New York Times Letters to the Editor
January 31, 2003

To the Editor:

To satisfy President Bush’s call for universal health insurance, Ted Halstead wants to make it mandatory (Op-Ed, Jan. 31). He wants to enroll the uninsured “in a default private plan by the government, and either billed or subsidized accordingly.” This would be tough to enforce.

In Mr. Halstead’s model, non- insurance would be disclosed on tax returns next year; what about sick or injured scofflaws in the interim? And what about the millions who don’t file Form 1040’s?

Despite major government subsidies, Mr. Halstead shuns new regulations. Lower premiums would be only the hoped-for result of insuring more young and healthy participants. In fact, the plan’s objective seems simply to finance private insurers, whose more than 14 percent overhead compares unfavorably with Medicare’s 2 percent administrative cost.

Wouldn’t it be easier and more cost-effective to improve and expand Medicare to cover everyone?
JOHN GLASEL
Hoboken, N.J., Jan. 31, 2003

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To the Editor:

Forcing all Americans to buy health coverage would not drive down coverage. As the laws of economics tell, increase the demand, and the prices will go up.

Ted Halstead’s plan (Op-Ed, Jan. 31) would force millions of Americans who have made a choice about their needs to buy coverage they may or may not need.

In addition, his suggestion that Americans would get better care from the insurance companies once everyone was forced to buy it flies in the face of experience.

If Mr. Halstead’s insurance companies want “young and relatively healthy Americans” to buy health insurance, they should focus on lowering the price rather than forcing the government to cover its shortfalls.
CHRISTOPHER BOWEN
Washington, Jan. 31, 2003

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To the Editor:

I appreciate Ted Halstead’s attempt at solving our health care crisis (Op-Ed, Jan. 31). But there is a flaw in his plan.

If we require all young individuals to buy insurance, the premiums would pay for only the medical resources they use. This would have no impact on the cost of health insurance for older individuals. If we require them to pay premiums higher than the resources they use, then we are taxing them to help offset higher costs for older individuals.

It is understandable that the general public does not understand the pricing of health insurance since the cost of medical services are harder to find than Iraq’s chemical weapons. But it is becoming increasingly frustrating that most people in a position to affect public policy do not understand the financial aspects of health insurance.
CHRIS S. CARLSON
Milwaukee, Jan. 31, 2003

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To the Editor:

I commend Ted Halstead’s endorsement of universal health coverage (Op-Ed, Jan. 31). However, his idea for putting it into effect is unfeasible on one major count.

Comparing mandatory health insurance to car insurance is misguided in that many Americans do not even own cars. Either they can’t afford one, or paying for insurance would cripple their quality of life.

For many, paying for this coverage would be an insurmountable task, even with a reduced cost. Why don’t we instead do away with this bureaucracy of privatized for-profit insurance companies? The powers that be could create a national health care system in which the money that was originally going to individual health costs would instead be collected in taxes, and health insurance would be provided for all. For those who cannot afford to pay for health insurance, this would allow them access to proper health care. STEVEN SOBEY
Allston, Mass., Jan. 31, 2003

http://www.nytimes.com/2003/02/03/opinion/L03INSU.html?tntemail0

How not to fix Medicare
Marcia Angell M.D.

Sen. Bill Frist (R-Tenn., whom The New York Times has taken to calling Dr. Frist), the Senate majority leader and President Bush’s new fair-haired boy, wants to fix Medicare. This is the same Bill Frist whose father founded a for-profit hospital chain, Hospital Corporation of America (HCA). Headed by Frist’s brother, HCA merged with another hospital chain, Columbia, to form the behemoth Columbia/HCA. After riding high for a few years, Columbia/HCA (now again called HCA) came crashing down when it was charged with massively defrauding Medicare and other insurers. So far it has paid $1.7 billion in fines to settle those charges, and its legal troubles are not over.

Not surprisingly, Bush and Frist would fix Medicare by making it more like the fragmented, for-profit insurance system that people under 65 find increasingly unreliable, inadequate and arbitrary. If Democrats engage this issue properly, it should be one of the epic battles of this session of Congress.

It’s not clear that Medicare needs fundamental fixing. It succeeds very well in its main purpose, which is to provide nearly every American over the age of 65 with a uniform package of benefits. Those benefits cannot be taken away from anyone or reduced for any reason. And because it is a non-profit, single-payer system, Medicare is fairly efficient, with low overhead costs.

Still, Medicare could use some fixing at the margins. It pays doctors too much for doing high-technology tests and procedures and too little for examining and talking with patients. Its benefit package needs updating to provide long-term care and drug benefits. And its finances need overhauling. More about this shortly.

So is this the kind of fixing Sen. Frist has in mind? Not on your life. Sen. Frist and his White House friends want the very opposite. They want to introduce commercial competition, encourage Medicare recipients to join managed-care plans, cap what Medicare will pay for services and pass more of the costs on to recipients themselves. Yes, they include a prescription-drug benefit, but apparently without any regulation of the pharmaceutical industry’s prices or of the drugs covered. Most Republicans favor paying private insurers to offer limited drug coverage under Medicare. Drug companies would remain free to charge whatever they like for expensive, new brand-name drugs often no better and sometimes worse than older, generic drugs. In other words, Sen. Frist and the White House would introduce the blessings of the private health market to Medicare.

Let’s take a closer look at those blessings. The majority of people under the age of 65 are covered by employer-sponsored private insurers, mostly through investor-owned managed-care plans. Health benefits vary widely and are often grossly inadequate. The hallmark of this market is the extent to which health dollars are diverted from medical care to corporate profits and overhead. Private insurers keep an average of 14 percent of premiums for their own profits and overhead; they outsource other tasks, such as utilization review and case management, to other for-profit businesses that also divert money from actual care. Compare that with the less than 3 percent overhead costs of Medicare.

Managed-care plans maximize profits in several ways. They try to avoid marketing their products to people likely to get sick. They cut costs by stinting on medical services and making patients pay more out of pocket. They usually limit the choice of doctors or charge higher premiums for the privilege of free choice. No wonder Americans hate managed care.

In fact, surveys have shown that Medicare is far more popular with its recipients than the private health-care system is. Furthermore, despite every effort to reduce costs by limiting services, private insurance premiums are now rising at double-digit rates — much faster than the rate of inflation for Medicare. Why on earth would anyone want to visit these conditions on Medicare? One might as well wish for locusts.

Furthermore, we have had experience with pushing Medicare recipients into private managed-care plans, and it was a disaster. In the early 1990s, Congress directed Medicare to encourage seniors to enroll in managed-care plans as a means of containing costs. For each senior, Medicare paid health plans 95 percent of the average Medicare costs per beneficiary in that geographic region. If the health-plan sponsors could provide coverage for less, they could pocket what they saved. Seniors were lured by the promise of smaller co-payments and broader benefits, such as coverage for prescription drugs and eyeglasses.

But look at what happened. The plans — deliberately — attracted mainly the youngest and healthiest of seniors, people who cost far less than 95 percent of the average. According to one study, Medicare ended up paying 12 percent more for enrollees in managed-care plans than it would have paid for the same patients outside the plans. “Choice” was a bonanza for the managed-care companies, but not for consumers or taxpayers. As patients aged or became seriously ill, they often left the plans and returned to the regular Medicare system, where coverage was usually more accessible and they could choose their own doctors and see specialists if they wanted.

When Medicare officials grasped that they were losing money, not saving it, on managed care, they cut back on reimbursement levels. At that point, deprived of their excess profits, private health plans began to bail out. Many curbed the benefits of Medicare recipients or stopped accepting them altogether (a couple of million seniors were simply dumped). Why would Sen. Frist, or anyone for that matter, want to repeat that failed experiment?

The answer may lie in a conservative ideology that believes private enterprise is always better and — even in the face of abundant evidence to the contrary — more efficient in providing just about anything, including a social service such as health care. And it may also lie in Republican gratitude for the lavish financial support the party receives from the health and pharmaceutical industries. But Sen. Frist’s own background is surely an important factor. His family is in the for-profit health-care business. Although he himself is said to have put his large interest in HCA into a blind trust (with the approval of the Senate Select Committee on Ethics), it still remains true that whatever is good for HCA is good for Bill Frist. And it is undeniable that Medicare policies affect the fortunes of the company. Yet Frist has become an important voice on health policy in the Senate, and now that he is majority leader, his influence will grow. It is astonishing that this obvious conflict of interest has been so little noted.

How, then, should we shore up Medicare? its fees should be adjusted to reward high-tech medicine less and time spent with patients more. It needs a mechanism for discouraging physicians from providing unnecessary services to generate more income. Other advanced countries with single-payer systems achieve that. In Canada, for example, doctors who are found to do much more than the average number of tests in their specialty may have their practices reviewed.

In addition, the benefit package should be updated to reflect current medical realities. Medicare, remember, was crafted in the mid-1960s, when medicine was quite different. Long-term care for chronic diseases was less important then (the focus was on acute diseases), as were prescription drugs for outpatients (there were not many effective drugs and they were cheap). That is why Medicare does not cover these things. But conditions have changed. Long-term care and outpatient prescription drugs are now not only medically necessary but also very expensive. It makes no sense for Medicare to continue to exclude them. However, any prescription-drug benefit would need to be restricted to the least-expensive effective drugs and include a mechanism for bargaining with drug companies for the best prices. Otherwise it would be an unaffordable windfall for the pharmaceutical industry.

The funding of Medicare also needs some attention. Medicare is divided into two parts. Part A, which covers hospital care and skilled nursing and home health care, is funded by a 2.9 percent payroll tax. Part B, which covers doctors’ services and outpatient care, comes out of general tax revenues and monthly payments from recipients. Those payments, now $58.70 per month, have increased over the years. Seniors are also responsible for substantial co-payments for services. The result is that Medicare recipients now pay more out of pocket (in constant dollars) for their health care than they did before Medicare was instituted. That tends to undermine the whole purpose of the program, which is to shield vulnerable seniors from the burdens of illness. I would favor eliminating the monthly Part B premiums and greatly reducing co-payments, as well as shifting more of the cost to general federal revenue.

Whether these reforms would have a net effect of increasing or reducing total Medicare costs is hard to say. Reducing overtreatment by physicians would save money. On the other hand, expanding benefits, eliminating Part B premiums and reducing co-payments would increase costs to the program. Seniors themselves would certainly save money, as would Medicaid, which now pays for much of long-term care. The fact is, countries with single-payer systems get more appropriate care for less overall money. Advances in technology and the aging population may well raise total health-care costs over time. But that’s all the more reason to spend health dollars efficiently. And if we Americans want to spend a little more of our gross domestic product on health care, that’s our choice.

Sen. Frist and the White House have it exactly backward. Turning Medicare over to the private sector would duplicate all of the health market’s arbitrariness, cost shifting and inefficiency. Instead, we should be thinking about strengthening and expanding Medicare as a public program. After all, it’s the only part of our health-care system that works even reasonably well. And if irony were not dead, we would surely notice how strange it is that the future of Medicare is in the hands of someone whose family business is paying enormous fines to settle charges of defrauding that very same program.
Marcia Angell M.D.

Copyright © 2003 by The American Prospect, Inc. Preferred Citation: Marcia Angell M.D., “Dr. Frist to the Rescue,” The American Prospect vol. 14 no. 2, February 1, 2003. This article may not be resold, reprinted, or redistributed for compensation of any kind without prior written permission from the author. Direct questions about permissions to permissions@prospect.org.

www.prospect.org/print/V14/2/angell-m.html

By Thomas Oliphant, 1/28/2003

WASHINGTON:PRESIDENT BUSH took office two years ago with a preposterous message against the gauzy backdrop of a phantom budget surplus that we could have it all – lower taxes and more services and benefits.

This week the message hidden in the fog of pre-State of the Union propaganda is that we can’t and that Bush wants to attack the services and benefits that make up America’s social contract to keep the tax cuts coming.

The best and biggest example is Medicare.

Behind PR words like ”choice” and ”competition” and the alleged ”magic of the marketplace” lies an option for the country’s retired people that Bush has rejected. He hasn’t rejected it because he considers it bad policy; it was considered an obvious part of a responsible health care policy. Instead, he has rejected it because he places a higher priority on cutting the top income tax rate and eliminating the levy on stock dividends.

The rejected choice would have added a prescription drug benefit to Medicare. It would have required major changes in basic Medicare to reduce the growth in its costs – currently more than $260 billion a year. But the changes would not touch Medicare’s essential features, which nearly two generations of retired people have embraced wholeheartedly.

In studying this option, administration officials went to great lengths to estimate how many retired people would choose it. Their conclusion was that virtually everyone would. The idea would have stimulated bipartisan discussion. There would have been vigorous arguments about the scope of the drug coverage and the extent of the cost controls, but the option would have nudged toward agreement.

The rejection of this choice had nothing to do with its merits and everything to do with Bush’s domestic priorities. The cost was estimated to be nearly $470 billion over the next decade. In demanding that $100 billion come out of a Medicare initiative, the president changed the politics from center to right.

To protect his tax cuts, Bush came up with a three-pronged hybrid based on coercion and cave-ins to his party’s campaign cash cows – insurance companies and their health maintenance organizations, drug companies, and for-profit health care providers. To call these three prongs ”choices” borders on the obscene.

The first one is fee-for-service Medicare as we know it. Not even Bush would propose eliminating this choice for those in or nearing retirement. The only problem with his initiative is that for those who choose it there would be no prescription drug benefits – none. That is the classic Hobson’s Choice – in reality, no choice at all.

To get even a puny drug benefit as well as limited coverage for the catastrophic illnesses that can land a person in a nursing home, there would be two paths open to the elderly.

One is HMOs and the managed care that Americans, with good reason, love to hate. For the growing population of basically healthy Americans in retirement this can be a genuine option were it not for the fact that insurance companies have been dropping coverage under Medicare by the millions recently because they don’t like the profit margins. In many parts of the country there are simply no HMOs offering retired people coverage. Bush wants to offer them higher profits and a new, coerced market.

To fill the remaining, cavernous gaps, he is also offering a national alternative run by for-profit companies. The details are sketchy, but this ”coverage” would reimburse no catastrophic costs up to $6,000 annually. For drugs, a retired person would pay half his costs up to $3,000 and receive no reimbursement for costs between $3,000 and roughly $5,500. For the first time, there would even be a requirement for copayments for home health care – in effect a new tax on the infirm trying to stay out of the hospital.

You can also bet that the Bush proposal will include nothing resembling restraints on soaring drug prices or for-profit provider charges. Given current trends, you could almost imagine every one of Bush’s new dollars getting snapped up in higher prices and fees.

This abomination did not emerge out of administration discussions about health care policy. Instead, it emerged out of discussions about budget priorities.

Right now the government’s hemorrhaging finances are mostly the result of a slumping economy and the higher costs of war. Down the road, however, the cause of an even greater hemorrhage will be tax cuts.

Something had to give, and Bush has decided that to preserve all those tax cuts, that something should be Medicare and its 40 million elderly beneficiaries.

Thomas Oliphant’s e-mail address is oliphant@globe.com.

This story ran on page A15 of the Boston Globe on 1/28/2003. © Copyright 2003 Globe Newspaper Company.

Tuesday, January 28, 2003
By Robbie Dingeman Advertiser Health Writer

State House leaders yesterday proposed an overhaul of the healthcare insurance system in Hawai’i, creating a state authority that would provide universal health coverage for all residents.

Rep. Dennis Arakaki, chairman of the House Health Committee, admitted such a radical change probably would not pass this year. But he said something revolutionary needs to be done to make affordable healthcare more available and to stem rising costs.

Hawai’i has long been viewed as a model state in providing its citizens with health coverage. The Prepaid Health Care Act of 1974 requires that employers pay the bulk of health insurance premiums for full-time employees.

But the share of Hawai’i residents without health coverage increased from 7.5 percent to 11.1 percent between 1997 and 2001, according to the U.S. Census Bureau. Among those who fall through the cracks are retirees and part-time workers.

Arakaki, supported by House Speaker Calvin Say and others, wants to scrap the prepaid health insurance program and replace it with a state authority that would roll all public and private healthcare insurance coverages into a single state-run insurance fund.

As described in House Bill 1617, the authority would collect payments from all insurance mechanisms – private plans such as HMSA, Medicaid, public-worker benefit programs and the medical portions of auto and workers’ comp insurance.

“Healthcare spending is at an all-time high; double-digit increases are expected for Medicaid costs and private insurance premiums, an aging population is needing more care and prescription drugs; and the poor economy is making it difficult for any payer to cover it, whether state governments, businesses or individuals,” said Arakaki, D-30th (Moanalua, Kalihi Valley, Alewa).

Senate President Robert Bunda was less than enthusiastic about Arakaki’s proposal, although he did not know the details.

“The first thing that crosses my mind is when you have any kind of state administration, of course you’re talking about more people added to the rolls, you’re talking about a bureaucratic maze that people kind of don’t want anymore,” said Bunda, D-22nd (North Shore, Wahiawa). “There are times when you have a state administrator doing something maybe the private sector should be doing, (and) the process is somewhat slowed down.”

Reaction from industry and community representatives was cautious to skeptical.

Cliff Cisco, senior vice president for the Hawai’i Medical Service Association, the state’s biggest private health insurer, said such a big change is unlikely to win support quickly.

“This would be a significant move toward government responsibility for all healthcare,” Cisco said. “I’m not sure that this community is ready to turn everything over to the government.”

Arakaki acknowledged that the proposal is likely to face opposition from businesses and the unions, who might not like the idea of being put into one plan. But he believes businesses, who have complained about the increasing costs of health insurance premiums, might be open to the discussion as a way to slow or stop rising costs.

Greg Marchildon, executive director of AARP Hawai’i, which represents retirees, said the organization sees the need for reform, because “the system in due time is simply going to implode under its own weight.”

But Marchildon isn’t sure the timing is right for a radical overhaul, because Hawai’i has been effective at insuring most of its residents.

“We are the envy of the rest of the states,” he said.

No state has universal health coverage, although there have been ballot initiatives put before voters.

In November, Oregon voters rejected a universal healthcare system that would have been the first in the nation, in which every resident would receive medical coverage for everything from massage therapy and marriage counseling to brain surgery and long-term care. The sponsors of the initiative cited rising numbers of uninsured people and spiraling costs.

Backers of the ballot proposal said they were outspent by powerful special interests, despite strong grassroots support.

“This is going to be a very tough haul,” Marchildon said.

Across the country, universal healthcare advocates have been frustrated in bids to revive debate and congressional action in Washington after the Clinton administration’s failed attempt to retool healthcare finance in 1993-94.

Oregon’s ambitious proposal called for potentially steep increases in payroll and personal income taxes. But supporters said those costs would be offset, because residents no longer would pay premiums for private health insurance. Instead, they would rely on a single-payer system that would reimburse doctors and other providers for their medical bills, with no co-payments or deductibles.

Opponents, including business leaders, insurers and health maintenance organizations, said the plan would have cost as much as $20 billion a year, wreaked economic havoc and caused an exodus of investment and jobs from Oregon.

Rich Meiers, president and chief executive of the Healthcare Association of Hawai’i, representing hospital and other healthcare providers, said it’s clear the industry needs to “look at something new,” though he stopped short of saying a state-run system would be an improvement.

Costs are going up for consumers and hospitals, while government reimbursements have declined as the numbers of uninsured have gone up, Meiers said.

The Associated Press contributed to this report. Reach Robbie Dingeman at rdingeman@honoluluadvertiser.com or 535-2429.

Article url: http://the.honoluluadvertiser.com/article/2003/Jan/28/ln/ln14a.html

January 23, 2003
Chicago Sun-Times
Op-Ed

Senate Majority Leader Bill Frist must recuse himself from health care legislation deliberations.

He comes to his new post with a record of self-interest and partiality for the corporate health care delivery system.

Frist owns $26 million of his family’s company, Hospital Corporation of American (HCA), the nation’s largest for-profit hospital chain. HCA has the questionable achievement of executing the largest white-collar crime in U.S. history, having been penalized $1.7 billion in fines, so far, for gouging Medicare, health care for our elderly.

It was only a forgiving Bush administration Justice Department that spared the perpetrators prison time. In 1995, Frist supported a Medicare bill to increase for-profit hospital reimbursements by $65 per patient, while reducing not-for-profit reimbursements by $6 per patient. More recently, he has worked to stop a strong patient’s bill of rights, and gridlocked a Medicare prescription benefit.

His reward from the health care industry: more campaign finance dollars than all but two Senate colleagues.

Dr. Frist has an ethical imperative to assure the American public that he will not, as majority leader of the Senate, frame health care legislation.

Quentin Young, M.D.,

Physicians For a National Health Program