Medical Economics
July 9, 2001

A roundtable discussion

Moderator: “What about the proposal that Medicare be used as a model for a new American system?”

George D. Lundberg, M.D., Editor-in-chief of Medscape and former editor of JAMA:

“Medicare could certainly serve as part of our model. It’s not a new idea. Some people have said that it should be extended to cover the whole population. Then they made the terrible mistake of calling that a ‘single-payer system.’ There will never be a single-payer system in this country, because that presupposes people can’t or won’t use their own money to buy whatever they want outside the system.”

http://me.pdr.net/me/public.htm?path=content/journals/m/data/2001/0709/round2.html

Comment: All health care systems, including single payer, allow people to use their own money to buy whatever they want outside of the system. It is long past time to end fighting against reform based on semantic or rhetorical issues, and to begin supporting reform based on sound policy. The words, “single payer,” are not the enemy, but reflexive, stilted thinking is. The issues are straight forward. We all agree on the goals of universal access and coverage, free choice, quality, and value in health care. The structural changes required to achieve those goals are simple. Even Dr. Lundberg recognizes that publicly administered insurance, such as Medicare, will provide the reform we need. Call reform single payer or don’t call it single payer, just do it!

Medical Economics
July 9, 2001

A roundtable discussion

Moderator: “What about the proposal that Medicare be used as a model for a new American system?”

George D. Lundberg, M.D., Editor-in-chief of Medscape and former editor of JAMA:

“Medicare could certainly serve as part of our model. It’s not a new idea. Some people have said that it should be extended to cover the whole population. Then they made the terrible mistake of calling that a ‘single-payer system.’ There will never be a single-payer system in this country, because that presupposes people can’t or won’t use their own money to buy whatever they want outside the system.”

http://me.pdr.net/me/public.htm?path=content/journals/m/data/2001/0709/round2.html

Comment: All health care systems, including single payer, allow people to use their own money to buy whatever they want outside of the system. It is long past time to end fighting against reform based on semantic or rhetorical issues, and to begin supporting reform based on sound policy. The words, “single payer,” are not the enemy, but reflexive, stilted thinking is. The issues are straight forward. We all agree on the goals of universal access and coverage, free choice, quality, and value in health care. The structural changes required to achieve those goals are simple. Even Dr. Lundberg recognizes that publicly administered insurance, such as Medicare, will provide the reform we need. Call reform single payer or don’t call it single payer, just do it!

Boston Globe
7/19/2001
by Benjamin Gedan

“The governor and state legislators will lose their publicly funded health care in 2004 if they do not provide the same coverage to all state residents – that is, if voters approve a ballot initiative to be unveiled today.”

Richard Lord, president of Associated Industries of Massachusetts:

“I think that it’s inappropriate to threaten the Legislature in that regard.”

Comment: Inappropriate? Why should the legislators be allowed to grant themselves publicly funded health care while denying the same to the voters? Is health care a right for all or only a right for elected officials?

Bush’s Pharmaceutical Cards
Institute for Public Accuracy Washington, D.C.
http://www.accuracy.org

Thursday, July 12, 2001

Responding to George W. Bush’s announcement today supporting discount cards for more Medicare recipients to use while buying pharmaceutical drugs, the following board members of Physicians for a National Health Program (www.pnhp.org) comment:

DON McCANNE, M.D. A retired family physician, McCanne said today: “White House spokesperson Ari Fleischer claims that ‘the president is committed to helping seniors get prescription drugs they need and deserve.’ But this plan is not a government program. It is merely a private, marketplace scheme that is receiving the personal endorsement of President Bush. The program will be administered by pharmacy benefit managers (PBMs), the prescription drug equivalent of managed care plans. These middleman businesses siphon off health care dollars that should be directed to patient care. The PBMs will sell memberships to Medicare beneficiaries. Providing everyone with a ‘discount’ is no discount at all. It is merely a price that is below an artificially inflated price set for the purpose of creating a fraudulent ‘discount’ price. If Mr. Bush really wants to help seniors ‘get prescription drugs they need and deserve,’ then he would support a bona fide Medicare prescription benefit that minimizes beneficiary cost sharing. Sadly, not even the leading congressional proposals would accomplish this goal.”

QUENTIN YOUNG, M.D. National coordinator of Physicians for a National Health Program, Young said today: “The pharmaceutical industry justifies its super profits by pointing to research and development costs, but it actually spends more on marketing than on R-and-D. Canada, Mexico and our own U.S. government Veteran’s Administration get deep discounts on pharmaceuticals by negotiating with manufacturers — up to 60 percent. The White House … could reduce costs sharply by allowing people in the U.S. to import pharmaceuticals from Canada, where they are substantially lower in cost, but this ‘free trade’ administration is suddenly for no trade and doesn’t want importing of low-cost pharmaceuticals when it curtails the drug companies’ profits.”

DAVID HIMMELSTEIN, M.D. Associate professor of medicine at Harvard Medical School, Himmelstein said today: “Medicare already covers some prescription drugs — those administered in a doctor’s office. And the Department of Defense, by law, gets the best prices from drug companies. If the administration were actually interested in covering people inexpensively, they could extend Medicare drug coverage to prescriptions administered outside a doctor’s office. If they, like the Defense Department, insisted on the lowest prices, this would cut drug prices dramatically. But instead, they are telling people they can go to private drug-buying firms, and these firms would negotiate prices with drug stores and distributors, not the drug manufacturers. This puts a squeeze on the retailers, but lets the big pharmaceutical companies off the hook. This is part of a pro-corporate agenda for health care that has no chance of actual progress. The thrust of where they are taking Medicare is to managed care, which has utterly failed in the Medicare program. Letting the HMOs into Medicare has actually cost money, between $2 billion and $3 billion per year according to the General Accounting Office. This is because the government gives HMOs 95 percent of the average cost for a Medicare recipient for each one an HMO signs up, but of course the HMOs cherry-pick the healthy ones; 18 percent of Medicare patients cost them nothing at all. Then, when HMO customers do get a major illness and start accruing serious bills, they’ve gone back to standard Medicare. Medicare is actually much more efficient than the HMOs — it has 2 percent overhead, whereas they have 15 percent overhead.”

Bush’s Pharmaceutical Cards
Institute for Public Accuracy Washington, D.C.
http://www.accuracy.org

Thursday, July 12, 2001

Responding to George W. Bush’s announcement today supporting discount cards for more Medicare recipients to use while buying pharmaceutical drugs, the following board members of Physicians for a National Health Program (www.pnhp.org) comment:

DON McCANNE, M.D. A retired family physician, McCanne said today: “White House spokesperson Ari Fleischer claims that ‘the president is committed to helping seniors get prescription drugs they need and deserve.’ But this plan is not a government program. It is merely a private, marketplace scheme that is receiving the personal endorsement of President Bush. The program will be administered by pharmacy benefit managers (PBMs), the prescription drug equivalent of managed care plans. These middleman businesses siphon off health care dollars that should be directed to patient care. The PBMs will sell memberships to Medicare beneficiaries. Providing everyone with a ‘discount’ is no discount at all. It is merely a price that is below an artificially inflated price set for the purpose of creating a fraudulent ‘discount’ price. If Mr. Bush really wants to help seniors ‘get prescription drugs they need and deserve,’ then he would support a bona fide Medicare prescription benefit that minimizes beneficiary cost sharing. Sadly, not even the leading congressional proposals would accomplish this goal.”

QUENTIN YOUNG, M.D. National coordinator of Physicians for a National Health Program, Young said today: “The pharmaceutical industry justifies its super profits by pointing to research and development costs, but it actually spends more on marketing than on R-and-D. Canada, Mexico and our own U.S. government Veteran’s Administration get deep discounts on pharmaceuticals by negotiating with manufacturers — up to 60 percent. The White House … could reduce costs sharply by allowing people in the U.S. to import pharmaceuticals from Canada, where they are substantially lower in cost, but this ‘free trade’ administration is suddenly for no trade and doesn’t want importing of low-cost pharmaceuticals when it curtails the drug companies’ profits.”

DAVID HIMMELSTEIN, M.D. Associate professor of medicine at Harvard Medical School, Himmelstein said today: “Medicare already covers some prescription drugs — those administered in a doctor’s office. And the Department of Defense, by law, gets the best prices from drug companies. If the administration were actually interested in covering people inexpensively, they could extend Medicare drug coverage to prescriptions administered outside a doctor’s office. If they, like the Defense Department, insisted on the lowest prices, this would cut drug prices dramatically. But instead, they are telling people they can go to private drug-buying firms, and these firms would negotiate prices with drug stores and distributors, not the drug manufacturers. This puts a squeeze on the retailers, but lets the big pharmaceutical companies off the hook. This is part of a pro-corporate agenda for health care that has no chance of actual progress. The thrust of where they are taking Medicare is to managed care, which has utterly failed in the Medicare program. Letting the HMOs into Medicare has actually cost money, between $2 billion and $3 billion per year according to the General Accounting Office. This is because the government gives HMOs 95 percent of the average cost for a Medicare recipient for each one an HMO signs up, but of course the HMOs cherry-pick the healthy ones; 18 percent of Medicare patients cost them nothing at all. Then, when HMO customers do get a major illness and start accruing serious bills, they’ve gone back to standard Medicare. Medicare is actually much more efficient than the HMOs — it has 2 percent overhead, whereas they have 15 percent overhead.”

The Associated Press
July 11, 2001
by Ron Fournier

“The plan relies on companies that manage drug benefits to buy prescription drugs in bulk. The companies would sell the cards to Medicare patients, who could use them at any pharmacy to purchase their medicine at a reduced rate.”

Ari Fleischer, White House spokesperson:

“The president is committed to helping seniors get prescription drugs they need and deserve.”

Comment: The reality:

** The fact that this plan “does not require congressional approval” confirms that this is not a government program. It is merely a private, marketplace scheme that is receiving the personal endorsement of President Bush.

** The plan will “not require federal money.” Without use of federal funds, the plan totally depends on the charity of the marketplace to reduce prescription drug costs, a principle based on a law of economics that does not exist.

** The program will be administered by pharmacy benefit managers (PBMs), the prescription drug equivalent of managed care plans. These middleman businesses siphon off health care dollars that should be directed to patient care.

** The PBMs will sell memberships to Medicare beneficiaries. Paying a fee for a “discount” card further strains the budgets of lower income beneficiaries. The Medicare card could be used to establish eligibility for the “discount,” without adding further administrative burdens and fees.

** Providing everyone with a “discount” is no discount at all. It is merely a price that is below an artificially inflated price created for the purpose creating a fraudulent “discount” price.

** Bulk purchasing is not unique to PBMs, but is characteristic of the industry. Only patients using the services of the small retailer pay inflated prices since those retailers are not allowed bulk rates. This is yet another example of unfair price discrimination characteristic of this industry.

** Many pharmacies are dependent on the PBM contracts. The PBMs are in a position to force the retailers, contractually, to honor the discount cards, while requiring them to accept the burden of the discounts, threatening the solvency of the retailers.

** Beneficiaries are to have choice between at least two PBMs in each region. Competition didn’t stop health care inflation under managed care plans; it won’t work for PBMs either.

“Discount” cards are a marketing scheme that have no beneficial impact on true costs. In fact, the administrative burden of these programs actually result in a modest increase in overall costs. Medicare beneficiaries need prescription drug coverage, and they need relief from ever-increasing out-of-pocket expenses that are impairing access to care. If Mr. Bush really wants to help seniors “get prescription drugs they need and deserve,” then he would support a bona fide Medicare prescription benefit that minimizes beneficiary cost sharing. Sadly, not even the leading congressional proposals would accomplish this goal.

http://www.washingtonpost.com/wp-dyn/articles/A42753-2001Jul10.html http://www.washingtonpost.com/wp-dyn/politics/news/latestap/A45734-2001Jul11.html

http://www.nytimes.com/2001/07/11/politics/11MEDI.html

Los Angeles Times
July 8, 2001
Commentary
by John Balzar

“I’ve been researching opinion polls. Nowhere do I see that Americans are clamoring for more courtroom tedium to heal what ails them. For that matter, nowhere do I see that they’re feeling healthier thanks to bewildering insurance paperwork. But in poll after poll, a Top 10 concern of Americans is health care, plain and simple.

“The fan dance now underway in the capital will do nothing except make worse what is already occurring in the nation. Employer-based health insurance plans are eroding. Premiums are soaring. The number of Americans without insurance is climbing, perhaps to 45 million of us. Many cannot afford their medicine.”

“Insurance companies do not deliver health care. They are profit-driven bureaucracies. If they had their way, they would insure only the healthy. As soon as we got unhealthy, we’d be uninsured.”

“I say, let’s collectively hire our own doctors and civil service health administrators. Private sector profits have no place in a business so important as life and death.

“Why are we so afraid of managing our own health care through our government, anyway? Because we don’t want heavy-handed, slow-moving decisions. Yet what could be more heavy-handed and slow-moving than the system we have?

“Actually, we are afraid of just the words: Socialized Medicine.

“So let’s start by changing terms. Let’s call it, American Health Care.”

Los Angeles Times
July 8, 2001
Commentary
by John Balzar

“I’ve been researching opinion polls. Nowhere do I see that Americans are clamoring for more courtroom tedium to heal what ails them. For that matter, nowhere do I see that they’re feeling healthier thanks to bewildering insurance paperwork. But in poll after poll, a Top 10 concern of Americans is health care, plain and simple.

“The fan dance now underway in the capital will do nothing except make worse what is already occurring in the nation. Employer-based health insurance plans are eroding. Premiums are soaring. The number of Americans without insurance is climbing, perhaps to 45 million of us. Many cannot afford their medicine.”

“Insurance companies do not deliver health care. They are profit-driven bureaucracies. If they had their way, they would insure only the healthy. As soon as we got unhealthy, we’d be uninsured.”

“I say, let’s collectively hire our own doctors and civil service health administrators. Private sector profits have no place in a business so important as life and death.

“Why are we so afraid of managing our own health care through our government, anyway? Because we don’t want heavy-handed, slow-moving decisions. Yet what could be more heavy-handed and slow-moving than the system we have?

“Actually, we are afraid of just the words: Socialized Medicine.

“So let’s start by changing terms. Let’s call it, American Health Care.”

Portland Press Herald
July 8, 2001
by Allan Drury

An interview with Howard R. Buckley, Mercy Hospital administrator:

Q: How has your thinking evolved over time on the single-payer issue?

A: I have watched the number of uninsured in Maine grow to 150,000 or so. I have felt the atmosphere and environment of distrust grow. I am seeing the rise in concern about health-care costs from small businesses. And the people that we serve no longer trust payers or providers.

People are drawn to work in health care because of its mission – helping patients and families. They become discouraged by the bureaucracy that we have built around that fundamental provider-patient interaction. And finally, I feel that health care isn’t a privilege, but a right that belongs equally to everyone. In the end, only a single-payer system will truly change the system for the better.

Q: Maine lawmakers have gotten high marks for extending access to low-income residents, but they haven’t done much to contain costs for most people with insurance. Is there anything the state can do about insurance costs for the middle class?

A: I don’t believe that anyone can contain costs unless here is a unified delivery system, providing the same health-care program to everyone and paid for by a single payer. If you can’t control the system, you can’t control the cost.

http://www.portland.com/business/stories/010708buckley.shtml

Health Affairs
July/August 2001
by Marsha Gold

“By almost any measure, the interim grade for the Medicare + Choice program as of the start of 2001 must be judged a ‘D’ if not an ‘F.’ In contrast to the goal of expanded choice, the M + C program has reduced the range of choice that once existed, with existing plans withdrawing, few new participants entering from among the newly authorized types of options, no geographic redistribution of participants to develop choice where none existed, and an increase rather decrease in the inequities in benefits and offerings between higher- and lower-paid areas of the country.”

From the editor’s prologue to this article:

“Remarkably, the policy community’s faith in the competitive model has persisted despite the acutely disappointing performance of Medicare + Choice. Congress has amended the program and enhanced payment levels, but enrollment and plan participation continue to decline. Nor has any alternative approach to restructuring Medicare emerged.”

Comment: President Bush and the conservatives along with the “bipartisan” support of Sen. Breaux continue to support privatization of Medicare through premium support legislation that utilizes private health plans. The experience with the Medicare + Choice program has confirmed that the private plans have wasted resources while denying coverage to major segments of the eligible population. Even more outrageous is that the editor of Health Affairs, perhaps the most important publication on health policy, states that no alternative approach to restructuring Medicare has emerged. Okay everyone… Open your windows… Climb out on your rooftops… And scream… WE WANT PRESCRIPTION COVERAGE! WE WANT CARE TO BE ACCESSIBLE AND AFFORDABLE FOR EVERYONE BY ELIMINATING OUT-OF-POCKET EXPENSES!

Of course, those supporting privatization claim that we cannot afford the existing program, much less the expansions. More nonsense. We already are funding the existing program through both the tax system and cost sharing. But cost sharing has had the negative impact of impairing access to care for lower income individuals simply because that care is unaffordable for them. A program of social insurance is clearly defective if it does not assure benefits for everyone. Means testing has been suggested and utilized to a limited extent, but that increases costs, increases administrative complexity, and is demeaning. Cost sharing has been promoted as a means of reducing utilization of health care services. That has essentially no impact on the affluent, but it does cause lower income individuals to forgo beneficial services because of lack of affordability. It has been estimated that the costs of administering cost sharing and means testing programs offset the savings induced by cost sharing. If we can get past our apprehensions about “government” and “taxes,” then it would be a greatly improved system of social insurance if we were to place all funds into the same pool and eliminate out-of-pocket expenses.

The prospect of including pharmaceuticals in the Medicare program has produced the predicted outcry that we would be bankrupting Medicare since this sector of health care costs is on a rocket trajectory. But should that be? Why do we accept the fact that physicians, hospitals, laboratories, and other providers of care are mandated to accept controls on their costs, but that we should allow the pharmaceutical industry total freedom, subject only to the dubious forces of the marketplace. When Medicare was first established, physicians were allowed to charge usual, customary and reasonable fees, and what happened? The rocket trajectory. The explosion of costs had to be brought under control through fee controls. (For those that protest government fee controls, keep in mind that the only real impact of managed care has been the imposition by the private, health plan bureaucracies of… guess what… fee controls!) There is absolutely no reason that we should not apply the same cost containment strategies to the pharmaceutical industry, especially now that pharmaceuticals have become an essential, integral part of health care. Much of the research is funded by taxpayers through the NIH. We are entitled to a return on our investment in the form of lower drug prices. The industry wastes tremendous resources in marketing and in production of expensive copycat drugs that add very little value. Let’s force this industry to adopt the same efficiencies and fair pricing to which hospitals and physicians must adhere.

Medigap plans are one of the worst insurance values on the market and waste dollars that could be better spent on health care. Many are unable to afford them. If we included pharmaceuticals in the Medicare program, and eliminated cost sharing, Medigap plans would be placed in that trash heap of bad ideas. Now that we know that private Medicare managed care plans have been wasting taxpayer resources, we can throw them on the same trash heap.

Come on! Let’s fix our traditional Medicare program by adding pharmaceuticals and eliminating out-of-pocket expenses. And then let’s let everyone participate in the single payer plan that’s as close to perfect as humanly possible, Medicare for All.

Newsday
July 6, 2001
Letters

The Patients Bill of Rights debate in Washington fails to address the day-to-day fears and concerns of patients. The bill would force them to go through an internal appeal, an external appeal, find and pay for an attorney and then spend more time waiting to be heard in our overcrowded court system.

They could literally die in the process.

Having the right to sue an HMO is an attempt to seek justice after the HMO has inflicted the harm. We have to prevent the harm.

Even if the Democrats win this battle, it would be the equivalent of applying a Band-Aid to treat a cancer, and will still perpetuate a system that allows patient care to be at the mercy of an industry that has a built-in incentive to deny care. Every dollar of care an HMO can deny to a patient increases the HMO’s bottom line. It’s time we faced up to this obvious anti-patient structural defect.

Why not use the mechanism that has worked successfully for the patient for 35 years, while performing with a mere 2-percent cost ratio for administration? Extend Medicare to the non-seniors.

Joe Kane

Editor’s Note: The writer serves on the executive board of the Long Island Coalition for a National Health Plan