Alliance for Health Reform Briefing
August 10, 2001
Washington, DC

Gary Lauer, President and CEO of eHealthInsurance, an on-line broker for health insurance:

“We are the largest source of health insurance for individuals and families in the country. We’re the largest producer of health insurance for many if not most of the largest carriers as well.”

“So what we did is we sampled randomly 20,000 active customers.” “We found that the average premiums that these 20,000 individuals and families are paying are in the range of $1,200 to $1,500 per person per year.”

“… based on this, what it tells us is that tax credits may, in fact, have an important impact for people who bought health insurance.”

“If you take the Reach Act for example (one of the tax credit proposals), $1,000 per year for individuals and $2,500 for families, we found… that 75 percent selected policies with annual premiums that are within 75 to 100 percent of the tax credit limit that’s proposed.”

“Tax credits so far are the best proposal that we’ve heard to help address a large portion of the uninsured. There are other people who are uninsured who obviously this is not going to help. There are people who have got very, very serious medical conditions either presently or historically, there are some people who are very economically challenged, you know, many of the high risk pools in states, other kinds of things need to be done for those and we feel very strongly about that. But you’ll find that we believe close to half of the uninsured today can afford health insurance or may be able to afford health insurance through tax credits.”

“You know, what we find is that there are some individuals and families who simply are uninsurable – just the way the system is today, they’re uninsurable. And we feel very strongly about high risk pools as a way to really help and support those people.”

“We find that about 80 percent or 4 out of 5 of our applicants actually get health insurance coverage. … one out of five goes uninsured through eHealthInsurance is not able to get coverage.”

“It’s safe to say that I won’t disclose information on income (of those insured) at this point. I’ve been asked about this previously. We’re going to go back and take a look at that and see if there’s a way to segment that without compromising anything.”

http://www.kaisernetwork.org/health_cast/uploaded_files/transcript081001.pdf

Comment: What a fantastic opportunity this is for Mr. Lauer’s company. His market is composed of a population subset that uses the Internet for making purchases. So he begins with individuals that are Internet sophisticated, mostly financially secure, and generally younger and therefore healthier than average. His insurance products exclude the chronically ill (by underwriting) and lower income individuals (by affordability) anyway. His carriers are elated to have directed to them this highly select segment of the market. He suggests that he is filling a void for the uninsured, although I suspect that more traditional brokers would suggest that he is merely attracting their former clientele. The fact that he refuses to disclose the income levels of his clients makes me suspect that he is not really filling the void for low income, uninsured individuals after all.

We continue to hear strong support for tax credits as an answer to insuring the uninsured. Mr. Lauer’s company demonstrates that tax credits would be a great deal for young, healthy, affluent families, and an even better deal for his company. But the problem we need to address is insuring those with more modest incomes and with existing disorders. Tax credits would have very little impact on those with the greatest needs. Mr. Lauer’s solution is to shift those costs to the rest of us through taxpayer funded public programs and through high risk pools, while he walks away with the cream of the business which is funded by us through tax credits!

Another attendee of this meeting was quite perceptive:

Bob Griss, Director of the Center on Disability and Health, Washington, DC:

“And I really don’t understand why there isn’t more attention to a pool that everybody’s in, that covers everybody, because to me that is the missing seat on the panel.”

A message from Uwe Reinhardt, Ph.D., James Madison Professor of Political Economy, Princeton University:

Don:

I have just posted this message on the course website of my course in first-year economics. I’ll e-mail you Paul Krugman’s piece.

Sun, Sep 16, 2001 —

As part of this course, I shall from time to time link our course website to news articles or commentaries that are relevant to this course.

I have just posted there a commentary by my colleague Paul Krugman on the issue of the private- and public-sector mix in an economy. A vulgar theory with much political traction in this country is that “government” is a state apart from the American people, from which it follows that reducing government spending is always a good thing and that it is always better to let the private sector handle any chore rather than turning it over to that alien entity, our government. You can be very popular at country-club cocktail parties around the country by spouting this simplistic (and erroneous) theory. You can also hear it recited, time and again, by certain talking heads on TV.

In his commentary, Professor Krugman highlights the price we pay for such shoddy thinking. Properly trained economists appreciate that the private sector has a comparative advantage in the production and management of many functions, while the government is better at producing and managing other functions.

Ironically, you now hear even ultra-conservative commentators on TV demanding that airport security in this country be “federalized,” that is, be made part of the civil service. They also, of course, ask that another government agency, the US armed forces, bail us out of our current predicament. Coming this late in the game, it is a sad irony to hear such talk from government’s visceral critics.

One objective of this course is to make you more thoughtful citizens than the many vulgar “thinkers” (to use the term loosely) who believe that government is not part of us (and we part of it), but who think instead that government is an alien force that takes things away from us–either our money or our freedom. If you pay attention in this course, you will not need a major tragedy to understand the proper roles of the private and public sectors in a well-run country. We shall come back to this theme many times in this course.

Paul Krugman’s opinion article: http://www.nytimes.com/2001/09/16/opinion/16KRUG.html

Comment: Although Professor Krugman’s article discusses the role of government in relation to the tragedies of the past week, all of us concerned about health care reform will understand the extrapolations to our health care system. Although the private sector health care system functions well when accessed, a publicly administered universal health insurance program can assure that access.

*******************

I. Alan Sager, Ph.D., Professor of Health Services and Co-Director of the Health Reform Program at Boston University School of Public Health, on September 5, 2001, provided testimony before a subcommittee of the United States Senate Committee on Commerce. His topic: “Americans would save $38 billion in 2001 if we paid Canadian prices for brand name prescription drugs.” He describes “how to win those savings and use them to protect all Americans against high drug costs without hurting drug makers or drug research.”

Alan Sager, Ph.D.:

“Together we face two challenges: making all needed medications available to all Americans at affordable prices, while building a durable financial foundation under drug research and delivery in the United States. I am convinced that we can do both of these. One reason is that we already spend enough money to do so. But not if we continue business as usual.”

The full testimony (revised) is available at: http://dcc2.bumc.bu.edu/hs/ushealthreform.htm which brings you to a page, “US Health Reform.” Under “A. Prescription Drug Reform,” “3. Testimony,” click on “AMERICANS WOULD SAVE $38 BILLION IN 2001 IF WE PAID CANADIAN PRICES FOR BRAND NAME PRESCRIPTION DRUGS.”

*******************

II. Martin Donohoe, MD, FACP, Assistant Professor of Medicine and Senior Scholar at the Center for Ethics in Health Care at the Oregon Health Sciences University, has prepared an excellent series of slides in PowerPoint format on various aspects of the pharmaceutical industry, with special emphasis on ethical perspectives. The information provided is particularly valuable for those of us dedicated to health care reform. Dr. Donohoe has generously offered to make the series available to us. The slides are very easy to read and thus are valuable as a stand-alone information resource, not to mention their value in educational presentations. If you are interested, you can contact Dr. Donohoe at his e-mail address which appears at the end of his message below.

9/14/01

Dear Dr McCanne:

I am a member of PNHP and teach medical humanities and social justice ethics at Oregon Health and Science University in Portland; one area I often lecture on is the pharmaceutical industry (history, current practices, financial and legal issues, ethical issues, etc.) After serving on a panel at the Bioethics Summer Retreat earlier this year, a number of participants requested a copy of my PowerPoint presentation on the pharmaceutical industry. I offered to e-mail a copy of the presentation to anyone from the bioethics listserv who was interested and received over 50 responses.

Now that I see that PNHP is becoming more involved in the issue of pharm co marketing, I wonder if any members (or the organization) is interested in a copy of the presentation, which contains over 100 slides and covers the economics of the industry, drug R and D and marketing (incl data on advertising to physicians and DTC advertising), the history of drug regulation in the US, policy and ethical issues facing the FDA, companies under investigation for various violations (or who have pled guilty) and why, info on the worrisome sequelae of increasing collaboration between academia and industry, guidelines re gifts and speakers/CME, etc.

I am happy to share the slides and have no proprietary interest in the presentation, and hope it can be of help to those training students, residents, and practicing MDs. I feel there is too much competition and not enough cooperation in academic medicine/medical education.

The refs are literally a 2 and ½ foot stack in my office, and I will be working on the paper over the next year. In a nutshell, most of the info comes from mainstream med jnls (eg JAMA, NEJM, Annals Int Med, J Gen Int Med), with small amounts from Public Citizen’s Health Research Group’s Health Letter, PNHP’s newsletter, or “mainstream” newspapers (e.g., NY Times).

If you think other members of this list or PNHP may be interested, please let me know and I can send them copies as an attachment. I would rather they contact me so that I can at least keep track of who is getting it and for what purpose they hope to use it. If you are interested in using me as a speaker for PNHP in some way, let me know, as I have also run a session on the single payer system, using PNHP data and slides, for our house staff.

Martin

Martin Donohoe, MD, FACP Assistant Professor of Medicine and Senior Scholar, Center for Ethics in Health Care Oregon Health Sciences University General Internal Medicine (L-475)
3181 SW Sam Jackson Park Road
Portland, OR 97225
503/494-6495 (ph) 503/494-6344 (fax)
donohoem@ohsu.edu

September 14, 2001
Relayed by Joanne Landy, MPH, MA, Executive Director, PNHP-NYC

Oliver Fein, M.D., Chair, Physicians for a National Health Program, New York Chapter:

“Dear PNHP-NYC members and friends,

“How are you? Many of us have been completely absorbed with the medical and psychological response to the World Trade Center disaster. Now, we must prepare for the aftermath. As health professionals, we are likely to experience both the physical and emotional impact among our patients and colleagues for months. As health progressives, we must seek ways to understand the roots of this week’s tragedy and propose positive ways to avert such horrors in the future. At the same time, we must continue our efforts at health system reform. In this spirit, we have decided to press forward with our September 21 protest against the pharmaceutical industry’s efforts to influence physicians (see forthcoming e-mail), to conduct our speaker’s training workshop on September 22; and, to hold our forum featuring Fitzhugh Mullan on “Big Doctoring: Primary Care-Essential but Endangered” on September 25. I hope to see you all at one or more of these events; apart from the specific agenda, it will be good to be together at a time like this.”

And the message on the September 21 protest:

A CALL TO PROTEST DRUG COMPANIES’ INFLUENCE ON DOCTORS
Plaza Hotel Friday, September 21, 6-7pm

On September 21, physicians will congregate at the Plaza Hotel in Manhattan for a gala event sponsored by Forest Pharmaceuticals, which has paid doctors $500 plus a free night with meals at the Plaza to attend a seminar that will promote its anti-depression drug Celexa. Across the country there is mounting protest against attempts by drug companies to manipulate doctors’ decisions about which drugs they prescribe. Join us in front of the Plaza at 59th St. and 5th Ave. from 6 to 7 pm for a press conference and protest demonstration.

Consider these facts:

· The pharmaceutical industry spends more on marketing than it spends on research and development (one company alone spent $136 million/year promoting just one medication – that’s more than Coca-Cola spent advertising Coke in that year).

· The pharmaceutical industry spends more on drug promotions (>$10 billion) than all U.S. medical schools spend on teaching students.

· Despite doctors’ beliefs to the contrary, studies have shown that drug company promotions, such as this event at the Plaza, do distort prescribing patterns.

· Meanwhile, millions of Americans do not have insurance to cover medications. Even Medicare doesn’t cover prescription drugs, except when you’re in a hospital. Yet, pharmaceutical costs are rising faster than the costs of doctors and hospitals. Many Americans must forgo their medicines in favor of such necessities as food and housing.

We call on the pharmaceutical industry to stop its excessive spending on marketing and to lower the price of prescription drugs.

We call on Congress to limit pharmaceutical prices for everyone by purchasing drugs in bulk, price controls, or a combination of these mechanisms, as is done in other countries throughout the world.

We call on Congress to enact a Medicare drug benefit. As a first step, we urge Congress to pass legislation that regulates pharmaceutical prices, such as the Allen-Johnson bill (HR 1400/S 699) that lowers drug prices for Medicare patients to the average price that the drugs are sold in other developed countries. This legislation is expected to reduce prices for brand-name drugs by 40 percent, and will make a Medicare drug benefit much more affordable.

SPONSORED BY PHYSICIANS FOR A NATIONAL HEALTH PROGRAM (New York Chapter) 2840 Broadway, #297 New York, NY 10025 pnhpnyc@igc.org www.pnhpnyc.org

Comment: We all must follow New York’s inspirational lead in moving forward with health care reform.

The unrelenting shock and grief that we all share on experiencing the tragic loss of 5000 lives seems like it will never end. In a few brief moments we saw unveiled a tragedy of unfathomable proportions. People in the prime of their lives… so wrong… so terribly wrong.

The entire nation now wants to do the right thing, even if we may still be confused as to what that is. One thing that we do know is that we must pick ourselves up and move forward. We agree that no evil force can be allowed to weaken our spirit and resolve. We must continue.

The high visibility and abruptness of the tragedy shocked all Americans and brought immediate responses in support of our leadership. We want the right things done, and as soon as possible. Much more insidious and much less visible is the infinitely greater premature loss of life and suffering that is wrought simply by the ineffectiveness of our health care system in properly allocating our abundant resources. The premature death and impaired quality of life that continues to occur is diffused over time and space, and it does not create isolated images that can be broadcast instantaneously over every network simultaneously. But these tragedies are just as real, and they are much greater in the sheer numbers of lives affected. Simply because of the lack of an instantaneous media presence, these tragedies fail to provoke the outrage that Americans would demonstrate if they only understood. So endless suffering and premature death continue. So wrong… so terribly wrong. That is why we must continue to speak out on issues of health care injustice. We must right this terrible wrong.

Quote of the Day

Families USA Press Room
September 12, 2001

“Most tax-credit proposals for the purchase of individual health coverage by low-wage workers, such as the President’s proposal, provide annual tax credits approximating $1,000 per year. But, according to the report, the average premiums for a standard health plan in the 25 states (studied) for healthy, non-smoking women ages 55 and 25 are $4,734 and $2,395, respectively. Health insurance for unhealthy and/or smoking women would be much higher or would be unavailable, according to the report.”

Ron Pollack, executive director of Families USA:

“The costs of individual health insurance are far more expensive than the cash value of pending tax-credit proposals. They are like a 10-foot rope thrown to a person at the bottom of a 40-foot hole. As a result, low-wage, uninsured workers across America will either find health premiums unaffordable or will only be able to buy Swiss cheese-type policies that have more holes than cheese.”

http://www.familiesusa.org/media/press/2001/taxcredit.htm

The unrelenting shock and grief that we all share on experiencing the tragic loss of 5000 lives seems like it will never end. In a few brief moments we saw unveiled a tragedy of unfathomable proportions. People in the prime of their lives… so wrong… so terribly wrong.

The entire nation now wants to do the right thing, even if we may still be confused as to what that is. One thing that we do know is that we must pick ourselves up and move forward. We agree that no evil force can be allowed to weaken our spirit and resolve. We must continue.

The high visibility and abruptness of the tragedy shocked all Americans and brought immediate responses in support of our leadership. We want the right things done, and as soon as possible. Much more insidious and much less visible is the infinitely greater premature loss of life and suffering that is wrought simply by the ineffectiveness of our health care system in properly allocating our abundant resources. The premature death and impaired quality of life that continues to occur is diffused over time and space, and it does not create isolated images that can be broadcast instantaneously over every network simultaneously. But these tragedies are just as real, and they are much greater in the sheer numbers of lives affected. Simply because of the lack of an instantaneous media presence, these tragedies fail to provoke the outrage that Americans would demonstrate if they only understood. So endless suffering and premature death continue. So wrong… so terribly wrong. That is why we must continue to speak out on issues of health care injustice. We must right this terrible wrong.

Quote of the Day

Families USA Press Room
September 12, 2001

“Most tax-credit proposals for the purchase of individual health coverage by low-wage workers, such as the President’s proposal, provide annual tax credits approximating $1,000 per year. But, according to the report, the average premiums for a standard health plan in the 25 states (studied) for healthy, non-smoking women ages 55 and 25 are $4,734 and $2,395, respectively. Health insurance for unhealthy and/or smoking women would be much higher or would be unavailable, according to the report.”

Ron Pollack, executive director of Families USA:

“The costs of individual health insurance are far more expensive than the cash value of pending tax-credit proposals. They are like a 10-foot rope thrown to a person at the bottom of a 40-foot hole. As a result, low-wage, uninsured workers across America will either find health premiums unaffordable or will only be able to buy Swiss cheese-type policies that have more holes than cheese.”

http://www.familiesusa.org/media/press/2001/taxcredit.htm

The New York Times
September 12, 2001
Editorial

“But this is an age when even revenge is complicated, when it is hard to
match the desire for retribution with the need for certainty. We suffer
from an act of war without any enemy nation with which to do battle.
The same media that brought us the pictures of a collapsing World Trade
Center shows us the civilians who live in the same places that
terrorists may dwell, whose lives are just as ordinary and just as
precious as the ones that we have lost.”

Please excuse the apparent insensitivity of the timing of the “Quote of the Day” message. I have just learned of the tragedies in New York and Washington and share with all of you our profound grief.

Don

Prepared for: The Vermont HRSA State Planning Grant, Office of Vermont Health
Access Prepared by: The Lewin Group, Inc. – John F. Shiels and Randall A. Haught
August 28, 2001

“Our analysis indicates that the single payer model would cover all Vermont residents, including the estimated 51,390 uninsured persons in the state, while actually reducing total health spending in Vermont by about $118.1 million in 2001 (i.e., five percent). These savings are attributed primarily to the lower cost of administering coverage through a single government program with uniform coverage and payment rules.”

“… the budgeting process for the single-payer program is likely to emerge as a powerful cost containment tool.”

The entire report is available at: http://www.dsw.state.vt.us/districts/ovha/AnalysisoftheCosts.pdf

Comment: Our health care system remains in turmoil primarily because we have been unable to contain costs, and all of our efforts to do so have created even greater problems and have failed to adequately address the major inequities inherent in our system. Now we have yet another study that demonstrates that we can contain costs while providing comprehensive health care coverage for everyone. How many studies do we need before the “controlling authorities” will allow us to bring the single payer concept to the negotiating tables? How many studies do we need before the media will begin to routinely include input from single payer advocates to provide balance (and color) to the articles reporting the defects in our current fragmented system, defects that single payer will cure? How many studies do we need to convince the public that it is time to dump the rhetorical lies and seriously address the real issues in health care?

Soon we will have the results of yet another study, from California, the Health Care Options Project. It will be unique in that not only will single payer reform be studied, but several other models will be prepared and submitted to a microsimulation process. The process will be completed in February. Will this be another report that will demonstrate the superiority of the single payer method, only to be filed away with all of the other reports? Or, maybe this time, shouldn’t we consider sitting down and devising the strategy to convert single payer into reality?

The California Health Care Options Project site: http://www.healthcareoptions.ca.gov/

The New York Times
August 31, 2001
by Tamar Lewin

“Over the last five years, the number of uninsured women has grown three times faster than the number of uninsured men, according to a new study by the Commonwealth Fund.”

“Lack of insurance is a serious problem for women, the report said, because women’s health needs are greater than men’s: women are more likely than men to have chronic illnesses, more likely to have mental health problems and more likely to make regular use of prescription drugs.”

“Older married women, aged 55 to 65, are 40 percent more likely to be uninsured than older married men, in part because their husbands meet Medicare’s age 65 coverage requirement and they do not. As couples near the age of Medicare eligibility, women married to older men are at especially high risk of being uninsured.”

Karen Davis, President of the Commonwealth Fund:

“It’s ironic, and not right that as women get older, and reach the age range where they’re most likely to be providing care to disabled family members, they’re also most likely to be having trouble making sure their own health care needs are met.”

http://www.nytimes.com/2001/08/31/national/31INSU.html

Comment: Again, 92% of Americans believe that it is important for the President and Congress to “deal with the issue of increasing the number of Americans covered by health insurance.” And yet they continue to follow policies that are supported by the 2% that believe it is “not at all important.” Why?

(Note: There will be no “Quote of the Day” for the next ten days.)