PNHP

Theodore Marmor responds

Theodore Marmor responds

Theodore R. Marmor, Professor of Public Policy and Management, Yale University School of Management, responds to Uwe Reinhardt:

This is a very low level of intellectual exchange, hardly worthy of Uwe. First, there is a straw man produced, then a commentary — based on Uwe’s participant observation–about the American citizenry. Not a word about the work on public opinion by, first, V.O.Key, and, more recently, by Ben Page, Larry Jacobs, and Robert Shapiro. In short, this is empirically uninformed generalizations, a subject that Uwe has strong opinions about. This reminds me of the fallacy of post-hoc, propter hoc, one that many economists are guilty of. If an outcome arises, it must have been because someone (group) wanted it and/or did not avoid it strongly enough. Ergo, what emerges must have been what was wanted/ or at least not sufficiently fought. This has little to do with explaining why America has the health care system it has, though the structure of our government–and the institutional advantages it gives to non-governmental interests does.

Theodore R. Marmor

Comment: Post hoc ergo propter hoc? – the great fallacy of logic that temporal relationships establish etiology. Is this or is this not a fault inherent in Professor Reinhardt’s discussion? Does “political will” influence government action? Does political will even exist in the presence of an uninformed and unconcerned electorate? Is it a fallacy of logic to propose that a disinterested public fails to create the political will that would be required to enact health care reform? Professor Marmor seems to reject the role of the the lack of public input into the political process, even though that, in turn, does allow for the enactment of private institutional advantages. In my reading of Professor Reinhardt’s comments, the concept of this lack of public involvement delivers a strong, implicit message, to which we shall return.

Fundamental to this discussion is understanding just what Americans do believe. Do Americans believe that individuals should be deprived of care simply because they cannot afford to pay for it? Suppose a teenage boy showed up at an emergency room with acute appendicitis, but has no insurance and no funds. Does anyone believe that he should be turned away? Of course not. What about the little girl with a potentially curable cancer, but with no insurance and no money. Everyone would agree that she must somehow be worked into our health care system, even if unable to pay. And what about the widow, who loses her insurance along with her husband, and then develops diabetic ketoacidosis. She too would certainly receive needed care. And the costs for providing care in each of these instances would be shifted to others, with all of us indirectly contributing through our unique, but highly flawed, American approaches to the funding of health care. But in this country, the costs of providing care for these individuals would be met only after they are forced into financial ruin or even bankruptcy. Does our egalitarian spirit that makes us want to assure that these people receive care extend to wanting them to face financial ruin? No, Americans are better than that. But Americans do have to begin to understand that these are the consequences of our highly flawed system of funding care. They have to understand that, with the same resources that we already have, we could provide insurance for these individuals and for everyone else in the nation. If they really did understand this, do you think that they might support that concept? They probably would, except for the hurdle that they believe that they don’t want the government involved, or at least they believe that they believe that..

But what do they really believe about government involvement in publicly administered programs of social insurance, specifically Social Security and Medicare? Well, they certainly want their Social Security retirement benefits, although many now want a much larger benefit. They agree that there must be some form of mandatory funding, or tax, but some believe that they can increase the return through private investment accounts. It is not the purpose here to debate the actuarial value of Social Security disability insurance, survivors’ annuities, progressive benefits, inflation adjustment of benefits, nor the excessive administrative expenses and risks of individual accounts. The point is that Americans do want government mandated retirement protection, and the majority still prefer public administration, and most of the rest would if they were fully informed on the issues. And Medicare? Focus groups now indicate that the majority do have some understanding of the privatization schemes, and they want a publicly administered Medicare program to always be there for them. In fact, they not only want Medicare to be protected, they want the benefits increased, especially to include pharmaceuticals. They want a bigger and better Medicare program, albeit a government program. Although anti-government elements have been successful in feeding Americans the “we don’t want the government involved” rhetoric that they parrot, they have not been successful in convincing them that social insurance is bad. The problem is that we activists have not effectively delivered a message that they can believe and support, the message that universal social insurance for health care would solve essentially all of our problems with the funding of health care. Yet we activists continue to bask in our successes in health care reform.

Our successes? Look at them. Look at all of the legislative proposals that were successfully introduced. Look at all of the initiatives and referendums that made the ballot. Look at the various bills that were passed, lacking only the necessary funding. Look especially at the great numbers of successfully completed studies confirming our suspicions that we have serious problems in health care, in spite of our great resources. Look at the studies that have demonstrated that we can provide comprehensive care for everyone with no increase in expenditures. Look at the great body of literature in health policy that has expanded our understanding. In the past decade, our efforts have intensified, and our successes have escalated. And look at the numbers of the uninsured in the past decade… from approximately 32 million to 40 million!? And the numbers with inadequate coverage… accelerating at a dizzying pace now that we are “empowering” health care consumers. And an administration that has reduced the numbers of uninsured by 3 million… not really, but a manipulation of the numbers that reduces the pressure to do something, even if it didn’t really bring one more individual into the ranks of the insured.

Our decade of successes has left us worse off than when we began! And yet we have a nation that believes that they are complacent with the status quo… if only they understood. And that is where we have failed. There will never be reform without political will. And there will never be political will without a clear message from the people. And there will never be a clear message if the people don’t understand the real issues. And there will never be reform if we continue to fail in our task of informing the public.

Maybe Professor Marmor was looking for a different message. But Professor Reinhardt’s message jumped out at me from the computer screen. The message I saw? HEY! YOU ACTIVISTS. WAKE UP! GET UP OFF OF YOUR DAMN DUFFS. GET OUT THERE AND WAKE UP THE NATION! WAKE THEM UP AND DELIVER THE GREAT NEWS THAT WE CAN PAINLESSLY ACHIEVE EQUITY AND JUSTICE IN HEALTH CARE FOR EVERYONE.

Yes, that is Professor Reinhardt’s message. But it is our task.

Don

Uwe Reinhardt responds to Theodore Marmor

Earlier message of Theodore R. Marmor:

This is a very low level of intellectual exchange, hardly worthy of Uwe… (remainder of message deleted)

Uwe Reinhardt responds:

My dear friend Ted:

Although I always welcome your thoughts on matters of social policy, and often profit from them, I am less charmed by your easy habit of dismissing arguments you do not like with adjectives such as “low-level intellectual exchange” or “empirically uninformed,” or similar infelicitous phrases. It is not a good habit, Ted, and you ought to disabuse yourself of it. Please stick to the substance of the argument and forget the ad-hominem barbs. You are a smart fellow, we know; but so are others in this debate. You may have noticed that I disagreed with Kip, but I did not call him names nor characterize his arguments with infelicitous labels. The only one I called names may be the lethargic American citizen, but even here the label “teenager” was meant to be seriously descriptive. I do find something juvenile in the idea that one has rights and no civic obligations and, frankly, never did get my mind around the American people until our children had reached teenage years.

A year ago, at one of the Princeton Conferences, Norm Ornstein gave the keynote address. Perhaps you do not think well of Norm. I and many of my colleagues consider him an astute observer of American politics. It is the reason he was invited to give the keynote address at that august conference. One of Norm’s propositions that night was that any proposed health reform that might exact any sacrifice whatsoever from any politically potent constituency is dead on arrival. I rose to remark that, in so many words, Norm had characterized the representative American citizen as a selfish lout without any civic vision, without any willingness ever to bear some personal sacrifice for the common good. There was icy silence in the room at first. But in the end everyone, including Norm, agreed that that is basically what he had proposed; and he stuck to it. Implicitly, we all agreed that universal coverage was, therefore, a far-off dream, that we could at most make small, incremental inroads into the problem of the uninsured. Indeed, we agreed that we might be lucky merely to maintain the status quo. What have you, Ted, to say about that? Is Norm Ornstein wrong?

After the 1994 election, I showed my students a graph (it had appeared in the NYT) according to which voter participation in the 1994 election rose sharply with income. As I (vaguely) recall it, over 60 to 65% percent of eligible voters with incomes above $60,000 voted. For the lower income strata the ratio descended to the mid 30s. I remarked to my students that it is small wonder that our economy is being rearranged by the government mainly to suit the tastes of the upper half of the income distribution and, incidentally, that the quest for universal health insurance was more or less derailed for the time being. If the subjects of our compassion don’t even bother to vote, and if political activists like Pete Stark and Henry Waxman become imperiled anachronisms, who can help the poor?

Is it really low-level intellectualism to argue that the typical American has a more keenly developed sense of entitlements than of civic duties? Is it really low-level intellectualism to hypothesize that Canadians and Germans, who view their health systems as part of the cement that forges a group of people into a nation, may have a stronger sense of nationhood and the civic contributions that go with it? Are these observation so unworthy that they need to be dismissed with unflattering arguments and the recitation of sundry, allegedly illustrious names, rather than being debated on the substance? What about debating these arguments on the substance, Ted?

Finally, in the realm of politics, is the economist’s idea that “if an outcome arises, it must have been because someone (group) wanted it and/or did not avoid it strong enough” or did not fight sufficiently hard for an alternative outcome really so far fetched that it can be easily dismissed simply with an allusion to the “post-hoc, ergo propter hoc” fallacy, without the need to engage the hypothesis directly, Ted? If the economist’s line of reasoning is so wrong, what have political scientists to offer in its stead? Do outcomes just happen, without anyone either wanting them or opposing them or not sufficiently fighting for them? How, Ted, DO things happen, then?

I am aware that the structure of our government, in which political influence can be purchased retail, legislator by legislator, chairman by chairman, makes it more difficult to legislate clean health care legislation than does a parliamentary system such as Canada’s or Germany’s, where there is party discipline and where political influence must be purchased wholesale (i.e., the whole party), if that is legal at all. But to completely dismiss the voter in this picture, as you seem to do, Ted, strikes me as going much too far. Are you telling me, Ted, that the wishes of the electorate do not at all matter in our democracy, that structure is everything?

My perhaps politically naive theory would be that our system of government allows the electorate from time to time to put into power one of several rival elites, who then run the country for the duration of their term, mainly (though not exclusively) at the behest of powerful, moneyed interest groups or powerful ideological allies. The point is that the electorate does have the power to replace the elites at the helm. Surely that power is worth something, and the electorate can properly be held accountable for its exercise or lack thereof. Are you dismissing that power altogether, Ted? Can structure alone explain why a potential elite openly devoted to universal coverage (e.g., Bill Bradley’s campaign last year) did not have a chance at all at the ballot box? Did the electorate having nothing at all to do with Bradley’s demise? Did it just happen?

Don McCanne does a much finer job than I can in commenting further on your comment, Ted. Let me then leave it at that.

Best regards,

Uwe

Don McCanne commented:

(The message is deleted except for the final comment)

Maybe Professor Marmor was looking for a different message. But Professor Reinhardt’s message jumped out at me from the computer screen. The message I saw? HEY! YOU ACTIVISTS. WAKE UP! GET UP OFF OF YOUR DAMN DUFFS. GET OUT THERE AND WAKE UP THE NATION! WAKE THEM UP AND DELIVER THE GREAT NEWS THAT WE CAN PAINLESSLY ACHIEVE EQUITY AND JUSTICE IN HEALTH CARE FOR EVERYONE.

Uwe Reinhardt continues:

That is my message, Don. In my perhaps politically naive but nevertheless firm view, unless the political power of the lower-income strata can be concentrated on the problem of the uninsured, there is unlikely to be much legislative relief in that area (short of President Bush’s having another epiphany. Miracles do happen.)

I would assume that I had sent all of you a somewhat angry piece I wrote on this issue two years ago for the US Chamber of Commerce. Ted is likely to dismiss that one, too. But many esteemed colleagues thought I was right on the mark with that piece among them, for example, Peter Budetti. If you don’t have it, I’ll e-mail it to you.

Pastor of the Shady Grove Presbyterian Church in Memphis, and long active in health care reform

Tom Mainor, provides two responses (before and after Dr. Reinhardt’s “bread and circus games” single payer commentary):

Aug. 14, 2001

I can understand that after all these years, Uwe Reinhardt is somewhat cynical and depressed at the current state of things. But Kip Sullivan is on target when he suggests that the American people have never been permitted to look at true alternatives without the pejorative labels attached. We have never really been provided a public examination of comparable health care systems and costs in other advanced nations. Nor has the press proceeded to examine why we are number one in spending and number 37 in results.

Corporations, with all their vaunted analytical resources and employee benefits, are pouring good money after good money into the corporatization of a resource that should be basic to civilized society. We would not corporatize fire departments and only put out the fires of those who had proper insurance. We would not allow ships to sink off our coasts because they did not have Coast Guard insurance… at least, I don’t think we are at that stage.

Our hospitals have been built in communities across the land, and funded by public (local, national and state), private, corporate and community-based fund-raising. They have been built for the simple reason that all of the above elements in society felt a need to have these resources. The sentiment and instincts to care for the vulnerable go back centuries. We do the same with VA and other health resources. St. Jude’s Children’s hospital here in Memphis is not in the business of making a profit off health care. They use abundantly provided resources to provide care for children–most often, children whose parents would never have the resources if the larger community had not provided such a place. This is multiplied across the land and the world.

The notion of publicly provided health care has a long tradition. HEALTH CARE IS TOO IMPORTANT TO BE LEFT TO THE MARKET PLACE. The bottom lines are the needs of the community, and how best to provide them. Universal access and globally budgeted health resources–including medical groups–is a way to use the abundant resources now being used for excessive administrative costs and for-profit entities. Salaried physicians in hospitals, e.g. trauma surgeons and others, as well as salaried medical professionals in medical academia provide often superior care to their for-profit colleagues….

Well, didn’t mean to go on so long… Cheers. Tom Mainor

Aug. 16, 2001

Masterful! Amazing! Sobering! Frustrating! Not the whole story! Perhaps with the brain power you have responding, there may be a way to begin to educate health professionals, some business and responsive and articulate journalists, and even a few political figures on various levels. One medical CEO here in Memphis told me he assumed the post as a right-leaning Republican. Now he is so disillusioned, he feels he has arrived at an almost socialist position. He is a good physician and CEO. More importantly, he really cares about how it all turns out.

One can understand Uwe’s despair, but we shouldn’t let the Limbaugh’s and the BushCheney’s of this world continue unchallenged. Ayn Rand’s philosophy may rule the day, but more fundamental human instincts, and the JudeoChristian (as well as other religious insights) still advocate providing for the care for and cure of the vulnerable and the sick in most societies. There are also progressive economic reasons for single payer/regional global health care budgeting that obtain which would improve both society’s and corporate well being. The Constitution also talks about providing for the general welfare, and advances the notion of a true Commonwealth.

Thanks to Uwe and his friends for the dialogue… Tom

Uwe Reinhardt comments on LeBow and Sullivan

Uwe Reinhardt, Ph.D., James Madison Professor of Political Economy, Princeton University, comments on the responses of Kip Sullivan and Bob LeBow, and then discusses managed care and the single payer approach to reform:

Because your scream at my one-liner was so primeval, Kip, let me respond to it and, in the process, to other commentaries that were submitted. Let me begin with some remarks on the American people as I have come to know them. Thereafter I’ll say a few words on the role of managed care and the peoples’ reaction to it. Finally, I shall offer my views on single payer systems. It will be useful for me to think through some of those issues.

THE AMERICAN PEOPLE

Both you, Kip, and also Bob LeBow portray the American people as more or less hapless subjects of a crony-corporatist “democracy” in which a corporate aristocracy uses its paid political agents to arrange the economy so as to suit the aristocracy’s tastes. Unlike similar setups in Asia, however, the American aristocracy is not benign. In Singapore, Taiwan and Japan, for example, such corporate aristocracies at least have installed universal, reasonably egalitarian health insurance systems and first-rate egalitarian systems of education. By contrast, America’s corporate aristocracy has left the lower classes to languish on both fronts–perhaps even to make them a more docile servile class.

A skeptic, like me, would wonder what makes the subjugated American plebs celebrate this nasty setup with such enthusiasm every July 4th. The answer might be that the aristocracy has kept the plebs mesmerized with some kind of opium–like religion, Lenin’s “opium of the people.” In this case, the opium is the myth that anyone in America has an equal chance of becoming rich or the President of the United States, which may be the reason why even the poor favor the abolition of the inheritance tax. Another helpful myth may be that we have the best health system, education system, railroad, cellular phone system, _______ (fill in any noun) in the world, which the average American firmly seems to believe. No matter how miserable an American may be, he or she thanks God for being in America. Powerful stuff, that, and very useful to the conduct of a society with as wide an income distribution as ours. Perhaps that is all it takes to subjugate a people.

Now, is that your vision of American “democracy”, Kip and Bob? This vision, of course, leaves the subjugated plebs totally off the hook in matters of health policy or any other public policy. It excuses them from informing themselves on matters of public policy, from participating in a conversation on it, and even from voting at all. The excuse is that any exercise of these powers would come to naught in any event.

I am not prepared to go quite that far. To be sure, there is something like a corporate aristocracy in America, and it is growing stronger and more entrenched by the day, as corporate chieftains have learned how to fleece their shareholders legally and to amass vast fortunes in the process. It is also true, as Bob points out, that American health policy has been run much more in the interest of the supply side than in the interest of patients. Leaving millions of American elderly citizens without coverage for prescription drugs is but one manifestation of this bias.

But I believe the American citizen would have more say and and could exercise more power in our democracy–even in health policy–if that citizen could ever bring him- or herself to mature beyond the stage of blissful adolescence. It may be outrageous for an immigrant to these shores to say it, but having lived consciously in two other societies, I am impressed with how juvenile the so-called average American citizen is on most matters of public affairs. To me, the typical American comes across as a permanently exuberant, lovable, sometimes charming and often vexatious adolescent who knows much about personal entitlements and very little about personal responsibility or civic duties. He or she is the rugged individualist who builds a house in the flood plains, only to whine why FEMA takes so long in coming to the rescue when the flood appears. It is also the investment banker in the Hamptons cursing the intrusive government, all the while basking in the comfort of federal flood insurance. As I said, those of us who came from abroad find this basically charming, somewhat amusing and often very frustrating. If America is the corporate aristocracy that you seem to have in mind, it is so mainly because the average American citizen simply refuses to grow up. Over half of them do not even vote or know the names of their state’s senators. By European standards, they are pathetic citizens, to use that term loosely.

HEALTH INSURANCE PRIOR TO ‘MANAGED CARE”

No foreigner, for example, could understand that any sane nation would run as uncontrolled and open-ended a social contract with its health system as the US did during the 1960s-1980s. Essentially, like the card-carrying teenagers that they are, the typical working American expected to be given by his or her employer an open-ended health-care credit card that could be used anywhere, for any conceivable purpose vaguely related to health care, in any amount, and whose balance the “parents”, the employer, was to pay off from time to time, without any question asked.

Much has been written about this period, and I won’t repeat it here. Jack Wennberg brought to our attention the inexplicable geographic practice and cost variations that this contract begot, and the questions it raised concerning the quality of American health care (just look at his last edition of the Dartmouth Atlas, devoted entirely to quality). Bob Brook, Mark Chassin et al. showed us how much unnecessary care and human suffering that contract begot us. Exuberant teenagers who won’t read much beyond papers like the New York Daily News, Americans remained blissfully ignorant on the fiscal and physical burden this contract visited on them. The single-payer Medicare program, in particular, was shown to be rife with what now has come to be called “misuse, overuse and underuse.” (I’ll fax you some stuff if you doubt me.) Kip says that this “overuse” was dwarfed by “underuse.” That may be so if one includes the uninsured. But within the body of insured, “underuse” would have occurred only if neither patient nor doctor had thought of additional ways to spend the insurance collective’s money.

Sadly, American medicine turned a deaf ear to the entreaties of policy analysts to address these issues. The only policy response from that quarter was the demand for more money, although from 1965 to about 1992, America increased its annual allocation to health by 4.5% in real dollars and per capita, year after year, as GDP per capita grew at about 1.7% per year. Expecting no help at all from the providers of health care, private employers turned to what was pitched to them by academics (notably Enthoven) as a perfect hybrid between pure government plans and unbridled private insurance: managed competition with managed care.

By its very nature, this construct sought to shift market power to the demand side of the health sector towards two ends: extracting price discounts from providers and imposing on them guidelines ostensibly designed to eliminate that vast and sometimes dangerous excess utilization. Managed care plans would never tell doctors what they could and could not do with their patients. They merely would tell them what they would and would not pay for. It is a subtle but important distinction. Even so, to hear “No” on any account, or whatever reason, in this context was more than either patient or provider was willing to countenance. Rationing of any sort was deemed un-American, and yet judicious rationing, as David Eddy has written so eloquently, is the core of a fair and efficient health system. Every single-payer system practices it, either overtly or implicitly.

THE MANAGED CARE BACKLASH

I agree with Kip that, during much of the 1990s, the managed-care industry made most of its profits from price discounts and, to some extent, from attracting favorable risks. There was little effective managing of care for two reasons.

First, the knowledge and tools to manage care were lacking. We know this because even the presumably benign, not-for-profit, physician-driven academic health centers who took capitation did not know how to manage care, for want of the basic know-how and the technology to implement it. No one managed care–not the insurers, not capitated providers, nor patients and their individual physicians. If you have any doubt about it, read what Jack Wennberg writes and shows in the latest Dartmouth Atlas of health care: The Quality of Medical Care in the United States: A Report on the Medicare Program. The Medicare program is, of course, the U.S. single-payer system par excellence.

Second, of course, the American teenage-consumer was unwilling ever to hear “NO!” under any circumstance, even if the “No” was intended to avoid paying for dubious or useless care. An American teenage-consumer is entitled even to unnecessary care, as long as he or she wants it. That is the operative credo.

But managed care did achieve something in the 1990s. As late as October 1993, the CBO had projected health spending of $1.673 trillion for the year 2000, 19.7% of GDP. Actual spending for 2000 was only about $1.3 trillion, less than 14% of GDP. Most of those savings came from price discounts. Some came from reducing hospital length of stay. Only a minute fraction could have come from the denial of recommended care that panels of clinical experts would have judged essential. I believe Joe Newhouse et al. had a paper to that effect in Inquiry a few years back.

Now, who got the $370 billion savings in 2000 relative to the CBO baseline forecast of $1.673 trillion? Physicians think it flowed to corporate executives and shareholders. I defy you to find a single economist who would agree to that interpretation. It is almost certain that, in the tight labor markets of the 1990s, the bulk of those savings flowed through to workers in the form of larger take-home pay. Alas, workers, do not know that. No one has ever told them that they actually pay for the “employer paid” portion of their premium through commensurately lower take-home pay. That is why American teenage-consumers really don’t care about cost containment, as long as they are not made to pay EXPLICITLY for it. The wag who said that in ignorance there lies bliss had it right, at last as far as employer-provided health insurance goes.

In a recent, very thorough and highly sophisticated survey of the literature, Harold Luft and his colleagues explored whether, on balance, managed care had hurt or improved the quality of care in America. They found no evidence either way. On balance, quality seem not to have been much affected by managed care, one way or the other. On the other hand, one can find isolated studies making either case.

I think the providers’ and media’s mindless assault on managed care has been unfortunate. Much of that assault has proceeded from sheer ignorance. In a recent survey undertaken by the Employer Benefit Research Institute, for example, it was found that 81% of those surveyed really had no clear idea what managed care was, 61% of respondents actually enrolled in managed care plans thought they were not enrolled in managed care, and even over half of the respondents who were members of an HMO did not think that they were in managed care. Shocking if one thought of these respondents as informed, mature adults; less so if one thinks of them as perpetual teenagers.

The insurance industry has now morphed back into mere bill payers, coupled with attempts to be a conduit of structured information to patients. But, unable and, in fact, no longer willing to manage care, insurers let premiums rise again in the very high double digits, and employers are eating these premiums, knowing that ultimately they will come of the fiscal hide of their unwitting, teenage employees. Insurance carriers never made much if any money from managing care. They made and make their money from taking x% of the money that flows through their accounts and from the float.

Is this, then, a victory for American patients and consumers? You may think so. I think not. The price will be borne by increasing numbers of uninsured in the years ahead and by ravaged paychecks of the insured. Hence my “Mazel tov!”

THE SINGLE PAYER APPROACH

There can be no question that much of the glory of America’s avant-garde health system and many of the problems Americans suffer at its hand reside in the nation’s insistence on operating a pluralistic health-insurance system with enormous choice, some of it real, much of it fake.

The glory, of course, is the endless, uncontrolled amount of money the system has shoveled into health care, begetting the luxurious techno-palaces we call hospitals and clinics, capable of giving the insured instant gratification. The downside is that the system is enormously expensive in terms of administrative costs, that it segments people by their health status and leaves so many out altogether, and that it is a bedrock of endless litigation over the terms of the myriad of fine-print insurance contracts that change every year.

A single payer system proceeds on the basis of one uniform benefit package, carefully thought out and well understood. There is little need to litigate, patient by patient, over what is or is not covered in the sundry clauses of customized benefit packages. To be sure, it is a one-size-fits-all approach. People who never contemplate having children are forced to pay for the health care of couples with children. Not a big deal, would say the civic minded Canadian, Asian and European. Outrageous say America’s selfish teenage consumers. Probably only in this country is there an actual movement that openly despises children, hates paying taxes for their schooling and health care, and contemptuously calls parents “breeders.” (Lisa Belkin wrote about them in The New York Times Magazine).

As James Robinson wrote (in curiously glowing terms) in Health Affairs about a year ago, the American insurance system now moves to mass customization. Wellpoint is the pioneer in this; Aetna now tries to ape it. Such a system , with literally hundreds of thousands of distinct, customized insurance contracts only poorly understood by the allegedly “savvy” American consumer–really, the consumer-teenager– will provide a field day for tort lawyers for years to come. This litigation is not and has not really been about managed care per se. It is simply over the interpretation of the zillions of distinct little fine-print clauses in the zillion of customized insurance contracts issued on an annual basis. For selfish reasons, Americans demand these contracts. Let them enjoy them, say I.

But this system of customized, risk-segmented insurance contracts was not crammed down the throat of America’s plebs. The plebs eagerly WANTED it. I recall sitting in on board meetings of insurers during the mid 1990s, at which consultants presented results from consumer surveys on what consumers wanted from their insurers. The range of products Wellpoint now offers was what America’s savvy consumer wanted during the mid 1990s. And Wellpoint responded to these consumers’ demand properly, doing well in the process. There was no aristocratic conspiracy here to cram down the throat of unsuspecting plebs products the latter would not like. This was a response to the plebs’ own, ill-informed and myopic yearnings, for a simple reason: it spared the healthy individual from the obligation of being one’s poor and sick brethren’s’ keeper. The overwhelming percentage of Americans are healthy at any enrollment time. These healthy ones overwhelmingly favor insurance policies that excuses them from the Judeo Christian thing to share the burden of health care. When they do get sick, of course, they whine and lament the absence of government from their lives. They may then yearn for a single-payer system or some other government program, like the folks who build houses in the flood plains. But as long as they are healthy they don’t like government or single payer systems. Then they play rugged little American individualist marching under the motto “God bless me, and the hell with you.”.

From time to time Americans have been offered an escape from this expensive and unwieldy cowboy system. One opportunity would have been the Clinton plan. To be sure, the klutzy Clintons, with the even kluztier Ira Magaziner’s help, had loaded the plan with so much needless regulatory burden that in the end it was decried even by the Brookings Institution. One can never forgive Clinton for mismanaging this opportunity so. But in the hands of smarter people (on the Hill) the Clinton plan could have been salvaged. It did try to rein in the worst excesses of an uncontrolled, fragmented insurance system. Alas, the savvy American teenage voter slept through this one–if it did not openly vilify an administration who at least had tried to help them. The people, as I recall it, wanted the government off its back, like teenagers who want a regulatory Mommy off their back.

Another occasion was a referendum on a single payer system in California shortly thereafter. Referenda come as close to Athenian democracy as one could have it, Kip. It is more than a debate this or that debater won in front of some particular audience. Those of the California plebs who did bestir themselves to vote at all voted AGAINST the idea (yes, Kip AGAINST!) when they had the opportunity to support it. I find that rather persuasive, Kip. The American teenage-consumer is far from ready to countenance a single payer system.

And there are, let’s face it, some downsides to the single-payer approach. Single-payer systems simplify administration, reduce the need for litigation and tend to spread risks over very large, heterogeneous pools. But they also have the tendency to be underfunded relative to what people might want. They are not very hospitable to innovation. And they ration in haphazard ways. This is certainly so in Britain, Japan, Taiwan and even Canada. Germany is moving that way as well. To argue that a seriously ill Canadian would fare better in terms of access to advanced technology than would a similar American in a typical managed care plan would strike me as disingenuous, although Kip might well offer that proposition. The Brits, the Canadians, the Germans and French do pay some price for their more or less single payer system. So, of course, have America’s elderly, whose single-payer Medicare program has a benefit package that is a living and cruel joke.

One can debate the pros and cons of single-payer systems versus a more pluralistic system (e.g., one like that envisaged under the Clinton plan) until hell freezes over. Different, smart, honorable people will come out differently on the issue, depending upon the weight they attach to each positive and negative dimension of each approach.

But let me assure you of this, my friends: When the time comes to debate these issues once again, the American plebs ain’t going to be with you. They will trust Rush Limbaugh to tell them what to think, if to think about it they wish at all. With the attention span that befits a teenager, it will take nothing in the way of simple propaganda to shove these teenagers one way or the other in a debate on the issue. And the money will shove them against the single-payer approach. And when the time to vote comes, they won’t even be there to vote. They’ll be fishing or attending football games. They’ll be anywhere but with you.

We stand at a cross roads in American health care. We could choose, if we wished, (A) to travel down a more egalitarian, budgeted system with some rationing–perhaps on the back of a single payer system or a regulated insurance system such as Germany’s or the Clintons’ plan. Alternatively, (B) we could “solve” our health care problem simply by declaring health care Coca Cola, a consumer good, that is to be rationed on the basis of ability to pay. We shall choose (B) in this country, bit by bit, but steadily, in a way that the teenage plebs will hardly notice until it is a fait accompli. Perhaps the income-based system will be chosen for us by the corporate aristocracy that, you seem to think, runs the country. Perhaps. In any event, the teenage plebs will sleep right through it–fishing or whatever, and they will whine only when it is too late for them individually.

CONCLUSION

I come back to where I started with my one liner: the American people have pretty much the health system that they asked for and deserve. They have asked for it, sometimes explicitly, sometimes through sheer apathy, and through a relentless selfishness that seems somewhat unique in the industrialized world. I used to have much sympathy with these folks. I have much less so now.

This attitude of mine is not new, nor a secret. I had written it all down in the 1995 spring edition of Health Affairs, in a commentary entitled: “Turning our Gaze from Bread and Circus Games.” In it I quote the Roman poet Juvenal who wrote, in the first century A.D., “Duas tantum res anxius optat, panem et circenses. (Its [the plebs’] anxious longing is confined to but two things–bread and circus games.)” It is widely thought that Juvenal was writing about his Roman contemporaries. He was not. He was writing about the average twentieth-century American and his or her posture on U.S. national health policy. At least, that is what I think. Do you think otherwise?

Best regards,

Uwe

Comment: Dr. Reinhardt’s message should be circulated widely. Our great task now is to meet his implicit challenge to prove that Americans really are more decent than their current inaction on health care reform would indicate.

Monthly Budget Review A Congressional Budget Analysis

August 9, 2001

“Medicare spending has also risen, by 8.4 percent. The growth rate has been accelerating since increased payment rates to health care providers took effect in April. For the entire year, CBO estimates that spending for Medicare will grow by 10 percent.”

http://www.cbo.gov/showdoc.cfm?index=2981&sequence=0&from=7

Comment: These numbers will certainly be used by those that want to “modernize” (i.e., privatize) Medicare, with the claim that the current Medicare program is inefficient. In fact, the traditional Medicare program has been much more efficient that the private Medicare HMO plans. Recent increases in Medicare spending have been only about 3 percent per year. Much of this year’s higher increase was due to intense lobbying efforts by the managed care industry. They were successful in gaining significant increases for their industry that were well in excess of the statutory limits of the Balanced Budget Act of 1997. We cannot allow the privateers to advance the claim that Medicare is inefficient, when the inefficiency lies primarily within their own industry.

Kip Sullivan responds to Bob LeBow:

Today’s message from Kip Sullivan, which follows in the next e-mail, you may be inclined to delete since it appears to be another long response in the current Reinhardt-Sager-LeBow-Sullivan series, and most of you are too busy for this. Please bear with us on this one. Sullivan describes one of the most important policy issues facing us today as we struggle with the issues of expanding coverage while containing costs. A major emphasis is being placed on controlling costs by creating patient-consumer cost-sensitivity, or “empowering” the patient-consumer in the health care marketplace. In reading Sullivan’s comments, I would suggest ignoring the challenge to LeBow in order to concentrate on the important policy behind his comments.

Don

Bob,

I disagree with your variation on Uwe’s criticism of “the American people.” Your version is that the American people are to blame for the world’s most expensive health care system because we want too many health services. You rested this rather controversial statement on the comment of a single patient that America’s health care system is expensive because Americans “expect the world.”

I make three points in this response:

(1) If we really must speculate on whether overuse of the US health care system is worse than underuse, the evidence should cause us to lean toward the conclusion that underuse is a worse problem.

(2) Your argument that “Americans expect the world,” even qualified as it was by your statement that our insane longing for medical services is abetted by corporate advertising, assists the right-wing in its quest to maintain a market-based system in the US.

(3) Your argument that drug company advertising is contributing to the high cost of health care is correct, but drug advertising is a minor issue compared to the other causes of the health crisis.

We do have some evidence that a few services are overused (e.g., bypass surgery and hysterectomies, and antibiotics), but we also have substantial evidence that the system is greatly underused. I’m thinking here primarily of the uninsured and the underinsured. I’m also thinking of evidence, including the Surgeon General’s recent report, indicating great underuse of mental health services. The seemingly intractable problem of low-quality nursing home care could also qualify as an example of underuse. I could list other evidence of underuse.

I won’t commit the mirror-image sin I’m accusing you of, that is, I won’t go out on a limb and say underuse of the US health care system is far worse than overuse. But I will say that existing evidence does not warrant the statement that “Americans want the world” and that this insane wanting is causing the US health care crisis. You can say it if you like, but you should note you’re engaged in pure speculation.

I believe the opinion of the patient you quoted is not based on her personal experience but is rather the product of the propaganda machine of the gigantic right wing in the health care debate — the health insurance industry, the AMA, big pharma, the Jackson Hole Group, hangers-on in academia, the Republican party, and a substantial number of Democrats who wish they were Republicans. This unholy alliance has drowned out competing explanations of the US health care crisis, to wit, that administrative costs and prices are excessive. This alliance claims that the health care system is expensive because patients want services they don’t need and because greedy doctors are eager to acquiesce to the demands of their dumb and/or gullible patients.

If the US is going to be forced to retain a market-based health insurance system, it is essential that the public be fooled into thinking that the primary cause of high costs is the consumption of an excessive volume of drugs and medical services, not the price of those drugs and medical services. If the public and law-makers can be fooled into thinking that the problem is primarily high volume rather than high price, they are more likely to be influenced by advocates of HMOs, MSAs, and defined-contribution schemes (e.g., Bush’s Medicare voucher plan). As long as the “volume is the problem” mantra reigns supreme, HMO advocates get to claim that someone has to do the dirty work of wiping out all those unnecessary services, and better to have HMOs do that than some government bureaucrat. And MSA and defined-contribution advocates get to claim that unnecessary services will be wiped out by “consumers” thinking twice about whether they actually need this or that service because now they have “first dollar exposure,” not “first dollar coverage.”

But if the public and law-makers understand that over-utilization of the health care system is minimal or atypical and perhaps more than offset by gross underuse, market advocates have a much tougher row to hoe. If overuse is atypical, HMO advocates have to admit their professed raison d’etre doesn’t exist, and MSA advocates have to give up pretending that MSAs will save money by cutting services and will instead have to peddle the implausible fantasy that MSAs will save money because patients will now be motivated to bargain with drug companies, hospital chains, and clinics for lower prices. The notion that the US health care system will enjoy substantial savings from patients driving hard bargains with drug companies, hospital chains, and clinics is too ludicrous for words.

Finally, I would like to offer the unfashionable view that the great brouhaha about drug advertising is a tempest in a teapot. Yes, drug advertising appears to be causing too many Americans to demand expensive drugs when less expensive drugs or no drugs at all would do. But total US health care costs in general, and drug costs in particular, were double those of the rest of the First World before the FDA gave the drug industry permission to do direct-to-consumer advertising, and they’re double now. The relative contribution that drug advertising makes to total health inflation is small, and the relative contribution it makes to the enormous disparity between US and rest-of-the-world health costs is very small compared to other factors, to wit, no drug price controls, no controls on provider expenditures, and a multiple-payer system with all its administrative costs.

The next time you hear a patient spouting HMO and right-wing theories of the health care crisis, I urge you to inform her she’s repeating speculative agitprop, not well established fact.

I leave town for a month in a few hours, so I won’t be able to respond to any brickbats or kudos. I wish everyone a cool remainder of the summer.

Kip Sullivan

Excerpt from a message dated 8/11/01:

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Ohio Group Tells Drug Reps: We'll Listen — If You Pay

AMNews
August 20, 2001
by Cheryl Jackson

“Leaders at the Queen City Physicians Group in Cincinnati figured that if drug company representatives wanted to lavish their doctors with gifts, why not instead have the reps give something that would help the practice and its patients? Hence, the thought process that led to the 56-physician multispecialty group’s plan to charge $65 for a 10-minute visit to listen to a pitch from a drug company sales rep.”

Frank A. Reddick, M.D., chair of the AMA’s Council on Ethical and Judicial Affairs (CEJA):

“This is setting up a commercial relationship, and it might prove a refreshing approach in that it’s a straightforward transaction. Whatever the pharmaceutical reps would have you say about their role, their role is a commercial one.” “Putting it on a flatly commercial way to access the physicians might actually lead to fewer of the sort of concerns that CEJA or the AMA has about gifts to physicians and some things that really aren’t related to the physician’s practice, like taking them to the ballgame. It may prove the wave of the future.”

http://www.ama-assn.org/sci-pubs/amnews/pick_01/bil20820.htm

Comment: From an unrelated letter in the same edition of AMNews:

Herbert Rakatansky, M.D., immediate past chair of CEJA:

“There is clear evidence that acceptance of similar gifts from industry influences prescribing habits. Such gifts are prohibited by opinion 8.061. Doctors who accept such gifts maintain they are not so influenced. The literature suggests otherwise. It is desirable for physicians to avoid even the appearance of impropriety in these circumstances.”

The new chair of AMA’s CEJA could learn from the prior chair. Or is this another unfortunate misstep in the transformation of the AMA?

Ohio Group Tells Drug Reps: We’ll Listen — If You Pay

AMNews
August 20, 2001
by Cheryl Jackson

“Leaders at the Queen City Physicians Group in Cincinnati figured that if drug company representatives wanted to lavish their doctors with gifts, why not instead have the reps give something that would help the practice and its patients? Hence, the thought process that led to the 56-physician multispecialty group’s plan to charge $65 for a 10-minute visit to listen to a pitch from a drug company sales rep.”

Frank A. Reddick, M.D., chair of the AMA’s Council on Ethical and Judicial Affairs (CEJA):

“This is setting up a commercial relationship, and it might prove a refreshing approach in that it’s a straightforward transaction. Whatever the pharmaceutical reps would have you say about their role, their role is a commercial one.” “Putting it on a flatly commercial way to access the physicians might actually lead to fewer of the sort of concerns that CEJA or the AMA has about gifts to physicians and some things that really aren’t related to the physician’s practice, like taking them to the ballgame. It may prove the wave of the future.”

http://www.ama-assn.org/sci-pubs/amnews/pick_01/bil20820.htm

Comment: From an unrelated letter in the same edition of AMNews:

Herbert Rakatansky, M.D., immediate past chair of CEJA:

“There is clear evidence that acceptance of similar gifts from industry influences prescribing habits. Such gifts are prohibited by opinion 8.061. Doctors who accept such gifts maintain they are not so influenced. The literature suggests otherwise. It is desirable for physicians to avoid even the appearance of impropriety in these circumstances.”

The new chair of AMA’s CEJA could learn from the prior chair. Or is this another unfortunate misstep in the transformation of the AMA?

Burton's German Trip Protested

The Washington Post
August 11, 2001
by Juliet Eilperin

“Rep. Dan Burton (R-Ind.), chairman of the House Government Reform Committee, arranged for an unusual government-paid trip to Frankfurt and Bonn this week to investigate the German postal system. He is also visiting his wife, who is receiving medical care in Frankfurt, according to the congressman’s aides.”

http://www.washingtonpost.com/wp-dyn/articles/A61368-2001Aug10.html

Comment: This is a very difficult report on which to comment. Those of us that dedicate our lives to health care are always saddened to hear stories of serious medical problems that require extraordinary measures. Our first and overriding response is the deep concern that we have for Mrs. Burton and for her family that shares in the pain of her difficult challenges. Any comments that follow inevitably will be interpreted by some as being callous for having used this opportunity to posture politically, but the posturing is precisely on behalf our concerns about access to health care for everyone that faces similar difficulties.

On to the comments:

What rhetoric predominates today?

Examples:

American has the best health care in the world.

We must continue to support research by our technological and pharmaceutical firms that are providing us with the most advanced care available, no matter what the cost.

Everyone should have the same insurance that members of Congress have (FEHBP).

Medicare needs to be modernized, giving beneficiaries choice like the federal employees have with the FEHBP program.

We don’t want a government program of health care.

Etc., etc.

Most of those reading these comments recognize this rhetoric, and understand the policy issues that drive it. There are very serious problems with our health care system, especially in access and coverage in a system that is infamous for wasting our abundant resources. Our national policies continue to favor the entrepreneurial elements in the health care system while continuing to neglect the unmet needs of the people. Unfortunately, the rhetoric continues to drive the displacement of our national priorities, as if the unmet needs were merely a nebulous construct, rather than real needs of real people.

Back to the difficult part of this message. We need to look at the actions of Rep. Burton, a man who is now deeply and intimately involved with the real needs of a real person. This overriding issue makes it impossible to fault his actions. He is making the best decisions he can in a very difficult, trying situation. He has walked away from “the best health care system in the world” and gone to another country that offers some of the best care available. He has walked away from “the most advanced research and technology” to another nation that likewise has advanced research and technology. With FEHBP coverage, he has his choice of any care within the limitations of his plan, but he elects to go to a country that happens to assure that care is covered and accessible for essentially everyone, with virtually no restrictions on providers. At home, he continues to work with elements in our society that want to keep government out of our health care. Yet he accepts a government funded health plan, and even is not above accepting government transportation for a combined personal and quasi-government-business trip. Apparently Rep. Burton does want the government involved in health care when it is providing him and his loved ones with access and coverage.

Real people have real needs. None of our needs are met by rhetoric. In health care, they are met partly by our own personal efforts. But clearly most of us by ourselves can never assure that we can meet the financial demands of catastrophic illness, nor the public health protections that can be provided only on a population basis, nor the assurance that the health care infrastructure will be there when we need it, nor the assurance that our resources will not be frittered by Wall Street and by the technological and pharmaceutical firms that have their own priorities which they have placed higher than the public good. Real people with real needs can expect those needs to be met only with a combination of personal effort balanced with a public effort that places reality above rhetoric.

Uwe Reinhardt comments on Bob LeBow’s response:

“It is hard to argue with Bob. He is totally right.”

Repeating the concluding remarks of Bob LeBow’s response:

Our system seems to embrace the ideals of “personal responsibility” for the poor but “personal opportunity” for the rich. Community benefit? That would be socialism. So “personal opportunity,” with its double-digit inflation result, has set the tone for American health care. We can see that with the direction our system is taking, the poor and near-poor will be increasingly left out, priced out of the market, by the “opportunists” who will then continue to lecture the less well-off about “personal responsibility.”

Yes, we have created a monster, but some folks are more to blame than others.

Burton’s German Trip Protested

The Washington Post
August 11, 2001
by Juliet Eilperin

“Rep. Dan Burton (R-Ind.), chairman of the House Government Reform Committee, arranged for an unusual government-paid trip to Frankfurt and Bonn this week to investigate the German postal system. He is also visiting his wife, who is receiving medical care in Frankfurt, according to the congressman’s aides.”

http://www.washingtonpost.com/wp-dyn/articles/A61368-2001Aug10.html

Comment: This is a very difficult report on which to comment. Those of us that dedicate our lives to health care are always saddened to hear stories of serious medical problems that require extraordinary measures. Our first and overriding response is the deep concern that we have for Mrs. Burton and for her family that shares in the pain of her difficult challenges. Any comments that follow inevitably will be interpreted by some as being callous for having used this opportunity to posture politically, but the posturing is precisely on behalf our concerns about access to health care for everyone that faces similar difficulties.

On to the comments:

What rhetoric predominates today?

Examples:

American has the best health care in the world.

We must continue to support research by our technological and pharmaceutical firms that are providing us with the most advanced care available, no matter what the cost.

Everyone should have the same insurance that members of Congress have (FEHBP).

Medicare needs to be modernized, giving beneficiaries choice like the federal employees have with the FEHBP program.

We don’t want a government program of health care.

Etc., etc.

Most of those reading these comments recognize this rhetoric, and understand the policy issues that drive it. There are very serious problems with our health care system, especially in access and coverage in a system that is infamous for wasting our abundant resources. Our national policies continue to favor the entrepreneurial elements in the health care system while continuing to neglect the unmet needs of the people. Unfortunately, the rhetoric continues to drive the displacement of our national priorities, as if the unmet needs were merely a nebulous construct, rather than real needs of real people.

Back to the difficult part of this message. We need to look at the actions of Rep. Burton, a man who is now deeply and intimately involved with the real needs of a real person. This overriding issue makes it impossible to fault his actions. He is making the best decisions he can in a very difficult, trying situation. He has walked away from “the best health care system in the world” and gone to another country that offers some of the best care available. He has walked away from “the most advanced research and technology” to another nation that likewise has advanced research and technology. With FEHBP coverage, he has his choice of any care within the limitations of his plan, but he elects to go to a country that happens to assure that care is covered and accessible for essentially everyone, with virtually no restrictions on providers. At home, he continues to work with elements in our society that want to keep government out of our health care. Yet he accepts a government funded health plan, and even is not above accepting government transportation for a combined personal and quasi-government-business trip. Apparently Rep. Burton does want the government involved in health care when it is providing him and his loved ones with access and coverage.

Real people have real needs. None of our needs are met by rhetoric. In health care, they are met partly by our own personal efforts. But clearly most of us by ourselves can never assure that we can meet the financial demands of catastrophic illness, nor the public health protections that can be provided only on a population basis, nor the assurance that the health care infrastructure will be there when we need it, nor the assurance that our resources will not be frittered by Wall Street and by the technological and pharmaceutical firms that have their own priorities which they have placed higher than the public good. Real people with real needs can expect those needs to be met only with a combination of personal effort balanced with a public effort that places reality above rhetoric.

Uwe Reinhardt comments on Bob LeBow’s response:

“It is hard to argue with Bob. He is totally right.”

Repeating the concluding remarks of Bob LeBow’s response:

Our system seems to embrace the ideals of “personal responsibility” for the poor but “personal opportunity” for the rich. Community benefit? That would be socialism. So “personal opportunity,” with its double-digit inflation result, has set the tone for American health care. We can see that with the direction our system is taking, the poor and near-poor will be increasingly left out, priced out of the market, by the “opportunists” who will then continue to lecture the less well-off about “personal responsibility.”

Yes, we have created a monster, but some folks are more to blame than others.

Management of Acne

U.S. Department of Health and Human Services Agency for Healthcare Research and Quality
Evidence Report/Technology Assessment, Number 17 March, 2001

“It is estimated that over 45 million people in the United States have acne vulgaris…” “Coupled with loss of productivity and unemployment, the direct cost of acne may exceed $1 billion per year in the United States.”

Findings: * “The literature is extremely heterogeneous, severely limiting the number of meaningful conclusions…” * “Evidence for subpopulations is either not available or reported in such varied manner as to prevent meaningful integration.” * “Evidence for quality-of-life outcomes and cost is not available.” * “Of 250 comparisons, only 14 had evidence of level A.” (Level A = moderate to strong evidence of a clinically meaningful endpoint) * “The literature is not organized to differentiate responses to (different levels of) therapy.”

http://www.ahrq.gov/clinic/acnesum.htm

Comment: If we cannot evaluate the management of the most common medical disorders, how can we ever make decisions about the proper allocation of our resources? An integrated, information technology system that links together our entire health care system would move us much closer to a model that would more readily provide answers to these fundamental questions about health care and our health care resources. Yes, there is much more work to be done to refine the information technology tools that would enable this, but we are moving much closer to that reality. Some of the challenges are discussed in the publication, “Networking Health” published by the National Academy Press (http://www.nap.edu).

Attempts at integrating our fragmented health care system, as exemplified by the Healtheon model, have failed miserably, largely because of conflicting interests in the marketplace. The framework that would enable integration would be a universal system of publicly-administered health insurance. Through an integrated information technology system for health care, we could help to provide a basis for making rational decisions on where our health care dollars would be wisely spent, and avoid wasting them on ineffective services. We will never achieve high quality until we develop a health care structure that drives quality.

Aetna Posts Wider Losses, Citing High Costs

The New York Times
August 9, 2001
by Milt Freudenheim

“The nation’s biggest health insurer, Aetna, said yesterday that its losses deepened in the second quarter as medical costs jumped 17 to 18 percent in its core managed care business.”

Aetna wants to “…. sharply reduce Aetna-insured H.M.O. membership while raising the number of self-insured employers that it serves. Self-insured companies take the risk of paying for any illnesses of workers; they hire administrative services companies like Aetna to line up discounts from hospitals and doctors and handle the bills.”

http://www.nytimes.com/2001/08/09/business/09CARE.html

Comment: So Aetna, the nation’s largest health insurer, wants to exit the market of health care risk pooling. They are content with the role of paper shuffling, while passing their traditional role of risk assumption on to employers. This is an implicit admission that they have been unable to fulfill the promise of cost containment in health care. But breaking large risk pools up into smaller ones increases the exposure to financial risk, now being passed on to employers. We have already seen that the employers no longer want to accept risks, and they are now, in turn, passing risk on to their employees, in the form of flexible (i.e., reduced) benefits and cost-sharing options (i.e., higher out-of-pocket expenses). Innumerable studies have demonstrated that these measures are reducing access to care because of lack of affordability, and impaired access results in impaired medical outcomes. As Aetna and other insurers flee their responsibilities to pool risk, the health of the nation deteriorates.

The solution to the problem of pooling risk is simple. Place all risk into one pool in the form of equitably-funded universal health insurance, diluting the risk such that financial barriers to care are eliminated. The other problem, containing costs, has defied all attempts of the defining authorities of the marketplace to invoke controls. The solution to cost containment is also simple. Establish a global budget for health care. We have more than enough resources to provide quality care for everyone. The budget process will allow us to allocate those resources more equitably. Those that reject a budget for our health care system are denying the fundamental reality that all of us use budgets all of the time. Revenues, expenditures, and judicious use of debt service, whether explicit or implicit, are characteristic of our management of our businesses, our household budgets, and even our government. Why should our health care system be allowed to escape budgetary control?

Is there a future for Aetna in a publicly administered program of universal health insurance? Aetna now wants to push paper, albeit in a modernized, information technology world. Aetna and other “insurers” can be a vendors of information management services. They can be adequately compensated by negotiating fair rates with the public administrators. This is the role they seem to want, and it is the role that would serve the rest of us well. Let’s quit bashing each other and join together in the cause of health care justice for all.

Uwe Reinhardt, Ph.D., James Madison Professor of Political Economy, Princeton University, commenting on today’s quote from the New York Times article, “Aetna Posts Wider Losses, Citing High Costs”:

“Aetna’s problem is not really unique. Never mind profits. They are a tiny leftover after expenses. Medical expenses are rising at other companies at pretty much the same rate.

“The real explanation is that the American people prefer a health system whose costs rise in the high double digits. They fought for it at the job and in the political forum. Now they have it. Mazel tov!”

Alan Sager, Ph.D., Professor of Health Services and Co-Director, Health Reform Program, Boston University School of Public Health, responds to the comments of Uwe Reinhardt, Ph.D.:

Do you know anyone who fought for things that contributed to double-digit increases? Anyone who wants a health system with rapidly rising costs? I don’t. I do know people who were worried by HMOs that made money when their patients got less care, and by HMOs that passed this incentive along to doctors and hospitals.

Aren’t all payers’ costs rising rapidly, HMO and others? If so, this would suggest that managed care’s loosening of control is not the cause.

We should consider a few other possible causes of today’s spending increases:

1) Hospitals and doctors demanding catch-up after years of slow payment increases, with hospitals able to enforce this demand, in many parts of the nation, through their increased market power–owing to mergers, closings, and the like.

2) Prescription drug spending doubling every five years or so.

3) Aging baby boomers getting more care.

4) Managed care, having squeezed out indemnity, is finally obliged to pay for care for more of the sicker people, many of whom had clung to their indemnity coverage as long as possible.

5) Managed care wrung out some one-time savings– took a step back on the up-escalator of health costs, but that escalator has continued its rise.

Where’s the evidence that actual HMO practices saved money in durably affordable ways? Where’s the evidence that they have suddenly vanished? I still know many groups of doctors that face the same tight withholds and expenditure targets today that they did in past years. And I know many doctors and others who insist that any HMO savings were more than offset by new paperwork and friction costs inside HMOs and imposed on caregivers’ practices.

Managed care advocates should not be allowed to blame rising costs on abandonment of some aspects of their pet techniques. Not, at least, without a reasonable assessment of all the reasons for the slow-down in cost increases in the mid-90s, and their acceleration today.

Kip Sullivan responds to Uwe Reinhardt:

Uwe,

Your statement that “the American people . . . fought for” this system is, at best, a gross exaggeration as applied to the work place, and so dreadfully wrong as applied to politics that your remark caused my toes to curl in my shoes.

I recognize that many economists, especially those less astute than you, espouse the notion that “the American people” shouldn’t be whining about the current health care system because it was “the American people” who, by “choosing” to enroll in managed care organizations (MCOs), got us into this mess. But this view, so typical of economists, ignores that dirty word “power” and that unpleasant phrase “economic duress.” Millions of Americans were given no choice by their employer — they had to enroll in an MCO. Millions more were given a “choice” between an MCO and a FFS plan, but the MCO, benefiting from cherry-picking, rationing, and cost-shifting, could charge lower premiums, and because most of “the American people” are not wealthy, the 5-10% savings on premiums amounted to significant financial pressure to enroll in the MCO. Our political leaders didn’t ask us whether we wanted to play consumer in a system rigged in favor of MCOs. We sure as hell didn’t “fight for it.”

Similarly, Medicaid recipients were never asked if they wanted to be placed at the tender mercies of HMOs. And America’s elderly have never been asked whether they want to be forced into HMOs via the Breaux-Frist-Bush “premium support” voucher plan, but by God, they’re going to get “premium support” if the right wing and the insurance industry has anything to say about it.

Polling data from the late 1980s to today indicate that when Americans are asked about managed care methods, they indicate disapproval of them. What little survey work has been done among seniors indicates they strongly oppose being pushed into MCOs, especially if the current bribe (called drug coverage) is taken away.

The error of your comments about what “we fought for” is even more obvious as applied to “the political forum.” Your remark suggests you think that what Congress does or doesn’t do is an accurate reflection of what “the American people fight for.” Where to begin? Dear Uwe: In this money-drenched democracy of ours, you run a grave risk of looking very foolish if you make statements based on the assumption that Congressional action or inaction reflects the will of “the American people.” Cf any newspaper. Cf anything that pops up on a Net search engine if you type in the words “campaign finance reform.” Trust me, you made yourself look foolish.

What little evidence we have about what “the American people” would vote for if we ever had anything resembling a fair debate indicates Americans would vote for a single-payer system. We have some polls indicating that, but we all know polls can offer different results depending on the wording. But at least two “citizen jury” experiments, which are a lot more trustworthy, indicate single-payer would win big in a fair debate. In a debate between an advocate of MSAs, of managed care, and of a single-payer system here in Minnesota in 1996, the single-payer advocate won. I was the single-payer advocate. Michael Scandrett, the director of what was called the Minnesota HMO Council, spoke for HMOs. The debate took place before 14 Minnesotans selected by the Minneapolis Star Tribune and KTCA TV, the local public TV station. It was moderated by the League of Women Voters. After three-and-a-half hours of debate, single-payer won 8 votes, 3 voted for managed competition, MSAs got no votes, and three abstained.

Sen. Paul Wellstone won a similar debate (stacked in favor of managed competition) before a “citizens jury” sponsored by the Jefferson Foundation in 1993.

Americans are most definitely not “fighting for” the current system. Let conservative politicians and Chicago-school economists engage in the pretense that gridlock in Congress and the persistence of the current health care system is the “will of the American people.” Let the rest of us who care about universal coverage state the truth: We suffer the current system and Congressional inaction because Big Money, not “the American people,” “is fighting” to preserve its status.

Kip Sullivan

Naomi Shaiken, President of Connecticut Call to Action, responds to A. Sager and K. Sullivan on Uwe Reinhardt, with another two cents added on health care reform activism:

My two cents:

Read between the lines! Uwe has been a proponent of national health care for THIS country for years!

He is angry, disgusted, fed up–with all the pontificating from DC and all the pundits – all words and no action.

Go back, my dear friends, and read what he wrote in ’90 -to the present and probably even before 1990!

He is NOT on the side of the insurance companies [none of us are!] He’s on our side – writes with sarcasm- mainly to agitate and he is most successful at that, given Sager, Sullivan et al responses.

Aetna’s demise in the health care insurance field could be a blessing in disguise, since our government runs health care better than any private insurance company! There is and always will be a need for the insurance industry – as the actuaries and as disbursement agents for the government.

We, in Connecticut, the Insurance State, have the most difficult task in selling any idea to reform the system. And, to even deepen that task, we’ve been rebuffed by our very own Medical Society! How’s them apples!

We need to mobilize in the streets, as we did in the ’60’s to get civil rights and in the ’70’s to stop an immoral war, since medical care is a human and moral right.

Forget the providers, forget the pundits – look towards the advocates who are out there daily – breaking our hearts. Any takers???

You have my permission to send my two cents out to all.

Naomi E. Shaiken President CT Call To Action – Saving Our Health Care System

Gerald Gollin, M.D., comments on pediatric underfunding

Gerald Gollin, M.D., Assistant Professor of Pediatric Surgery at Loma Linda University School of Medicine, comments on the underfunding of pediatric care in El Paso, and the implications for access to care for all of us:

I am one of the pediatric surgeons mentioned in the NY Times article who left El Paso because a children’s hospital was not built. The article is exactly right that the situation in El Paso is what much of the rest of the country can expect with the current system. Just making more people eligible to share the same limited pot of funds is not going to work, even though it makes us feel good to say that more people are being “covered”. The only way that my partners and I can make it in Southern California is that we have a mechanism to share in the disproportionate share that our hospital receives from the state. If not for that, it would be impossible to care for our population that is well over 50% MediCal. The shortage of pediatric subspecialists in California is critical and it effects all children–even those with full insurance. It is the same situation in El Paso. There are no pediatric surgeons–no matter how much money a patient’s family has–so a child with a surgical emergency is up the creek.

Gerald Gollin, MD

Comment: Dr. Gollin clearly confirms the premise in yesterday’s quote and comment. In spite of our great resources, we do not have an effective structural system for allocation that would assure efficiency in the use of those resources. Dr. Gollin has demonstrated that our current fragmented system of allocation has resulted in the total deprivation of pediatric surgical services for everyone living in El Paso, and also has resulted in the need to resort to the defective and unreliable policies of gamesmanship and cost shifting to fund pediatric surgical services in a mecca of health care.

Maldistribution of resources is not just a problem for the poor. It is now affecting all of us, even the most affluent. The Los Angeles Times published an article that provides yet another example. Inadequate resources are being directed to our emergency rooms, threatening their solvency. This is partly because of the burden of caring for uninsured individuals that, by default, are forced to use emergency rooms as their primary source of care. In a follow-up editorial, the Los Angeles Times stated what this means to all of us. “We can be rich. We can have health insurance. We can have our federal tax rebate check in our back pocket. None of this will do us any good if we’re in the back of an ambulance and the nearest hospital emergency room is full.”

Providers will always compete with each other for the resources that we do have. But if this competition occurs within a system designed to optimize allocation, we will all have access to better care. Only a unified, single payer system offers this promise. Health policy analysts understand this. But if we are to convert this principle into action, we must make every effort to be sure that the voters understand as well.

Los Angeles Times:

“Amid Nationwide Prosperity, ERs See a Growing Emergency” http://www.latimes.com/news/printedition/la-000063865aug06.story

Editorial, “Closed Door at the ER” http://www.latimes.com/news/local/la-000064011aug07.story

The New York Times:

“A City Struggles to Provide Care Ensured by U.S.” http://www.nytimes.com/2001/08/07/national/07CARE.html