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/

Callifornia State University, Sacramento, on the California Health Care Options Project (HCOP):

I attended the final HCOP meeting yesterday.

It is clear from the Lewin analyses that the single payer proposals meet the goals of universality and cost-savings. In fact – the conclusions are that everyone in California can be covered for less than the projected $151b in 2002.

The major challenges are to:

– Consolidate the three single payer proposals into one

– Organize the broadest coalition of organizations and individuals to inform and educate the population to support single payer

– Build the community-based, political structure, to legislate and implement the program

The recent reports of the collapsing “sick illness” system, and the HCOP assessment, provides the opportunity to confront the need for dramatic change.

Two letters, published in The Toronto Star, responding to Tony Fell’s call to open the Canadian health care system to private-sector funds:

Apr 10, 2002

Re Medicare rule changes urged, April 9.

For the chairman of the largest publicly funded hospital in Canada, Tony Fell of the University Health Network, to be championing private health care shows how profoundly out of touch he is with most Ontarians and how ignorant he is about the basics of health-care economics.

In poll after poll, Canadians have told whoever asks that they do not want two-tier health care.

Instead of worrying about his golfing friends waiting for hip or knee surgery, maybe Fell should talk to the nurses who work in the network’s hospitals. They will tell him that two-tier health care and a more privatized system will only worsen the problems he acknowledged, such as the nursing shortage.

Increased and stable funding from our governments and a reorganization of health-care services with a focus on community health services is the place to start to address the system’s problems.

If the nurses don’t convince Fell, who is also chairman of RBC Capital Markets, perhaps he should lunch on the links with another banking leader, Charles Baillie, chair and CEO of TD Bank. Baillie warned in 1999 that: “To set aside our single-payer, publicly funded universal health-care system would not simply be a moral error. It would be a grave economic error as well.”

Doris Grinspun

Executive Director Registered Nurses Association of Ontario Toronto

April 11, 2002

Believe U.S., Canadians, you don’t want private care

Re Medicare rule changes urged, April 9.

It is astonishing that the University Health Network’s chairman, Tony Fell, is calling for opening the Canadian health-care system to private-sector funds. He must be blind to what is happening in the United States.

Private plans are increasing cost-sharing with beneficiaries. This is a nice way of saying that the plans are passing risk on to the very beneficiaries that need health care the most. Not only are 40 million uninsured Americans having problems accessing care, but now average-income individuals who have serious acute and chronic disorders are facing financial barriers to care. This behaviour of the private health plans is only to be expected, since corporate regulators insist that the interests of shareholders must be placed first.

And this week a new report from the American College of Emergency Physicians reveals that 90 per cent of large U.S. hospitals operate at or over capacity, with overloading of our emergency rooms and frequent diversion of ambulances.

This year the U.S. is spending $1.55 trillion (U.S.) on health care, 14.7 per cent of our GDP, far more than any other nation, and yet we are receiving the worst value for our health-care dollars. The reason is that our fragmented system of private plans, government plans and no plans at all creates unbelievable administrative excesses that waste resources that should be going to care.

This week, the California Health and Human Services Agency completed a study of nine different models of reform. The single-payer models, similar to Canada’s system, would provide full, comprehensive services for absolutely everyone and reduce health-care costs for California by $7 billion. Those models that build on our current private and public system failed to deliver on the goals of universality and comprehensiveness and would increase costs for Californians.

Canadians can be very proud of their publicly funded system. We hope that the California study will enlighten our political leaders in the United States as to the wisdom of your approach.

Dr. Don McCanne

President Physicians for a National Health Program Chicago, Ill.

Copyright 2002. Toronto Star Newspapers Limited. www.thestar.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

Boston Business Journal
April 4, 2002
By Linda Goodspeed

Yet even now that there’s a commission looking at funding streams and options for achieving universal coverage, few think single-payer is the right course. Many believe the incremental expansions the state (Massachusetts) has enacted over the past decade, which have brought the state’s uninsured rate to one of the lowest in the nation (about 7 percent of the entire population and less than 2 percent of children) is working.

State Sen. Richard Moore, D-Uxbridge, co-chairman on the joint legislative Committee on Health Care:

“Right now we have about 7 percent of the population uninsured. We’re looking at a significant tax increase to get at those 7 percent by going to a single-payer system.”

“Nothing will happen around single-payer health care in the current legislative session. We can’t afford it.”

http://www.bizjournals.com/industries/health_care/health_insurance/2002/04/08/boston_focus5.html

Comment: Sen. Moore has failed to acknowledge the cost savings of replacing the health plans with a single payer system. It is simply not true that Massachusetts “can’t afford” to shift the wasted resources in the current system to filling in the voids in funding the delivery of health care services. Shifting funding to the tax system might be a “tax increase,” but for most individuals, it would be a net reduction in their health care costs. Using tax rhetoric to hide the beneficial impact of single payer reform is deceptive, if not outright dishonest.

Health Affairs
Web Exclusive
April 3, 2002
By John Holahan and Mary Beth Pohl

Abstract:

The number of uninsured Americans fell in 2000 for the second consecutive year. The reduction has been attributed to the continued expansion of employer-sponsored insurance. However, the increase in employer coverage among adults was offset by declines of other types of coverage. For children, increases in public coverage plus the growth in employer-sponsored insurance led to the reduction in the number of uninsured children. Over the longer period (1994-2000), one of great economic growth, the uninsurance rate was essentially the same at the end as at the beginning. The rate of employer-sponsored insurance increased sharply, so that more people had employer coverage. However, these increases were offset by reductions in other forms of coverage, particularly Medicaid and state-sponsored insurance and private nongroup coverage, so the overall rate of uninsurance did not change.

And from the article:

This analysis examines a period of great prosperity. As of this writing, the nation was in a recession, and there is concern that the number of uninsured persons will rise sharply.

http://www.healthaffairs.org/WebExclusives/Holahan_Web_Excl_040302.htm