PNHP

Uwe Reinhardt responds:

Uwe Reinhardt responds:

The ideal system you describe is the Canadian model. Overall capacity
there is fixed by budget and health planning, and physicians do the best
within that system of constraints. Another way of putting this is that
patients have free choice of doctors and hospitals and the latter have
free choice of therapy within the physical resource constraint imposed
on both patient and doctor by the government. There is rationing, but
with appeal to fixed physical capacity, not with appeal to money budgets
in the face of excess capacity (the US model).

Why is the Canadian model off the table? Because America’s physicians,
as represented by the AMA, have shoved it off the table. Recall that
the AMA in the early 1990s had a $4 million war chest for the sole
purpose of bad-mouthing the Canadian health system. And the gullible
American public went along with it. All one needs to tell Americans is
that foreigners are un-American and the case is closed. We saw that in
the referendum on the single-payer system in California.

Thus, my friend, no sympathy for physicians from this economist, nor for
patients who find themselves pushed around by MBAs. I am firmly on the
side of the MBAs. American physicians have always sought a system
riddled with excess capacity and rationed with appeal to budgets, and
that is precisely what they got, “as the doctor ordered,” so to speak.
And, let us face it, MBAs are the ideal people to ration with appeal to
budgets. That is the great skill of business people.

Best regards,
UER

Don’s comment: I certainly agree that we would need MBAs to help us
manage global budgets under a public service model, but we no longer
want them as emissaries of Wall Street.

Aetna's Unmet Claims

The Washington Post
February 25, 2001

by Bill Brubaker

“Shortly after becoming chairman of Aetna Inc. last year, William H. Donaldson stood before a hostile audience of physicians and made a promise he has since repeated many times.” “…Donaldson said there would be ‘a sea change in our corporate attitude toward working with your profession.'”

And now…
William H. Donaldson, chairman of Aetna Inc.:

“We’re trying to bring some discipline to, let’s say, doctors… who send out for 25 tests or do things that are unnecessary. The medical profession has been taught in school that everything is okay. I mean: ‘Send out for 1000 tests. Do it.’ You know, with no attention to price control. No attention to the efficient and effective practice of medicine.”

“People want more than what they bought, the coverage that’s been bought. (They want) a $1 million experimental something or other. We say, ‘No, that isn’t covered by your policy.'”

Comment by Dr. Don McCanne:

William Donaldson recognized that Aetna had trashed both patients and physicians. His business acumen made him realize that, to be successful, Aetna would have to regain the support of patients and physicians, and thus his promise of a “sea change.” William Donaldson also knows that, as chairman, his first responsibility must be to the shareholders. He is obligated to look at the balance sheet and attempt to manipulate each side in order to increase the bottom line. He cannot escape his fundamental business instinct.

On the expenditure side, the problem is obvious to an astute businessman. Physicians spend too much and patients consume too much. So businessmen know where to place the blame for the problems with our health care system – on the patients and the physicians! So the proper business response is to control this reckless spending behavior. Even though physicians order only tests that are appropriate for the clinical circumstances, a good businessman will reduce this overhead expense by declaring some tests to be “unnecessary.” Even though patients expect help as long as any hope remains, a good businessman will extinguish that hope because it is “unaffordable” for the corporation. There is a fundamental cultural difference between the MBA and the MD. The private health plan model that controls our system today has placed the MBA in charge.

Is there a model that can put the MD in charge? After all, cost constraints will be with us forever, and the MD would have to function within these limits. What would happen if we were to change the primary mission of our health care system from the current business model of maximizing shareholder value to a public service model of maximizing allocation of our finite health care resources? In selecting tests for the patient, the physician would be selecting beneficial tests that would be limited only by the amount of resources available. There would be no arbitrary reduction of tests to fulfill the MBA’s duty to increase the bottom line. When the patient is looking for hope, the avenues available would be limited only by the existing resources and not by the MBA that wants to improve profits by dashing hope.

We need to nurture the partnership of the patient and the physician. We can do this by removing the MBA from the relationship, and by returning free choice to the patient. We can make accessible our health care resources to the limit of the full capacity of our system. We can do this by rejecting the private, middleman health plans, and by replacing them with a publicly administered, universal risk pool. Why on earth has this model been left off of the negotiating tables? Please tell me!

Don R. McCanne, M.D.
33781 Avenida Calita
San Juan Capistrano, CA 92675-4905
949-493-3714
Fax 949-493-7985
mccanne1@home.com

Aetna’s Unmet Claims

The Washington Post
February 25, 2001

by Bill Brubaker

“Shortly after becoming chairman of Aetna Inc. last year, William H. Donaldson stood before a hostile audience of physicians and made a promise he has since repeated many times.” “…Donaldson said there would be ‘a sea change in our corporate attitude toward working with your profession.'”

And now…
William H. Donaldson, chairman of Aetna Inc.:

“We’re trying to bring some discipline to, let’s say, doctors… who send out for 25 tests or do things that are unnecessary. The medical profession has been taught in school that everything is okay. I mean: ‘Send out for 1000 tests. Do it.’ You know, with no attention to price control. No attention to the efficient and effective practice of medicine.”

“People want more than what they bought, the coverage that’s been bought. (They want) a $1 million experimental something or other. We say, ‘No, that isn’t covered by your policy.'”

Comment by Dr. Don McCanne:

William Donaldson recognized that Aetna had trashed both patients and physicians. His business acumen made him realize that, to be successful, Aetna would have to regain the support of patients and physicians, and thus his promise of a “sea change.” William Donaldson also knows that, as chairman, his first responsibility must be to the shareholders. He is obligated to look at the balance sheet and attempt to manipulate each side in order to increase the bottom line. He cannot escape his fundamental business instinct.

On the expenditure side, the problem is obvious to an astute businessman. Physicians spend too much and patients consume too much. So businessmen know where to place the blame for the problems with our health care system – on the patients and the physicians! So the proper business response is to control this reckless spending behavior. Even though physicians order only tests that are appropriate for the clinical circumstances, a good businessman will reduce this overhead expense by declaring some tests to be “unnecessary.” Even though patients expect help as long as any hope remains, a good businessman will extinguish that hope because it is “unaffordable” for the corporation. There is a fundamental cultural difference between the MBA and the MD. The private health plan model that controls our system today has placed the MBA in charge.

Is there a model that can put the MD in charge? After all, cost constraints will be with us forever, and the MD would have to function within these limits. What would happen if we were to change the primary mission of our health care system from the current business model of maximizing shareholder value to a public service model of maximizing allocation of our finite health care resources? In selecting tests for the patient, the physician would be selecting beneficial tests that would be limited only by the amount of resources available. There would be no arbitrary reduction of tests to fulfill the MBA’s duty to increase the bottom line. When the patient is looking for hope, the avenues available would be limited only by the existing resources and not by the MBA that wants to improve profits by dashing hope.

We need to nurture the partnership of the patient and the physician. We can do this by removing the MBA from the relationship, and by returning free choice to the patient. We can make accessible our health care resources to the limit of the full capacity of our system. We can do this by rejecting the private, middleman health plans, and by replacing them with a publicly administered, universal risk pool. Why on earth has this model been left off of the negotiating tables? Please tell me!

Don R. McCanne, M.D.
33781 Avenida Calita
San Juan Capistrano, CA 92675-4905
949-493-3714
Fax 949-493-7985
mccanne1@home.com

Talking About HMOs

The Wall Street Journal
February 21, 2001

by Scott Hensley

Uwe Reinhardt, James Madison Professor of Political Economy at Princeton
University:

“In the next recession, I think employers will make free choice more expensive to employees by adopting this defined-contribution approach.”

WSJ: How do you think health care coverage will change then?

Dr. Reinhardt: “It will become a multitier system, by ability to pay. You would still have the uninsured as the bottom tier. The next-lower tier would be gatekeeper-model HMOs. There will be a primary-care gatekeeper and no free choice of specialists. There will be tight drug formularies. There will be generics whenever possible. And you may not
always get today’s technology. You might, in fact, get yesterday’s technology.”

“I think Medicaid, for instance, will try to use that model as much as possible, which might not be bad – certainly better than the unmanaged fee-for-service Medicaid. No one ever proved that gatekeeper models are bad clinically. It is just simply annoying to us to have to get permission to go to an ear doctor when our ear aches. The low-wage workers with employer-paid insurance probably would have to opt for this low-cost model also.”

“Eventually, the free-choice insurance models will cost more. But what you will be buying is not necessarily higher-quality care, just more choice. The middle and upper-middle class will be in HMOs with point of service, meaning patients can go outside the HMOs for care but pay substantially more out of pocket for freedom of choice or for PPOs –
which are loosely managed. And then, of course, there is emerging boutique medicine for the moneyed elite. Well-to-do people – of whom there are now quite a few – will probably keep forever the open-ended, fee-for-service, “Disneyland” health insurance policy most Americans had before the 1990s.”

Comment by Dr. Don McCanne:

If we continue to passively accept the premise that the only realistic solutions to our health care system problems are to incrementally build on the current model dominated by health plans, then we can expect to realize Dr. Reinhardt’s predictions. But why should we? We have the resources to provide high quality care for everyone. As long as everyone is provided access to all beneficial services, then there is no reason that the moneyed elite should be denied access to hospital penthouse suites or vanity cosmetic surgery if they want to pay for that independently. Employers will move further into defined contribution models which can only have the effect of impairing access
for lower income individuals due to lack of affordability of the out of pocket expenses that they will be forced to bear. Our health care delivery system is in fairly good shape, though sound policy decisions could improve it. Our system of funding and allocating our abundant resources is in critical condition. Incremental tinkering will only consume more funds, and perpetuate and expand highly flawed policy. It is indefensible that we leave off of the negotiating table the one reform that would correct most of these defects in funding and allocation. It is an ethical imperative that our national leadership
take a serious look at the model of a publicly administered, universal risk pool, and compare that model with our current one of incremental tinkering. We should demand no less.

Don McCanne
mccanne1@home.com

Privatised health care: U.S. system not the way to go

By Miguel Aguayo
The Toronto Star

Talk of privatizing the health-care system in Canada began to emerge shortly before my immigration from the United States.

Its proponents spoke positively, even enviously, of the speed with which medical treatment was received south of the border. No lining up in queues and more choices in treatments were offered as evidence that a private system is better than Canada’s universal health coverage. These testimonials, however appealing, are not the complete story.

In my youth, becoming ill and going to the hospital was expensive. When someone in the family needed medical attention, the cost of health care was paid either out of pocket or through health insurance.

Even those who were lucky enough to have health insurance did not walk away without debt. The insurance policies usually required a co-payment of 20 per cent. This payment structure encouraged people from the working class (or lower) to delay seeking treatment in the hope that the symptoms would subside. If not, it usually meant a trip to the emergency room because the disease or injury had progressed to the point that the trip became necessary.

This was a gamble that my father once played and lost.

Instead of rushing me to the hospital when I became stricken with meningitis, my parents waited almost three days before we made the trip. Consequently, I became deafened for life. At first glance, this may seem like a case of bad parenting, but in context, this delay in seeking medical attention is somewhat understandable.

Over the years before my illness, my siblings and I experienced a series of illnesses. My sister’s birth had a few serious complications. I had an appendectomy. My bother had abdominal surgery.

These successive hospitalizations kept my parents from getting ahead financially. So it is not surprising to me that my father would try to avoid another hospital bill. Accruing a large hospital bill has led many to, consciously or subconsciously, delay seeking treatment for illnesses.

Americans are more likely to buy over-the-counter medications than seek medical help. This is true even when a fever is present, which is the medical “red flag” that something is wrong. Pop a couple of acetaminophen tablets, cross the fingers, and hope for the best. An expensive trip to the emergency room was made only if the illness persisted.

Eventually, insurance companies developed the managed care concept to control the spiralling cost of medical treatment that resulted from this practice. Under managed care, Americans could seek treatment without being stuck with a bill afterward. Unfortunately, the price they paid was costly insurance premiums and a rigid set of rules to follow. If a rule was broken, the patient got stuck with the bill.
My experience with managed care was not better than the old insurance system. My share of the premiums, after my employer’s contribution, was an annual $4,000 for a family of three. Worse yet, some of the rules that patients had to follow were simply unrealistic. For instance, unless it’s a life-threatening condition, you are supposed to call the hospital before seeking treatment.

I once got stuck with a bill that amounted to several hundred dollars when an anxiety attack put me in a hospital without contacting my primary care centre in advance. Never mind that I thought I was having a heart attack or that deaf people rarely have an accessible phone handy while in public places. The important issue was the call was not made.

Although these stories are worst case scenarios, they provide a contrast to the picture that proponents of privatization wish to paint. What they would like Canadians to believe is that allowing the medical system to chase dual goals of providing optimum care and realizing a profit will not hurt the system.

They seem to believe that allowing private medicine into our system will somehow improve services and reduce costs. After living under the American system, accessing medical treatment here is liberating. When I feel ill, I call my doctor and get help.

I don’t have to worry about the cost. I don’t have to worry about special rules that can place the full cost of service on my shoulders. Sure, there are problems in the Canadian health-care system, but opening it up to privatization, to me, is simply not the way to go.

Miguel Aguayo is a member of The Star’s community editorial board.
Copyright 1996-2001. Toronto Star Newspapers Limited. All rights reserved.

Medicaid Spending Growth Headed Upward in Coming Years

Kaiser Family Foundation Release -February 9, 2001

John Holahan, co-author of the Urban Institute study:

“Medicaid spending could grow by up to 10 percent in the near future because of rising health care costs, particularly prescription drugs, the eroding impact of Medicaid managed care, wage pressures in the health care industry, (and) the use of supplemental financing programs and enrollment increases.”

Diane Rowland, Executive Director of the Kaiser Commission on Medicaid and the Uninsured:

“State efforts to improve health care coverage for the low-income population are beginning to pay off. We need to build on this success by continuing to expand coverage even if the economy cools off.”

The full report is available at:
http://www.kff.org/content/2001/2230/2230.pdf

Comment by Dr. Don McCanne:

Medicaid has been praised as a program that provides health care coverage for the low-income segment of our society. Although the issues are very complex, we should step back for a broader perspective on the role of Medicaid.

Only the impoverished, and not even all of them, are granted the ticket that allows entry to the facilities of Medicaid providers. From the perspective of the provider, that ticket means only that the the individual bearing it has cleared the qualification process to
participate, and that the provider will look only to the program, and not to this impoverished individual, to be compensated for services rendered.

Although many varieties of providers are involved, for simplification we will look only at physicians and hospitals. Hospitals receive 12% of their revenues through Medicaid and physicians receive 7%. The reasons for this difference are also complex, but a few factors are evident.

Hospitals do not have much choice as to whether they will accept Medicaid patients. Most hospitals have an obligation to accept virtually all acute care patients, regardless of payment source. Hospitals, whether for-profit or nonprofit, operate on a very small
profit margin. Managed care plans have been effective in ratcheting down rates for hospitals, and so the government has had to assure that their programs, including Medicaid, have been funded at a level that assures the solvency of hospitals. Otherwise, our hospital system could collapse. The burden of cost shifting has been moved from the insurance industry to the taxpayers, especially through Medicare, but to a limited extent also through Medicaid.

On the other hand, physicians often do have a choice as to whether they will accept Medicaid patients (except for emergency room coverage). Physicians also have a much lower percentage of overhead than hospitals and are able to accept the losses on Medicaid by accepting a lower net income. Those physicians that believe that everyone should have access to care demonstrate their belief by accepting the more modest lifestyle associated with modest incomes. As a result, in physicians’ offices,
the taxpayers benefit from cost shifting. This explains one factor in the physician-hospital revenue differential.

Low income Medicaid patients tend to have greater medical needs with a greater need for acute care hospitalization. Because of low compensation rates, care in physicians’ offices tends to be more crisis oriented, with lower levels of preventive and maintenance care. This aggravates the need for acute care hospitalization due to neglect of
chronic disorders, thereby increasing hospital costs.

Access to care under Medicaid is impaired. Hospitals will admit acute care patients, but elective patients are often discouraged, especially by for-profit hospitals. Many physicians will not accept Medicaid patients. Those that do usually have over-booked appointment schedules, and may not be accessible geographically. Many primary care physicians have a great deal of difficulty in obtaining specialized care for their Medicaid patients. Managed care entities now provide inefficient, wasteful middleman services for many Medicaid programs. Through highly restricted provider lists, these managed care entities have further reduced access, especially by severe limits in the lists of authorized specialists.

A subtle but pernicious attitude permeates our health care system. That attitude is that, somehow, Medicaid patients are second rate citizens, not deserving of the level of care to which “working families” are entitled. It is a “welfare program” for the poor. It is a very low tier on a multi-tiered system of health care, surpassing only the tier of the uninsured.

We have the resources to provide comprehensive care for everyone. There is no reason to continue to support the flawed health policies and humiliation of the Medicaid program. Everyone in this nation could have free choice of quality care if only we would establish a publicly administered, universal risk pool.

Single Payor Legislation in Maine

The Maine legislature has taken a potentially historic step on the road to the real health care reform that Americans need. The recently passed legislation sets the stage for a truly caring and efficient health care system for the state of Maine, which could become a national model. We call on the Governor of Maine to sign this legislation. Once the governor has added his signature, we urge the Commission established by the bill to rapidly implement a statewide single payer system that would eliminate private health insurers in Maine, and use the money currently wasted on their paperwork and profits to fund care.

The bill is available here (MS Word format).

"Trading Health Care Away? GATS, Public Services and Privatisation"

by Sarah Sexton

Even before its meeting in November this year in Qatar, the WTO has already begun talks to expand one of its agreements – the General Agreement on Trade in Services or GATS.

Services are now a significant part of the economies of industrialised countries and are governed by complex domestic regulations. These countries are now trying to revise the Agreement to increase international trade in services. If they are successful, GATS could be used to overturn almost any legislation governing services from national to local level.

Particularly under threat from GATS are public services – health care, education, energy, water and sanitation, for instance. A revised GATS could give the for-profit sector further access and could make existing privatisations effectively irreversible.

Experience in the United States and several Latin American countries, where health services have been run for profit over the past decade or so, suggests that the result will be a decline in accessibility to health care worldwide.

This briefing outlines the growth in services in recent years, the main provisions of GATS and its proposed revisions, and some key corporate aims in extending the Agreement. It details how public services may not in fact be excluded from GATS.

It considers what may happen if private companies are enabled to capture the most profitable components of publicly-provided and -funded health care services: a two-tier health system in which a reduced public sector has to cope with the elderly, chronically sick and the poor who most need health care and who can least afford it..

Sarah Sexton/Larry Lohmann/Nicholas HildyardÊ
THE CORNER HOUSEÊ
PO Box 3137Ê
Station RoadÊ
Sturminster NewtonÊ
Dorset DT10 1YJÊ
BRITAINÊ
Tel: +44 (0)1258 473795 Fax: +44 (0)1258 473748 Email Ê
Website: http://cornerhouse.icaap.org/

Ohio Single Payer Program

WHEREAS every person residing or employed in Ohio, without regard to sex, age, race, income, place of residence, place of employment, or any other circumstance, is entitled as a matter of right to quality health care, the same as any other person; and

WHEREAS there is a growing crisis in health care in the State of Ohio, manifested among other ways by massive layoffs, steep increases in premiums, copayments and deductibles, a steady increase in the number of persons without health insurance, and the closing of many health care facilities, especially those serving low-income segments of the population; and

WHEREAS insured persons now commonly experience unacceptable, sometimes life-threatening delays in obtaining approval for needed health care services by private, for-profit health insurers; and

WHEREAS the complexity and redundant bureaucracy arising from the existence of multiple, for-profit insurance plans, each with its own distinct program of coverage and benefits, its own costly administrative and executive structure, and its own system of processing managed care approvals, payments of benefits and/or reimbursements, etc., wastes up to 30% of premiums paid for medical coverage by Ohio employers and private citizens, resources which otherwise could be used to provide benefits; and

WHEREAS the administrative burden to health care providers in complying with the bureaucratic requirements of dealing with a multitude of insurers and plan provisions distracts physicians, hospitals and other health care providers from their central mission to provide quality health care for the people of Ohio; and

WHEREAS the added costs of care and insurance premiums created by these inefficiencies and structures are a drain on the financial resources of the taxpayers of Ohio, on those Ohio businesses currently providing their employees with health care benefits, and on every level of government throughout the State; and

WHEREAS Ohioans and Ohio businesses are burdened by unchecked increases in the costs of insurance premiums, prescription drug costs and medical costs in general, imposing ever greater hardships on Ohio residents and employers and driving many businesses and individuals to reduce or eliminate medical coverage or benefits; and

WHEREAS tens of thousands of Ohioans, including the elderly, children, the unemployed, the poor and those whose employers do not provide health insurance benefits, are forced to do without necessary medical care or to pay beyond their means, leading to over 40% of personal bankruptcies; and

WHEREAS a single-payer, publicly-funded, not-for-profit health plan will eliminate the redundant bureaucracy caused by a multiplicity of insurers, greatly reduce administrative costs associated with providing medical care, free up additional financial resources to provide improved medical care for all Ohio residents, allow physicians, hospitals and other medical providers to put all of their efforts into providing quality care, and reduce the cost of health care coverage for Ohio residents and employers; now, therefore, be it

RESOLVED:

i. That the Ohio General Assembly commit to enact, without delay, “Ohio Care” — a comprehensive, publicly funded, not-for-profit health insurance program covering: (a) all residents of the State of Ohio as well as all dependents of Ohio residents, whether residing within the State or elsewhere, and (b) all persons employed in the State, regardless of residence within or outside the State, as well as their dependents;

ii. That upon its effective date, Ohio Care will provide health insurance to all persons employed in the State and their dependents by or through their non-federal public and private employers, including all health insurance previously provided by the State government to its employees, and thereby will relieve Ohio employers of the cost and administrative burden of providing health insurance coverage;

iii. That Ohio Care will provide to every person covered by it one uniform program of health insurance benefits, the same as provided to every other covered person, including prescription drug coverage, dental care, vision care, long-term care, and coverage for mental illnesses on full parity with coverages for all other types of illnesses;

iv. That an Ohio Care Commission will be created, as an independent agency of State government, to implement and administer the Ohio Care program, with the composition of the Commission and the method by which its members are selected to be determined by implementing legislation;

v. That a health insurance benefit provided by the Ohio Care benefit program to a person covered by the program may in any given instance exceed, but not be inferior in scope or amount to, the benefit to which an otherwise similarly situated person would be entitled if that person were a federal government employee;

vi. That the Ohio Care benefit program will be designed and maintained so as to guarantee health care services of excellent quality, timely delivered and accessible to all; full support for ongoing medical research, medical education and training; full choice of providers; and access to comprehensive, preventive and long-term care;

vii. All federal funds allocated for health care purposes by Medicare, Medicaid, Veterans Administration, and other programs will be paid to Ohio Care, after obtaining the necessary waivers from the federal government;

viii. That any person who while covered by Ohio Care requires health care services anywhere in the world will be entitled to Ohio Care benefits to pay for such services to the extent payment has not otherwise been provided; and the Ohio Care Commission may enter into reciprocal arrangements with other jurisdictions to meet the health care needs of persons while traveling;

ix. That any Ohio resident displaced from employment by the private health insurance industry in this state as a direct result of the enactment of Ohio Care will be eligible to receive, at state expense, retraining and temporary financial assistance to facilitate reemployment without significant loss of income, and will receive preference for hiring for employment by the Ohio Care Commission in any position for which the displaced resident is qualified; and

x. That Ohio Care will be funded by utilizing federal, state and local monies that currently are used to fund existing Ohio health care programs, savings realized by eliminating administrative waste and profits of the current health care system, and any additional funding mechanism deemed necessary to ensure that Ohio Care is fully funded, with adequate reserves.

[Submitted by the Single-Payer Action Network Ohio (SPAN Ohio) on November 19, 2001. For copies write us c/o GCIU Local 546M, 3227 West 25 Street, Cleveland, OH 44109 or call 216-368-2631.]