PNHP

Investor ownership in hospitals signals "the triumph of greed"

Investor ownership in hospitals signals "the triumph of greed"

Last February in City Council chambers, the Bloomington community came together behind Bloomington Hospital and against the concept of a private for-profit competing hospital in our community. The idea was defeated, but it has not died. Dr. Tiwari and unnamed other backers now threaten to build their new hospital in the county where there are no zoning restrictions to stop them. What was a bad idea in the winter is still a bad idea this summer.

In Canada, where their medical system is privately run but financed by the government like our Medicare, there has been talk of trying to improve efficiency and reduce cost by building some for-profit hospitals, and so a group of researchers from McMaster University in Ontario, along with other investigators from throughout Canada, recently published a thorough review of all the printed literature from the U.S. experience where for-profit and not-for-profit hospitals were concerned. Their study, published in the Canadian Medical Journal June 8, showed that patients at for-profit hospitals had higher mortality and higher costs than at not-for-profit hospitals. An editorial accompanied it, written by renowned Harvard researchers Drs. Steffie Woolhandler and David Himmelstein, and it applies to our local situation.

Woolhandler and Himmelstein start by pointing out that “some aspects of life are too precious, intimate or corruptible to entrust to the market. We prohibit selling kidneys and buying wives or judges.” But private investment in health care has been expanding. “In the United States, investor-owned firms have come to dominate renal dialysis, nursing home care, inpatient psychiatric and rehabilitation facilities and health maintenance organizations (HMOs). They have made significant inroads among acute care hospitals (now owning about 13 percent of such facilities), as well as outpatient surgical centers, home care agencies and even hospices. The for-profit barbarians are at the gates.”
It seems so intuitively obvious that if hospitals compete, then prices should come down. Statistics from the Indiana Hospital Association don’t bear that out, with hospital charges in Bedford and Terre Haute, towns with two competing hospitals, considerably higher than those at Bloomington Hospital. The Harvard doctors point out that those who favor for-profit health care argue that the profit motive optimizes care and minimizes costs. But the findings of the study didn’t bear that out. “Why does investor ownership increase costs?” they ask. “Investor-owned hospitals are profit maximizers, not cost minimizers. Strategies that bolster profitability often worsen efficiency and drive up costs. Columbia/HCA, the largest hospital firm in the United States, has paid the U.S. government $1.7 billion in settlements for fraud, the payment of kickbacks to physicians and overbilling of Medicare. … When Columbia/HCA’s CEO resigned in the face of fraud investigations, he left with a $10 million severance package and $324 million in company stock.”

Himmelstein and Woolhandler go on to ask: “Why do for-profit firms that offer inferior products at inflated prices survive in the market? Several prerequisites for the competitive free market described in textbooks are absent in health care. First, it is absurd to think that frail elderly and seriously ill patients, who consume the most care, can act as informed consumers (i.e., comparison-shop, reduce demand when suppliers raise prices or accurately appraise quality). Even less vulnerable patients can have difficulty gauging whether a hospital’s luxurious appurtenances bespeak good care. Second, the ‘product’ of health care is notoriously difficult to evaluate, even for sophisticated buyers like government.”
I cannot say it any better than Drs. Himmelstein and Woolhandler. Their article ends with a message that could have been written specifically for Bloomington:
“For-profit specialty hospitals have blossomed across the United States. Most of these new hospitals duplicate services available at nearby not-for-profit general hospitals, but the newcomers avoid money-losing programs such as geriatric care and emergency departments (a common entry point for uninsured patients). The profits accrue to the investors, the losses to the not-for-profit hospitals, and the total costs to society rise through the unnecessary duplication of expensive facilities. Behind false claims of efficiency lies a much uglier truth. Investor-owned care embodies a new value system that severs the community roots and Samaritan traditions of hospitals, makes physicians and nurses into instruments of investors, and views patients as commodities. Investor ownership marks the triumph of greed.”

Investor ownership in hospitals signals “the triumph of greed”

Last February in City Council chambers, the Bloomington community came together behind Bloomington Hospital and against the concept of a private for-profit competing hospital in our community. The idea was defeated, but it has not died. Dr. Tiwari and unnamed other backers now threaten to build their new hospital in the county where there are no zoning restrictions to stop them. What was a bad idea in the winter is still a bad idea this summer.

In Canada, where their medical system is privately run but financed by the government like our Medicare, there has been talk of trying to improve efficiency and reduce cost by building some for-profit hospitals, and so a group of researchers from McMaster University in Ontario, along with other investigators from throughout Canada, recently published a thorough review of all the printed literature from the U.S. experience where for-profit and not-for-profit hospitals were concerned. Their study, published in the Canadian Medical Journal June 8, showed that patients at for-profit hospitals had higher mortality and higher costs than at not-for-profit hospitals. An editorial accompanied it, written by renowned Harvard researchers Drs. Steffie Woolhandler and David Himmelstein, and it applies to our local situation.

Woolhandler and Himmelstein start by pointing out that “some aspects of life are too precious, intimate or corruptible to entrust to the market. We prohibit selling kidneys and buying wives or judges.” But private investment in health care has been expanding. “In the United States, investor-owned firms have come to dominate renal dialysis, nursing home care, inpatient psychiatric and rehabilitation facilities and health maintenance organizations (HMOs). They have made significant inroads among acute care hospitals (now owning about 13 percent of such facilities), as well as outpatient surgical centers, home care agencies and even hospices. The for-profit barbarians are at the gates.”
It seems so intuitively obvious that if hospitals compete, then prices should come down. Statistics from the Indiana Hospital Association don’t bear that out, with hospital charges in Bedford and Terre Haute, towns with two competing hospitals, considerably higher than those at Bloomington Hospital. The Harvard doctors point out that those who favor for-profit health care argue that the profit motive optimizes care and minimizes costs. But the findings of the study didn’t bear that out. “Why does investor ownership increase costs?” they ask. “Investor-owned hospitals are profit maximizers, not cost minimizers. Strategies that bolster profitability often worsen efficiency and drive up costs. Columbia/HCA, the largest hospital firm in the United States, has paid the U.S. government $1.7 billion in settlements for fraud, the payment of kickbacks to physicians and overbilling of Medicare. … When Columbia/HCA’s CEO resigned in the face of fraud investigations, he left with a $10 million severance package and $324 million in company stock.”

Himmelstein and Woolhandler go on to ask: “Why do for-profit firms that offer inferior products at inflated prices survive in the market? Several prerequisites for the competitive free market described in textbooks are absent in health care. First, it is absurd to think that frail elderly and seriously ill patients, who consume the most care, can act as informed consumers (i.e., comparison-shop, reduce demand when suppliers raise prices or accurately appraise quality). Even less vulnerable patients can have difficulty gauging whether a hospital’s luxurious appurtenances bespeak good care. Second, the ‘product’ of health care is notoriously difficult to evaluate, even for sophisticated buyers like government.”
I cannot say it any better than Drs. Himmelstein and Woolhandler. Their article ends with a message that could have been written specifically for Bloomington:
“For-profit specialty hospitals have blossomed across the United States. Most of these new hospitals duplicate services available at nearby not-for-profit general hospitals, but the newcomers avoid money-losing programs such as geriatric care and emergency departments (a common entry point for uninsured patients). The profits accrue to the investors, the losses to the not-for-profit hospitals, and the total costs to society rise through the unnecessary duplication of expensive facilities. Behind false claims of efficiency lies a much uglier truth. Investor-owned care embodies a new value system that severs the community roots and Samaritan traditions of hospitals, makes physicians and nurses into instruments of investors, and views patients as commodities. Investor ownership marks the triumph of greed.”

Is Switzerland's health care consumer-driven?

Is Switzerland’s health care consumer-driven?
JAMA
September 8, 2004
Consumer-Driven Health Care
Lessons From Switzerland
By Regina E. Herzlinger, DBA; Ramin Parsa-Parsi, MD, MPH

Conclusion

Switzerland’s universal-coverage health care system consumes a larger fraction of gross domestic product than most other countries, likely reflecting its citizens’ preferences and resources. Health care expenditures are closely linked to income. Yet, in contrast with the United States, whose health care expenditures are the highest percentage of gross domestic product in the world and where more than 40 million citizens are uninsured, the consumer-driven Swiss health care system achieves 30% lower per capita health care costs and universal coverage while providing reasonable quality of care. These results can be attributed primarily to the control exercised by Swiss consumers and the relatively high cost transparency of the system, requirement for universal coverage, and risk adjustment of insurers. Additional savings would likely be ttained with liberalization of provider coverage and reimbursement policies.
http://jama.ama-assn.org/cgi/content/full/292/10/1213
And…

JAMA
September 8, 2004
The Swiss Health System
Regulated Competition Without Managed Care
By Uwe E. Reinhardt, PhD

Conclusion

Health services research seeking to test hypotheses on the basis of
nonexperimental data frequently faces the problem that a given database
can
support 2 or more rival hypotheses. The Swiss health system is a case in point.
In the view of Herzlinger and Parsa-Parsi, the Swiss health system provides
empirical support for what is now known in the United States as consumer-directed health care. That approach expects insurance policies with high deductibles and coinsurance to convert hitherto excessively insured, passive recipients of health care into vigilant shoppers for health care, motivated to control both its cost and its quality and capable of doing so. Because Swiss households do bear relatively high out-of-pocket costs for both health insurance and health care, one can appreciate how this interpretation might be reached.
However, others might not be persuaded by this argument, for several reasons. First, across nations there appears to be no correlation between cost sharing and per capita health spending. Relative to Switzerland, Germany, the Netherlands, and Canada, for example, have much lower levels of cost sharing by patients but also much lower per capita spending on health care. Second, cost sharing by patients in Switzerland is unlikely to have begotten the allegedly superior quality of Swiss health care because, as Herzlinger and Parsa-Parsi point out, Swiss patients have virtually no information on the quality of the care they receive.

Finally, what is most impressive about the Swiss health system is the role tight government regulation plays throughout the entire system. One can plausibly rgue that this regulation is chiefly responsible for both the high quality and (relative to the United States) low cost of Swiss health care. Absent that regulation, the Swiss health system probably would metamorphose into something resembling the much less regulated, high-cost US system, which is both more inefficient and more inequitable than the Swiss system, as Herzlinger and Parsa-Parsi take pains to point out.

http://jama.ama-assn.org/cgi/content/full/292/10/1227

Comment: The rhetoric of reform has shifted from managed care to consumer-driven health care (CDHC). The health care system in Switzerland has several features of the CDHC model supported by Regina Herzlinger and others here in the United States. Supporters of CDHC will cite the Swiss experience as proof that CDHC is highly successful in improving health care value by placing the consumer in control. As Herzlinger and Parsa-Parsi state in their article, it would be even more successful if additional features of the model were adopted.

Uwe Reinhardt, in his commentary, concedes that the given database on the
Swiss health system can support rival hypotheses. However the wish-it-were-true comments that provide support for the CDHC hypothesis is countered by the fact that (1) there is no correlation between consumer-sensitive cost sharing and per capita health spending, and (2) superior quality could not have been achieved by Swiss health care shoppers because they have no reliable source on health care quality. CDHC has not been the source of the market ideal of higher quality at lower cost. Before our nation dives into a transformed CDHC system, we should look at some of Herzlinger and Parsa-Parsi’s “Lessons for the United States” wherein the Swiss CDHC model falls short:”To attain cost control and consumer responsiveness, it is necessary to permit considerable experimentation in insurance policies’ coverage, benefits, and terms…”
“To reward efficient, effective providers, it is necessary to permit health care providers to innovate freely in the delivery of health care and its pricing… Providers will thus be motivated to innovate in health care services for the sick and to earn revenues by responding to consumer demand rather than relying on guaranteed budgets or clients.”

“Over time, the growth in compulsory benefits has absorbed an increasing fraction of the consumers’ payment, thus compromising the consumer-driven
aspects of the Swiss system. To avoid growth in compulsory benefits, it is necessary to require coverage in terms of dollars, not benefits; for example, require insurance for all health care expenses exceeding a certain amount, rather than specific benefits.”

This is not code language. Any health policy analyst understands precisely the policy implications of these concepts. Not realizing that these articles would be released today, in yesterday’s Quote of the Day message I discussed mandatory purchase of insurance by individuals (individual mandate) in a highly regulated insurance environment. This seems to describe the Swiss system fairly accurately. Loosening regulatory controls and depending more on marketplace choice, as Herzlinger and Parsa-Parsi suggest, would threaten rather than enhance the value that the Swiss are currently receiving in health care.

Moving in the other direction, merging all insurers into a single payer would provide the opportunity to ensure maximal value by corralling costs and by rewarding providers for quality. Consumers understand that they will never have enough knowledge to fully orchestrate their own care. They just want to have confidence in a system that is designed to provide maximal value. And single payer is specifically designed to do just that.

Lessons from Three Countries with Single Payer

FOR IMMEDIATE RELEASE
Contact: Dr. Elinor Christensen
August 8, 2004
EChris7@aol.com
(312) 782-6006

Statement by Dr. Elinor Christensen on Lessons from Single Payer Health Systems in Scotland, Norway, and Finland

Available for media interviews and lectures on health care reform and the flawed Bush and Kerry health plans

I am a family medicine physician whose medical career of 40 plus years has included private practice, inner city maternal and child health clinics, twenty years of college health, including medical administration, and rural health care in two underserved communities. I learned so much from each of these experiences, serving patients to the best of my ability with a variety of encumberances.

My most satisfying experience was working for twenty years as staff physician and later as medical director at a private university with a mandatory, low cost, comprehensive single payer universal health plan covering all students enrolled in the university. We were able to deliver high quality comprehensive health care at a very reasonable cost because everyone was in a single risk pool. Also the administration of the plan was simple and cost effective.

Since retirement I have spent a week each of three countries with single payer universal health programs which are successful and enthusiastically used and appreciated by their citizens. The countries I have visited are Norway, Finland, and Scotland to study their successful programs including services provided, how it is funded, how it is administered, maximum out of pocket expenditure per person per year, and any problems. These countries are spending half as much per capita as we are spending and having better outcomes because everyone is covered from birth to death and everyone is included in a single risk pool (single payer) and everyone has easy access to the personal physician of their choice. Health education and prevention, as well as early intervention, play an integral part in the success of their universal health care plans and excellent outcomes.

I am available for media interviews and lectures to discuss the successful models of health care that exist in other countries, and to share my personal experience of the savings and administrative simplicity possible under single payer. I am also available to advise public officials and political candidates at all levels of government.

Americans deserve a better health care system that serves everyone. We can design and implement an optimal universal health care plan which meets the needs of our people, lifts the burden from business, and controls skyrocketing health care costs at the same time.

It is time for leaders in medicine and government to have vision and courage and to do the right thing.

####

Dr. Christensen is a former President of the American Medical Women’s Association* and is the co-chair of the Colorado chapter of Physicians for a National Health Program, a national organization with over 12,000 members with headquarters in Chicago.

· Affiliation for identification purposes only.

Is Switzerland’s health care consumer-driven?

Is Switzerland’s health care consumer-driven?
JAMA
September 8, 2004
Consumer-Driven Health Care
Lessons From Switzerland
By Regina E. Herzlinger, DBA; Ramin Parsa-Parsi, MD, MPH

Conclusion

Switzerland’s universal-coverage health care system consumes a larger fraction of gross domestic product than most other countries, likely reflecting its citizens’ preferences and resources. Health care expenditures are closely linked to income. Yet, in contrast with the United States, whose health care expenditures are the highest percentage of gross domestic product in the world and where more than 40 million citizens are uninsured, the consumer-driven Swiss health care system achieves 30% lower per capita health care costs and universal coverage while providing reasonable quality of care. These results can be attributed primarily to the control exercised by Swiss consumers and the relatively high cost transparency of the system, requirement for universal coverage, and risk adjustment of insurers. Additional savings would likely be ttained with liberalization of provider coverage and reimbursement policies.
http://jama.ama-assn.org/cgi/content/full/292/10/1213
And…

JAMA
September 8, 2004
The Swiss Health System
Regulated Competition Without Managed Care
By Uwe E. Reinhardt, PhD

Conclusion

Health services research seeking to test hypotheses on the basis of
nonexperimental data frequently faces the problem that a given database
can
support 2 or more rival hypotheses. The Swiss health system is a case in point.
In the view of Herzlinger and Parsa-Parsi, the Swiss health system provides
empirical support for what is now known in the United States as consumer-directed health care. That approach expects insurance policies with high deductibles and coinsurance to convert hitherto excessively insured, passive recipients of health care into vigilant shoppers for health care, motivated to control both its cost and its quality and capable of doing so. Because Swiss households do bear relatively high out-of-pocket costs for both health insurance and health care, one can appreciate how this interpretation might be reached.
However, others might not be persuaded by this argument, for several reasons. First, across nations there appears to be no correlation between cost sharing and per capita health spending. Relative to Switzerland, Germany, the Netherlands, and Canada, for example, have much lower levels of cost sharing by patients but also much lower per capita spending on health care. Second, cost sharing by patients in Switzerland is unlikely to have begotten the allegedly superior quality of Swiss health care because, as Herzlinger and Parsa-Parsi point out, Swiss patients have virtually no information on the quality of the care they receive.

Finally, what is most impressive about the Swiss health system is the role tight government regulation plays throughout the entire system. One can plausibly rgue that this regulation is chiefly responsible for both the high quality and (relative to the United States) low cost of Swiss health care. Absent that regulation, the Swiss health system probably would metamorphose into something resembling the much less regulated, high-cost US system, which is both more inefficient and more inequitable than the Swiss system, as Herzlinger and Parsa-Parsi take pains to point out.

http://jama.ama-assn.org/cgi/content/full/292/10/1227

Comment: The rhetoric of reform has shifted from managed care to consumer-driven health care (CDHC). The health care system in Switzerland has several features of the CDHC model supported by Regina Herzlinger and others here in the United States. Supporters of CDHC will cite the Swiss experience as proof that CDHC is highly successful in improving health care value by placing the consumer in control. As Herzlinger and Parsa-Parsi state in their article, it would be even more successful if additional features of the model were adopted.

Uwe Reinhardt, in his commentary, concedes that the given database on the
Swiss health system can support rival hypotheses. However the wish-it-were-true comments that provide support for the CDHC hypothesis is countered by the fact that (1) there is no correlation between consumer-sensitive cost sharing and per capita health spending, and (2) superior quality could not have been achieved by Swiss health care shoppers because they have no reliable source on health care quality. CDHC has not been the source of the market ideal of higher quality at lower cost. Before our nation dives into a transformed CDHC system, we should look at some of Herzlinger and Parsa-Parsi’s “Lessons for the United States” wherein the Swiss CDHC model falls short:”To attain cost control and consumer responsiveness, it is necessary to permit considerable experimentation in insurance policies’ coverage, benefits, and terms…”
“To reward efficient, effective providers, it is necessary to permit health care providers to innovate freely in the delivery of health care and its pricing… Providers will thus be motivated to innovate in health care services for the sick and to earn revenues by responding to consumer demand rather than relying on guaranteed budgets or clients.”

“Over time, the growth in compulsory benefits has absorbed an increasing fraction of the consumers’ payment, thus compromising the consumer-driven
aspects of the Swiss system. To avoid growth in compulsory benefits, it is necessary to require coverage in terms of dollars, not benefits; for example, require insurance for all health care expenses exceeding a certain amount, rather than specific benefits.”

This is not code language. Any health policy analyst understands precisely the policy implications of these concepts. Not realizing that these articles would be released today, in yesterday’s Quote of the Day message I discussed mandatory purchase of insurance by individuals (individual mandate) in a highly regulated insurance environment. This seems to describe the Swiss system fairly accurately. Loosening regulatory controls and depending more on marketplace choice, as Herzlinger and Parsa-Parsi suggest, would threaten rather than enhance the value that the Swiss are currently receiving in health care.

Moving in the other direction, merging all insurers into a single payer would provide the opportunity to ensure maximal value by corralling costs and by rewarding providers for quality. Consumers understand that they will never have enough knowledge to fully orchestrate their own care. They just want to have confidence in a system that is designed to provide maximal value. And single payer is specifically designed to do just that.

Labor and the Health Crisis

Labor and the Health Crisis
by Kip Sullivan
August 04, 2004
 
Workers in every Industry from trucking to telecommunications, know that there’s a health care crisis in the United States. Yet the AFL- CIO refuses to endorse the only proposal that can rein in health care inflation without damaging quality of care: a single-payer system.

In a single-payer system, one insurer or payer (typically a government agency) reimburses doctors and hospitals. Oddly, though it refuses to endorse universal single-payer, the AFL-CIO has endorsed Medicare, a single-payer health care system for the elderly.

The AFL-CIO’s illogical position – single-payer for the elderly but not for the rest – has contributed to labor’s feeble influence on the national health care debate.

THE CASE FOR SINGLE-PAYER

Two features are essential to an ideal single-payer system. First, one payer (or insurer), rather than hundreds of insurers, reimburses providers (doctors and hospitals) and drug manufacturers.

This cuts administrative costs for insurers because a public insurer devotes a much lower proportion of revenues to overhead (marketing, supervising doctors, underwriting, lobbying, obscene salaries for management, and profits) than private-sector insurers do. It also cuts administrative costs for providers because providers have to bill only one payer, not hundreds.

This feature, by itself, would cut the U.S. health care bill by 10-15 percent if it were extended to all Americans.

Second, the one payer in a single-payer system must have the authority to set limits on what doctors, hospitals, and drug companies charge. This feature could easily cut another 10-15 percent.

Medicare is not an ideal single-payer system, but it does contain both of these essential features. It is the sole payer for Medicare’s 41 million beneficiaries for the services it covers, and it has the authority to set limits on what doctors and hospitals charge. (Unfortunately, thanks to legislation passed last year, Medicare will have no authority to set limits on drug company prices once Medicare drug coverage commences in January 2006.)

MEDICARE FOR ALL

Because Medicare resembles a single-payer system, it is far and away the most efficient health insurance program in the nation, public or private. Medicare’s overhead costs eat up only two to three percent of its revenues, while private-sector plans divert roughly 20 percent of their revenues to overhead.

For this reason, and because Medicare pays providers slightly less than private insurers pay them, Medicare’s per capita costs rose at an average rate of 9.6 percent annually between 1970 and 2000, versus 11.1 percent for private sector insurers. And, perhaps most importantly, traditional Medicare has achieved greater efficiency without resorting to the private sector’s favorite cost-containment tactic-routinely refusing to pay for necessary medical services.

If Congress passed legislation giving Medicare the authority to limit drug prices and lowering Medicare’s eligibility age from 65 to zero, we would have a national single-payer system, what single-payer advocates often refer to as Medicare-for-all.

UNIONS AND SINGLE-PAYER

Although several AFL-CIO affiliates have long supported a national single-payer system, the national AFL-CIO has deliberately avoided endorsing single-payer. Today, a section of the AFL-CIO’s website entitled ‘How can we fix our health care system?’ says not a word about single-payer.

The website does mention, however, the National Coalition on Health Care, to which the AFL-CIO belongs. The NCHC consists of big corporations (including AT&T, GE, Pfizer, and United Health Group, the nation’s largest health insurance company), churches, and unions.

Like the AFL-CIO, the NCHC avoids supporting fundamental health care reform, instead calling public attention to our health care system’s deficiencies and the need for universal coverage.

(Many people equate single-payer with universal coverage, but the two are not synonymous. A government could, in theory, establish a single-payer system and not cover its uninsured. Similarly, universal coverage could be achieved without fundamental health care reform, by, for example, raising taxes high enough to pay for health insurance for the nation’s 44 million uninsured, and turning the new revenues over to the health insurance industry.)

LABOR’S PARALYSIS

The AFL-CIO has never explained why it won’t endorse single-payer, leaving observers to draw their own conclusions. In a 1999 article for The Journal of Health Politics, Policy and Law, Marie Gottschalk focused on the fact that some unions, including many in the building trades, run their own insurance plans (called Taft-Hartley funds), which would disappear under a single-payer system.

According to Gottschalk, in 1991 AFL-CIO President Lane Kirkland and SEIU President John J. Sweeney led the internal campaign to keep the AFL-CIO from endorsing single-payer. The issue came to a head that year because premium inflation had hit double digits for several years in a row, and because the single-payer movement had succeeded in introducing single-payer legislation in several state legislatures and the House of Representatives.

Single-payer advocates, including unions such as AFSCME and UAW, believed that labor’s endorsement would add significantly to single-payer’s credibility with politicians and the media. But the federation’s health policy committee split eight-eight on a motion to endorse single-payer.

A second possible reason for the AFL-CIO’s single-payer paralysis is the Democratic Party’s tendency towards either paralysis or bogus solutions on health care, coupled with the AFL-CIO’s tendency to follow the Democrats on health policy, rather than lead them.

In the early 1990s, the AFL-CIO in Minnesota stood by while Democrats campaigned for ‘managed competition,’ the doomed theory that pushing people into HMOs would solve the health care crisis. When ‘managed competition’ bit the dust in the late 1990s, Minnesota’s Democratic legislative leadership simply stopped talking about fundamental reform, and the AFL- CIO did not challenge them.

NO VOICE

The AFL-CIO’s hemming and hawing on single-payer came with a high price. It deprived the organization of a voice in the debate about health care reform that reached a crescendo during the first term of the Clinton presidency.

Not surprisingly, labor had little influence in the writing of the Clintons’ awful Health Security Act of 1993 (which advocated managed competition). Not surprisingly, single-payer legislation was shunted aside in Congress and nearly all state legislatures. Not surprisingly, the Health Security Act died in the Senate in 1994.

The death of that legislation, and a short-lived reprieve from rampant health care inflation in the mid-1990s, swept health care reform off the national agenda for the rest of the 1990s.

But by 2000, double-digit premium inflation had returned and unions were out on strike all over the country over employer attempts to cut insurance coverage and shift costs to employees. More and more union leaders are now calling for political action to solve the health care crisis.

But effective political action on the health care crisis is highly unlikely as long as the AFL-CIO refuses to endorse single-payer.

Even with the AFL-CIO in the ranks of the single-payer movement, the odds against single-payer being established in the near future are not good. But if the AFL-CIO were to endorse the single-payer solution and pour resources into organizing grassroots support for it, that would jolt the debate about single-payer up to a much more visible level, which would in turn make organizing for single-payer a lot easier.

Kip Sullivan is on the steering committee of the Minnesota Universal Health Care Coalition.

U.S. patients face long queues!

U.S. patients face long queues!

The Boston Globe
August 1, 2004
Colonoscopies tax health industry
By Liz Kowalczyk

… hundreds of thousands have queued up for colonoscopies.

The rush has strained the healthcare system…

… some (hospitals) are booked for six months.

http://www.boston.com/yourlife/health/diseases/articles/2004/08/01/colonoscopies_tax_health_industry?pg=full

Comment: The above comments are true. Significant queues have developed for
colonoscopies in the United States. But the point of using the selected excerpts from the article is that it demonstrates the type of deception that is being used to imply that universal health care systems always result in queues and marketplace systems never do. In fact, demand that exceeds capacity is what results in queues regardless of the method of funding health care. Many nations with universal public systems have proven that capacity can be adjusted to meet an appropriate level of demand.

The United States does have a significant but invisible queue due to two factors. Those without adequate insurance are not allowed a place in the line, and those who are in the system and theoretically have adequate coverage are receiving only half of the services that they should be. Neither of these groups are tallied, and so their “infinite” queue is neither defined nor discussed.

The deception of the opponents of reform in using queues as a reason to reject a universal system should be no more acceptable than my deception in editing out the comments that explain that the long queues are due to the recent recommendation that colonoscopy now be used for routine colon cancer screening. Capacity will be increased in response to this demand, just as capacity is being increased in Canada in response to increased demand for diagnostic imaging.

We know how to improve access and improve appropriate utilization of our health care system. Let’s start demanding more honesty in our national dialogue on reform.

Global budgets and sustainable growth rate

Global budgets and sustainable growth rate

United States General Accounting Office Testimony Before the Subcommittee on Health, Committee on Energy and Commerce, House of Representatives
May 5, 2004
Medicare Physician Payments
Information on Spending Trends and Targets
Statement of A. Bruce Steinwald, Director, Health Care-Economic and Payment
Issues

Concluding Observations

To a large extent, the physician fee cuts projected by Medicare’s Trustees are required under SGR’s system (Sustainable Growth Rate system) of cumulative spending targets to make up for excess spending in earlier years. MMA (Medicare Prescription Drug, Improvement, and Modernization Act of 2003) added to the excess spending by specifying minimum fee updates for 2004 and 2005 without resetting the spending targets for those years. As a result, physician fee cuts were postponed, not avoided.

In considering the projected fee cuts, however, it is important to recall that Congress originally established Medicare spending targets for physician services in response to runaway spending in the 1980s. The recent increase in volume and intensity growth suggests that Medicare faces a fundamental physician spending growth problem even if the SGR slate of missed spending targets were somehow wiped clean. Currently, projected Medicare spending for physician services exceeds what policymakers have specified-through the parameters of the SGR system-is the appropriate amount to spend. Because of expected increases in the volume and intensity of services provided by physicians, real spending per beneficiary is projected to grow by more than 3 percent per year. SGR, designed to promote fiscal discipline, allows such spending to grow by just over 2 percent per year. If the growth in real spending per beneficiary is not lowered through other means, SGR will mechanically reduce fee updates in an attempt to impose fiscal discipline and moderate total spending increases. Although this mechanical response may be desirable from a budgetary perspective, any consequences for physicians and their patients are uncertain.

http://www.gao.gov/new.items/d04751t.pdf

Comment: A common response to escalating prices is the institution of price (fee) controls. This response is not limited to governments, as in the case of Medicare, but it is also characteristic of the private sector, as in the dictated fees of the managed care plans. In health care, in order to increase income when fees are fixed, physicians respond by increasing the volume of services (number of services provided to each patient) and by increasing the intensity of services (increasing the complexity and costliness of those services). The experience with Medicare confirms that this phenomenon is very real.

Because of escalating spending in the Medicare program, the sustainable growth rate (SGR) system was established. Total program spending for physicians was allowed to increase at a “sustainable” rate of about 2% per year. It is important for single payer supporters to understand this concept because it is somewhat analogous to the “global budgets” which would be used to limit excessive growth in health care expenditures. A more rational rate than an arbitrary 2% would be adopted, but the system would still be funded within the confines of a defined budget.

Because the volume and intensity of Medicare services have been increasing significantly, the fees (prices) per unit of service will decrease over the next several years. This has been compounded by the requirement to recapture, through lower fees, payments made in previous years that were high due to forecast estimates that proved to be erroneous. But even without these errors, physicians will perceive the lower fee schedule to represent pay cuts, even though the global payments will increase by about 2%. It can be anticipated that there will be increased physician opposition to any “government-run” program like Medicare. We should be prepared to explain to them how lower fees will not reduce their gross incomes (although overutilizers could drain funds away from physicians who are trying to provide care at more appropriate levels of utilization).

Fee-for-service incentivizes excessive services. Capitation for individual physicians incentivizes the erection of barriers to care. Salary plus incentives seems to be the least perverse mechanism of compensation, but would we be willing to convert our health care system into a national health service?

Can the Democrats learn from the swallows?

Can the Democrats learn from the swallows?

In These Times
July 23, 2004
Cure a Sick Healthcare System
By Steffie Woolhandler and David Himmelstein

Like Capistrano’s swallows, the Democrats always return to health reform. Unfortunately, this year they’re showing little more brain power than the birds.

Don’t get us wrong, we’re no fans of President George Bush’s health agenda:
Ship tens of billions of federal dollars to a panoply of healthcare firms, privatize Medicare, and dangle skimpy tax credits in front of the 44 million uninsured. But Kerry seems intent on refilling a failed prescription for reform: by proposing to give hundreds of billions to private insurers in exchange for measly coverage for some of the uninsured.

Kerry promises more of the same. He proposes to spend about $65 billion annually to expand coverage through two mechanisms: One, offer government
subsidies for private insurance; two, expand Medicaid. As a nod to middle-class Americans, he’d try to hold down private premiums by having the feds pick up the tab for any patient whose care costs more than $50,000-a misguided effort that shifts some costs to the taxpayers but leaves control in the hands of private firms. Kerry’s massive new spending would leave at least 17 million uninsured (by his own estimate) and tens of millions more with inadequate coverage, and stimulate the malignant growth of healthcare costs.

Kerry’s plan would actually boost bureaucracy. He’d funnel hundreds of billions of additional public dollars through wasteful private plans. And he’d do nothing to cut the tens of billions that doctors and hospitals waste on insurance paperwork. Kerry claims administrative savings for his plan-through computerized billing and claims processing. But such claims are not credible; more than two-thirds of all healthcare bills already are filed electronically. It’s not sending the bill that’s expensive. It’s the insurance advertising and sales, utilization review, eligibility
determination, obtaining pre-approvals for referrals, cost-tracking, and co-payment collections. All would continue under Kerry.

For the 85 percent of Americans who currently have insurance, Kerry offers virtually nothing. No plausible plan to upgrade their coverage, slow premium
increases, bring down drug costs, improve quality, or expand the number of
nurses. He’d just ask tax-payers facing skyrocketing premiums to chip in for
the coverage of the uninsured.

http://www.inthesetimes.com/site/main/article/cure_a_sick_healthcare_system/

And…

infoplease
Accessed July 28,2004

The famous cliff swallows of San Juan Capistrano… land at the mission in San Juan, California, on or around St. Joseph’s Day, March 19, to the ringing bells of the old church…

Legend has it that the swallows took refuge in the Mission San Juan Capistrano from an irate innkeeper who destroyed their muddy nests. The swallows return to the old ruined church each spring knowing they will be protected within the mission’s walls.

The mission is located near two rivers and was an ideal spot for the swallows to nest for years because of the abundance of the insects on which they feed. The reduction in numbers of the insects, largely as a result of the development of the area, has caused some of the swallows to locate further from the center of town and explains why there are no longer huge clouds of swallows descending on the Mission.

http://www.infoplease.com/spot/swallows1.html

Comment: Thanks in a large part to the inspiration provided by the work of Steffie and David, I know something about health policies that would correct the profound deficiencies in our system. As a life-long liberal, I also know something about the Democrats and their positions on issues of social justice. And as a resident of San Juan Capistrano, as I look out of my home office window towards Dana Point Harbor and observe the darting and diving flight of the swallows catching their food, I do know a little bit about the swallows of Capistrano.

Steffie and David state that the Democrats are showing little more brain power than the swallows. But when the swallows return to Capistrano, they know how to adapt to the havoc that has been wreaked on their habitat. They know where to go to build their nests and collect their food. When the Democrats return to Washington, they too recognize the havoc that has been wreaked on our health care system. But they don’t seem to know where to go to find the policy wonks who would show them how to build a health care system that would care for everyone. They can’t seem to get past their political advisors who are reminding them that the Democrats are the party of inclusiveness, and they can’t afford to offend the libertarians.

No, Steffie and David, I’m afraid that the swallows are the ones with the superior brain power.

Don McCanne
San Juan Capistrano, CA

Our Health Care Mocks Equality

Our Health Care Mocks Equality

I was reading the Berkshire Eagle on July 4th, and was moved by our Declaration of Independence, printed on the editorial page, and its proclamation  of equality for all people,  and of their rights to life, liberty and the pursuit of  happiness. It made me think of all the people who live in poverty in the Berkshires, and of our current health care crisis. Many Americans cannot afford the basics for life ( like food, shelter and health care), let alone pursue happiness. And while the health care crisis affects us all, it is even more of a disaster for those who are thrust into bankruptcy because of catastrophic illnesses for which they have no health insurance, for those who are unable to afford primary health care and suffer from pain and untreated illnesses, and for those who have to choose between food and necessary medications. The World Health Organization ranks the United States 72nd on the performance of our health care system, based on our level of health.  This is below all industrialized nations, and below many third world nations.
  
In Pittsfield, 5,075 residents (11.4%) live below the poverty line (defined as $18,400 per year for a family of four), as do 18.2% of North Adams residents. Over twelve thousand Berkshire County residents live in poverty, which represents almost 10% of the people in our county. The United States is number one in poverty among industrialized nations, with 35 million people living below the poverty line. Seventeen percent of children in the United States live in poverty.  Our poverty levels are 60% higher than in the United Kingdom and Canada, twice those of Sweden , and three times those of the Netherlands.  Yet our average income is similar to, or higher than, these nations.  Our poverty rate is due to income inequalities. Forty three million Americans were without health insurance in 2002; these uninsured exceeded the total population of 24 states.  Medicaid insured 14 million in 2002 (30% of those in poverty), but 10.5 million others in poverty had no health insurance.  Of those in poverty, workers are less
likely to be covered than non-workers.  For every medical problem that has been studied (cardiovascular disease, diabetes, high blood pressure, etc.), the poor, the uninsured, and minority group members in the United States receive inappropriately low rates of care.

Canada has a single payer national health care system that covers everyone. Even the poorest Canadians now have mortality rates below the U.S. average.
All other industrialized nations have a single payer national health care system, funded and administered by the government, that provides universal access to health care.  Yet in the United States, we make a mockery of the document from our founding fathers that supports such a right. There are organizations in Berkshire County which are working hard to address the health care needs of those in poverty, or those who fall dangerously close to that abyss. The Children’s Health Center in Great Barrington and the Neighborhood Health Center in Pittsfield have cared for those in poverty for years. Ecu-Health Care in North Adams helps people find medical care through public health programs, or from doctors who will reduce their fees.  Volunteers in Medicine, a clinic in which doctors will donate their time, is slated to open next month in Great Barrington. These are all efforts worthy of our support, to address the immediate needs of
those in poverty.  But they can only ameliorate the symptoms of a system that breeds these inequities.

The Declaration of Independence further states, “..To secure these rights, governments are instituted among men.”  Bills are in the legislatures in Massachusetts and other states, as well as in the federal legislature, to create single payer health care, that would provide universal coverage, and be funded and administered by the government.  It is time for the government to intervene in our health care crisis.  It is time to take health care funding and administration out of the hands of profit-making insurance corporations.  It is time for the United States to further the vision of our founding fathers, who wrote that stirring
document when our country was created. The Declaration of Independence started a revolution. Two hundred years later it can be the inspiration for another revolution, that will change the face of health care delivery in our country and make it accessible to every American citizen.

Susanne L. King, M.D., Lenox, MA
7/26/04    

Low Medicaid fees impair access

Low Medicaid fees impair access

Health Affairs
Web Exclusive
June 23, 2004
Changes In Medicaid Physician Fees, 1998-2003: Implications For Physician Participation Despite recent gains, the relative attractiveness of Medicaid patients
has not improved much over the longer term.
by Stephen Zuckerman, Joshua McFeeters, Peter Cunningham, and Len
Nichols

Despite some improvement among primary care physicians in states with the
lowest fee levels, physicians continue to be paid less for Medicaid beneficiaries than for other groups of insured patients, and they are much less likely to accept new Medicaid patients than other insured patients.

States are now dealing with the worst financial crisis since the Great Depression and will not be in position to raise provider fees greatly, so access for Medicaid recipients may be at increasing risk.

http://content.healthaffairs.org/cgi/reprint/hlthaff.w4.374v1

Comment: As long as Medicaid remains chronically underfunded, access to
essential services will remain impaired due to a lack of willing providers. Impaired access results in impaired outcomes. By continuing to support a
separate program for low income individuals, we tacitly accept the principle that they are not entitled to the same level of improved outcomes that the rest of us expect.

Most incremental proposals would leave Medicaid in place. But shifting Medicaid patients into a universal program would improve access and outcomes. Shouldn’t we be supporting health care policies that result in improved outcomes?