Resource – Page 1158

Face it: We’re rationing health

By Robert Kuttner, 6/11/2003

HEART DISEASE runs in part of my family. A beloved uncle died at 50 of a heart attack. One grandmother died in her 60s of congestive heart failure; the other of high blood pressure. Others, happily, have lived into their 90s, and I hope I take after them.

In those years, doctors could do little. There was aspirin for pain, nitroglycerine for temporary relief of ”angina,” and digitalis to stimulate the heart. That was it.

But today my fate is not just a matter of diet, exercise, and genetics. There are statin drugs if my arteries tend to clog, several classes of blood pressure medication, and much more. There are elegant diagnostic tests, like the echocardiogram I recently had, where I could both see my heart and its valves on a monitor and listen to the healthy sloshing of my splendid pump. (I’m fine, Mom, this was a routine screening.) And if things ever get bad, there are delicate angio-procedures, valve jobs, triple and quadruple bypasses, even heart transplants. And they all cost a small fortune, from the $10 pills to the $20,000 surgeries. One thing about aspirin, nitrogylcerine, and digitalis: They were dirt cheap. Science keeps inventing ways to keep us alive and well, and all of us expect nothing but the best.

All of which brings me to the debate about health insurance. There are really two issues here, and they tend to get blurred. The first is how we contain costs. The second is how we cover everybody. Seemingly, the two goals are at odds with each other.

How on earth do you restrain health costs as the population keeps aging and as science keeps marching on, much less if everyone is insured? One easy solution: freeze the state of science at about 1950, and we could insure everyone in the United States for cheap. But who wants that?

The fact is that HMOs and the employers who buy most of the insurance can disguise the ugly word all they want, but much of what they do is a form of rationing. They limit available tests, drugs, and procedures. They punish doctors in the pocketbook for spending more than a few minutes with patients. They make the paper chase so complex that many consumers just give up and don’t fill the prescription, or they go without the procedure (and the richer among us just pay out of pocket). All of these measures can be politely called managed care or ”alignment of incentives,” but all are forms of rationing. And unlike true rationing, in which care is based on dire need, wealthier people can always buy their way out.

We are hearing a lot from the Bush administration that competition is the solution to escalating health costs. You can shop around for a car or a hotel; why not for a health plan?

The reason is that medicine and health insurance are not ordinary commodities. For starters, most private health plans deny consumers meaningful choices. The whole point is to limit the choice of doctors and hospitals to those who give the plan discounts and follow the managed care company’s treatment rules.

Insurance companies also spend a fortune on marketing (to target consumers less likely to get sick), on claims processing, and on profit. One of the worst sources of inefficiency in the whole system is the cost of the fragmentation that comes from having duplicative and parallel private bureaucracies.

Every reputable study, including the most recent one from the bipartisan Congressional Budget Office, shows that the most cost-effective way of spending limited health dollars is through a single universal system, like Medicare. The elderly may be bewildered by the system, but they are no fools. They know that the one oasis of completely secure coverage and fully free choice is conventional Medicare. That is why the Bush administration, despite wanting to herd seniors into HMOs, caved in and agreed to allow (still too skimpy) drug benefits for people who stay with Medicare.

Here’s where the two questions – cost containment and coverage – come together. The best way of cutting avoidable costs (but not cutting care) and also insuring every American is to put everyone in the same universal system. There would still be difficult choices, but nothing like the insecurity, cost-shifting, waste, and profiteering of the present system.

What stands in the way? Only the insurance industry, the drug companies, the Fortune 500, half the American Medical Association, and the Republican Party. That’s all.

Robert Kuttner is co-editor of The American Prospect. His column appears regularly in the Globe.

This story ran on page A23 of the Boston Globe on 6/11/2003.
© Copyright 2003 Globe Newspaper Company.

HealthCARE Act of 2003

American College of Physicians
ObserverWeekly
6-10-03
Access update
New House bill based on ACP proposals to expand access to care

Legislators introduced a bill into the House today to expand health insurance coverage to millions of uninsured Americans. The proposal already has the support of organizations representing more than 300,000 physicians.

The bill is identical to legislation introduced into the Senate last month. Both proposals are modeled after ACP’s seven-year plan to expand access to care to all Americans by 2010.

Reps. Steven LaTourette (R-Ohio) and Marcy Kaptur (D-Ohio) introduced the Health Coverage, Affordability, Responsibility and Equity (HealthCARE) Act of 2003.

The bill would give states new options to expand coverage through existing public programs. It would also give individuals a tax credit to buy coverage from private plans.

The House legislation would expand access to care through the following measures:

* Give states new options to expand safety net programs for the poor.

* Create refundable tax credits to give eligible individuals the same subsidies to buy health insurance that the federal government gives its employees.

* Allow tax credits to be used to buy individual coverage or coverage through a state purchasing pool modeled after the Federal Employees Health Benefit program.

* Give small businesses access to the same types of affordable health plans available through state purchasing arrangements.

* Create an expert commission to recommend additional measures.

Supporters of the legislation include ACP (American College of Physicians), Families USA, the American Academy of Family Physicians, the American Academy of Pediatrics, the American College of Cardiology and the American College of Geriatrics.

http://www.acponline.org/weekly/2003/6/10/index.html?hp#accessbill

The identical bill introduced in the Senate by Sen. Jeff Bingaman (NM), S.1030, HealthCARE Act of 2003, is available at Thomas: http://thomas.loc.gov/, and type in the bill number, S.1030

Comment: It is unlikely that this “bipartisan” bill will engender significant Republican support, especially without the Tom DeLay/Bill Thomas stamp of approval. But if the public demand for comprehensive reform increases much more, this bill could gain traction. And it does have the support of Families USA and several significant physician organizations.

Although this bill might expand coverage, it would do so partly by expanding private plans through an FEHBP model which would leave in place very costly administrative inefficiencies, and would expose low-income individuals covered by this legislation to cost-sharing that could threaten affordability of care. Analyses of similar proposals demonstrate that this is a very costly method of expanding care. And for moderately low-income, uninsured individuals, this bill provides only a committee that will think about their problem.

If such a bill were to pass, it would greatly reduce or even eliminate the pressure to enact reform that would ensure affordable, comprehensive health care for everyone. If we really do want an equitable health care system that meets our goals, we’re simply going to have to replace the private health plans with a single program of social insurance.

Let’s not be distracted by yet another costly but inadequate attempt to achieve a “politically feasible,” compromise proposal.

Enthoven's managed competition model

Health Affairs
Web Exclusive
28 May 2003
Employment-Based Health Insurance Is Failing: Now What?
A strategy, based on managed competition, to free employers from the health
care cost spiral and produce effective managed care.
By Alain C. Enthoven

There are two types of HMOs existing today. “Carrier HMOs” are insurance companies that offer a comprehensive benefit package, characteristic of HMOs, but deliver the services by contracting with independent doctors or medical groups whose main mode of payment remains fee-for-service (FFS). This is in contradistinction to “delivery system HMOs” that are based on their own dedicated medical groups and working mainly under per capita prepayment. The latter are a much more powerful lever for reshaping health care.

“Managed competition” is an alternative to… (current) employer policies. The idea is for the employer to increase competition by offering employees a wide choice of carriers and plan designs, a responsible choice (employees are fully responsible for premium differences), individual choice, informed choice, and multiple choices of delivery systems. If a critical mass of employers were to do this in a market, they could create conditions in which efficient delivery systems could enter, market their superior value for money, and achieve economies of scale. In managed competition, insurers need to be linked with specific, geographically overlapping delivery systems. (Six carrier HMOs, each offering practically every provider in town, would not be “competition” in this sense. The point is competition among delivery systems, not just carriers.)

http://www.healthaffairs.org/WebExclusives/Enthoven_Web_Excl_052803.htm

Comment: In this article, Professor Enthoven identifies many of the problems inherent in the current employment-sponsored, managed care system. He continues to support his model of managed competition as the solution to our wasteful, dysfunctional system. But his model is dependent on the voluntary initiative of a “critical mass” of employers to create a market in which “geographically overlapping” delivery systems, with “economies of scale,” would compete.

Although perhaps an oversimplification, his model suggests that almost all physicians, hospitals, and other providers be placed in several Kaiser-type HMOs within the same community, without significant provider overlap. Even densely-populated urban regions would find difficulties supporting multiple, large, integrated delivery systems. And experience has shown that many suburban and almost all rural areas cannot support even a single integrated delivery system. This does not mean that integrated delivery systems should be excluded as a form of health care delivery, but they can never be relied on as the dominant model in all communities, unless as a universal, public health service model.

There are critical issues that must be addressed during our efforts to reform the funding of health care. Ensuring affordable access to comprehensive services for everyone must be our primary mission. A mission of establishing an artificial business model designed specifically to enhance marketplace competition, regardless of the negative impact on patients, misses our priorities for reform, and should be discarded as the inadequate and highly flawed concept that it is.

Physician behaviour in the single payer system of Taiwan

Health Affairs
May/June 2003
Taiwan’s New National Health Insurance Program: Genesis And Experience So
Far
by Tsung-Mei Cheng

Taiwan’s NHI is a government-run, single-payer national health insurance scheme, financed through a mix of premiums and taxes, that compensates a mixed public and private delivery system predominantly on a fee-for-service basis. NHI enrollment is mandatory, to ensure adequate risk pooling and the broad-based collection of funds to finance the NHI.

Taiwan’s health care providers obtain their revenues from three sources: (1) payments by the NHI, (2) patient user fees and copayments, and (3) proceeds from the sale of products and services not covered by the NHI.

Experts in Taiwan appear to believe that the absolute level of fees paid by the NHI is too low and that many fees are considered to be below cost. In the absence of effective volume controls, providers’ simplest response to low fees is to expand the volume of services they provide while reducing the resources going into each unit of service (for example, shortened visit length). The BNHI’s chief executive officer, Hong-Jen Chang, remarked that “Taiwan’s doctors are well paid. But they work very, very hard to use volume to make up for the low fees.” Ta-Fu Huang, chairman of the DoH’s Quality Commission, has written extensively about Taiwan’s medical culture of the “three-minute patient visit” with physicians that is typical of doctors in Taiwan. That fee-driven practice style may lead to misdiagnosis, improper treatment, or delays in proper treatment.

A feature that Taiwan’s health system shares with other health systems in Asia is that hospitals are allowed to sell patients drugs at prices far above their acquisition cost, which they negotiate with the drug companies. In the Taiwan vernacular, the resulting profit margins are known as the “drug price black hole.” The U.S. analogue of this practice is the profits oncologists serving Medicare patients can earn on drugs they use in outpatient chemotherapy. Coupled with the PF system of rewarding hospital-based doctors, permitting hospitals to profit from the sale of drugs leads to a serious conflicts of interest, as it invites the overmedication of patients, including a perilous overmedication with antibiotics. According to a December 2002 study report by the DoH, close to half of the doctors in Taiwan prescribe four to five drugs per visit for upper respiratory infections, and 10 percent prescribe more than eight drugs; in only fourteen of 103,024 outpatient visits did the doctor not prescribe any drugs. The CEO of a large private hospital told me that 44 percent of his hospital’s income is derived from the prescription and sale of drugs to patients.

To the detached observer, Taiwan’s current health system conveys a confusing picture. The nation spends only 5.44 percent of its GDP on health care from all sources (or about 6 percent on a more inclusive measure). By the benchmark of the OECD countries, a nation with Taiwan’s current GDP per capita (US $14,188) would be expected to spend somewhere around 7.3 percent of its GDP on health care, give or take half a percentage point. This estimate could be taken to mean that Taiwan’s health system is underfunded. Not surprisingly, there have been calls for increased spending to improve equity and quality.

On the other hand, however, the accusation of widespread supply side-driven, provider-induced use of health care suggests a surplus of capacity, even at the relatively low spending level of only 5.44 percent of GDP. It leads critics of Taiwan’s provider community to argue that allocating a higher percentage of GDP to health care might make the problem of excess capacity even worse and merely increase the profits of providers.

A reconciliation of these contradictory perspectives may be to argue that what is actually in surplus is relatively low-quality care, whose expansion should not be encouraged with added funds. At the same time, it probably is true that a high quality, state-of-the art health system with longer patient visits, more accurate diagnoses, better-equipped hospitals, timely introduction of new drugs and technology, a better information infrastructure, and superior quality all around probably would require more than the current 5.44 percent of GDP. If that interpretation is valid, any move to a higher level of spending should be carefully targeted.

… additional funding should be directed to the development of an IT infrastructure capable of identifying waste, fraud, and abuse and, at the same time, inducing the delivery system to practice high-quality, evidence-based medicine.

http://www.healthaffairs.org/readeragent.php?ID=/usr/local/apache/sites/healthaffairs.org/htdocs/Library/v22n3/s14.pdf

Comment: As we advocate for reform, it is important to understand both the problems that can arise with single payer systems and the solutions to those problems. We need to be able to counter the criticisms of the opponents of reform, and then we will need to be certain that mechanisms will be in place to ensure efficient utilization of our health care resources.

Enthoven’s managed competition model

http://www.healthaffairs.org/WebExclusives/Enthoven_Web_Excl_052803.htm

FEHBP is a flawed model for reform

The Henry J. Kaiser Family Foundation
The Federal Employees Health Benefits Program: Program Design, Recent
Performance, and Implications for Medicare Reform
May 2003
Prepared by Mark Merlis

Conclusions

FEHBP (Federal Employees Health Benefits Program) has often been an attractive model for policymakers who wish to increase the roles of competition and private plans in the Medicare program. FEHBP has succeeded in offering varying degrees of health plan choice to a large and diverse population of employees and annuitants, at costs comparable to those for other large employer plans. The program is more flexible and less bureaucratic than Medicare and relies chiefly on the market, rather than regulation, to control costs and assure quality.

Still, the program is not without its shortcomings, some of which have been notable for many years. FEHBP has faced many of the same problems as the Medicare+Choice program:

* FEHBP per capita costs have risen faster than Medicare costs in recent years, though somewhat less rapidly than spending by other employer plans. Only part of the FEHBP spending growth is attributable to rising drug expenditures, and costs would have risen even faster if plans had not reduced benefits. As the OPM Director has acknowledged: “Despite its size, the FEHB Program is not immune to the inflationary pressures that have driven up costs in the health-care industry in recent years.”

* Competition under FEHBP, as under the Medicare+Choice program, has been distorted by pricing problems. Because government contributions to FEHBP plans are not adjusted for demographic factors, health risk, or geography, the net prices offered to participants may reflect enrollee characteristics or plan location, rather than the value of benefits or plan efficiency.

* While many Medicare beneficiaries have no access to Medicare+Choice plans, FEHBP nominally offers enrollees multiple health plan choices everywhere in the country. However, participants in less populous areas may have access only to the national PPO plans, and some of these plans may not always provide meaningful choices among providers. PPOs generally achieve savings by negotiating discounted rates with providers; providers in isolated areas who face limited competition may have little incentive to grant these discounts.

* FEHBP administrative costs, including OPM, agency, and plan costs, can only be estimated, but are probably in the range of 7 to 15 percent of claims, depending on the type of plan. Medicare administrative costs for the fee-for-service program are only about 2 percent of claims. Costs for the Medicare+Choice program are probably comparable to those for similar FEHBP plans.

FEHBP is a model that policymakers are examining as they consider ways of introducing more choice under Medicare or of developing new mechanisms for extending coverage to the uninsured. The FEHBP experience highlights the difficulties in developing a competitive system that operates efficiently and equitably for a nationwide program. And FEHBP’s recent performance suggests that competition alone may not resolve the ongoing dilemma of maintaining comprehensive benefits while controlling spending growth.

http://www.kff.org/content/2003/6081/6081v1.pdf

Comment: Although this report discusses the FEHBP program as a model for Medicare reform, FEHBP is also being proposed by many politicians and other advocates as a model for expanding health care coverage through employer or individual mandates.

FEHBP, “the health care coverage that members of Congress have,” has been touted by many as the ideal model of reform. Although it is the largest and most effective of existing programs that use private insurers, it is also a program with wasteful administrative excesses and with inequities that are inevitable when depending on a variety of plans with variable benefits, pricing and availability. In contrast, an equitable program of social insurance would significantly reduce administrative costs thereby making affordable truly comprehensive benefits for everyone.

Why do we continue to support extreme models of reform, such as the FEHBP proposals, when our own simple program of social insurance would provide affordable, equitable and comprehensive coverage for everyone?

Tax subsidies for private health insurance benefit the wealthy

The Robert Wood Johnson Foundation
The Synthesis Project
May 2003
Tax subsidies for private health insurance: who currently benefits and what
are the implications for new policies?

Policy-makers are considering a variety of new tax credit proposals to expand health insurance coverage. Understanding how current tax subsidies work and their role in supporting employer-sponsored insurance (ESI) is important when designing such policies.

Higher-income workers benefit far more from the current ESI tax subsidy than lower-income workers.

First of all, they are in higher tax brackets. A worker in the 28 percent tax bracket saves 28 percent of the premium cost, while a worker in the 15 percent bracket saves only 15 percent.

They also are more likely to have ESI. Almost 90 percent of workers with income three times the poverty level or higher have ESI, compared to less than one-third of workers with income below the poverty level.

In addition, employers of higher income workers pay a larger percentage of the premium on average, translating into a larger tax exemption for those employees.

Finally, higher-income workers tend to have more coverage-multiple policies, richer benefits, and family rather than individual coverage- increasing premiums and the value of the tax exemption.

Lower-income workers benefit only slightly from the income tax exemption and the Medicare payroll tax exemption. They benefit in the short run from the Social Security payroll tax exemption, but it hurts them in the long run by reducing their retirement income.

The overall impact of the upside down subsidy is striking.

Many economists argue that employers pass on the costs of their contributions for health insurance to workers in the form of lower wages. Under that assumption, the tax subsidy is worth one-third of the premium for families with income above $200,000. These families pay only two percent of their income for health coverage.

In contrast, the subsidy is worth about 10 percent of the premium for families with ESI making less than $10,000. These families pay about 40 percent of their income (including what their employers pay in premiums) for health coverage.

http://www.rwjf.org/publications/synthesis/reports_and_briefs/pdf/no3_policyprimer.pdf

Comment: This report demonstrates that current tax policies designed to support our existing system of employer-sponsored insurance result in profound inequities, disproportionately benefiting the wealthy.

Can modifying tax policy alone correct these inequities? Each adjustment can have an impact on employer participation, employee participation, shifting between individual and employer-sponsored coverage, comprehensiveness of benefit packages, variations in the level of public funding, extent of patient cost-sharing, and endless other potential policies. As each adjustment is made to improve equity, the model will move closer to universal, comprehensive coverage with progressive public funding, and elimination of the link to employment.

Try manipulating the single payer model to include private health plans while preserving the same level of equity that a single payer system would provide. Bet you can’t do it. So why do we keep insisting that we begin with private health plans as we reform health care?

Letter to the Editor – Philadelphia Inquirer

h2. Army Had the Answer

The best health-care system we two have ever known belonged to the U.S. Army.

Dependents were covered; equipment was up-to- date; doctors had a decent salary based on their level of training and experience; defensive medicine was unnecessary since there were no malpractice suits.

Paperwork was minimal, sensible and manageable.

We could be honest with our patients, young or old.

We saluted the adminstrators, but medical decisions were made by medical people in consultation with all those concerned.

Within those appropriate military requirements, we felt perfectly free to provide proper care and were respected as professionals. And although there were snafus, most doctors had a more-than-satisfactory experience.

Despite some problems, like waiting lines in clinics, most patients were also satisfied.

Therefore, the solution to the current medical malpractice insurance crisis: universal, single- payer, tax-supported health care under the aegis of Medicare — an idea which many doctors support — along with compensation panels (not lawsuits) for serious mistakes. Private insurance schemes should be abolished while the income of the health-care professional is, after compensating them for their schooling and indebtedness, kept within definite limits.

Robert E. Kay, MD
Philadelphia
robertekaymd@mycidco.com

Lindley M. Winston, MD
Malvern
lindleymw@aol.com

Study Estimates That Coverage of the Uninsured Would Add Up To $69 Billion in Overall Health Care Spending

Contacts:
Rakesh Singh, KFF (202)347-5270
Jon Gardner, Health Affairs (301)656-7401

Article in Health Affairs Indicates That Newly Insured Would Use Additional Care Amounting to a 3-6 Percent Increase in Health Spending

WASHINGTON——If the country provided universal coverage under the current health system, the cost of additional medical care provided to the newly insured would increase health spending’s share of gross domestic product by less than one percentage point—or about 3 to 6 percent of total health care spending, according to a new report prepared for the Kaiser Commission on Medicaid and the Uninsured and published today by Health Affairs.

Urban Institute researchers Jack Hadley and John Holahan conclude that this range—$34 billion to $69 billion per year, depending on the approach taken—would mean the “cost of expanding insurance coverage may be a relatively small or at least a very worthwhile investment when considered against the benefits of improved health, increased longevity, and potentially greater national income.” The researchers estimate the cost of expansion to universal coverage would increase health spending from 14.1 percent to between 14.5 and 14.9 percent of GDP.

“This study shows that the direct cost of providing care to the 41 million uninsured would be less than annual inflation in health spending—8.7 percent in 2001, but still would require a commitment of new resources in a time of fiscal deficits,” said Diane Rowland, executive director of KCMU.

The study measures the direct cost of care if all the uninsured were provided coverage and they increased their use of the health system to the same rate as the insured population. It therefore reveals the potential increase in overall health spending, and not what federal legislation would cost. Federal legislation would likely have additional objectives and could use a variety of approaches. Depending on the legislative approach, the Congressional Budget Office would estimate a governmental cost for a proposal, which would be distinct from the estimate in this study.

“While it won’t be inexpensive to cover the uninsured, this paper shows that a major coverage expansion would only be a small fraction of what the United States already spends on health care,” said John Iglehart, founding editor of Health Affairs.

Starting with the well-documented premise that having health insurance increases health care use, the authors set out to calculate the cost of new care that would be used if the uninsured population had coverage. The goal was to establish benchmarks that could be used to test the efficiency of future proposals for expanding insurance coverage by comparing them to the cost of an “average” private or public insurance plan.

The two alternative approaches assessed by the study:

1) One assumed the newly insured’s spending would be similar to that of either lower- or middle-income people covered by the “average” private insurance policy,

2) The other assumed coverage would resemble people covered by the “average” public insurance policy (predominantly the Medicaid or State Children’s Health Insurance Program.

The study findings show that spending for new medical care under a public coverage expansion could cost half as much as under a private coverage approach. Expanding coverage to the entire uninsured population would increase spending by $34 billion under the public coverage standard and $69 billion under the private coverage standard. Including the $99 billion in medical care already used by the uninsured, the total cost of expanding to universal coverage would range from $133 billion to $168 billion.

The two approaches were chosen because of their prevalence in the current system and their distinctive features. Private insurance typically includes cost sharing, a range of covered services, and access to a broad set of medical providers with varying payment rates. Public insurance typically includes limited patient cost sharing, a broad range of services, but limits access to a set of medical providers who are willing to accept lower payment rates.

The Health Affairs article is available at http://www.healthaffairs.org/WebExclusives/Hadley_Web_Excl_060403.htm. The research was supported by KCMU’s Cost of Not Covering the Uninsured project. The Commission convened an expert advisory group to work on developing new information and analyses on the uninsured problem in America. The project has previously released work reporting on the consequences of being uninsured and the amount the nation already spends on care for the uninsured. Work will continue on the financial burden bourne by the uninsured when seeking care and the implications of insurance expansions to the near-elderly.

A webcast of today’s policy briefing releasing the article in Washington, D.C., and a video interview with the authors of the study can be viewed after 5 p.m. EDT at the following link http://www.kaisernetwork.org/healthcast/kff/04jun03.

Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research.

The Kaiser Commission on Medicaid and the Uninsured (KCMU) serves as a policy institute and forum for analyzing health care coverage and access for the low-income population and assessing options for reform. The Commission is a major initiative of the Henry J. Kaiser Family Foundation and is based at the Foundation’s Washington, DC office. The Henry J. Kaiser Family Foundation is a non-profit, independent national health care philanthropy dedicated to providing information and analysis on health issues to policymakers, the media and the general public. The Foundation is not associated with Kaiser Permanente or Kaiser Industries.

Democrats must offer bolder health plans

By Robert Kuttner, 5/21/2003

”Make no little plans; they have no magic to stir men’s blood.”– Daniel H. Burnham

WITH ONE EXCEPTION, the health plans released by the Democratic presidential contenders are a set of little plans. They leave the current system largely intact and use subsidies and tax credits to reduce the number of uninsured — as if the whole system were not broken. With slight variations, this is the approach chosen by both former Vermont Governor Howard Dean and Massachusetts Senator John Kerry. And North Carolina Senator John Edwards and Connecticut’s Joe Lieberman will likely do the same. Congressman Dick Gephardt, by contrast, had the nerve to throw a long pass. The problem is that he hurled it in the wrong direction. Gephardt began well. He proposed to repeal Bush’s entire 2001 tax cut. He added another bold feature, opening Medicare to people over 55.

But the rest of his plan mainly gives tax breaks to corporations that provide health coverage for their workers. This sounds good, until you remember that most large corporations already provide some kind of health coverage. For them, the money will be mainly windfall. (Kuttner’s Corollary to Burnham’s Law is that if you’re going to make bold plans, they had better be the right plans.)

Any of the Democratic plans are an improvement on what Bush proposes, which is mainly to shift even more risks to individuals. Reportedly, the Republicans will soon press legislation that is the mother of all bad health bills — privatizing Medicare, turning Medicaid into a limited block grant, limiting malpractice suits, and doing a pro-drug-industry version of prescription coverage.

But the Democrats will need to do more than play defense. They need something bolder to get real political traction from health insurance, let alone to solve the problem.

What is the nature of the health care crisis? For starters, coverage is eroding, even for the insured. There’s a squeeze on corporate profits in a climate of rising health costs. So health costs are being shifted from plan to individual, with the result that many people go without needed treatments that the plan won’t cover and that they can’t afford out of pocket.

The number of people without insurance is also increasing. Smaller businesses won’t provide insurance. More people are self-employed. And as bigger businesses increase the employee share costs, many lower-paid workers decline the insurance because they can’t afford it.

Costs keep escalating for three distinct reasons. Science keeps inventing new tests, new treatments, new drugs, all of which add to the overall costs. The population keeps aging. And the system is stunningly inefficient, with its patchwork of fragmentary health plans and its profiteers taking bites out of each medical transaction.

If we leave intact the present system, with its wasteful fragmentation, billing, underwriting, and insurance company profits, there is only one big place to reap savings — by withholding more care as nonessential and by avoiding the sick.

Yes, there are other containable costs, however they are not the main story. The much-touted crisis in malpractice insurance needs fixing, but it is only a small fraction of the cost problem. And we need to reduce escalating drug costs, by shifting to generics wherever possible and preventing the drug companies from continuing to extend the patents of medicines that should be in the public domain. But that, too, is not the main engine of medical inflation.

The real problem is a system where health insurance is optional for employers and run through private insurers. This leads tens of billions to be wastefully spent, on everything from billing, to second-guessing doctors, to shifting costs, to avoiding subscribers likely to get sick.

Other advanced nations face the same march of science and even more difficult demographic realities — their populations are even older on average, thanks to two generations of better health care. But they are better equipped to contain costs and get the most for their health outlays because they have universal health systems. Yes, there are difficult choices, but they are typically made by panels of doctors, citizens, and ethicists, not by private insurance companies.

The best solution here is national health insurance. We already have it for one segment of the population, through Medicare. The program is easy to understand, and even fits on a bumper sticker: ”Medicare for all.”

Face it: Even incremental proposals by Democrats will be attacked as too costly and entailing too much government. They might as well do it right.

Robert Kuttner is co-editor of The American Prospect. His column appears regularly in the Globe.

http://www.boston.com/dailyglobe2/141/oped/Democrats_must_offer_bolder_health_plans+.shtml

Don McCanne Letter to the Editor

(unpublished)
Letters to the Editor
The Washington Post

Re: “Universal Health Care Gets Boost,” May 26

The common perception of the health care reform proposals of the Democratic candidates is that, as stated in the Washington Post (Universal Health Care Gets Boost,” May 26), all proposals are “big and ambitious, and are far costlier than anything that has been proposed since Clinton.” But that’s not quite true. The most ambitious proposal, the single payer proposal of Rep. Dennis Kucinich, would provide comprehensive coverage for everyone without increasing health care costs.

California Health and Human Services Agency supervised a study of nine models of health care reform. An independeant analysis demonstrated that all models that build on our current system of private health plans and public programs actually do increase costs. But the models that replace the existing private plans and public programs with a single public payer were shown to be capable of providing comprehensive benefits for everyone while actually reducing total health care costs, primarily by eliminating the profound administrative waste that characterizes our current fragmented system of funding care.

The findings are not a mere theoretical construct. The current issue of Health Affairs includes a report on the single payer system established in Taiwan in 1995. Their program “brought the health care utilization rates of the 41 percent of Taiwan’s hitherto uninsured population up to a par with those of the previously insured population” without increasing costs nor increasing waiting times for health care services.

Single payer reform is often dismissed as not being “politically feasible.” But that is hardly a reason to not take a closer look at it. A single payer system would benefit everyone by covering all essential medical services. It would benefit health care providers by converting administrative waste into resources to pay for more care. It would benefit businesses by providing proven mechanisms to contain health care costs, which is not possible under our current system. It would benefit taxpayers by providing better mechanisms to contain government health care costs. The only losers would be the private health plans. But why should our national policies be designed to protect and nurture this expensive, superfluous, and egregiously wasteful industry, at the cost of so much suffering and even death of those who are left out of our system?

It’s time to set aside politics and closely examine policies that would accomplish our goals of affordable, comprehensive coverage for everyone. The single payer model of reform is the only model that would ensure affordability of a truly universal and comprehensive program. It certainly should be front and center in all debates on reform.

Don McCanne, MD
President, Physicians for a National Health Program
Chicago, IL
www.pnhp.org

Incremental reforms will not solve the health care crisis

The Journal of the American Board of Family Practice
May-June 2003
Health Policy

Why Incremental Reforms Will Not Solve the Health Care Crisis

By Don McCanne, MD

Incremental models of reform perpetuate our flawed, fragmented system of funding health care. They perpetuate inequities both in the funding of health care and in the allocation of our health care resources. They limit choice of health care providers. None assures continuity of coverage and care. Many incremental proposals barely have an effect on the numbers of uninsured, and none of them ensure truly universal coverage. All incremental approaches substantially increase health care costs, and most current proposals assure neither financial security nor health security.

In contrast, a single payer program would provide affordable, equitable, comprehensive care for everyone.

Whether through tax policy, public programs, regulatory oversight, mandated coverage, or a combination of these and other interventions, the government will be intimately involved in our health care funding. We can no longer afford to dismiss any valid option because it is a government solution, especially in that all proposals are government solutions. We must decide how we can best use our government resources to be sure that we are receiving the greatest value for our health care investment. Limiting our consideration to various incremental solutions closes the door on the health care reform goals of equity, affordability, and efficiency, and it threatens the goals of universality, provider choice, access, and comprehensiveness. When all are readily achievable, why accept less?

For the full article: http://www.jabfp.org/cgi/content/full/16/3/257

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