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?

PNHP Home

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.

News Release
Congressman Pete Stark
September 21, 2001
Rep. Pete Stark Statement on Medicare HMOs’ Abandonment of America’s Senior Citizens and Persons with Disabilities”

Congressman Pete Stark:

“Independent analyses have long shown that we over-pay private plans under Medicare, relative to what their costs are. Just last year, we enacted legislation that gives Medicare HMOs an additional $32.5 billion over the next 10 years. We are told that it would go into extra benefits, but it has not. Instead, it is lining shareholder and CEO pockets, while Medicare beneficiaries are again left in the lurch. It is unconscionable to spend more of our scarce resources on this part of the program when millions of Medicare beneficiaries lack coverage for prescription drugs. We need to be working to improve Medicare for all beneficiaries.”

Comment: Increased funding of Medicare HMOs is an issue that has survived the reshuffling of legislative priorities. House Ways and Means Chairman Bill Thomas, on September 21, released a statement that indicates that they intend to move forward with legislation that would increase funding for Medicare HMOs. This is with the concurrence and support of Thomas Scully, Administrator of the Centers for Medicare and Medicaid Services (CMS, formerly the HCFA).

The Ways and Means Committee release is available at: http://waysandmeans.house.gov/press/2001/september/9-21-01.htm

In spite of misleading rhetoric, the facts are not in dispute. Initially, Medicare HMOs were successful in directing marketing to a relatively healthy subset of Medicare beneficiaries, thereby escaping much of the economic burden of higher cost, less healthy patients. Since they were awash in unspent taxpayer dollars, they were required to either return the excess funds, or spend them on patients or on their own industry. Thus those that joined HMOs experienced greater benefits, especially the inclusion of pharmaceuticals, and lower out-of-pocket expenses. And there were still plenty of funds left to enrich the shareholders and administrators of these plans. But studies did confirm that the taxpayers were not receiving value for this investment because of diversion of funds away from patient care and into inefficient, private health plan bureaucracies.

In response, Congress slowed the rate of increases in payments to HMOs. In the meantime, their HMO patients were growing older and more expensive, squeezing the profit margins for the HMOs. Congress then granted additional funding, but not enough to allow the HMOs to continue with their extravagant bureaucratic wastes. Thus HMOs continue to withdraw from unprofitable markets. As a result, those Medicare beneficiaries that joined HMOs are losing the extra benefits of pharmaceutical coverage and lower out-of-pocket costs.

The response of Rep. Thomas and others is to support legislation that will provide funding for these benefits, and provide adequate profit margins for the HMOs. There are two very important issues here. One is that they are perpetuating an inefficient system that is wasting taxpayer funds by diverting them away from patients and into the HMO industry. This violates a fundamental duty of Congress to reduce waste of taxpayer dollars.

The other issue relates to the fact that Medicare beneficiaries should have pharmaceutical coverage and lower out-of-pocket costs. But that should apply to all Medicare beneficiaries, not just to HMO plan members. Thomas and his colleagues want to limit those benefits to individuals that will join the organizations owned by his friends in the industry. What better marketing leverage could you have than to provide a gift of taxpayer funds to managed care companies for extra enticements for patients, while prohibiting the entitled patients that remain in the more efficient, traditional Medicare system from receiving those same benefits?

Medicare was established as an equitable system. It is a blatant abuse of the legislative process to end equity by granting tax payer funded enticements to be used for unfair marketing advantage of an abusive managed care industry.

Congress has a moral obligation to correct both of these wrongs. They need to end the waste of taxpayer dollars diverted to inefficient private bureaucracies. And they need to assure equitable access to care for all Medicare beneficiaries by preventing financial barriers to care. They can do this best by adding a pharmaceutical benefit and by reducing out-of-pocket expenses. If they did this, the superfluous HMO bureaucracies would go away. Then maybe we’ll be ready to seriously consider Medicare for All.

The Washington Post
September 22, 2001
“Federal Insurance to Rise 13.3%” by Stephen Barr

“Health insurance premiums for federal employees and retirees will rise an average 13.3 percent next year, the Bush administration said yesterday. The 2002 rates are nearly 50 percent higher than what government workers paid in 1998.”

“The federal program, which provides health insurance coverage to about 9 million government workers, retirees and family members worldwide and more than 800,000 people in the Washington area, often serves as a bellwether for premium increases in the private sector.”

“The Federal Employees Health Benefits Program is the largest employer-sponsored program in the nation, annually providing more than $24 billion in health care benefits. Employees may choose from about 180 health plan options and, depending on the plan, the government usually pays from 70 percent to 75 percent of the total premium.”

Colleen M. Kelley, president of the National Treasury Employees Union:

“Clearly, something is wrong when a health care plan of this size fails to use its marketing clout to help keep premiums in line.”

http://www.washingtonpost.com/wp-dyn/health/A6618-2001Sep21.html

Comment: Something’s wrong? The largest health benefit program in the nation, with 180 competing health plan options for nine million individuals, has not been effective in using market competition to control costs? Hasn’t this been an adequate test of the theory of containing costs by having health plans compete in the marketplace? How much more testing of this failed premise are we going to tolerate? We’ve had enough. It is time to seriously consider a proven method of cost containment, which, much more importantly, has the greater advantage of introducing equity to our health care system: a publicly-administered program of universal health insurance.

American Enterprise Institute
Health Policy Discussion
“Is Inequality Bad for Our Health?”
An event scheduled for October 11, 2001

From the invitation for this event:

“A popular topic in public health research today is that inequality, and in particular income inequality, is one of the most powerful determinants of health and the most important limitation on the quality of life in modern societies.

“While a few studies have provided evidence that the greater the disparity of wealth in a society, the less healthy the population, many researchers have gone well beyond what might be warranted by the weight of evidence alone. The World Bank, World Health Organization, and National Institutes of Health have even lent more credibility to the ‘income inequality as health determinant theory’ and its far-reaching implications such as the restructuring of important sections of our economic system.

“Jeffrey Milyo of the Irving B. Harris School of Public Policy, University of Chicago, will critique the income inequality hypothesis, its validity and its applicability.”

The invitation is available at: http://www.aei.org/inv011011.htm

Comment: So the American Enterprise Institute wants to refute the notion that income inequality is a determinant of health. We can anticipate the probable content of the presentation of Jeffrey Milyo by examining some of his work. The papers cited are available at: http://www.harrisschool.uchicago.edu/wp/author.html#milyo

In the following paper, Jeffrey Milyo and his colleague, Jennifer Mellor, conclude that “we find no consistent association between income inequality and individual health status.”

“Income Inequality and Health Status in the United States: Evidence from the Current Population Survey” By Jennifer M. Mellor and Jeffrey Milyo Abstract: Several recent studies have identified an association between income inequality and aggregate health outcomes; this has been taken to be evidence that inequality is detrimental to individual health. We use data from the 1995-1999 March Current Population Survey to examine the effect of income inequality on individual health status for both the general population and those individuals in poverty. We find no consistent association between income inequality and individual health status. Our results contradict recent claims that the psycho-social effects of income inequality have dramatic consequences for individual health outcomes.

In the following paper, they hedge a little bit by saying, “while the poor may suffer the most from inequality, it is claimed that the rich also suffer… ”

“Is Inequality Bad for Your Health?” By Jeffrey Milyo & Jennifer M. Mellor Abstract: “A number of recent studies suggest that income and social inequalities have detrimental consequences for population health. While the poor may suffer most from inequality, it is claimed that the rich also suffer, and as a result, redistributive policies may not be zero-sum. Perhaps for this reason, the inequality hypothesis has been met with great enthusiasm. In this paper, we review the basic arguments and evidence that inequality has a causal effect on health and find them wanting in many aspects.”

And in the following paper they concede that “none of this should be construed as a refutation of the claim that relative deprivation may have physical consequences.”

“Re-Examiniing the Evidence of an Ecological Association Between Income Inequality and Health” by Mellor and Milyo An excerpt from the paper: “None of this should be construed as a refutation of the claim that relative deprivation may have physical consequences. However, there are serious shortcomings in the current articulation of the inequality hypothesis, and in the way most authors have tested it.”

What is this all about? Conservatives are very concerned about the prevailing rhetoric that income inequality negatively impacts lower income individuals, especially their health status. This theory provides strong support for distributive policy, using a portion of “excess” wealth to meet our egalitarian desires for health care equity. Because of their strong opposition to distributive policy, they wish to refute the rhetoric of the egalitarians, and replace it with their own rhetoric. They wish to build on prior rhetorical successes such as, “I’m from the government and I’m here to help you.”

Milyo and Miller do present selected data that would suggest that income inequality, as an isolated finding, does not necessarily correlate with impaired health status. A wealthy community, including individuals with massive megawealth, might have significant income inequality, but, because of the paucity of very low income individuals, may not have impaired health status. Whether or not their conclusions are valid, their findings will allow the conservatives to establish the new rhetoric that “income inequality is not a health determinant.” This is very important rhetoric because most individuals will extrapolate the unwarranted conclusion that low income is not a determinant of health.

Newt Gingrich will be the discussant for this event. Hopefully, someone reading this message will attend, and present to him the following posit. Although income inequality alone possibly may not correlate with impaired health status, no person, not even Milyo, disputes that fact that low income is strongly correlated with impaired health status. Clearly, there is a pressing need to improve the status of low income individuals, whether through funding of public programs or through private or regulatory distributive policies. (Don’t hold your breath waiting for adoption of private distributive policies.) Where, in society, should the funding come from, if not from the more affluent individuals who could not possibly experience any change in quality of life through distributive policy? Or should we just concede that we are not egalitarian, and let the unfortunate fend for themselves?

America is better than that. Let’s clobber their rhetoric before it is disseminated.

Los Angeles Times
September 19, 2001
by Ronald Brownstein

At the moment the first fireball seared the crystalline Manhattan sky last week, the entire impulse to distrust government that has become so central to U.S. politics seemed instantly anachronistic.

The erosion of faith in the federal government has been probably the most profound change in America’s political landscape over the last generation.

Yet given the critical responsibility of safeguarding the skies, private companies apparently have cut corners and cut costs as they inevitably balanced concern about the general welfare with their need to generate a profit. Now, the widespread assumption is that the federal government, unconcerned with profit, will provide a more thorough and effective defense against hijackings or bombings.

The lesson is twofold. While government indeed can learn about efficiency from the best businesses, some public services–education comes to mind–are still best provided by public institutions that don’t need to turn a profit. And while U.S. industry has proved brilliant at creating wealth and inspiring innovation, it’s naive (or disingenuous) to expect private companies to operate entirely in the public interest.

It’s simply misguided to see the federal government as something divisible from America, when it is in fact the tool through which we meet collectively the challenges that we can’t handle alone. It obscures that basic truth to suggest we must choose between trusting government or the people. “In time of crisis,” notes Reed (Bruce Reed, chief domestic policy advisor under President Clinton), “we realize that the people and government are one and the same.” The tragedy is that it took so much private pain to remind us that sometimes public actions through government aren’t the problem–they are the solution to our problems.

http://www.latimes.com/news/nationworld/nation/la-000075207sep19.story

Comment: Public administration of universal health insurance? By the government? After all, it’s our government… our insurance… our health.

American Journal of Public Health
September, 2001
by Kate E. Pickett, PhD, et al

“Approximately 13% of pregnant women in the United States smoke, with serious health consequences for themselves and their infants.”

“We surveyed coverage of prenatal tobacco dependence treatments in health maintenance organizations (HMOs) in California to assess the availability, accessibility, use, and effectiveness of services offered to pregnant smokers.”

“MediCal managed care plans were more likely to provide coverage for face-to-face services (individual and group counseling) compared with commercial HMOs. In California, members of MediCal managed care plans may have better access to the most effective, clinically intensive tobacco dependence treatment services, because providers of MediCal managed care are mandated to identify and intervene on risk conditions identified during pregnancy.”

“Our findings suggest that in 1997, most California HMOs were not covering the extended or augmented psychosocial interventions that have been recommended for all pregnant smokers by the US Public Health Service. Although managed care offers the potential for increasing the availability and accessibility of such services for plan members, this survey suggests that that potential is not being realized. In addition, many California HMOs are unable to judge the use or effectiveness of these services and can neither track the costs and benefits of existing programs nor determine the need for additional services.”

http://www.ajph.org/cgi/content/full/91/9/1393

Comment: Because of the purported “success” of managed care health plans in controlling costs, the California state administration decided to utilize managed care organizations for MediCal, California’s Medicaid program. MediCal has been somewhat of a challenge for managed care organizations, both because of federal mandates for coverage (“bureaucratic government interference”) and because of chronic underfunding of the Medicaid program. The private managed care plans have had fewer controls on benefits and greater funding, allowing them to “excel” in managing care partly by putting in place preventive programs that will improve outcomes of their patient-beneficiaries. Smoking cessation programs during pregnancy represent an optimal use of health care resources, and provide an opportunity for managed care plans to prove that they deliver on their promise of higher quality care and more preventive services.

Although both utilize managed care, the underfunded MediCal program, with “excess government interference,” significantly outperformed the private managed care plans in this crucial preventive program. This was at a time (1997) when the private plans were fully developed and operational and were still flush with cash. If less funding and more government oversight produces a better outcome, isn’t it time to take a closer look at the overall structure of our health care system? How about a publicly administered, universal health insurance program? Any takers?

The American Prospect
September 10, 2001
by Marcia Angell, M.D.

Marcia Angell, M.D., senior lecturer in social medicine at the Harvard Medical School and the former editor-in-chief of the New England Journal of Medicine:

Faced with the likelihood of a large increase in the number of Americans without health insurance, many policy makers and interest groups are coalescing around the same solution: refundable tax credits to enable the uninsured to purchase private insurance. (A refundable tax credit is like a cash subsidy.) In insurance terms, this is essentially a defined contribution (contributing only a fixed amount toward the premium, and requiring workers to pay the rest). Often billed as a method to increase workers’ options, this is really inflation protection for employers.

Tax credits for the uninsured are a bad idea for several reasons.

First, even the most generous of the proposed tax credits would not buy an adequate policy.

Second, the influx of federal money would probably cause premiums to rise even faster than current projections. Unless premiums are regulated (which nobody proposes), tax credits for the uninsured would be a windfall for the insurance industry.

Third, tax credits would tend to drive out other types of coverage. Employers could use them as an excuse to drop health benefits altogether or shrink them further. That would be particularly likely if premiums rose steeply as a result of the tax credits.

Fourth, most of the tax-credit proposals require individuals to fend for themselves in the notoriously treacherous market for individual coverage. Some companies would likely offer cut-rate plans for the amount of the tax credits, but those plans would have very large out-of-pocket payments and very narrow benefits.

Finally, complex administrative requirements, including the need to monitor the insurance market and ensure that criteria for eligibility are met, would probably generate a huge and expensive new government bureaucracy. That would siphon off still more of the U.S. health dollar for overhead, which is already an exorbitantly high fraction of the total.

Compare the tax-credit idea with Medicare (which is a public, single-payer system embedded in the private, market-based system). Medicare offers defined benefits, not defined contributions; that is, all beneficiaries are entitled to certain services. The program provides a uniform set of benefits to nearly everyone who qualifies, and it does so far more efficiently than the private sector’s employment-based system. Furthermore, by regulating prices as well as benefits, Medicare limits what providers charge. Certainly, Medicare has plenty of room to improve. It could make the benefit package more appropriate for seniors and it could control inflation better (although it does better on this score than the private sector). But the essential mechanisms for doing both are in place.

No system can work if it doesn’t cover virtually everyone automatically and regulate prices as well as benefits. No matter how many ways we try to shift costs and plug holes, we will sooner or later have to face that fact. Otherwise, we continue to chase a rapidly receding quarry: health care that is both adequate and affordable. Precisely what makes the tax-credit idea attractive to conservatives– the preservation of the private market–is what will doom it in practice. We had better come up with another solution, because the problem is about to get a lot bigger. Universal Medicare, anyone?

http://www.prospect.org/print/V12/16/angell-m-2.html

Comment: Repeating the words of Sen. Jay Rockefeller, at a Senate Finance Committee hearing on tax credits:

“… the tax credit is the wrong approach. It is the wrong approach, period. That’s all there is to it. It will not work. It will not work at the figures that are being offered by you… the figures that’ll come in part from the other side, maybe some from our side. It won’t work. And I think we have to decide on this committee do we want people to get health insurance or do we not?”

Breaking news: Kaisernetwork.org reports today that “those measures with greater chances of passing include the allocating $28 billion over three years to reduce the number of uninsured through tax credits and CHIP and Medicaid expansions… ”

Further comment: Increasing income eligibility levels for the CHIP and Medicaid programs is very important as a temporary, urgent measure that would provide immediate relief of unmet medical needs. Concurrently we must continue unrelenting advocacy for comprehensive reform. But right now, the tax credit issue is on the front burner. It is imperative that we snuff it out immediately!

Jeannie Brewer, M.D. is a board member of California Physicians Alliance, the California chapter of Physicians for a National Health Program. She has multiple sclerosis and will be uninsurable once her COBRA benefits run out. This is her response to the messages on tax credits for health insurance:

“I am just one small example, but I pay almost $600 a month for health insurance for me and my newborn daughter and even that will disappear in 2 years, and I will not be able to purchase insurance no matter what the tax rebate/credit/incentive is. We need a single payer plan, period.”