PNHP

Patchwork Health-care Reform not What Most Want, or Need

Patchwork Health-care Reform not What Most Want, or Need

Published on Sunday, January 11, 2004 by the Boulder Daily Camera
Single-Payer: We’d Get More for Less
Patchwork Health-care Reform not What Most Want, or Need
by Brian Smith

Politics aside, we could all have better health care for less cost. Our current health-care system pays for universal health care but does so in an ineffective, costly manner while providing overall poor care. Unfortunately, a majority of physicians are opposed to single-payer health care, despite a majority of citizens who support it. Major health-care reform will happen only if citizens demand change.

Currently, no one can be denied health care for lack of insurance, but private providers can demand payment at time of service, while emergency providers cannot. This tends to shift uninsured patients toward expensive ER care. Since the emphasis in ER medicine is single-contact care, all eventualities must be covered, and that leads to significantly more expensive care.

A visit for a cold in a clinic setting may cost $50, while that same visit in an ER could easily exceed $500. In addition, patients without insurance tend to put off visits until they are sicker, when care is more expensive and outcomes poorer. Improving access to care, promoting preventative care, and adequately treating disease can significantly decrease cost while improving outcomes. It should be noted that unrecoverable costs of care for the underinsured are shifted to paying patients.

In 2002, health-care costs in this country exceeded $1.6 trillion. This represents approximately 15.5 percent of the U.S. GDP, in contrast to most developed countries, where costs are typically less than 10 percent GDP. A significant portion of this cost is administrative, which approaches 30 percent to 35 percent in America as opposed to 15 percent to 17 percent in the Canadian system. Private insurance overhead runs almost 12 percent vs. 3.5 percent for Medicare.

Pharmaceutical costs have spiraled out of control, with really no attempts to limit them. Currently medications account for about 15 percent of overall health costs and rising. There is no market control of these costs, and costs are set based only on what the pharmaceutical company wants to earn during the life of the drug patent. Competitive drugs are usually priced in the same ballpark. Generics are only marginally cheaper. When drugs from this country can be exported to Canada, re-prescribed and re-imported at cost savings of 20-50 percent, it is clear there is a problem.

It is important to understand the lack of market control in all aspects of medicine. The ultimate consumer, the patient, rarely has any concept of cost vs. benefit of medications, studies, care etc. Physicians write prescriptions but don’t have direct knowledge of actual costs. This lack of market control is inherent to the system of medicine and understanding that is essential to understanding the need for external controls on the system.

A quick look at the numbers involved in implementing universal health care shows it is feasible. By switching to a single-payer system, administrative costs could easily be reduced by 50 percent. Reasonable tort reform could cut malpractice costs by 50 percent, and cost controls of medications could easily realize savings of 25 percent. Overall, these measures could reduce U.S. health-care costs to about $1.35 trillion. Improved access, prevention and disease management should further reduce cost to about $1 trillion to $1.2 trillion (10 percent of the GDP).

Universal care could be funded by modestly increasing the “Medicare” tax, appropriately taxing tobacco and alcohol, incorporating a 10-percent co-payment, and combining all current health-provider systems while utilizing the current infrastructure. The current Medicare/Medicaid budget is about $420 billion. Some $200 billion in taxes on cigarettes and alcohol would help to offset the health costs associated with their use.

Another $40 billion to cover the health-care costs associated with motor vehicle accidents could be raised either through vehicle licensing fees, fuel tax, or could be collected by auto-insurance companies. Adding current VA funding of $25 billion, worker’s comp ($80 billion) and a 10-percent co-payment for those who can afford it ($100 billion); only an additional $300 billion to $350 billion would need to be raised through a combination of payroll and income taxes to provide universal care. Keep in mind that overall this represents a cost savings while guaranteeing coverage for all and improving health care.

Universal single-payer health care is both economically feasible and desirable. With decreased societal cost and improved health, it is a win-win situation. Why physicians and politicians resist such change really has more to do with their financial interests in the current system, or fear of government-run programs, rather than interest in providing good health care for all citizens. The current system is broken, and health-care costs will continue to spiral out of control if
the government continues its patchwork approach to reform. A recent poll shows 62 percent of Americans want universal single payer health care.

It is up to you to let them know you care. Brian Smith is a Boulder physician.

Copyright 2004, The Daily Camera and the E.W. Scripps Company

Health care is broken

Health care is broken
by David Lazarus of San Francisco Chronicle
Wednesday, January 14, 2004

Businesses large and small are drowning in health-care costs, and their solution by and large is to pass the buck to cash-strapped employees.

In Southern California, about 70,000 supermarket workers have been striking for several months as their employers seek to shoulder them with a greater share of medical expenses. Similar disputes are under way in a variety of other industries.

Nearly 100,000 workers at telecom giant SBC say they’re prepared to walk off the job when their contract expires in April if the company attempts to have them pay a greater share of insurance premiums.

The nation’s largest pension fund, the California Public Employees’ Retirement System, increased health-care premiums for its 1.2 million members this year by an average 16 percent, in line with double-digit increases for nearly all insurance providers.

The U.S. health care system is clearly broken. Companies are being strangled by runaway medical expenses — SBC alone pays more than $2 billion annually in health-care costs — while employees and other members of the public are increasingly struggling to obtain adequate care at reasonable prices.

More than 43 million Americans now lack health insurance and account for as much as $130 billion in annual economic losses resulting from poor health or early death, according to the influential Institute of Medicine in Washington.

The United States needs a universal health care system, and it needs it now.

“There’s a crisis right this minute,” said Steffie Woolhandler, a physician and Harvard Medical School researcher who advocates a national health care system.

“It’s conservatively estimated that 18,000 adults die every year because they don’t have insurance,” she observed. “That means at least 1,500 people will die this month and about 50 people are dying today, as we speak.”

The situation is so grave that the Institute of Medicine, which works closely with the federal government on health issues, is expected to issue an unprecedented call today for creation of a universal insurance system by 2010.

At the same time, though, the question of universal insurance is so complex that the institute, a component of the National Academy of Sciences, is unlikely to advocate a specific plan or approach. Sources familiar with the matter say the institute is expected to instead merely encourage policy-makers to take a fresh look at expanding health coverage.

The last time universal coverage received in-depth scrutiny, under the Clinton administration, the issue became mired in complex questions of implementation and funding. It was also aggressively attacked by entrenched special interests, particularly the $300 billion insurance industry and $160 billion pharmaceutical industry.

Now, however, things are different. Calls are gradually emerging from the private sector for a radical overhaul of the existing health-care system. The U.S. auto industry, for example, estimates that it spends as much as $1,200 on employee and retiree medical benefits for every vehicle it builds.

General Motors is the largest purchaser of private health-care coverage in the country. It spent $4.5 billion in 2002 to insure 1.2 million active and retired workers. Those costs in turn are passed on to buyers of GM cars and trucks.

Bill Ford, chief executive of Ford Motor Co., has called rising health- care costs “our biggest issue.” He’s asked his company’s vice chairman, Allan Gilmour, to study proposals for a national insurance system and to share his findings with other business leaders.

“Big businesses are finally standing up and saying that they can’t compete internationally with the current system the way it is,” said Ida Hellander, executive director of Physicians for a National Health Program, a Chicago advocacy group with more than 10,000 members nationwide.

Her organization argues that a so-called single-payer system, similar to Canada’s state-backed insurance network, is the best solution for the United States. Under this system, tax dollars would fund universal coverage that would allow any American to receive treatment from any doctor at any hospital.

It’s not such a far-fetched idea. Federal and state taxes, along with tax subsidies for businesses, already account for more than 60 percent of the $1.6 trillion spent annually on health care in the United States, primarily through Medicare and Medicaid.

Physicians for a National Health Program, or PNHP, argues that existing public financing for Medicare and Medicaid should be retained. Meanwhile, a payroll tax of about 7 percent would replace all other employer expenses for medical costs, and an income tax of about 2 percent would replace employees’ current insurance premiums, co-pays, deductibles and other out-of-pocket expenses.

The organization notes that such a change would represent a savings for the vast majority of working Americans. It would be costlier for firms that do not presently offer workers medical benefits, but would extend health coverage to millions of workers now left to fend for themselves (often at the expense of other taxpayers).

Smaller companies that do provide health coverage would benefit enormously from lower rates resulting from economies of scale. Universal insurance would also be significantly less expensive for most larger companies and would put a halt to double-digit increases in premiums seen annually for the past four years.

No less important, PNHP says, universal coverage would eliminate the thorny question of medical benefits in all future negotiations between employers and employees.

“We’re already spending enough money each year to pay for a national health plan,” Hellander said. “The problem is that we’re throwing a lot of that cash down the drain.”

National Health Insurance Could Save $286 Billion on Health Care Paperwork

Press contacts:
Ida Hellander, M.D.; (312) 782-6006
David U. Himmelstein, M.D.; (617) 665-1032 (clinical office); (617) 497-1268 (research office)
Sidney M. Wolfe, M.D.; (202) 588-1000

Study Shows National Health Insurance Could Save $286 Billion on Health Care Paperwork: Authors Say Medicare Drug Bill Will Increase Bureaucratic Costs, Reward Insurers and the AARP

A study by researchers at Harvard Medical School and Public Citizen to be published in Fridays International Journal of Health Services finds that health care bureaucracy last year cost the United States $399.4 billion. The study estimates that national health insurance (NHI) could save at least $286 billion annually on paperwork, enough to cover all of the uninsured and to provide full prescription drug coverage for everyone in the United States.

The study was based on the most comprehensive analysis to date of health administration spending, including data on the administrative costs of health insurers, employers health benefit programs, hospitals, nursing homes, home care agencies, physicians and other practitioners in the United States and Canada. The authors found that bureaucracy accounts for at least 31 percent of total U.S. health spending compared to 16.7 percent in Canada. They also found that administration has grown far faster in the United States than in Canada.

The potential administrative savings of $286 billion annually under national health insurance could:

1- Offset the cost of covering the uninsured (estimated at $80 billion)
2- Cover all out-of-pocket prescription drugs costs for seniors as well as those under 65 (estimated at $53 billion in 2003)
3- Fund retraining and job placement programs for insurance workers and others who would lose their jobs under NHI (estimated at $20 billion)
4- Make substantial improvements in coverage and quality of care for U.S. consumers who already have insurance

Looked at another way, the potential administrative savings are equivalent to $6,940 for each of the 41.2 million people uninsured in 2001 (the most recent figure available for the uninsured at the time study was carried out), more than enough to pay for health coverage. The study found wide variation among states in the potential administrative savings available per uninsured resident. Texas, with 4.96 million uninsured (nearly one in four Texans), could save a total of $19.5 billion a year on administration under NHI, which would make available $3,925 per uninsured resident per year. Massachusetts, which has very high per capita health administrative spending and a relatively low rate of uninsurance, could save a total of $8.6 billion a year, making available$16,453 per uninsured person. California, with 6.7 million uninsured, could save a total of $33.7 billion a year, which would make available $5,016 per uninsured person. (See accompanying chart for details on other states.)

Last week, the government reported that health spending accounts for a record 15 percent of the nations economy and that health care spending shot up by 9.3 percent in 2002. Insurance overhead (one component of administrative costs) rose by a whopping 16.8% in 2002, after a 12.5% increase in 2001, making it the fastest growing component of health expenditure over the past three years. Hence the figures in the Harvard/Public Citizen Report (which was completed before release of these latest government figures) may understate true administrative costs.

The authors of the International Journal of Health Services study attributed the high U.S. administrative costs to three factors. First, private insurers have high overhead in both nations but play a much bigger role in the United States. Second, The United States fragmented payment system drives up administrative costs for doctors and hospitals, who must deal with hundreds of different insurance plans (for example, at least 755 in Seattle alone), each with different coverage and payment rules, referral networks, etc. In Canada, doctors bill a single insurance plan, using a single simple form, and hospitals receive a lump sum budget, much as a fire department is paid in the United States. Finally, the increasing business orientation of U.S. hospitals and insurers has expanded bureaucracy.

The Medicare drug bill that Congress passed last month will only increase bureaucratic spending because it will funnel large amounts of public money through private insurance plans with high overhead.

The recent Medicare bill means a huge increase in administrative waste and a big payoff for the AARP,” said study author Dr. David Himmelstein, an associate professor of medicine at Harvard and former staff physician at Public Citizens Health Research Group. “At present, Medicare’s overhead is less than 4 percent. But all of the new Medicare money $400 billion & will flow through private insurance plans whose overhead averages 12 percent. So insurance companies will gain $36 billion from this bill. And the AARP stands to make billions from the 4 percent cut it receives from the policies sold to its members.

Dr. Steffie Woolhandler, a study author, associate professor of medicine at Harvard and a founder of Physicians for a National Health Program, said that. &Hundreds of billions are squandered each year on health care bureaucracy, more than enough to cover all of the uninsured, pay for full drug coverage for seniors and upgrade coverage for the tens of millions who are underinsured. U.S. consumers spend almost twice as much per capita on health care as Canadians who have universal coverage and live two years longer. The administrative savings of national health insurance make universal coverage affordable.

Dr. Sidney Wolfe, director of Public Citizens Health Research Group added:This study, documents the state-by-state potential administrative savings achievable with national health insurance. These enormous sums could be used to provide health care for the more than 43 million uninsured people in the United States and drug coverage for seniors. These data should awaken governors and legislators to a fiscally sound and humane way to deal with ballooning budget deficits. Instead of cutting Medicaid and other vital services, officials could expand services by freeing up the $286 billion a year wasted on administrative expenses. In the current economic climate, with unemployment rising, we can ill afford massive waste in health care. Radical surgery to cure our failing health insurance system is sorely needed.

Dr. Himmelstein described the real-world meaning of the difference in administration between the United States and Canada by comparing hospitals in the two nations. Several years ago, he visited Toronto General Hospital, a 900-bed tertiary care center that offered an extensive array of high-tech procedures, and searched for the billing office. It was hard to find, though; it consisted of a handful of people in the basement whose main job was to send bills to U.S. patients who had come across the border. Canadian hospitals do not bill individual patients for their care and so have no need to keep track of who receives each Band-Aid or an aspirin.

A Canadian hospital negotiates its annual budget with the provincial health plan and receives a single check each month to cover virtually all of its expenses,& Himmelstein said. It need not fight with hundreds of insurance plans about whether each day in the hospital was necessary, and each pill justified. The result is massive savings on hospital billing and bureaucracy.

Doctors in Canada face a similarly simple billing system. Every patient has the same insurance. There is one simple billing form with a few boxes on it. Doctors check the box indicating what kind of visit they provided to the patient (i.e., how long and whether any special procedures were performed) and send all bills to one agency.

Himmelstein returned to Boston and visited Massachusetts General Hospital, which was similar to Toronto General in size and in the range of services provided. Himmelstein was told that Massachusetts Generals billing department employed 352 full-time personnel, not because the hospital was inefficient, but because this department needed to document in detail every item used for each patient and fight with hundreds of insurance plans about payment.

U.S. doctors face a similar billing nightmare, Himmelstein said.” They deal with hundreds of plans, each with different rules and regulations, each allowing physicians to prescribe a different group of medications, each dictating that doctors refer patients to different specialists.”

The U.S. system is a paperwork nightmare for doctors and patients, and wastes hundreds of billions of dollars.

###

Dr. Woolhandler and Dr. Himmelstein are co-founders of Physicians for a National Health Program, an organization with over 12,000 members advocating for single-payer national health insurance in the United States. PNHP was founded in 1987 and has physician spokespeople across the country. For a local spokesperson, call the national headquarters at 312-782-6006. Visit us online at www.pnhp.org.

Public Citizen is a non profit, member supported, consumer advocacy organization founded by Ralph Nader in 1971. Public Citizen fights for safe foods, drugs and medical devices; for greater consumer control over personal health decisions; and for universal access to quality health care.

Copies of the articles appearing in the January issue of the International Journal of Heath Services (listed below) will be available in .pdf format at www.pnhp.org starting on Wednesday, January 14, 2004 at 3pm. Advance copies for the press can be obtained by calling Joseph Shin at 312-782-6006.

1. Health Care Administration in the United States and Canada: Micromanagement, Macro Costs.

2. Administrative Waste in the U.S. Health Care System in 2003: The Cost to the Nation, the States, and the District of Columbia, with State-Specific Estimates of Potential Savings.

Click here to view the IJHS Data tables by State

Click here to view pdf format of IJHS State by State Study

Click here to view pdf format of IJHS US vs. Canada Study

Patients' perceptions of "the best health care system

The Commonwealth Fund
January 2004
Mirror, Mirror on the Wall: Looking at the Quality of American Health
Care through the Patient’s Lens
By Karen Davis, Ph.D., et al

U.S. health care leaders often say that American health care is the best in the world. However, recent studies of medical outcomes and mortality and morbidity statistics suggest that the United States-despite spending more per capita on health care and devoting to it a greater percentage of its national income than any other country-is not getting commensurate value for its money. The Commonwealth Fund’s cross-national surveys of patients’ experiences in and views of their health care systems offer the opportunity to assess U.S. performance relative to other countries through the patients’ perspective-a dimension often missing from other international comparisons.

Using data from two recent surveys conducted in five English-speaking nations-Australia, Canada, New Zealand, the United Kingdom, and the United States-this report ranks the countries in terms of patients’ reports on care experiences and ratings on various dimensions of care.

Based on these surveys of patients, the U.S. rarely outperforms the other nations surveyed; on most measures of the quality of care, it ranked last or second-to-last. Among the five countries surveyed, the U.S. performed particularly poorly on measures of equity and meeting the health care needs of its vulnerable populations. The U.S. also ranked last on patient erceptions of safety, efficiency, and effectiveness (measured in terms of ability to adhere to recommended care). Only on timeliness for admission to hospitals or for elective surgery did the U.S. rank highest among the five nations. In terms of timeliness for other services, including ready access to physicians, the U.S. was not the leader. New Zealand outperformed the U.S. in terms of providing prompt access to primary care physicians and specialists.

These results indicate a consistent relationship between how a country performs in terms of equity and how patients then rate performance on other dimensions of quality: the lower the performance score for equity, the lower the performance on other measures. This suggests that, when a country fails to meet the needs of the most vulnerable, it will be judged most harshly by its citizens. Rather than disregarding its performance on equity as a separate and lesser concern, the U.S. should devote far greater attention to seeing that the health system works well for all Americans. These findings raise fundamental questions about the current trend in the U.S. to increase patients’ out-of-pocket costs, and about the lack of action on the growing numbers of uninsured and underinsured. The U.S. needs to make a major commitment to improving health insurance coverage and quality of care.

If it fails to act, not only will the U.S. standing among health systems continue to erode, but there will be a predictable rise in public dissatisfaction and significant economic and human costs.

http://www.cmwf.org/programs/international/davis_mirrormirror_683.pdf

Comment: So we have “the best health care system in the world”… except for its performance. Well, at least we still rank first in one category…we spend the most.

Patients’ perceptions of “the best health care system

The Commonwealth Fund
January 2004
Mirror, Mirror on the Wall: Looking at the Quality of American Health
Care through the Patient’s Lens
By Karen Davis, Ph.D., et al

U.S. health care leaders often say that American health care is the best in the world. However, recent studies of medical outcomes and mortality and morbidity statistics suggest that the United States-despite spending more per capita on health care and devoting to it a greater percentage of its national income than any other country-is not getting commensurate value for its money. The Commonwealth Fund’s cross-national surveys of patients’ experiences in and views of their health care systems offer the opportunity to assess U.S. performance relative to other countries through the patients’ perspective-a dimension often missing from other international comparisons.

Using data from two recent surveys conducted in five English-speaking nations-Australia, Canada, New Zealand, the United Kingdom, and the United States-this report ranks the countries in terms of patients’ reports on care experiences and ratings on various dimensions of care.

Based on these surveys of patients, the U.S. rarely outperforms the other nations surveyed; on most measures of the quality of care, it ranked last or second-to-last. Among the five countries surveyed, the U.S. performed particularly poorly on measures of equity and meeting the health care needs of its vulnerable populations. The U.S. also ranked last on patient erceptions of safety, efficiency, and effectiveness (measured in terms of ability to adhere to recommended care). Only on timeliness for admission to hospitals or for elective surgery did the U.S. rank highest among the five nations. In terms of timeliness for other services, including ready access to physicians, the U.S. was not the leader. New Zealand outperformed the U.S. in terms of providing prompt access to primary care physicians and specialists.

These results indicate a consistent relationship between how a country performs in terms of equity and how patients then rate performance on other dimensions of quality: the lower the performance score for equity, the lower the performance on other measures. This suggests that, when a country fails to meet the needs of the most vulnerable, it will be judged most harshly by its citizens. Rather than disregarding its performance on equity as a separate and lesser concern, the U.S. should devote far greater attention to seeing that the health system works well for all Americans. These findings raise fundamental questions about the current trend in the U.S. to increase patients’ out-of-pocket costs, and about the lack of action on the growing numbers of uninsured and underinsured. The U.S. needs to make a major commitment to improving health insurance coverage and quality of care.

If it fails to act, not only will the U.S. standing among health systems continue to erode, but there will be a predictable rise in public dissatisfaction and significant economic and human costs.

http://www.cmwf.org/programs/international/davis_mirrormirror_683.pdf

Comment: So we have “the best health care system in the world”… except for its performance. Well, at least we still rank first in one category…we spend the most.

Maybe the nation needs a doctor

The New York Times
January 9, 2004
Sick State Budgets, Sick Kids
By Bob Herbert

While headlines continue to tell us how great the economy is doing, states across the U.S. are pulling the plug on desperately needed health coverage for low-income Americans, including about a half-million children.

Even as the Bush administration continues its bizarre quest for ever more tax cuts, the states, which by law have to balance their budgets, are cutting vital social programs so deeply that tragic consequences are inevitable.

It seems extremely strange that in the United States of America, the richest, most powerful nation in the history of the world, we are going backward in the 21st century in our ability to provide the most fundamental kinds of health care to ordinary people, including children.

Maybe the nation itself needs a doctor. Shoving low-income people, including children, off the health care rolls at a time when the economy is allegedly booming is a sure sign of some kind of sickness in the society.

Gov. Schwarzenegger acknowledges budget pain for poorest Californians

The New York Times
January 10, 2004
Governor Seeks Big Cuts in California’s Spending Plan
By John M. Broder

Gov. Arnold Schwarzenegger presented his first budget on Friday, a $76 billion spending plan for the state of California that includes significant cuts in health care, public education and payments to local governments.

Mr. Schwarzenegger acknowledged that the reductions would be painful to many
of the poorest Californians but said that he was forced by “irresponsible”
spending under Gov. Gray Davis and the Democratic-dominated Legislature
to make those cuts.

“We will not raise taxes,” Mr. Schwarzenegger said. “Higher taxes will punish working families. It will kill jobs and drive businesses away. It will stall the recovery we need to pay for essential programs.”

The governor’s plan cuts spending by more than $4.6 billion, with the largest reduction, roughly $2.7 billion, coming from health and human services programs. The proposal limits the number of new children enrolled in health programs. It also raises deductibles and co-payments for recipients of Medi-Cal, the state’s name for the Medicaid program, and cuts payments to medical providers.

Anthony Wright, executive director of Health Access California, a consumer group, said: “Under this proposal, hundreds of thousands of children and others would be denied basic care, and millions of Californians would have to pay more to get basic health services. The governor is putting the burden of this crisis on low- and moderate-income families, rather than restoring the tax brackets for himself and other wealthy Californians, so they can share in the solution.”

For the Health and Human Services portion of the California state budget: http://www.dof.ca.gov/HTML/Budgt04-05/BudgetSum04/HHS_w.pdf (If you elect to read this document, please equip yourself with a box of Kleenex… No, two boxes.)

Comment: Instead of cutting spending for essential health and human services programs for the most vulnerable (and cuts in education, and local services such as police, fire, and trauma centers), why doesn’t Gov.

Schwarzenegger eliminate the “irresponsible” spending of Gov. Davis and the Democrats? Although he hasn’t changed the rhetoric that helped to elect him, it appears that the “irresponsible” spending was, in fact, a fiction.

Is it really more responsible to continue to protect Gov. Reagan’s tax cuts for the rich, rationalizing it by the discredited Laffer curve? Is this what the voters really asked for? I hope not, but I’m no longer certain.

Don

CMS report on health spending increases

Health Affairs
January/February 2004
Health Spending Rebound Continues In 2002
By Katharine Levit (and colleagues from the Office of the Actuary, Centers for Medicare and Medicaid Services)

U.S. health care spending climbed to $1.6 trillion in 2002, or $5,440 per person. Health spending rose 8.5 percent in 2001 and 9.3 percent in 2002, contributing to a spike of 1.6 percentage points in the health share of across domestic product (GDP) since 2000 (to 14.9% in 2002).

The continued acceleration in health care spending growth has posed financial challenges for government, businesses, and individuals alike. Compared with economic growth of 3.6 percent, growth in health spending of 9.3 percent pressures employers to cut other spending increases, possibly through reducing jobs, wage gains, or health benefits or through Shifting more costs to employees. State and federal governments face the same dilemma of costs rising more rapidly than revenues, leading every state to scrutinize discretionary Medicaid benefits as the number eligible for coverage continues to grow.

Factors fueling growth in health spending are already showing signs of dissipating in 2003. Preliminary data indicate that hospital use has eased and that wage growth in the health sector has decelerated slightly. Furthermore, Medicare givebacks have expired, and states have begun plans to curtail Medicaid spending growth. Finally, as consumers share more of the increases in cost, the value of health services will be more closely weighed against other purchases, underscoring the considerable value of some services and the discretionary nature of others.

http://content.healthaffairs.org/cgi/content/full/23/1/147

Comment: Can the health care consumer really distinguish between services that are of considerable value and those that are more discretionary? In a life-threatening emergency, services are rendered without significant consumer input, even though the financial consequences for the patient may be severe.

But what about decisions regarding management of serious chronic disorders such as diabetes, hypertension, congestive heart failure, or hyperlipidemia? For the great multitude of individuals who have negligible disposable income, the consumer decisions become a choice of essentials such as housing and food, versus adequately managing a disorder that may have minimal symptoms at present, but, in time, may have a major detrimental impact on the individual’s health status. The health care consumer may perceive these expenses to be discretionary, when, in reality, reducing spending now may result in disability and premature death. No truly humane policymaker for health care provider can ever consider these expenses to be being discretionary.

Perhaps the most common example of an “unnecessary” discretionary service is the C-T or MRI scan “demanded” by the patient. Even though medical decisions are ultimately made by the patient, it is the responsibility for the physician to see that the patient’s decision is an informed one. If the scan is unnecessary, the physician has an obligation to inform the patient of that fact in explaining why he or she is not ordering it. Sometimes the claim is made that a scan may be necessary to “prevent a lawsuit.” But if the patient’s symptoms indicate that a scan could detect a problem that might have adverse consequences, then it is an indicated test. But if the test is clearly not indicated, that alone is adequate evidence to defend against accusations of malpractice for not ordering the test. It is the physician’s obligation to avoid wasting resources on services that are not indicated.

Nevertheless, excessive discretionary services are a problem. But they are related to excess capacity and to a dependence on use of specialized services for problems that would be more appropriately provided on a primary care level. Rather than being left to a flawed decision process of patient-consumers, reduction of this waste will need to be made by comprehensive planning decisions, both controlling capacity and allocating our resources appropriately, thereby ensuring an adequate primary care Base with an appropriate level of high-tech care.

The other important method of improving spending is to eliminate the profound administrative waste by reforming our method of funding care. We need structural reform that will improve health care spending, rather than consumer-directed financial barriers to necessary services.

Reducing spending on essential health services through policies that create the deception that these costs are “discretionary,” and unaffordable anyway, is simply inhumane.

Bill Schwied, an inspiration for us all

January 7, 2004

William Schwied, MD, MPH, founder of People for a National Health Program (PNHP), in his acceptance speech as Leisure Worlder of the Month:

“I will close with a global approach to dreams and goals: Nurturing and enriching the lives of all peoples in need; and creating a world without poverty, greed, human suffering, inequality, and war.”

Comment: I am personally eternally grateful to Bill, initially for his presentation of the single payer proposal in grand rounds at our hospital a decade ago, and for his continuing support since. He has provided inspiration to me, encouraging me to continue to pursue a life of activism on behalf of health care for everyone.

Don McCanne

Using fines to fund trauma care?

Orlando Sentinel
January 5, 2004
Editorial
Give green light to fines

A legislative proposal to provide badly needed money to hospital trauma centers by increasing the traffic fine for red-light runners deserves support.

This approach could be a winner for Orlando Regional Medical Center and other hospitals that are struggling to come up with money to keep their trauma centers running.

http://www.orlandosentinel.com/news/opinion/orl-edped053010504jan05,1,2446659.story?coll=orl-opinion-headlines

Comment: Let’s get serious! We desperately need a rational system of funding all health care. Negligible tweaks just won’t do it.

Prerequisite humiliation for Medicaid and S-CHIP

The Argus
January 2, 2004
Sign ups for health insurance scheduled

OAKLAND — If you’re low-income and need no- to low-cost health insurance for both children and adults, mark Jan. 10 on your calendar.

That’s the day the Alameda County Social Services Agency will sign up children, families and senior citizens 65 and older for state and county health plan programs.

(Medi-Cal program specialist Belinda) Llaguno said applicants should bring a
birth certificate, marriage certificate or valid picture identification; proof of immigration status, Social Security card, proof of address (such as a utility bill), proof of income (such as wage stubs), child care receipts, vehicle registration, current bank statement and proof of other assets (such as life insurance).

http://www.theargusonline.com/Stories/0,1413,83~1971~1866160,00.html

Comment: Could you imagine being asked for this amount of documentation before being enrolled in either an employer-sponsored plan or an individual
private health plan? Yet those least able to afford health care coverage are
being subjected to this humiliating and burdensome process that denies these
individuals the right to privacy that the rest of us expect.

The obvious reason for extensive documentation is to establish that income and assets meet a level of poverty that would warrant public assistance for health care. Yet the rest of us are not required to establish a level of income and assets that would qualify us as being able to afford the payments for private insurance.

Health care coverage should be automatic for everyone, from the moment of birth, regardless of income or assets. Adopting a universal program of social insurance would end this unnecessary, humiliating process by including everyone in an equitably-funded system.

Time for single payer?

Time for single payer?
By Ruth Rosen  San Francisco Chronicle 12/29/03

Don’t be surprised if health care turns out to be the sleeper issue in the 2004 presidential campaign and if a majority of Americans eventually decide that a single-payer system is the most cost-efficient way to provide health care for everyone.

Why? Because our health system — a fragmented hodgepodge of private and public-health plans — is broken.

HMOs — which pay huge amounts for administrative and bureaucratic costs, advertising and skyrocketing drug prices — no longer can contain costs. They have also turned the health-care system into a blizzard of paperwork.

Physicians who recently resisted a single-payer system have grown increasingly resentful of HMO bureaucrats who micromanage their medical decisions. Inadequate reimbursements are driving some out of business. They also dislike having to consult dozens of drug lists or formularies before
they can prescribe medicine for their patients. They’d rather spend time caring for sick people.

Businesses, which seek a level playing field, may also become supporters of a single-payer system. Consider the inequities they face. General Motors, which has a huge group of retired workers, must pay for their lifetime health costs. Newer companies, however, either don’t offer health-care benefits to workers or retired workers or don’t yet have any retired workers to worry about.

Labor, too, is a natural constituency for a single-payer system. The three-month long grocery workers’ strike in Southern California against major supermarkets has highlighted the burden businesses now bear for paying for their workers’ health care. How can Safeway, which has paid decent wages and benefits, compete with union-busting Wal-Mart, which pays subsistence wages and offers health-care insurance at unaffordable premiums?

It can’t. To avoid a race to the bottom, each employer should not have to pay for their workers’ health care. Instead, through an equitable tax, they should contribute to a single-payer health system.

And don’t forget the 40 million uninsured Americans. Soon after the Medicare bill passed, Senate Majority leader Bill Frist announced that Republicans would next try to address the medical needs of those who lack medical insurance. These are people whose votes could be captured by any candidate who promises to reduce their anxieties about getting health care.

The wealthy, too, may come to view single payer as a better alternative. Why? Because one of the best kept secrets in the United States, according to the American Hospital Association, is that 80 percent of our emergency rooms are overcrowded and the average wait is four hours. The poor, of course, already know this. But when middle class and wealthy Americans with heart attacks or serious injuries discover that they, too, may be diverted from one hospital to another, they may reconsider the value of their “excellent” medical insurance.

The fact is, most hospitals operate with “a just-in-time inventory” that works just fine for an average Tuesday evening in May. But on a Saturday night during the winter flu season, emergency rooms are filled with children and elderly people with high temperatures, along with heart attack victims and people bleeding from knife or gunshot wounds. (Don’t even think about what might happen after a bio-terrorist attack, a fire or an earthquake.) Triage nurses must decide who will receive medical attention. When all the emergency rooms are filled to capacity, some patients lie on gurneys in the hall, waiting for an intensive-care bed and monitor.

By contrast, a single-payer system would reduce the burden on emergency rooms by providing everyone with primary care in physicians’ offices and outpatient facilities.

A single-payer system would also cost less. The overhead for Medicare is only 2 percent; for private insurance it is up to 25 percent.

Health care is a human right, not a privilege. If you don’t believe this now, you might change your mind if and when you find yourself in need of life-saving care in a hospital emergency room.

E-mail Ruth Rosen at rrosen@sfchronicle.com
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003/12/29/EDGS53U1CM1.DTL
 
*****
[Extracts] Bush drug proposal enrages veterans
Plan may alienate military retirees by imposing higher fees for prescriptions
By DALE EISMAN 1/01/04Copyright 2004 The Virginian-Pilot
 
WASHINGTON — The Bush administration is considering dramatic increases in the fees military retirees pay for prescription drugs, a step that would roll back a benefit extended 33 months ago and risk alienating an important Republican constituency at the dawn of the 2004 campaign season.
 
Pentagon budget documents indicate that retirees may be asked to pay $10 — up from $3 — for each 90-day generic prescription filled by mail through Tricare, the military’s health insurance program. Tricare’s current $9 co-pay for a three-month supply of each brand-name drug would jump to $20.
 
The proposal also would impose charges for drugs the retirees now receive free at military hospitals and clinics. There would be a $10 fee for each generic prescription and a $20 charge for brand-name drugs dispensed at those facilities.
 
A Pentagon spokesman declined Wednesday to comment on the drug plan, calling it “pre-decisional.” But word of the proposal was being spread at the speed of light by veterans service organizations, who were urging their thousands of members to send calls and letters of protest to the White House and members of Congress.
 
“It’s something that we’re going to look at very closely when we return,” said Tom Gordy, chief of staff for Rep. Ed Schrock, R-Va. The House is to reconvene Jan. 20.
 
“You’re tampering with a benefit that was earned by people putting their lives on the line,” said James F. Lokovic, a retired Air Force chief master sergeant and deputy director of the Air Force Sergeants Association.
 
Lokovic’s 136,000-member association already has sent Bush a letter warning of “significant backlash from millions of retired military voters” if the plan is included in the 2005 defense budget the administration will unveil in a few weeks.
 
“Somebody just isn’t paying attention,” the Military Officers Association of America said in “special alert” sent to its 390,000 members. “The war on terrorism is reminding the nation of servicemembers’ sacrifices every night on the evening news … and yet the administration seems to continue going out of its way to penalize the military community.”
 
The officers association alert and an Internet site run by the sergeants association recall attempts by the administration to impose a $1,200 deductible for care provided to most military retirees at Veterans Affairs hospitals and the Pentagon’s long-running opposition to bills providing for “concurrent receipt” of military pension and VA disability payments.
 
The budget documents circulating Wednesday gave no hint of the current status of the plan or the thinking behind it. Military retirees — those who served 20 years or more — had no prescription drug coverage until April 2001.
 
But the documents indicate that the proposed charges would considerably ease the burden of prescription drug costs on the defense budget. The new co-pays would generate more than $728 million in 2005, the Pentagon estimated, and nearly $4.2 billion by the end of 2009.
 
But spokesmen for veterans groups said the VA fills prescriptions for service-related illnesses and injuries at no charge. Its $7 co-pay applies only for medications given to outpatients for ailments unrelated to their service. And even those prescriptions are free when the veteran receiving them has an annual income of less than $9,690 if single and $12,692 if married.
 
*****
To buy or block cheap drugs — Race to the Canadian border
By Froma Harrop  The Providence Journal  12/31/03

WE ARE NOW WITNESSING an extraordinary game of chicken between the states and the Bush administration. About a dozen states are gunning it toward the Canadian border in pursuit of cheaper prescription drugs. The federal government, meanwhile, is racing to block the way. If the states succeed in defying Congress’s ban on drug imports, everything will change: U.S. drug companies will no longer be able to charge Americans up to twice
what foreigners pay for the same pills.
 
The hottest head on the freeway belongs to New Hampshire’s Republican governor, Craig Benson. He has demanded a federal waiver that would let his state import U.S.-made drugs. And he’s setting up an official Web site to help private citizens buy their prescriptions in Canada.

“We will work within the law wherever possible,” says Benson’s spokesman, implying a right to also ignore the law.

Two days after Benson’s announcement, representatives from 10 states met in Atlanta with Canadian pharmacies to discuss doing business together.  The potential savings are huge. One participant, Illinois, puts the savings from buying drugs in Canada at $94 million. Also attending were Ohio, Oklahoma, North Carolina, Massachusetts, Alabama, Vermont, West Virginia, Delaware and Louisiana.

Drugs are cheaper in Canada because Ottawa negotiates the prices pharmaceutical makers may charge there. Most other countries do likewise. The United States, by contrast, keeps its people captive to whatever price the drug companies can get away with. Need we add that the industry is a very generous contributor to political campaigns?

Such policies are not very popular with the electorate, so the powers in Washington have developed complicated rules designed to hide what they’re up to. For example, the new Medicare law cleverly allows Americans to bring drugs back from Canada — but only if the U.S. Food and Drug Administration deems them safe, which it won’t do.

To calm the natives, the administration has left open a safety valve: It looks the other way when individuals bring back medicines from Canada or Mexico for their own use. Slapping cuffs on Grandma as she steps off the bus from Algodones is not good P.R.

But states and cities are another matter. They are enormous purchasers of drugs for workers, retirees, Medicaid patients and prisoners. Once they start going to Canada for drugs also, the ban becomes meaningless.

The battle is not without its comical moments. Three of New Hampshire’s four congressional delegates voted with the Republican leadership against legalizing drug imports. One of them, Rep. Jeb Bradley, now praises Governor Benson for defying a law he helped pass. The two senators, John Sununu and Judd Gregg, had the good sense not to comment.

Is there a states’-rights issue here? “From a constitutional perspective, it’s a fairly clear-cut case,” says Timothy Conlan, a professor of government at George Mason University. “Congress has the power to regulate interstate and foreign commerce.”

However, the Bush administration is under no obligation to block the road to Canada. “It’s likely that the administration has enough discretion that if it wanted to allow states to do this, it probably could have allowed it,” Conlan adds. And giving the states the green light would have fit in with the president’s stated pro-federalism agenda.

(Although conservatives in Washington speak of promoting states’ rights, they often bar state action when it conflicts with the interests of the private sector. “That pattern is pretty consistent,” Conlan says.)

In discussing this issue, it would help to recognize that the pharmaceutical industry is not like most businesses. The public considers its products a social good and helps pay for them with large taxpayer subsidies. Further, a new medication enjoys many years of patent protection — during which its maker has the exclusive right to sell it.

So there’s no point pretending that Coumadin is like a camera battery — a product whose price can be sensibly set by market forces. The federal government must sit down with the pharmaceutical industry and work out a new arrangement for pricing drugs.

Until then, we will be treated to the weird sight of Americans begging foreign governments for relief on the price of American-made drugs. The states’ mad dash to the Canadian border shows more than a dissatisfaction with Washington policy. It demonstrates a growing contempt for it.

Froma Harrop is a Journal editorial writer and syndicated columnist. She may be reached by e-mail at: fharrop@projo.com.