Bob Griss, Director of the Center on Disability and Health, Washington, DC, responds to Drs. Gordon, Marmor, Oberlander and Caplan:

The objective opportunity is there for the emergence of National Health Insurance as Dr.Gordon reveals, but it is not a sure thing as Professors Marmor and Oberlander remind us.

Clearly, private insurers would prefer that Congress rely on COBRA continuation policies and CHIP expansions instead of creating a right to health care for everyone. But COBRA continuation does not guarantee adequate coverage, nor does it provide the leverage for cost containment or an information system that facilitates quality assurance in our fragmented health care system.

Now is the time to publicize the advantages of National Health Insurance at the national and state levels to all of the interest groups while:

(1) Employers lay off many of their workers as the economic recession deepens, and shift their rising health insurance premiums to their remaining employees;

(2) States seek to cut benefits and increase cost-sharing in their Medicaid programs which CMS (formerly HCFA) has enabled them to do through the recently imposed HIFA waiver and the even more pernicious gutting of consumer protections in Medicaid managed care by gutting the regulations designed to safeguard the needs of the most vulnerable Medicaid recipients with disabilities; and

(3) Medicare leaves a growing number of seniors and persons with disabilities without outpatient prescription drug coverage as drug profits continue to soar driving up health care prices throughout our health care system while drug companies continue to use their lobbying power to oppose the cost containment mechanisms that Medicare uses for all other health care providers.

Bioethicist Art Caplan correctly understood that terrorism has obliterated the distinction between soldiers and civilians making it imperative that all residents have access to medically necessary health care.

Meanwhile, Representative Jan Schakowsky (D-IL) stands poised to introduce a legislative mechanism called “First Things First Act” that would roll back the tax cut for the wealthiest Americans until various social objectives are achieved to ensure the unity and productivity of our nation. Among her objectives are:

(1) Adequate responses to the needs created by the terrorist attack, including impacts on workers,

(2) Extended solvency of the Social Security and Medicare Trust Funds,

(3) Medicare prescription drug coverage,

(4) Federal funding of school modernization, and

(5) Affordable housing.

Instead of arguing whether a Republican-dominated White House and House of Representatives would ever enact a right to health care, the challenge to health care reformers is to publicize the advantages that National Health Insurance could offer to all stakeholders in society, and mobilize support from mainstream advocacy groups like AARP, labor unions, employers, religious groups, and health care providers to get behind a political strategy like “First Things First” that could pave the way for “National Health Insurance”.

Bob Griss, Director Center on Disability and Health Washington, DC Email Address: Bgrisscdh@aol.com

Quote of the Day

October 5, 2001

The response to Jeoffry Gordon’s call for a shift in strategy can be summarized best by Arthur Caplan’s statement, “Fifty years of waiting for a national health system has left tens of millions with nothing… Let’s get the damn thing done already.”

As expected, the call for moving forward with reform brought many suggestions for the specifics of reform, and many criticisms of the various proposals currently being floated. There is no consensus on the models for reform, but there is universal agreement that we must accomplish reform now.

But the precise models are not the urgent issue. Dr. Caplan is absolutely right. The urgent issue is that we must go to the negotiating tables IMMEDIATELY. We need to lay down on the table the fundamental issues of health policy – coverage, equity, affordability, access, cost containment, adverse selection, portability, continuity, etc., etc. Then we can hash out the policy applications that will address these issues.

The fights in the past have been over the concerns of special interests, such as viability of the private health plans, greed and ego needs of physicians, egalitarian issues of equality versus equity, protection of consumer advocacy litigation income, etc, etc. But these are not extraneous issues that interfere with reform; these are very real issues that must be considered as well. A few examples.

We desperately need an integrated information technology system in health care. Integration would be most effectively achieved and enforced by a public entity, but the application would be more effective through contracted vendors – opening a great opportunity for the health plans to transform themselves into something useful for our health care system. They can be relieved of the burden of risk pooling, which they are attempting to abandon anyway.

If health care as a profession is to remain attractive to some of our more gifted individuals, we will need to compensate them adequately, and we can do this by establishing collective negotiating rights for providers. And restoring the traditional physician-patient relationship will meet the ego needs of physicians. This can be done by eliminating the micromanagement of the middleman money managers, and replacing them with quality improvement programs based on assessment of applications of evidence-based medicine.

Litigation reform is in order, but accountability must be assured by allowing access to appeals and to recourse. We can restore consumer rights to patients while reducing the waste inherent in our poorly targeted litigation system.

The liberal-progressive wing in the reform movement can continue to advocate for equity or fairness in our health care system, without misdirecting efforts to establish equality, which sometimes can be inequitable (a subject appropriate for another editorial).

All special interests have real concerns that must be addressed. Instead of attempting to achieve compromises that inevitably result in mediocrity, we should be looking for the strengths that the special interests bring, and weave them into our system, while rejecting the weaknesses that would compromise reform.

Let’s all move immediately to the negotiating tables. Let’s leave our junk policy science behind. Let’s put down on the table the real issues that need to be addressed with real policy science. Let’s bring ALL of the special interests to the table. Let’s begin with only one rule: Advocates of each position are mandated to keep foremost in mind at all times what is best for the American patient. If we create a model that is best for the patient, it will be the model that is best for any special interests that have a rightful place at the table. Those that don’t belong there will rapidly reveal themselves to the rest of us.

There is far more than enough genius amongst the recipients of this message to initiate this process. Who volunteers as the convener?

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University of California, Irvine
Graduate School of Management
Health Care Management Distinguished Speaker Program
October 2, 2001

Dr. Paul Ellwood, “The Father of HMOs”

The following comments are not absolutely verbatim quotes, but were reconstructed from notes taken by me during Dr. Ellwood’s presentation:

Dr. Ellwood stated that he has written off managed care companies. But he is ready to try refrom again. He believes that reforms will be far more complex, and that the task will be much more difficult.

He has developed a new acronym for his concepts of future reform, although he states that this is a work in progress.

His acronym: HEROIC, as follows:

H: Health system, with an emphasis on the health component rather than on financial incentives. We should consider that the new form be not-for-profit. (He mentioned that he is disgusted when a managed care executive goes to Wall Street and brags about raising premiums and reducing benefits.)

E: Evidence based medicine. Physicians must agree to follow principles of evidence based medicine. Consumers must agree that evidence based care is sufficient. As an example, they should not an MRI when evidence based medicine does not support its use.

R: Responsibility. Patents need to assume more responsibility for their own health and for the costs of health care. He did state that there is danger that the defined contribution will be too low.

O: Outcomes accountability. Outcomes accountability is absolutely necessary to assure high quality.

I: Information technology. Health care is lagging in information technology. Information technology is demanding, complex and costly. It interferes with “clinical productivity” (i.e., income generation). But information technology provides the glue that holds the health care system together.

C: Commitment. We will be able to identify individuals that will acquire specific disorders. A health care relationship will need to be sustained, with a lifetime tracking and alerting system.

He said that we can design a better health care system, but the problem is getting there. We do not want to put cost containment in front of the system that assures health. We must develop an American health system that hails who we are.

Comment: Listening to Dr. Ellwood, he was obviously very disappointed that the managed care revolution did not fulfill his dreams of quality, efficiency and integration, that would improve outcomes through evidence based health care. He is disappointed that his concepts were developed primarily into a business model rather than a health care model. He believes that we can go back and design a model that will incorporate his concepts, although the implementation will be difficult. It is interesting that in informal conversations after his presentation, a few individuals commented that he had implicitly (but not explicitly) endorsed single payer reform.

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The New York Times
October 1, 2001
Letters

To the Editor:

(editorial, Sept. 28):

An additional indirect but major economic effect of the Sept. 11 terrorist attacks may be in health care policy. The economic slowdown that had dramatically increased unemployment in August has been accelerated by the attack to the point of inducing a full-fledged recession.

Most Americans who have health insurance get it through their work. When the slowdown began, 43 million Americans had no health insurance.

As unemployment grows, the families of laid-off workers will add many more millions to the ranks of the uninsured. Perhaps when we get to 50 million or 60 million uninsured, it may at last be politically acceptable to discuss universal health insurance.
JAMES J. FLORIO
Metuchen, N.J.
The writer was governor of New Jersey, 1990-94.

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The Washington Post
September 29, 2001
“”by Dana Milbank and Richard Morin

“And, for the first time in three decades, a majority of Americans said they trust the federal government to do the right thing – a sharp but perhaps temporary reversal in the way citizens view their political institutions. Nearly two in three respondents said they trust the government in Washington to do the right thing either ‘just about always’ or ‘most of the time,’ the poll found. That is more than double the percentage who expressed such confidence in a Post-ABC News survey in April 2000, and more than three times the proportion who said they trusted the federal government at the low point in 1994.”

“Some see hope for a lasting change in public attitudes. ‘I think there is the potential that Sept. 11 will turn out to be a turning point for civic America,’ said Harvard political scientist Robert Putnam, whose book ‘Bowling Alone’ last year documented the decline in civic engagement and trust. ‘It’s a horrible tragedy, but there could be some good coming from it if it causes us to become . . . more aware of the obligations we have to other people and more open-minded about the role of government.'”

Robyn Webb, 26, a high school math teacher who lives in Mount Laurel, N.J.:

“I have a renewed respect for the federal government, absolutely. People see that the government is one of the only avenues we have to get some things done. It puts renewed hope about the government and their capabilities to do things.”

http://www.washingtonpost.com/wp-dyn/articles/A42864-2001Sep28.html

From the poll, conducted September 25-27:

16. How much of the time do you trust the government in Washington to do what is right? Would you say just about always, most of the time, or only some of the time?

13% – Just about always
51% – Most
35% – Only some
01% – None

http://www.washingtonpost.com/wp-srv/politics/polls/vault/stories/data092801.htm

Comment: The Washington Post has listed the responses over the years to this inquiry. The current responses supporting trust in the government are a very dramatic turnaround from prior polls. In fact, the last time that there was this level of support was 1966, the year Medicare was initiated. Although this poll was primarily directed toward our military response, the one medical question asked suggests that this trust may be very real. Three-fourths of respondents opposed postponing action on prescription drugs for seniors.

It may be that tragic, shocking events evoke introspection and values clarification. Clearly, we do understand again what really is important. We recognize our own personal needs as we recognize our needs as a community. We place values over substance. The lines separating the private element from government blur when we look at our values. We see a need not only for ourselves but for all of us to have adequate food, shelter, education, health care, and the enjoyment of our varied arts. At times like this we see that the private sector alone has not been able to assure that these fundamental needs will be there for all of us. Perhaps the government, our government, does have a role in assuring that the private sector ensures, not equality, but equity in meeting these needs. Equity is not a construct of the marketplace, but rather it is a construct of a society joining together as a government. In health care, the marketplace can excel at delivering health care, but the government is needed to inject equity. Universal health insurance is possible only with government action. Shouldn’t we take a serious look at that, when trust in our government is at a 35 year high?

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The New York Times
September 28, 2001
by Robert Pear

Over all, the number of people without health insurance declined by 551,000, to 38.7 million last year, from 39.3 million in 1999, the bureau said. The proportion of people without coverage declined to 14 percent, from 14.3 percent.

The Census Bureau said it had made technical changes that tended to reduce the number of people listed as uninsured, so the figures for 1999 and 2000 are not directly comparable with those for earlier years. In conducting interviews, the bureau said, it now asks follow-up questions to help people recall whether they have insurance.

Several economists and health policy experts said the declines were unlikely to continue this year. Tens of thousands of people have been laid off, the economy has weakened, and the cost of health care and health insurance has shot up.

Kate Sullivan, director of health care policy at the United States Chamber of Commerce:

“We now have very different economic conditions. Employers are experiencing the highest premium increases in a decade. I expect to see an increase in the number of uninsured in 2001 because people have been losing their jobs. An unemployed worker cannot easily afford coverage.”

http://www.nytimes.com/2001/09/28/national/28INSU.html

Comment: HHS Secretary Tommy Thompson stated yesterday that current proposals for the uninsured include modifying COBRA benefits for the recently unemployed, and expanding the Medicaid program. Although both of these efforts should be supported, they will hardly impact the problems of inequity, cost containment, affordability and access. In these difficult times, reform that will contain health care costs is clearly in the national interest. We can contain costs, while improving access and reducing inequity, by enacting a program of publicly-administered universal health insurance. This should be elevated to the status of emergency legislation.

Health Affairs (web exclusive)
September 26, 2001
by Bradley C. Strunk, Paul B. Ginsburg, and Jon R. Gabel

Abstract:

This paper provides an update on trends in health care costs since 1999. Although the growth rate in overall costs has been stable since 1999, the trend in costs for hospital services rose, while that for prescription drugs declined, although it remains extremely high. Increased growth in hospital costs reflects the retreat from tightly managed care and labor shortages. The discrepancy between premium trends and cost trends has increased, which reflects the health insurance underwriting cycle. If these trends continue, likely responses by employers would lead to consumers’ facing higher out-of-pocket costs and an increase in the number of uninsured persons.

In a release from the Center for Studying Health System Change (HSC), Paul B. Ginsburg, Ph.D., the president of HSC:

“The volatile combination of rising costs, increasing premiums and a slowing economy have set the stage for consumers to pay more for care and an increase in the number of uninsured Americans.”

http://www.hschange.org/CONTENT/373/ (The full report is available at the HealthAffairs.org link in this article.)

Comment: So is the glass half full or half empty?

Half full? * Increases in health care costs are not as great as the current premium increases would indicate since the premium increases reflect, in part, the health insurance underwriting cycle. * The trend in increasing costs for prescription drugs has declined. * The increases in hospital costs reflect a retreat from tightly managed care, most likely a transitional adjustment.

Half empty? * The trend in costs for prescription drugs remains extremely high, in spite of a decline. * The growth rate in overall costs has not improved since 1999. * The premium equivalents of self-insured firms, which tend to reflect true health care costs, dampening the effect of the insurance underwriting cycle, rose at 9.5% in 2001, well in excess of inflation.

Or maybe the glass is clear full or clear empty?

Clear full? * (No evidence.)

Clear empty? * True health care costs continue to increase at a rate significantly greater than the rate of inflation. * Consumers (i.e., patients) will assume a greater share of the financial burden of health care. * Current trends will increase the numbers of uninsured.

Obviously, the health care economics glass is clear empty. We do not have in place any mechanisms that are capable of preventing true health care costs from escalating beyond the rate of inflation. We have saturated the capacity, or at least the will, of the purchasers of health plans to absorb any more increases in costs. We are increasing the financial burden of the patient-consumers, a major segment of whom lack the levels of disposable income that will allow them to absorb the increased costs. Worse yet, there is no prospect of adding one drop to the empty glass as long as we depend on the current market models of health care asset allocation which have drained the glass dry. With an empty glass, we have nothing left but to chew up and spit out the patient-consumers, a cruel, inhumane, heartless substitute, when the glass could be filled full by merely adopting a publicly administered, universal health insurance program.

The Boston Globe
September 25, 2001
“Kennedy to Launch Drug Program” by Rick Klein

“Former US Representative Joseph P. Kennedy II today will launch a private drug-discount program that could save elderly and poor consumers thousands of dollars in medication costs.”

“Kennedy said he has negotiated substantial discounts in drug prices with drugstore chains through his nonprofit Citizens Health Corp., a subsidiary of Citizens Energy Corp.”

“Kennedy’s announcement comes after several years of failed attempts to get the state to move forward with its own bulk-purchasing program. The Legislature has required the administration to establish bulk purchasing each of the past two years, but no major steps have been taken.”

“In the summer, the administration of Acting Governor Jane Swift appeared ready to embrace the concept, at least on a limited basis. But those efforts now appear stalled However, Swift administration sources said they will meet to discuss whether they can work with Kennedy’s plan to offer discounts to seniors enrolled in Prescription Advantage, the new state-sponsored drug insurance plan for the elderly and disabled.”

Alan Sager, Ph.D., a professor at the Boson University School of Public Health:

“This sounds like a well-intentioned effort that could help some people, and on balance, it’s probably worth doing. Unfortunately, it can tackle only a very small share of the problem of unaffordable medications.”

http://www.boston.com/dailyglobe2/268/metro/Kennedy_to_launch_drug_program+.shtml

Comment: Joseph Kennedy’s effort to improve access to pharmaceuticals, through private efforts to make them more affordable, is most admirable. But what will happen? Other efforts to contract discounts will compete. With no other mechanisms to contain costs, the pharmaceutical industry will merely grant discounts from an artificially inflated wholesale or retail price. An example of the perversity of this process is the current process by which pharmaceutical firms grant Medicare a discount from the Average Wholesale Cost (AWP) which has proven to be an artificial construct that the industry has used to assure that high drug prices are maintained.

Also, other entities will be demanding the same discounts, including federal and state programs, such as Prescription Advantage, pharmacy benefit managers, and any other element that must pay for pharmaceuticals. Lacking control of the process, the balloon phenomenon is operational – push in here and it bulges out there – shifting costs so that the industry does not have any net reduction in revenues. Who pays for these shifting costs? They are funded by everyone who requires prescription drugs, but the funding is inequitable at a time that we are attempting to improve equity in our health care system.

Fee controls through contracting by health plans and through government action have been relatively effective in limiting the profits of physicians, hospitals, laboratories, and radiological services to a level that have allowed fair but not excessive profits. This is because the joint private and government control of these sectors of health care is almost complete. On the other hand, the pharmaceutical industry still has a large sector of patients that do not have a private or government intermediary to control the market. This sector includes a major segment of the Medicare beneficiaries, the uninsured, those covered by privates plans that do not offer pharmaceutical benefits, and those that must purchase a significant amount before their plans kick in. This has left the pharmaceutical industry with an intact balloon, allowing unlimited cost shifting.

Pharmaceutical costs are the greatest inflationary element in health care today. When other sectors of health care are subjected to price controls, why should this industry be insulated?

Is there room for price reductions that will allow fair profit for the pharmaceutical firms? Clearly there is. This industry has also been egregiously wasteful in administrative and marketing costs, much of which could be eliminated. Drugs should be selected based on medical benefit. Physicians should be updating their knowledge through legitimate continuing education rather than by accepting sales pitches of this industry. Copy cat drugs should be funded based on their real value rather than based on their patents and success of their marketing programs. R & D should be directed to new breakthroughs rather than for the purpose of extending patents via copy cats. Perhaps the most important change that needs to be made is to make drugs available to every person that genuinely needs them. The marginal costs to expand production to meet this need are almost negligible. Diluting average costs with this very low cost expansion of production would have the greatest impact on reducing the per prescription price of drugs.

The United States has one of the least equitable health care systems of all industrialized nations. Inequity is particularly a problem in our allocation of pharmaceuticals. The solution is simple. Establish a publicly administered, universal health insurance program. Require the pharmaceutical industry to end waste, to produce value, and then to negotiate for rates that meet their legitimate costs and still provide a fair profit. The pharmaceutical industry would thrive, but, much more importantly, more patients would thrive.