House of Representatives
Committee on Ways and Means
Subcommittee on Health
May 1, 2001
Marilyn Moon, Ph.D., Senior Fellow, Urban Institute:
“In many ways, the Medicare + Choice benefit has been one of the less successful changes that have occurred in Medicare.” “At present, the program is neither saving money for the federal government nor achieving good, stable care for many of its enrollees.”
The entire testimony is available at:
Secretary Robert Reich: “This is a terribly important hearing.”
Dr. Quentin Young: “I’m confidant that when we get universal national health insurance, which will come a lot sooner than many of us in the room expect, this very hearing will be considered one of the launching pads of the beginning of that process in a fresh way.”
Dr. Marcia Angell: “A fifth and final myth is that a single payer system is a good idea, but politically unrealistic. Now that is a self-fulfilling prophesy. In my opinion, the medical profession and the public would be enthusiastic about a single payer system if the facts were known and the myths dispelled.”
Rep. John Conyers: “I just wanted to say that this is the best health care hearing that’s ever been held in the United States’ House of Representatives, and you should all be proud of yourselves.”
Rep. Dennis Kucinich: “We really need to hold town hall meetings all across the country on this issue and wake the town, tell the people… ”
The transcript of this landmark hearing is now available at: http://www.kaisernetwork.org/health_cast/uploaded_files/kff050101.pdf
Summary by Ellen Schaffer, Ph.D., MPH, with Ida Hellander, MD
As many of you know, the Congressional Progressive Caucus, Black Caucus, Hispanic Caucus, and the Congressional Universal Health Care Task Force, sponsored a hearing on universal, single payer, national health insurance from 10 a.m. to 3 p.m. on May 1, 2001. An impressive array of speakers and members of Congress appeared, and at the end, Representative Conyers (D-MI) declared it was “best hearing on health care ever held in the Congress.”
You can view the entire hearing on the web at the Kaiser Family Foundation website. The listed url is: www.kaisernetwork.org/healthcast/uhcb/may01. Alternatively, go to www.kaisernetwork.org/. Click on “view healthcasts,” then “calendar,” then look at the May 1 listing and click on “Progressive Caucus Universal Health Care.” A transcript is also on-line there.
What happened: Three notable trends
1. There is strong and committed leadership from active, progressive members of Congress for advancing health care reform in this session.
2. Support for comprehensive reform is broadening among communities of color, doctors, union members, patients, providers, and advocates.
3. There is growing recognition that market-based solutions are failing, but the battle lines are being drawn between the current administration, which is determined to further privatize Medicare and other public programs, and advocates of effective, single payer reform.
The progressive House leadership signaled their serious commitment to universal, comprehensive single payer health care reform, by their statements and by their presence throughout the day. Progressive Caucus chair, Rep. Dennis Kucinich (OH), vice-chair Rep. Barbara Lee (CA), and Rep. John Conyers (MI) engaged the participants for nearly five hours, and Rep. Donna Christensen (Virgin Islands), chair of the Black Caucus health committee, stayed for most of the proceedings. Twelve members of Congress attended, and many stayed for several hours, a truly significant turnout.
The three panels
Robert Reich, former Secretary of Labor, led off the proceedings with a statement.
Dr. Marcia Angell, former editor of the New England Journal of Medicine, presented a White Paper prepared by the Physicians’ Working Group for Single-Payer National Health Insurance, a group organized by PNHP National Coordinator and APHA Past-President Dr. Quentin Young. The paper is available at the web site of Physicians for a National Health Program at www.pnhp.org under “News and Updates.” Dr. Angell’s clear and compelling presentation that universal single payer national health insurance is both imperative and affordable received a standing ovation from the members and the audience.
In addition to Dr. Angell, members of the Physicians Working Group for Single-Payer National Health Insurance come from a wide array of physician organizations and backgrounds: Dr. Rodney Hood, the President of the National Medical Association which represents African-American physicians; Dr. Elinor Christiansen, the President of the American Medical Women’s Association; Dr. Merlin DuVal, President Nixon’s Assistant Secretary for Health; Drs. Christine Cassel and Gerald Thompson, Past Presidents of the American College of Physicians; Dr. Sindhu Srinivas, President of the American Medical Student Association; APHA Past President Dr. Quentin Young, Philadelphia Health Commissioner Dr. Walter Tsou, APHA Past-President, Dr. Helen Rodriguez-Trias, the Economic Policy Institute’s Dr. Edith Rasell, Dr. Olveen Carasquillo, Universal Health Care Task Force of the National Hispanic Medical Association, Dr. Peter Beilenson, Baltimore City Health Commissioner, and PNHP co-founders Drs. David Himmelstein and Steffie Woolhandler.
During the second panel, members of Congress spoke about their own legislative proposals.
Reps. Kucinich and Conyers announced their intentions to work together to draft a new bill for single payer national health insurance.
Rep. Barbara Lee spoke eloquently about HR 3000, the U.S. Universal Health Service Act, which she will re-introduce, and its importance both for public health and for redressing health care inequalities.
Rep. Jesse Jackson Jr. (IL) made an impassioned presentation about his proposed resolution to make health care a constitutional right.
Other speakers included Reps. Ciro Rodriguez (TX), Tammy Baldwin (WI), John Tierney (MA), and Pete Stark, Hilda Solis, and Bob Filner (all CA).
The third panel included other supporters of universal health care, who presented their personal experiences as health care providers, patients, and analysts to dramatize the need for universal health care.
Ellen Shaffer, a founding member of the APHA Working Group on Universal Health Care, discussed the importance of a publicly accountable and public financed universal system to provide access and coordinated, high quality care for immigrant workers in California, women with breast cancer, and high-risk infants. APHA members Donald Light, Claudia Morrissey, Nancy Milio, Mary Villedrouin, Thelma Correll, Carmen Nevarez, Karyn Pomerantz, Mark Hannay, and Susan Reverby, and Barbara Brenner, contributed to her statement.
Other providers and patients represented the American Psychological Association, the Service Employees International Union, the Black Nurses Association, the League of Women Voters, the Massachusetts Nurses Association, the Black Health Care Brain Trust, people with sickle cell anemia and cancer. A doctor protested the recent closing of DC General Hospital. Frank Clemente of Public Citizen’s Congress Watch presented a critique of the Breaux-Frist proposal to privatize Medicare.
The audience for the hearings were as impressive as the panelists, including among others: Bob Griss, Executive Director, Center on Disability and Health, and APHA Executive Director Mohammed Akhter; Kevin Lindamood of Health Care for the Homeless; Gail Shearer of Consumers Union; Madeleine Gold of SEIU; and many Congressional staff, including Cathy Hurwit, staff for Rep.Jan Schakowsky, and staff for Sen. Paul Wellstone. The hearing room was packed and enthusiastic.
Significance of the event
PNHP National Coordinator Dr. Quentin Young’s extraordinary energy and vision, combined with excellent staffing by PNHP assistant Jackie Le, brought together a wide-ranging group of doctors in support of a single payer health care system, and gave our champions in Congress like Reps. Kucinich, Lee, Conyers and Christensen a platform for action on single payer national health insurance, which was endorsed before the hearing by both the Progressive and Black Caucuses. This diversity was reflected in the participation of the Black and Hispanic Caucuses, and the range of advocates for reform who spoke at and attended the hearing.
It was remarkable that these members of Congress devoted almost five hours on a working day to listening to moving and effective testimony. Thanks to Congressional staff Joel Segal, Allison Friedrich, and Danielle LeClair for their dedication to this project.
As the discussion on the Breaux-Frist Medicare proposal reminded all of us, our vision is not driving national policy, and in fact supporters of the failing market approach are pushing hard and fast to undermine public programs in the U.S. and to export privatization abroad. It is more critical than ever to show our support for those courageous and visionary members of Congress who are standing up to lead the way, by mobilizing our organizations, and encouraging our representatives to co-sponsor progressive legislation, including the upcoming new Conyer’s bill for single payer national health insurance and to join the Universal Health Care Task Force.
Physicians’ Working Group on Single-Payer National Health Insurance Proposal for Health Care Reform
May 1, 2001
Presented to the Congressional Black Caucus, the Congressional Progressive Caucus, and the Congressional Hispanic Caucus
“A National Health Insurance Program is the only affordable option for universal, comprehensive coverage. Under the current system, expanding access to health care inevitably means increasing costs, and reducing costs inevitably means limiting access. But an NHI could both expand access and reduce costs. It would squeeze out bureaucratic waste and eliminate the perverse incentives that threaten the quality of care and the ethical foundations of medicine.”
This landmark white paper is available at:
The videocast of the entire hearing is available at:
Comment: Downloading this white paper is a must. Single payer national health insurance is now back on the agenda for health care reform.
The Globe and Mail
April 27, 2001
by Richard Mackie
Premier Mike Harris:
“We have a real crisis, I think, in expectation versus affordability, particularly into the future.” Canada needs “a clear, new, revolutionary way of looking at (health care)…. There can’t be any sacred cows.”
“We should not be afraid to say, can the private sector run this hospital better? Can they provide this service better?… If they can, why should we fear that? We should welcome that.”
Comment: Look south, Mr. Harris, look south!
The Globe and Mail
April 27, 2001
by Richard Mackie
Premier Mike Harris:
“We have a real crisis, I think, in expectation versus affordability, particularly into the future.” Canada needs “a clear, new, revolutionary way of looking at (health care)…. There can’t be any sacred cows.”
“We should not be afraid to say, can the private sector run this hospital better? Can they provide this service better?… If they can, why should we fear that? We should welcome that.”
Comment: Look south, Mr. Harris, look south!
New Doctor
Issue No. 74
Summer 2000-2001
by Dr. Con Costa, Vice-President of the Doctors Reform Society
“Australians are facing the loss not just of Medicare but of their whole health system. When health is taken over by big business there is a loss of the doctor-patient relationship, patients losing their rights to good treatment, overtaken by the corporations’ right to profits. Doctors will lose the wide range of freedoms they have enjoyed in the practice of their craft since the time of Hippocrates.
“What we are faced with is not just a defence of Medicare. It is a defence of our health system, and in Australia, as in the USA, it should be supported by all health professionals, community groups, trade unions, health organisations and political parties. Our advantage is that the people still remember a health system that puts patients first.”
The Sacramento Bee April 23, 2001 by Greg Gordon
“Government and private studies dating to the early 1980s have found that, because HMOs draw healthier Medicare patients, taxpayers have paid those plans excessively for standard benefits.”
“The General Accounting Office found an even bigger overpayment in a study of 800,000 Medicare recipients shortly before they enrolled in 210 HMOs. Congress’ investigative arm reported last summer that HMOs had enrolled seniors who were 13.2 percent healthier and were overpaid by $3.2 billion.”
Bruce Vladeck, former head of the Health Care Financing Administration:
“This is an area in which the beliefs of many politicians are just contrary to the data. Historically, the public sector in health insurance in the United States has significantly outperformed the private sector.”
Dr. Scott McClellan, a former Stanford University economist and physician, and now Pres. Bush’s White House health care advisor:
“Even with Medicare, I think that the evidence is that private plans are cheaper.”
Comment: The current goal of the administration and the “bipartisan” conservatives in Congress is to privatize Medicare. Prescription coverage for Medicare beneficiaries is being held hostage to this agenda. We need more candor and honesty in the debate. If the issue were over increasing the efficiency and reducing waste in the Medicare program, the Medicare + Choice options would be eliminated immediately. Dr. McClellan, Sen. Breaux and Sen. Frist know the results of the studies. To state that private Medicare plans are cheaper is a blatant, unmitigated lie. It is time for them to speak the truth and state forthrightly that they believe that it is more important for the taxpayers to support the health plan industry than it is to assure that Medicare dollars will be utilized in the most efficient manner for patient care. If they really don’t believe this, then they should initiate proposals that will improve Medicare, beginning with the termination of the exorbitantly wasteful Medicare + Choice program.
The Private Sector Council has announced that Senator John Breaux (D-LA) is this year’s recipient of the Public Sector Leadership Award.
Comment: ’nuff said.
Los Angeles Times
April 24, 2001
by Matthew Miller
In response to the April 20 headline in the Washington Post, “Insurance Plan Would Help 6 Million, White House Says,” Matthew Miller creates a fictional interview of Dick Cheney by Tim Russert:
Tim Russert: But wouldn’t you agree the problem (uninsured) is bigger now, and we have more money to address it? Dick Cheney: Yes, that’s why we’re taking decisive action. Tim Russert: But how decisive is it for the 37 million uninsured your plan, by your own admission, ignores?
Comment: For a quality two minute break, it will be worth your time to read the interview that, as Matthew Miller says, “the nation needs.” It is available at:
Really, take a break and enjoy this masterpiece.
Don
A CALL TO ACTION ON HEALTH CARE REFORM
Tune in to this important webcast
Health Care Reform Hearing A live webcast
May 1 at 10:00 AM to 12 Noon, EDT
Speakers: Robert Reich, former Secretary of Labor Sen. Paul Wellstone Rep. John Conyers Dr. Marcia Angell, former editor of the New England Journal of Medicine Dr. Quentin Young, Physicians for a National Health Program Dr. Rodney Hood, National Medical Association
Rayburn House Office Building, Room 2237 Washington, D.C.
Hosts: Congressional Black Caucus Progressive Caucus
The Washington Post
April 23, 2001
by Robert B. Reich, Professor of Social and Economic Policy at Brandeis University
“A few years ago Democrats championed such things as universal health care. Now that there’s money to pay for it, they’re rooting for the smaller of two tax cuts instead.”
“Given what’s happened to the incomes of working families relative to the incomes of the people at the top, a cut that mostly benefits the people who enjoyed most of the gains of the past decade is morally repugnant. So how can Democrats support a $1.2 trillion tax cut, with almost no room for expanded health care? Why aren’t they putting universal health care on the table instead?”
“To be sure, lowering the debt reduces federal borrowing costs, but so what? As John Maynard Keynes pointed out 60 years ago, public indebtedness per se isn’t a problem. The underlying question is what that debt is used for. If the benefits to the public exceed the costs of borrowing from the public, it would be silly not to borrow. And with health care costs soaring and coverage declining, the benefits of universal health care are high indeed.”
Jeoffry Gordon’s response to Sam Baker and Uwe Reinhardt:
I read Sam Baker’s comments about the contemporary USA health system’s administrative cost structure with great interest, but the situation is far far worse than he imagines. Under old fee-for-service medicine the insurance company’s overhead was occasionally an efficient 10% (medical loss ratio of 90%). However, under HMO medicine, at least here in California by actual survey of the California Medical Association, the INSURANCE COMPANY’S overhead is 14 to 25%. Then we must add the overhead of the local IPA or PHO (contracting with the insurance company to provide and manage the care) which easily runs 8 (unbelievably low) to 30% (I ought to know having run one for 5 years). Then we must add an incremental 5% in each DOCTOR’s office for a 1/2 to full time staff person to deal with HMO paperwork and prior authorizations (I ought to know I do it every day). Thus the true administrative cost of the HMO system in California runs 27 to 60%(!) and is in fact probably about 40%. This is no kidding – only 40 to 60 cents of the premium dollar goes to medical services and their “ordinarily associated” administrative costs.
In my opinion Professor Reinhardt’s economic calculus is perfectly precise and revealing of the economic biases of contemporary economics which have distorted everything to find ways to justify the free market, competitive approach to health care. What is most sad about this situation is the fact that when I studied health economics 30 years ago (in its infancy) Nobel Prize winning economist Kenneth Arrow had already published an analysis of why the health care system could not function efficiently in an economic sense in the competitive market place. For instance health care is a “public good”; a sick patient cannot comparison shop; the doctor orders the services not the patient; the pervasive insurance system distorts the market; certain aspects of health care consumption are totally inelastic (not price sensitive); etc. All of these insights have been selectively forgotten by all the pontificating academic economists — and several generations of national leadership as well.
Jeoffry B. Gordon, MD, MPH
1947 Cable Street
San Diego, CA 92107
The Hartford Courant
April 22, 2001
by Diane Levick
“The danger in Aetna jacking up rates higher than those of competitors is that the company could be left with high-risk business, benefits consultants and analysts say. Employers with high claims that couldn’t get lower rates elsewhere would stay with Aetna, while lower-risk employers would jump ship, sending Aetna into a downward spiral.”
Todd B. Richter, a senior research analyst at Banc of America Securities:
“It’s like flushing a toilet bowl. Once you hit the lever, there’s nothing you can do to stop the water from going out the bottom of the toilet.”
“This company needs to be dramatically reduced in size. Buried in there are probably 7 to 8 million lives of quality (profitable) business.”
Comment: As long as we leave Wall Street in charge, we will see application of health policy principles that improve business models at the cost of policy that improves equitable utilization of our resources. Issues such as adverse selection would no longer be a problem if we had a publicly administered, universal risk pool.
Response of Sam Baker to Uwe Reinhardt’s response to Pollner and Wooten:
Don —
Uwe Reinhardt’s reply to Pollner and Wooten has been circulating, more so than Pollner and Wooten’s original critique, so thanks for sending that out. It’s taken a little while for me to work through Reinhardt’s documents. They are very worthwhile, especially the critiques of mainstream economists and their attitudes toward the free market. I like Reinhardt’s dissection of how economists trash proposals for incremental reform.
I would fault his economic analysis on one point, however: Reinhardt continues to ignore the administrative cost issue. Himmelstein and
Woolhandler have been writing about this for — what, 15 years? Mainstream economists simply refuse to believe that a government-run system can be more efficient than an market-based system. They don’t even think about it. Reinhardt is able to step out of the box on some issues, but not this one.
The blindness to administrative cost helps mainstream economists in their critique of incremental reform. As Reinhardt puts it so well, incremental reform is typically based on identifying a group of people who seem particularly needy. Reinhardt calls members of this group “OC’s” for Objects of Compassion. The OC’s might be children in working poor families, or they might be uninsured people aged 55-65, or whatever. Someone proposes a modest program to help the OC’s. An economist then demonstrates that such a program would pull in many people who are not in the OC group, because they already have private insurance. Reinhardt calls attracting people (and their employers) from private insurance to public insurance “crowding in.” Crowding in adds to the total cost of the program. If you divide this expanded total cost by the number of people in the original OC group, you get an astronomical figure. This huge average cost per OC discredits the program. Here is where Reinhardt stops. My answer is that attracting
people out of private insurance and into public insurance is a good thing, because it reduces the administrative cost. The more crowding in we have, the lower is the total social cost of providing health insurance to the public. Medicare, for example, spends about 2% of its cost on administration. Private insurance plans are considered highly efficient if they spend 10% on administration and profit. Shifting people from private insurance to Medicare should save about 8% of cost. This doesn’t include any consequent savings to providers.
I would fault Reinhardt’s political analysis, too. By attributing our anti-reform bias ultimately to the American people, he gets to a point where everyone is to blame, and therefore no one. The public relations industry thrives on the principle that public opinion can be shaped. The AMA (more so in the past) and the insurance industry, with help from the for-profit hospitals, can spend what it takes on public relations and on gifts to politicians.
— Sam Baker
Associate Professor
Department of Health Administration
Norman J. Arnold School of Public Health
University of South Carolina
800 Sumter St.
Columbia, SC 29208
sbaker@sophe.sph.sc.edu
Uwe Reinhardt responds to Sam Baker:
Thank you, Professor Baker, for your thoughtful dissection of my views on the problem of the uninsured.
Although I did not on this occasion address the issue of administrative costs, I have on many other occasions. In this regard I cite a McKinsey Global Institute study (1996) which showed that, after all proper adjustments have been made, Germans in 1990 spent $390 more per capita on health care proper than did Americans (allegedly without superior outcomes). The McKinsey team, aided by Nobel Laureate Ken Arrow no less, took this to mean that Germans are sloppy in their use of health care resources and needed McKinsey to help them out. Shown also in the study, but very much de-emphasized, was the finding that Americans spent $360 more per capita on “administration” and another $259 per capita more on “other,” which probably includes administration as well. In other words, Americans seem to blow on administration every penny and more that they squeeze out of their doctors and nurses by way of allegedly superior clinical productivity. I lectured on this study to a German audience, with the German Minister of Health 3 feet away from me, and implored him to disregard McKinsey, for the sake of my mother, who sat right next to him. In short, I do not disagree with you on this point.
As to my political theory, I think I do disagree. After the demise of the Clinton plan, I wrote a rather harsh piece in Health Affairs entitled: “Gazing at Bread and Circus Games.” In it I took to task the intellectually lazy and politically lethargic American plebs–too lazy to read, too lazy to vote, just energetic enough to whine incessantly–pretty much deserving the mess they got in health care.
True, the moneyed interest groups do have much sway over the Congress, and always will. But it would help if the poor did vote and support politicians willing to fight for them. They don’t. I am angry about them as I write, so I had better stop.
Best regards,
Uwe R.
Chicago Tribune
April 15, 2001
George Lundberg, MD, former editor of the Journal of the American Medical Association:
“The Clinton proposal exposed the central problem of system reform. No health system reform will ever get off the ground if the people believe that they have to surrender something to make it happen. We won’t manage even a half-step forward if anyone perceives a loss.”
“… no country has achieved universal insurance voluntarily. It must be mandatory.”
Comment: In a recent comment, we applauded Dr. Lundberg for his support of universal insurance although we disagree with his stand on several issues of health policy. Here Dr. Lundberg defines the most important hurdle on the path to reform. We must demonstrate to those that have coverage that, under a publicly administered, universal risk pool, not only will they not lose anything, they will gain more comprehensive coverage, more freedom of choice in health care, fairness in funding of their care, and the satisfaction of knowing that everyone will have
access to our health care system. Our task must be to inform the nation of the superior benefits of rational reform.