San Francisco Chronicle
April 18, 2002

By Victoria Colliver

Marking an unprecedented increase in health care costs, the board of the California Public Employees’ Retirement System said that its HMO premiums for 2003 will have to increase by an average 25.1 percent and that it will dump its PacifiCare and Health Net plans.

CalPERS officials mentioned several strategies to save money in 2003. They included what’s known as “single-risk pool,” a self-funded model that would put all employees in one pool and require everyone to pay the same amount for similar services.

Peter Lee, President and CEO of the Pacific Business Group on Health, a statewide purchasing coalition for major employers, saying that change needs to come from the state and federal government:

“This is a signal health care has to be at the top of legislative policy agenda.”

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2002/04/18/BU16464.DTL

And from David Broder’s column in the April 17 edition of The Washington Post:

Dr. Henry Simmons, President of the National Coalition on Health Care (of which CalPERS is a member):

“The message is that the problem is far more serious than anybody in the political process is acknowledging. The incremental strategy is bankrupt. We need a big debate on how to get a grip on this system.”

http://www.washingtonpost.com/wp-dyn/articles/A63337-2002Apr17.html

Comment: The largest (next to the federal government) and most effective purchaser of health plans is on its knees, paying a 25% percent premium increase!

And now the president of the Pacific Group on Health, representing major employers, states that change needs to come from the state and federal government. And the president of a bipartisan coalition on health care states that the incremental strategy is bankrupt.

And the Los Angeles Times, in an editorial on April 16, states that the California Health Care Options Project “tells us there is a way to expand health coverage,” including three (of nine proposals) “that would provide universal coverage under a single payer system.”

Is there a message here?

Rudolph Mueller, M.D., author of “As Sick As It Gets”:

“… and, then, the other thing we do in this nation is we blame it on the individual. If someone dies prematurely, it’s their fault. If they have a bad outcome, it’s their fault. If they have a job that doesn’t provide insurance, it’s their fault that they didn’t get a well paying job that had insurance. If they come in and their diabetes is uncontrolled, they didn’t take their medicines, it’s their fault they didn’t take their medicines. No, it’s more… They don’t have insurance. They don’t have prescription coverage. They can’t afford their medicines. Their employer doesn’t provide health insurance because they need to be profitable.”

Dr. Mueller critiques the U.S. health care system in this 11 minute video that can be downloaded at: http://www.snowshoefilms.com/

Olin Frederick, Inc., the publisher of “As Sick As It Gets”: http://www.olinfrederick.com/

The Toronto Star
April 9, 2002
By Theresa Boyle

Canadians should be allowed to pay out-of-pocket for some medical procedures now covered by provincial health insurance plans, says (Tony Fell) the head of the University Health Network. (The University Health Network is the largest academic health sciences centre in Canada. It encompasses Toronto General Hospital, Toronto Western Hospital and Princess Margaret Hospital.)

He said the ban on extra billing of patients by physicians for “more exotic medical services and treatments over and above basic health care” should be lifted. The Canada Health Act should be opened up to allow private coverage of a hip or knee replacement “to facilitate a better golf game,” he said, offering an example. He had no other examples available.

http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1018303302131&call_page=TS_Canada&call_pageid=968332188774&call_pagepath=News/Canada&col=968350116467

Comment: If a joint replacement is not medically indicated, then it really wouldn’t facilitate a game of golf and shouldn’t be done, regardless of the funding source. Of course, the example chosen is ridiculous and would never be a basis for privatizing Canada’s Medicare system.

But efforts continue in Canada to open the private markets in health care which can only result in two-tiered health care. Initially, the affluent will use the private approaches primarily to bypass the queue. But then the public Medicare program will be treated like a safety-net or welfare program and will be chronically under-funded. The irony is that health care for the wealthy will not improve significantly in spite of a greater infusion of personal funds, but health care for those with modest or low incomes will deteriorate because of inadequate public funding. Canada must reject privatization schemes that would defeat the public good.

Jeff Kirsch, Deputy Executive Director, Families USA, responds to Donald Light on employer coverage (March 30):

In the recent discussion of employer coverage via your email, Don Light wrote:

“In a detailed study of private employers, Marquis and Long found that 51.5% of small employers offer health insurance (many with high co-premiums that workers feel they cannot afford), but they also found that only 58.1% of all other employers offered health insurance. This is a strikingly low number for a system based on employers in a large, affluent nation.”

Please pass along to Don the following information from a Kaiser Family Foundation/Health Research and Education Trust survey report on employer coverage (http://www.kff.org/content/2001/20010906a/EHB2001_sof.pdf , see page 3 ). Their data are very different than those cited by Don.

In the summary of this 2001 report from, the authors state that employer-sponsored coverage reaches 2 out of 3 Americans. Don may be using different criteria for “small” employers, but the report says that 65% of small business (3-199 employees) offered health coverage, and that virtually all firms with over 50 employees offer coverage. The breakdown of firms offering coverage looks like this: 58% of the smallest (3-9 employees); 76% of firms with 10-24 employees; 90% of firms with 25-49 employees; and 96% of firms with more than 50 employees.

Of course, this doesn’t mean that all employees are eligible for coverage (overall about 20% are ineligible because of issues like waiting periods or minimum work hour requirements); nor does it mean that all those eligible elect to take it (about 17% of those offered coverage don’t take it for cost reasons or because they have other coverage, such as through a spouse).

I’m not responding because I think that employer coverage is the answer to our many problems. Clearly, there are many concerns about the quality of coverage employees receive and how much they must pay. And there are more reasons to be worried about the movement of some employers to defined contribution policies (teaming catastrophic coverage with MSA-type schemes).

But the fact remains that approximately 9 out of 10 Americans with private coverage get their coverage from their employer, so we need to monitor that closely and work for improvements. Moreover, as much as we might want to move to a national health insurance system, we face a mighty challenge from those who want to move to an individually-based market system using individual tax credits. This threat is growing and it is not advocated just by the right-wing: many moderate Republicans and Democrats also support individual tax credits. In the face of that serious challenge, our sense is that supporting existing employer coverage becomes an important piece of the strategy to hold the line against an individual tax credit approach to health care “reform.”

Hope this adds to the debate. Jeff

Ida Hellander, M.D., Executive Director of Physicians for a National Health Program, responds to Jeff Kirsch on employer-sponsored coverage:

Jeff’s figures exclude Medicare beneficiaries — if you add Medicare then Light is right. Also, much of that “employer-sponsored” coverage is actually publicly-funded coverage for government workers. If you exclude them, private employers only COVER 43% of Americans (not 90%!!) and only PAY for 21.2% of health costs.

Alliance for Health Reform

April 5, 2002
Washington, DC

James Robinson, Ph.D., Professor of Health Economics at the University of California at Berkeley:

The new increased cost sharing virtually is designed to shift more cost onto the ill. As one person said to me once, “New product designs are designed to protect non-users from users.” And where did that come from? Where’d that come from?

Well, I think that, in the past decade, that the public sector has abdicated its basic responsibility to define what is a decent minimum health insurance and healthcare system or entitlement. And, to fight everything else, as optional and buy-out. It’s abdicated that, and it has pandered to the special interest and defined everything as the basic minimum, which drove to the current affordability crisis simultaneously in our laws, step by step, every cost control mechanism in managed care.

And so the last response available to the payers, and I’m talking about the employers here, is cost sharing. That’s the last thing. I mean, what are ya gonna do, capitation? Gate-keeping? I mean, you know. And so that’s where we are. That’s where we are. And cost sharing hurts the sick and it hurts the poor. That’s the essence of cost sharing, all right?

Now, ideally, we would all have MSA accounts which were adjusted for income, and those of us that are high income would have small accounts and we’d pay most of the rest of it off our Visa card, and those that are low income people would have real fat accounts, okay?

Also, these would be health adjusted and people that had chronic diseases would have big MSAs and people who are the worried well, oh, yeah, I’m worried well, would have small accounts, right? That’s the way, you know, the system ought to work, all right? But, as long as we’re into this-this fantasy land, where healthcare is an entitlement, it’s a right, and somebody else is gonna pay for it, and no choices have to be made, no priorities have to be set, no tradeoffs are necessary, we will never get there. And the system by itself, driven by the wishes of the individual employer and the individual employee, the healthy employee, wants the high deductible product. They want the MSA because they can spend an MSA on dental, vision, all kinds of other cool stuff. Of course, a diabetic is gonna spend the whole MSA just on diabetes care.

And that is the system that we have created. We, America, have created this system.

http://www.kaisernetwork.org/health_cast/uploaded_files/4.05.02_Transcript_HealthInsurance.pdf

Comment: Professor Robinson seems to support the concept that the public sector must define a basic tier of “decent minimum health insurance.” Clearly he recognizes the terrible consequences of shifting the costs of essential services to the individual, cost sharing that hurts the sick and poor. He recognizes that MSAs destroy access to the risk pool for the sick and poor, by protecting non-users from users.

So the public sector needs to define the basic tier. Can Dr. Robinson create a template for that tier? For the middle-aged patient, disabled with advanced degenerative hip disease, is the first tier being provided with a walker or wheelchair, with hip replacement being limited to those capable of sharing the cost? Are mammograms or a PSA tests for prostate cancer, tests which may not lead to improved outcomes for most of those screened, basic tier tests, or should they also be limited to those that are capable of sharing the cost? Or should the basic tier be defined in general terms such that all beneficial health care services should be covered? And since “beneficial” is a fluid term that changes with the state of the art, how would Dr. Robinson’s template accommodate this ephemeral concept? The reality is that placing “basic” care completely within the risk pool, and then requiring cost sharing for elective or more expensive services will inevitably prevent access to important, beneficial services for the sick and poor.

So what is the answer? The $1.55 trillion that we are spending on health care is more than enough to fund all providers and facilities that we need to provide the capacity for comprehensive services for everyone, providing that excessive administrative waste is reduced. Since the escalating costs of health care seem to be a primary concern that needs to be addressed, we can do this simply by establishing a global budget for our entire health care system. If capacity is pushed to the limit, decisions can be made on limiting services that are of negligible value, or, alternatively, we may actually want to shift more of the GDP to health care. But with a budget that is currently 14.7% of our GDP, under a single payer model there would never be a need to tell a person that your tier qualifies you only for a walker for the rest of your life.

Uwe Reinhardt, Ph.D. responds to James Robinson, Ph.D. on patient cost sharing:

I believe both Jamie Robinson and Don McCanne are right.

In a way, Jamie repeats the dire message that I wrote last August and that triggered such a heavy e-mail traffic, notably from Ted Marmor. Jamie says, “We, America, chose this.” To which Ted might add the footnote, “‘We America’ is the small elite that makes health policy.” Whatever the case may be, we are stuck with this system and shall now go through a lengthy (possibly permanent) phase in which the financial burden of health care is rolled over from the shoulders of the healthy to the shoulders of the sick. I see no way around it now, and I did not last summer.

Don is also right. If Canada spent 14% of its smaller GDP on health care, within the current structure of that system, one cannot imagine what they could not have. Gold-plated bed frames, perhaps; but everything we have and more they could have.

Alas, for some reason God won’t allow us Americans to have a single payer system, so the point is moot. Nor, of course, will the elite making health policy in Canada ever allow 14% of the GDP to be spent on health care. So that scenario is moot for Canadians.

Jamie’s (and my) prediction for America rules: Rationing by health status and income.

Mazel tov!

Best

Uwe