physicians, And Hospitals
By James G. Kahn, Richard Kronick, Mary Kreger and David N. Gans
Health Affairs
November/December 2005

Estimates of administrative costs in the U.S. health care system have been the subject of considerable controversy during the past decade. Single-payer analysts Steffie Woolhandler, David Himmelstein, and their colleagues have argued that moving to a Canadian-style system would reduce U.S. administrative costs by 10-15 percent of total health spending.

The hypothesis suggested by Woolhandler and colleagues, and supported by common sense, is that the complexities of a highly fragmented, multiple-payer system account for the “excess” administration.

To inform discussions of reform-related cost savings, it is valuable to document the portion of administrative costs attributable to the U.S. system of paying providers.

Administrative costs account for 25 percent of health care spending, but little is known about the portion attributable to billing and insurance-related (BIR) functions. We estimated BIR for hospital and physician care in California. Data for physician practices came from a mail survey and interviews; for hospitals, from regulatory reporting; and for private insurers, from a consulting company. Private insurers spend 9.9 percent of revenue on administration and 8 percent on BIR. Physician offices spend 27 percent and 14 percent, and hospitals, 21 percent and 7-11 percent, respectively. Overall, BIR represents 20-22 percent of privately insured spending in California acute care settings.

In comparison to the health care systems of other advanced economies, it is difficult to argue that the United States has an efficient health care system: Its high level of clinical health care spending does not seem to be matched by superior outcomes.

To the extent that competition does not foster cost control and quality improvement, and to the extent that a simpler system with fewer insurers would allow a reduction in BIR, then reductions in BIR are an attractive target for reform initiatives.

http://content.healthaffairs.org/cgi/content/abstract/24/6/1629

Comment: This landmark study supports prior evidence that the United States wastes a tremendous amount of resources on health care administration. What is particularly noteworthy in this study is that it breaks out the administrative costs that are specifically due to billing and insurance related functions for health care covered by private insurance plans in California, a microcosm of health spending in the United states.

Let’s state that again. Billing and insurance related functions represent over one-fifth of privately insured spending.

Is that clear? The billing and insurance administration functions of private insurers combined with the resultant billing and administrative burden placed on physicians and hospitals constitute over one-fifth of privately insured spending.

How many times have you heard that, even if the administrative waste is real, the U.S. health care system is so complex that you could never recover those costs with a single payer system? Do not ever again let such a statement go unchallenged. Under a single payer system, much of the billing and insurance related functions would disappear. This study confirms the enormity of the savings that would ensue.

Health care reform plans are cruel hoax

Letters
Berkshire Eagle
Tuesday, November 08

To the Editor of THE EAGLE:-

Dear Gov. Romney, Speaker DiMasi and Senate President Travaglini:

We urge you to abandon your ill-conceived proposals for health care reform and to adopt, instead, a single-payer program of universal coverage for the commonwealth.

As physicians and health professionals, we witness the heavy toll of unnecessary suffering endured by patients who delay care and even forego vital treatment due to costs. While the uninsured bear the heaviest burden, many with insurance also find care unaffordable due to co-payments, deductibles and restrictions on coverage. Reforms should address the grave problems of both groups.

Your plans to loosen regulations on health insurance, allowing ever-skimpier coverage, would perpetrate a cruel hoax. Such cut-rate policies would cost families thousands of dollars yet offer miserly care and little protection from financial ruin in the face of serious illness. Many who currently enjoy adequate coverage would doubtless be forced into plans with gaping holes and onerous restrictions on choice. If there is one thing worse than being uninsured it’s paying dearly for worthless coverage.

Your view that we can achieve universal coverage by forcing people to buy themselves insurance ignores the most basic facts about who is uninsured. Only 12.4 percent of the 748,000 uninsured in our state are both young enough to qualify for low-premium plans (under age 35) and affluent enough (family incomes greater than 499 percent of poverty) to readily afford them. Yet even this 12.4 percent figure may be too high if insurers are allowed to charge higher premiums for persons with health problems; only half of uninsured persons in those age and income categories report that they are in “excellent health.” (The statistics in this paragraph were obtained by analyses of data that the Census Bureau collected on Massachusetts residents in March 2005).

Proposals to raid the existing free care pool in order to partially subsidize cut-rate policies would actually worsen the plight of many who are currently uninsured. Under such reforms, patients now eligible for free or low-cost services would often face greater restrictions on care and higher out-of-pocket costs. The only real winners would be the private insurers who would surely gain millions from the sale of near-useless policies.

Replaying Dukakis’ failed employer mandate, i.e. making employers pony up more money for coverage, will not lead to universal coverage. As Dukakis found, relentlessly rising health costs quickly stir rebellion among powerful employers, making the program unsustainable.

While we welcome the expansion of Medicaid as a stopgap measure to cover more poor families, we know that this strategy ultimately leads to a dead end. Inevitably, the next economic downturn will bring a flood of additional families pushed onto the Medicaid rolls just as state tax revenues fall. As in the past, Medicaid will be cut when the need is greatest.

In contrast, a single-payer reform would create a stable long-term financing mechanism for health care. It could cut costs by streamlining health care paperwork, making universal, comprehensive coverage affordable. The commonwealth’s three largest private insurers spend more than $1.3 billion annually on billing, marketing, high executive salaries and other administrative costs. That’s 10 times as much overhead per enrollee as Canada’s national health insurance program. And hospitals and doctors spend billions more fighting with insurers over payments for each aspirin tablet, x-ray and doctor’s visit. If we cut bureaucracy to Canada’s levels we could save at least 14 percent of current health expenditures, enough to cover all of the uninsured in Massachusetts and to improve coverage for the rest of our patients as well.

And single-payer is popular. Sixty-two percent of Massachusetts doctors support it (according to a recent study in the Archives of Internal Medicine), joining the Massachusetts Nurses Association and dozens of other labor, seniors and consumer groups.

We recognize that a single-payer reform threatens the multi-billion dollar insurance industry, and would force down the high profits enjoyed by drug companies. But such interests must not be placed ahead of the health of the people of Massachusetts. Only a single-payer system can assure universal and comprehensive coverage at an affordable price. The people of the commonwealth deserve no less.

RICHARD BERLIN, M.D.

DR. SUSAN BIRNS, M.D.

DR. LIZA DONLON, M.D.

Boston, Nov. 3, 2005

The letter was signed by 290 Massachusetts M.Ds. Dr. Berlin is from Lenox and Dr. Birns and Dr. Donlon are from Pittsfield. Other Berkshire doctors who signed the letter are: Dr. Ronald Durning Jr. Williamstown; Dr. Leslye Heilig, Great Barrington; Dr. Mike Kaplan, Lenox; Dr. Suzanne King, Lenox; Dr. Alan Kulberg, Pittsfield; Dr. David Lotto, Pittsfield; Dr. Henry Rose, Pittsfield; Dr. Marie Rudden, Lenox; Dr. Sandra M. Stowe; Pittsfield; Dr. G. Thomas Stowe, Pittsfield; Dr. Charles Wohl, Lenox.

PPOs up, HMOs down

Uncertain prognosis: California workers face a whirlwind of change as employers seek alternatives to costly HMOs
By Clea Benson
The Sacramento Bee
November 9, 2005

Because HMOs are more tightly regulated than other types of health insurance, most of the plans that shift costs to consumers are preferred-provider organizations, or PPOs. They give patients more flexibility in choosing their doctors than HMOs, but also give insurers more flexibility to change what they cover and how they charge for it.

Unlike PPOs, HMOs must cover certain benefits, such as maternity care. The state Legislature has passed 23 bills in the past seven years mandating that HMOs cover specific health costs.

(In California) eight out of 10 employers who provide health insurance are offering PPO coverage, up from just under half of employers in 1996. Meanwhile, only four out of 10 companies are offering HMO plans this year, down from six out of 10 in 1996, according to the Kaiser Family Foundation.

And the gap in premiums between HMOs – traditionally the cheaper option – and PPOs is dwindling, because HMOs can’t easily pass rising costs on to consumers. In some workplaces, HMOs now cost more than PPOs.

http://www.sacbee.com/content/politics/story/13834795p-14675316c.html

Comment: California HMOs became popular because they provided comprehensive benefits at a lower premium. Although PPOs were more expensive and had greater cost sharing, they were frequently selected by financially secure individuals since they allowed more choice because of their larger panels of providers.

Since PPOs are not as tightly regulated as HMOs, they were allowed more flexibility in product design. To improve market share, they needed to slow the increase in premiums. They could do this by limiting benefits and by dramatically increasing deductibles, co-payments and coinsurance. The result was predictable. HMO coverage is being displaced by PPO coverage.

What is the impact on the patient-consumer? As Anthony Wright, executive director of Health Access states, “This new trend is all about placing more risk and more cost onto the individual.” By making PPOs affordable, health care has become unaffordable.

Canadian socioeconomic status and utilization of imaging services

Socioeconomic status and the utilization of diagnostic imaging in an urban setting
By Sandor Demeter, Martin Reed, Lisa Lix, Leonard MacWilliam and William D. Leslie
CMAJ
November 8, 2005

The pillars of the Canada Health Act are that health care should be comprehensive, universal, accessible and publicly administered and that coverage should be portable between provinces. Acknowledging that health care is under provincial jurisdiction, the federal government provides provinces with financial incentives to realize these goals. As such, income level should have no effect on utilization of insured medical services.

We examined over 300,000 diagnostic imaging claims (general radiology, vascular, computed tomography, magnetic resonance, and general and obstetric
ultrasound) made in the Winnipeg Regional Health Authority between Apr. 1, 2001, and Mar. 31, 2002. Using patient postal codes, we assigned socioeconomic status (SES) on the basis of average household incomes in Canada’s 1996 census.

Interpretation: We found a pattern of increased diagnostic imaging utilization in patient groups with a higher SES.

http://www.cmaj.ca/cgi/content/full/173/10/1173

Comment: This study demonstrates that an equitable system of universal health insurance alone will not ensure equitable access to health care services. Obviously, other factors not addressed in this study also play some role.

Opponents of reform will use this study to further condemn the Canadian single payer system as being incapable of providing equitable access to care. They will then renew their call for private insurance options as the solution, in spite of the fact that there is a disconnect in logic.

Canadians need only to look south of their border to see the profound inequities in access that are created by a fragmented private and public system of funding health care.

Much will need to be done in the United States to reduce the barriers to health care caused by socioeconomic status. A crucial first step would be to eliminate financial barriers by enacting universal, comprehensive national health insurance.

Medicare-for-All would save money and cover everyone

By Merton C. Bernstein
Special to The Star
Kansas City Star

Faced with daunting health insurance costs, American enterprises are eliminating coverage or passing along more of the cost to employees and retirees.

State legislatures, particularly in Missouri, are shrinking Medicaid eligibility and benefits.

There is a better way to tame health-care budgets — eliminate administrative costs by covering everyone through Medicare.

Imagine if the electronics industry used thousands of differently shaped plugs on their appliances, each requiring a matching socket before they could be used. Absurd! But this describes American health insurance: doctors, hospitals, labs and other providers must match their billions of bills with thousands of differing insurance plan provisions, many designed to promote sales rather than sound treatment. Intelligent design? Hardly.

The resulting chaos is unnecessarily costly, with as much as 30 percent of our medical care payments going to process claims. In contrast, in 2004, Medicare administrative costs were 1.9 percent. If Medicare applied to everyone, insurers and care providers would be saved most of what they spend on trying to fit their innumerable plugs into that almost-infinite number of sockets.

Medicare-for-All is the practical answer to the double-digit health-insurance cost increases we’ve faced over the last four years. What’s standing in the way is the outmoded and discredited ideology that the market will discipline health-care costs.

In reality, health-care costs rage out of control. More and more individuals and families lose insurance protection, and medical care charges constitute one of the three major causes of personal bankruptcy. Health-care costs are strangling business and threaten the very existence of many employers with costs that competitors in countries with national health insurance do not face.

State budgets are staggered by the double whammy of having to increase Medicaid outlays for the poor while confronting surging health-care costs of government employees, including teachers.

Health maintenance organizations, touted as a cure, became a disease. Many HMOs collapsed, shriveled or bugged out, stranding their participants. Tax-favored medical savings plans have proven useless, except perhaps to the wealthy.

Tax breaks and other subsidies to encourage coverage only add to total medical care costs, delaying the goal of universal coverage. And as costs escalate out of control, that goal becomes more and more unattainable.

Applying Medicare to everyone would achieve annual savings on the order of $300 billion, enough to cover everyone with a comprehensive plan that surpasses most private coverage and means-tested public programs, even Medicaid.

Establishing and periodically recertifying eligibility for tens of millions of individuals and families under Medicaid incurs administrative costs 5 percent greater than Medicare’s administrative costs. Other federal and state means-tested programs produce similarly unnecessary costs.

For example, Massachusetts operates means-tested programs that use eight different formulas for eligibility and benefits despite similar program goals. Consolidating those programs into Medicare would save tens of billions in administrative costs and give greater assurance that individuals, especially children, would receive timely medical care.

Medicare uses private insurers as intermediaries between providers and patients. These private insurers, under Medicare, operate efficiently and at low cost. Their inclusion in Medicare-for-All would prevent the allegation of “too much government.”

Medicare-for-All would tame costs and make coverage universal. We can readily pay for it by pooling what we already spend on health care. That means no new taxes.

Business, government, individuals and families cannot afford the current costly chaos. It makes economic sense to cut nonbenefit outlays rather than eligibility and benefits.

Those avoidable costs are present but unseen in what we buy or cannot afford. Those unnecessarily higher prices reduce the ability to pay for other needed and desired goods and services. Healthier people incur lower health-care bills, work more productively and avoid the absences and other dislocations that sickness usually brings,

Everyone would be in better hands with Medicare-for-All.

Merton C. Bernstein is a Coles Professor of Law Emeritus at Washington University and a founding board member of the National Academy of Social Insurance.

Physicians push for universal health coverage in Indiana

Health Care Crusade
By Tom Murphy
Indianapolis Business Journal
VOL. 26 NO. 35, NOV. 7-13, 2005

Some heart muscle had already died by the time family members coaxed the 50-something uninsured man into visiting Bloomington Hospital a few weeks ago.

The patient had suffered severe chest pains two days before his hospital visit but didn’t seek treatment, said Dr. Rob Stone, an emergency-room physician there.

“It was clearly because he was afraid of the bill,” Stone said.

By the time he made it to the hospital, the man was suffering a second heart attack. Now he faces a bill even larger than the one he tried to avoid–and possible bankruptcy, Stone said.

The Bloomington doctor said he sees similar cases all the time in his emergency room. If it’s not a heart patient, it’s someone who walked around for days on a broken ankle to avoid paying for an X-ray.

Those scenarios have motivated Stone and a small group of colleagues to push for giant change in Indiana. They want to ditch private health insurance provided by companies like Indianapolis-based WellPoint Inc. and adopt a government-funded, privately administered system that covers every Hoosier.

They envision massive cuts in bulky overhead costs that come with private insurance, generating more money to provide care under the so-called single-payer plan. They see a system that doesn’t exclude people based on pre-existing conditions.

Detractors, however, question those administrative savings. From their view, the system would bog down in bureaucracy and lead to rationed care.

“You tell me one system that the government’s gotten involved with that does work well,” said Norm Springer, president of the Indianapolis chapter of the Washington, D.C.-based National Association of Health Underwriters.

Stone and his group–a half-dozen doctors and professors in Bloomington and Indianapolis–hope to introduce a bill to the Indiana General Assembly by 2007, even though they know they’ll face a fierce battle and near-impossible odds.

At the very least, they want people to start talking about this option, said Dr. Chris Stack, a retired Indianapolis surgeon.

“All people know is, they’ve got insurance or they don’t have insurance and it’s a pain in the ass,” he said. “We basically feel that if people knew the details of a single-payer plan … a majority of the population would support it.”

Coverage for everyone

The group, all members of a local chapter of the Chicago-based Physicians for a National Health Program, started meeting in Bloomington a few months ago to flesh out this Medicare-for-all idea.

“We’re trying to just get some traction, recruit more people and sort of get more leverage,” Stack said.

Currently, most people receive coverage through private insurance or the government-funded Medicaid or Medicare programs. The single-payer plan would end employer-backed insurance and put everyone under the same coverage umbrella.

“What this would gradually do is redeploy money which is currently spent on overhead and profit in the private health care segment into health care for everybody,” said Stack, who also boasts an MBA from Northwestern University.

Private companies such as WellPoint, the nation’s largest health insurer, and its subsidiaries like Anthem Blue Cross and Blue Shield in Indiana might have to shift their focus–and business model–from providing coverage to administering it.

Stack points to Canada, Australia and Japan as models for Indiana. He said his group is not asking for Great Britain’s system, where doctors and nurses are essentially government employees.

In Indiana, such a plan might be funded by blending Medicaid and Medicare money with the state Worker’s Compensation pool and taxes, Stone said. Other states have pitched a similar approach.

Although the details are still sketchy, the group sees crystal-clear reasons for change.

Cutting reams of red tape

The current, public-private system leaves roughly 46 million Americans without insurance, said Dr. Stephen Jay, chairman of the Department of Public Health at the IU School of Medicine.

In Indiana, about 800,000 people have no insurance–a total that amounts to nearly 14 percent of the population, according to the Indiana Family & Social Services Administration.

Stone’s group sees other reasons, too.

About 30 percent of a private plan’s total cost goes toward overhead or administrative expenses–things like keeping the office lights on or marketing the policy, according to Stack. The group envisions huge savings by slashing that percentage with a single payer.

“The basic contention we have is, they don’t add any value to health care,” he said. “This is just a business.”

Having a single payer also would trim the pre-authorizations and pre-certifications for care that frustrate doctors, Stack said.

“[A single payer] would not screen out anybody because they’ve been sick,” he said. “There would not be any disqualifying feature.”

The idea of efficient spending for the private insurer, he contends, involves weeding out the sick and unhealthy.

The business emphasis in the current system also undermines the trust between patient and provider, IU’s Jay said.

“Health care is viewed as a business just like any other,” he said. “There are worries about whether the people in that business are looking after my health concerns.”

Clunky bureaucracy

Those who don’t love the idea of universal coverage–insurance industry representatives, for instance–see several flaws.

Anthem spokesman Tony Felts doesn’t buy the great overhead savings predictions. He contends the competitive private market compels insurers to work efficiently and breeds innovation.

He offers up the new health savings account plans as a prime example of how insurers react to demand from employers.

“When you have a large bureaucracy that is running a health care system, it’s not nimble and isn’t as responsive to changing market forces,” he said.

Single-payer systems like Canada’s also can lead to rationing of care, especially for expensive treatments, Felts said.

“There’s no guarantee, even in a single-payer system, that promises universal care … that a certain medical procedure won’t be eliminated or rationed to reach the savings that are projected,” he said.

A single insurance provider also would limit the number of coverage options a person can choose from, Anthem Vice President Dr. David Lee noted at a panel discussion hosted this fall by IBJ.

Medicaid and Medicare also reimburse providers at rates lower than private health insurance, the National Association of Health Underwriters’ Springer said. He’s not sure many doctors would back the pay cut that might come from a single-payer system.

Indeed, Stone and members of his group are in the minority among doctors. Specialty surgeons might see a pay cut under this system, while doctors who treat a large number of poor patients could come out ahead.

However, he believes the single-payer system is growing.

“I think more and more physicians are realizing the current system really interferes with the doctor-patient relationship and is just full of headaches,” he said.

A popular idea in some circles

Single-payer proponents have kept a low profile so far, but the idea has attracted some high-level attention in central Indiana.

Health care needs to undergo big changes to its market-driven system–or something drastic like a switch to a single payer, said Alex Slabosky, president and CEO of The HealthCare Group LLC, which owns and operates the state’s second-largest insurer, M-Plan Inc.

Slabosky cited the number of uninsured Americans as proof the current system doesn’t work.

“I personally believe in a single-payer system, but if you want to preserve the market, we need to change the way the market system works,” he said during the IBJ-sponsored panel discussion.

A single-payer system that cares for everyone is the inevitable answer, said Robert J. Brody, president and CEO of Beech Grove-based St. Francis Hospital & Health Centers. Most hospitals or providers make up for the money they lose on Medicaid, Medicare and the uninsured by hiking charges to private insurance.

That leads to double-digit insurance premium increases, which leads to more people dropping coverage, which leads to more uninsured.

“I don’t see how we can maintain the status quo and expect any good result,” he said.

A tall order

At least 18 states introduced legislation this year advocating a universal, coverage-for-everyone health care system, according to Physicians for a National Health Program. None of those proposals made it out of their respective legislatures.

Still, the state level remains the best place to build traction for this push, said Dr. Ida Hellander, the program’s executive director. Neither political party has taken the leadership reins nationally on this issue.

She noted that Canada’s national health care system started in the province of Saskatchewan and spread. In the States, Wisconsin gave birth to Social Security.

“There is precedent for both health care and our other safety-net programs to start in one state and spread from there,” she said.

Just don’t look for that precedent to come from Indiana.

A single-payer system involving the government would be “very difficult” to work through the General Assembly, said State Sen. Patricia Miller, R-Indianapolis, who chairs the Senate’s health finance committee and health and provider services committee.

The idea raises too many questions for her about funding and whether people would want to give up their private benefits. She sees much more support for measures that focus solely on helping the uninsured.

“The single-payer issue to me makes it much more complicated than just getting people who don’t have health insurance covered,” she said.

State Rep. Charlie Brown, D-Gary, pitched a bill for universal coverage in the late 1980s. It didn’t survived the Legislature.

Brown said he still doesn’t see enough support there.

“But that does not mean it should not be tried,” he said, “and I am willing to carry that banner again.”

Medicare endorsement equals cash for AARP

Letters to the Editor
Des Moines Register
November 7, 2005

As the cries of outrage over the new Medicare drug plan grow louder, the shadow cast over the AARP grows darker.

It was AARP’s endorsement in 2003 that propelled the plan through Congress. The organization told members that the need to expand Medicare to cover prescription drugs was sufficiently urgent to outweigh the law’s faults. What few understood at the time was that the law went far beyond drugs and provided for the dismantling of Medicare in favor of taxpayer-supported, private-profit health plans. And AARP’s “nonprofit” arm stood to make big bucks off the plan.

AARP has collected hundreds of millions for use of its logo by private firms, including, under the new law, United Health Care. It makes millions more skimming profits from premiums it collects for private insurers. Its defenders contend that AARP’s nonprofit and for-profit segments are totally independent. Yeah, right. But it’s impossible to dispute that the nonprofit activities that supposedly champion retirees’ causes are what makes its endorsements profitable.

Former Gov. Terry Branstad, in an Oct. 22 Register essay that sounded as if it were composed by the pharmaceutical lobby, defended the Medicare drug plan as providing relief to the elderly who now pay huge drug bills. Some of the elderly may enjoy some benefits, but far from enough to justify the cost to taxpayers imposed by the drug makers.

One of the law’s most outrageous provisions prohibits Medicare from negotiating drug prices – meaning the pharmaceutical industry will set the price, subject to change without notice.

And, in what appears to be an effort to panic Medicare users into buying into this nonsense, the law imposes a penalty of 1 percent per month on the premiums of those who don’t sign on promptly.

Why are drugs cheaper in Canada? Because Canada negotiates the price. So does Veterans Affairs. So does Medicaid. And the pharmaceutical industry would like to force them and all other buyers into line.

The answer? Congress should shift into reverse and kill the 2003 Medicare revisions now, before the roots of this noxious weed get firmly established.

-Bill Leonard, Des Moines

Krugman's solution for employment-based health insurance

Pride, Prejudice, Insurance
By Paul Krugman
The New York Times
November 7, 2005

Employment-based health insurance is the only serious source of coverage for Americans too young to receive Medicare and insufficiently destitute to receive Medicaid, but it’s an institution in decline. Between 2000 and 2004 the number of Americans under 65 rose by 10 million. Yet the number of nonelderly Americans covered by employment-based insurance fell by 4.9 million.

The funny thing is that the solution – national health insurance, available to everyone – is obvious. But to see the obvious we’ll have to overcome pride – the unwarranted belief that America has nothing to learn from other countries – and prejudice – the equally unwarranted belief, driven by ideology, that private insurance is more efficient than public insurance.

The U.S. system is much more bureaucratic, with much higher administrative costs, than those of other countries, because private insurers and other players work hard at trying not to pay for medical care.

The economic and moral case for health care reform in America, reform that would make us less different from other advanced countries, is overwhelming.
One of these days we’ll realize that our semiprivatized system isn’t just unfair, it’s far less efficient than a straightforward system of guaranteed health insurance.

http://select.nytimes.com/2005/11/07/opinion/07krugman.html?hp

Comment: Although most are familiar with Paul Krugman’s column in The New York Times, some may not be aware that he is a Professor of Economics at Princeton. He received his Ph.D. from MIT, and has taught at Princeton, Yale, MIT and Stanford. The point is that he thoroughly understands the economic case for national health insurance. Our task is to make sure that everyone else does too.

Spin Control at Wal-Mart

By Liza Featherstone
The Nation

Today marks the premiere of Robert Greenwald’s documentary Wal-Mart: The High Cost of Low Price, and Wal-Mart is ready with a “war room” led by Robert McAdam, who is, charmingly, the former strategist for the tobacco industry.

Wal-Mart’s spin machine is being sorely tested. Just last week, a secret internal memo recommending that the company curb healthcare costs by “dissuad[ing] unhealthy people from coming to work at Wal-Mart” was leaked to the advocacy group Wal-Mart Watch. The memo’s suggestions included designing “all jobs to include some physical activity (e.g., all cashiers do some cart-gathering).” This amounts to nothing less than a plan to discriminate against the disabled, sick and elderly. It’s contemptible, of course, but it also has serious legal implications; Wal-Mart has been forced to settle lawsuits from disabled workers in the past, and this memo will almost definitely strengthen the case of any who wish to sue the company in the future.

In the memo, whose contents were first revealed in the New York Times, Wal-Mart admits that criticism of its meager, unaffordable healthcare plan is contributing to the decline of Wal-Mart’s overall reputation and that “our critics are correct in some of their observations…our coverage is expensive for low-income families, and Wal-Mart has a significant percentage of Associates and their children on public assistance.” The memo acknowledges that 46 percent of Wal-Mart workers’ children are either on Medicaid or uninsured.

It’s very clear that criticism and public pressure are bothering Wal-Mart’s leaders. So far, they are mostly investing in spin and devising harebrained–and inhumane–schemes like those outlined in the memo. But the same memo does contain a glimmer of hope that the company could respond to pressure by doing something good–in particular, a suggestion that the company “refram[e] the debate” on healthcare, emphasizing that “this is everybody’s problem, not just Wal-Mart’s” and “establishing Wal-Mart as a leader on this critical issue.” We couldn’t agree more. The best way for Wal-Mart to curb its healthcare costs–and improve its image–would be to lobby for single-payer national health insurance; for its activist critics, all this pressure on the company to improve its health benefits should be a means to that end.

As unrealistic as that might sound–after all, Wal-Mart is a right-wing company, whose campaign contributions tend to favor antigovernment Republicans, not European-style social democracy–there is no telling what people might do when under enough political and economic pressure.

A recent study commissioned by Wal-Mart showed that from 2 percent to 8 percent of its customers had stopped shopping there because of “negative press.” All of this is having some surprising effects, including unpredictable policy recommendations from the company’s leadership.

Last week, CEO Lee Scott called for increasing the minimum wage, a suggestion that drew howls of wounded betrayal from the company’s usual defenders on the Wall Street Journal editorial page, but which Scott rightly pointed out would help the company’s customers, many of whom are low-wage workers. National health insurance would do the same, while allowing the company to save money on benefits–and on spin.

Paying former tobacco lobbyists to convince the public that Wal-Mart is a good corporate citizen is going to get expensive.

This article can be found on the web at:

http://www.thenation.com/doc/20051121/wal-mart_nation