PNHP

Myths about Canada, U.S. health care debunked

Myths about Canada, U.S. health care debunked

Canadians aren’t flocking to U.S. for medical care

By Bill Mann
MarketWatch, The Wall Street Journal, Aug. 9, 2012

PORT TOWNSEND, Wash. (MarketWatch) — It’s a relief to see hard facts finally emerging on this side of the border about Canada’s single-payer health-care system.

For years I’ve heard Canada’s popular medicare (the Canadian term for universal health care) system slagged by lies, distortions, and outright ignorance on U.S. radio talk shows and other American popular media (where do people GET this stuff?). And for years, I’ve tried to set the record straight in my online and newspaper columns, having lived in Canada and actually having used their system. My son and his family are now covered by it in Vancouver.

Also, for years I’ve heard from Canadians, in Comments under my pieces and in email, thanking me for trying to set the record straight. They overwhelmingly like their medical delivery system, which turned 50 just last month.

I’ve also heard Canadian talk-show callers upset and incredulous about the nonsense being circulated south of the border about their single-payer medical system, which is still evolving as Ottawa pays less and the provinces pay more of growing health-care costs.

Anyone who wants a strong, honest defense of the Canadian system should keep a copy handy (and print out, as I have) a well-written piece — a touchstone, actually — in the latest online edition of the journal of the U.S.’ large and powerful AARP.

The well-researched, fact-based AARP article is written by an American, Aaron E. Carroll, M.D., and is titled “5 Myths About Canada’s Health Care System.” Its subhead:

“The truth may surprise you.” It just might, my fellow Americans.

To separate fact from polarizing talk-show nonsense, Carroll, the director of the Center for Health Policy and Professional Research in Indianapolis, examined the major myths about the Canadian and U.S. systems, myths I hear repeatedly voiced on U.S. talk shows of all political stripes.

The first myth Carroll takes on is the oft-heard one about Canadians supposedly “flocking” to the U.S. to get medical care. An eye-popping pie chart, generated by peer-reviewed journal “Health Affairs,” shows only a tiny sliver of Canadians heading south for care — less than 1%.

Even more telling here is a “Health Affairs” survey of U.S. hospitals near the Canadian border, where you’d expect all these “care-deprived” Canucks to go first. A vast majority saw fewer than one Canadian a month. Bigger hospitals, even those rated by U.S. News & World Report as “America’s Best,” also saw very few Canadians, in either emergency or elective care. And these are exactly the hospitals where you’d expect to well-off Canadians to go.

(I love the metaphorical title of the Health Affairs study, “Phantoms in the Snow: Canadians’ Use of Health Care Services in the U.S.”)

The second myth, about Canadian doctors supposedly taking U.S. jobs, is also debunked by Carroll’s research and facts, which show high Canadian physician satisfaction in Canada and fewer Canadian doctors heading south to practice — less than 0.5% of all Canadian MD’s in the most recent findings.

(Charts and graphs from hard data, something many MarketWatch readers appreciate. Carroll’s well-researched article is loaded with them).

The third myth concerns how Canadians ration health care in specific areas. Every Western nation rations medical care out of necessity. As we’ve mentioned here before, Americans have chosen (so far, anyway) to ration medical care by income.

One favorite argument, heard on the floor of Congress and elsewhere, is that Canada denies hip replacements to older people. Absolutely not true, Carroll documents. Older Canadians get a ton of hip replacements. He can’t resist adding this wry note in the AARP piece:

“Know who pays for care for older people in the U.S.? Medicare. A single-payer system.”

The fourth myth is that Canadians have far longer wait times for medical treatment because of its system. This is one I hear all the time. Carroll says this is true, BUT…there’s a good reason:

Canadians have shown admirable restraint — something normally in short supply here in the U.S. They’ve actually opted to hold down medicare costs by consciously waiting longer and limiting supply, mostly for elective procedures. Imagine that.

Canadians, in other words, have made a choice to be fiscally conservative, Carroll says in his well-documented article. They’re more realistic and less demanding than many American patients are. Carroll says that Canadians COULD, if they wanted to, cut down wait times — by spending more on health care. But they’ve actually made a conscious choice not to do this.

This is no smoke screen: I’ve heard callers on Canadian radio shows state exactly this many times. They’d rather show personal restraint by waiting a bit longer than running up deficits.

The final myth about Canada rationing health care in its system and the U.S. not doing so governmentally, is trickier, Carroll admits. But he points out that although the U.S. pays quite a bit more of its GDP than Canada does on health care, far more Americans in need of care go unseen by doctors. And U.S. medical outcomes, he adds, are middling at best.

Feel free to have a discussion on the two systems, Carroll concludes. His piece has hundreds of Comments below it, not surprisingly — many of them rehashing the same old tired myths about Canada’s popular system his piece debunks).

But, he adds, but if you do have a discussion on this important subject, “Stick to the facts.”

Given the U.S.’ history in this politically charged area, as my Canadian friends would put it, “Not bloody likely.”

http://articles.marketwatch.com/2012-08-09/commentary/33111026_1_canadian-system-single-payer-medical-system-medical-care

Pharmaceutical R&D – its cost and what it delivers

Pharmaceutical research and development: what do we get for all that money?

By Donald W Light, Joel R Lexchin
BMJ, August 7, 2012
Data indicate that the widely touted “innovation crisis” in pharmaceuticals is a myth. The real innovation crisis, say Donald Light and Joel Lexchin, stems from current incentives that reward companies for developing large numbers of new drugs with few clinical advantages over existing ones.
The “innovation crisis” myth
The constant production of reports and articles about the so called innovation crisis rests on the decline in new molecular entities (defined as “an active ingredient that has never been marketed . . . in any form”) since a spike in 1996 that resulted from the clearance of a backlog of applications after large user fees from companies were introduced. This decline ended in 2006, when approvals of new molecular entities returned to their long term mean of between 15 and 25 a year.
The real innovation crisis
More relevant than the absolute number of new drugs brought to the market is the number that represent a therapeutic advance. Although the pharmaceutical industry and its analysts measure innovation in terms of new molecular entities as a stand-in for therapeutically superior new medicines, most have provided only minor clinical advantages over existing treatments.
How much does research and development cost?
Although the pharmaceutical industry emphasises how much money it devotes to discovering new drugs, little of that money actually goes into basic research. Data from companies, the United States National Science Foundation, and government reports indicate that companies have been spending only 1.3% of revenues on basic research to discover new molecules, net of taxpayer subsidies. More than four fifths of all funds for basic research to discover new drugs and vaccines come from public sources. Moreover, despite the industry’s frequent claims that the cost of new drug discovery is now $1.3bn (£834m; €1bn), this figure, which comes from the industry supported Tufts Center, has been heavily criticised. Half that total comes from estimating how much profit would have been made if the money had been invested in an index fund of pharmaceutical companies that increased in value 11% a year, compounded over 15 years. While used by finance committees to estimate whether a new venture is worth investing in, these presumed profits (far greater than the rise in the value of pharmaceutical stocks) should not be counted as research and development costs on which profits are to be made. Half of the remaining $0.65bn is paid by taxpayers through company deductions and credits, bringing the estimate down to one quarter of $1.3bn or $0.33bn. The Tufts study authors report that their estimate was done on the most costly fifth of new drugs (those developed in-house), which the authors reported were 3.44 times more costly than the average, reducing the estimate to $90m. The median costs were a third less than the average, or $60m. Deconstructing other inflators would lower the estimate of costs even further.
Hidden business model
Although the industry’s vast network of public relations departments and trade associations generate a large volume of stories about the so called innovation crisis, the key role of blockbuster drugs, and the crisis created by “the patent cliff,” the hidden business model of pharmaceuticals centres on turning out scores of minor variations, some of which become market blockbusters.
Myth of unsustainable research and development
Complementing the stream of articles about the innovation crisis are those about the costs of research and development being “unsustainable” for the small number of new drugs approved. Both claims serve to justify greater government support and protections from generic competition, such as longer data exclusivity and more taxpayer subsidies. However, although reported research and development costs rose substantially between 1995 and 2010, by $34.2bn, revenues increased six times faster, by $200.4bn. Companies exaggerate costs of development by focusing on their self reported increase in costs and by not mentioning this extraordinary revenue return. Net profits after taxes consistently remain substantially higher than profits for all other Fortune 500 companies.
Towards more cost effective, safer medicines
What can be done to change the business model of the pharmaceutical industry to focus on more cost effective, safer medicines? The first step should be to stop approving so many new drugs of little therapeutic value. The European Medicines Agency (EMA) does Europe a disservice by approving 74% of all new applications based on trials designed by the companies, while keeping data about efficacy and safety secret. Twenty nine per cent of new biologicals approved by the EMA received safety warnings within the first 10 years on the market, and therapeutically similar drugs by definition have no advantages to offset their unknown risk of increased harm. We need to revive the Norwegian “medical need” clause that limited approval of new drugs to those that offered a therapeutic advantage over existing products. This approach led to Norway having seven non-steroidal anti-inflammatory drugs on the market compared with 22 in the Netherlands. Norway’s medical need clause was eliminated in 1996 when it harmonised its drug approval process with that in the EU. EU countries are paying billions more than necessary for drugs that provide little health gain because prices are not being set to reward new drugs in proportion to their added clinical value.
We should also fully fund the EMA and other regulatory agencies with public funds, rather than relying on industry generated user fees, to end industry’s capture of its regulator. Finally, we should consider new ways of rewarding innovation directly, such as through the large cash prizes envisioned in US Senate Bill 1137 (Sen. Bernie Sanders), rather than through the high prices generated by patent protection. The bill proposes the collection of several billion dollars a year from all federal and non-federal health reimbursement and insurance programmes, and a committee would award prizes in proportion to how well new drugs fulfilled unmet clinical needs and constituted real therapeutic gains. Without patents new drugs are immediately open to generic competition, lowering prices, while at the same time innovators are rewarded quickly to innovate again. This approach would save countries billions in healthcare costs and produce real gains in people’s health.
http://www.bmj.com/content/345/bmj.e4348

This important BMJ article by Donald Light and Joel Lexchin gives us the background that explains why we have the feeling that the pharmaceutical firms are gouging us with outrageous pricing, in spite of their excuse that these prices are necessary to support their research and development – an excuse that seems not to hold water.
The pharmaceutical industry wants less government involvement (except for the research money), when what we need is much more government involvement. Under a single payer system that included pharmaceuticals, prices would be negotiated based on truly legitimate costs plus fair profits, and not based on wasteful expenses such as product research designed primarily to reset the patent clock.
As Light and Lexchin explain, even the European nations would benefit with a greater regulatory role in improving value though such measures as determining medical need of new products. But just think how much better off we would be in the United States if we would just get past the concept that we must go all out to protect the sacred marketplace – a concept that has allowed the pharmaceutical firms to continue to plunder us.

Dutch insurer intends to block single payer for Slovakia

Slovakia wants to nationalise private health insurers

Private Healthcare UK
August 6, 2012

Slovakia’s prime minister Robert Fico plans to reduce national healthcare to a single state-owned insurer by 2014, and this would mean the nationalisation of two private health insurers or buying them.
 
The government wants to introduce a system of one health insurer instead of several health insurers. Fico says, “Privately-owned health insurers should leave the Slovak market. Slovakia’s health care system has been suffering from a lack of funding, while private insurers turn a profit based on public money.”
 
The current health care system in Slovakia is a form of private-public partnership, where all Slovaks pay a healthcare tax of 14%, and can choose cover provided by one of the three providers, who provide cost-free treatment.
 
The two private health insurers, Union, owned by Dutch insurer Achmea, and Dovera, controlled by Slovak-Czech private equity group Penta Investments, provide cover for 1.8 million of a total 5.4 million Slovakians. The state owned General Health Insurance Company, better known as VsZP, provides cover for the remaining 3.6 million.

As a local company, Penta has to be very careful what they say and so has said it will listen to government plans.
 
But Achmea has said it will use all official and legal channels to protect the business interests of Union, and is not interested in selling Union or its portfolio to the state. If it invokes EU law on protectionism it could take many years for any legal battle to be concluded, and as a large EU health insurer Achmea has the financial and political muscle to thwart tiny Slovakia.

http://www.privatehealth.co.uk/news/august-2012/slovakia-to-nationalise-private-health-insurers-37456/

Comment: 

By Don McCanne, MD

Slovakia has a health insurance program covering everyone, financed by a payroll tax. But Slovakians can choose one of two private insurers in place of their public plan. Slovakia’s prime minister now wants to end the diversion of public money to profits of the private insurers, so all funds are spent on health care.

Many in the United States who support private insurance have praised the Dutch system of private health plans, but you really have to question the moral authority of these plans when a large Dutch private insurer intends use EU law to force Slovakia to continue to use its unwanted insurance product.

Yet our political leaders in the United States want to keep the private insurers in charge. It seems that Slovakia has some valuable lessons for us.

Big Pharma's claim of an 'innovation crisis' is a myth, BMJ authors say

By Susan Perry
MinnPost.com, 08/08/12

For the past decade or so, we’ve been hearing repeatedly about an “innovation” crisis in pharmaceuticals. Big Pharma and its friends in government and elsewhere have claimed that research into new drugs is slowing down, primarily, they say, because of onerous regulatory demands.

“With the growing difficulty of getting drugs through the [Food and Drug Administration] labyrinth and the rising cost of drug approval, Pfizer must produce revenue for continued research — the lifeblood of pharmaceutical companies,” lamented the president of the Galen Institute, an industry-funded and free-market public policy organization, in Forbes last December. “Without this research, the pipeline would run dry, delaying or even killing new medicines for Alzheimer’s, Parkinson’s, and countless other diseases.”

But is it true? Is there really an innovation crisis? No, according to a new analysis published Tuesday on BMJ.com. The real crisis is in a system that rewards drug companies for developing new products that offer few, if any, therapeutic benefits over existing ones, argue Donald Light, a professor of social medicine and comparative health care at the University of Medicine and Dentistry of New Jersey, and Joel Lexchin, a professor of health policy and management at York University in Toronto.

As Light and Lexchin point out, the number of new drugs that are licensed each year has stayed at a relatively stable average rate of 15 to 25 for decades. Those numbers, the professors add,

do not support frequently heard complaints about how hard it is to get any new drug approved. They also mean that neither policies considered to be obstacles to innovation (like the requirement for more extensive clinical testing) nor those regarded as promoting innovation (like faster reviews) have made much difference. Even the biotechnology revolution did not change the rate of approval of new molecular entities, though it changed strategies for drug development. Meanwhile, telling “innovation crisis” stories to politicians and the press serves as a ploy, a strategy to attract a range of government protections from free market, generic competition.

And that’s where the problem — “the real innovation crisis,” as Light and Lexchin call it — lies. For, although the pharmaceutical industry likes to emphasize how much money it devotes to discovering new drugs, only a small amount of its revenues actually goes into basic research. One independent analysis found that Big Pharma spends about 1.3 percent of its revenues on discovering and developing new molecules. That compares with the estimated 25 percent that it spends on marketing.

Most funds for basic research are public funds
“More than four fifths of all funds for basic research to discover new drugs and vaccines come from public sources,” Light and Lexchin add.

A cutback on public money for basic research, therefore, would seem to be a key threat to drug innovation.

And, yes, research and development costs have risen significantly for drug companies (by an estimated $34.2 billion between 1995 and 2010), but revenues have risen faster (by $200.4 billion within that same time period).

“Companies exaggerate costs of development by focusing on their self reported increase in costs and by not mentioning this extraordinary revenue return,” write Light and Lexchin. “Net profits after taxes consistently remain substantially higher than profits for all other Fortune 500 companies.”

Independent reviews have also concluded that only about 1 in 10 newly approved medicines offers patients any substantial benefits, write Light and Lexchin. Most new drugs are, instead, minor variations on older drugs — variations that are extremely profitable for drug companies, especially when an older and similar blockbuster drug comes off patent.

Authors’ recommendations
To get the pharmaceutical industry to change the current business model, Light and Lexchin urge governments to stop approving drugs that provide little health gain. They also recommend that “to end industry’s capture of its regulator,” regulatory agencies should be publicly funded rather than reliant on industry-generated user fees. In addition, they support legislation introduced by Sen. Bernie Sanders, I-Vt., in the U.S. Senate in 2011 that would reward innovating companies by giving them substantial “prizes in proportion to how well new drugs fulfilled unmet clinical needs and constituted real therapeutic gains.”

In a second BMJ paper published Tuesday,  a group of British economists and health-policy researchers argue that drug companies should be required to demonstrate how a new drug compares to ones already on the market before receiving government approval. A drug should be licensed only when a company can show that it’s superior to an existing treatment, not just to a placebo. Such a requirement, the paper’s authors argue, would help patients and doctors, as well as regulators, better understand the relative risks and benefits of all new drugs. It would also encourage drug companies to develop new drugs for diseases and conditions that currently have few or no treatment options.

Unfortunately, both BMJ papers are behind a paywall.

http://www.minnpost.com/second-opinion/2012/08/big-pharmas-claim-innovation-crisis-myth-bmj-authors-say

Big Pharma’s claim of an ‘innovation crisis’ is a myth, BMJ authors say

By Susan Perry
MinnPost.com, 08/08/12

For the past decade or so, we’ve been hearing repeatedly about an “innovation” crisis in pharmaceuticals. Big Pharma and its friends in government and elsewhere have claimed that research into new drugs is slowing down, primarily, they say, because of onerous regulatory demands.

“With the growing difficulty of getting drugs through the [Food and Drug Administration] labyrinth and the rising cost of drug approval, Pfizer must produce revenue for continued research — the lifeblood of pharmaceutical companies,” lamented the president of the Galen Institute, an industry-funded and free-market public policy organization, in Forbes last December. “Without this research, the pipeline would run dry, delaying or even killing new medicines for Alzheimer’s, Parkinson’s, and countless other diseases.”

But is it true? Is there really an innovation crisis? No, according to a new analysis published Tuesday on BMJ.com. The real crisis is in a system that rewards drug companies for developing new products that offer few, if any, therapeutic benefits over existing ones, argue Donald Light, a professor of social medicine and comparative health care at the University of Medicine and Dentistry of New Jersey, and Joel Lexchin, a professor of health policy and management at York University in Toronto.

As Light and Lexchin point out, the number of new drugs that are licensed each year has stayed at a relatively stable average rate of 15 to 25 for decades. Those numbers, the professors add,

do not support frequently heard complaints about how hard it is to get any new drug approved. They also mean that neither policies considered to be obstacles to innovation (like the requirement for more extensive clinical testing) nor those regarded as promoting innovation (like faster reviews) have made much difference. Even the biotechnology revolution did not change the rate of approval of new molecular entities, though it changed strategies for drug development. Meanwhile, telling “innovation crisis” stories to politicians and the press serves as a ploy, a strategy to attract a range of government protections from free market, generic competition.

And that’s where the problem — “the real innovation crisis,” as Light and Lexchin call it — lies. For, although the pharmaceutical industry likes to emphasize how much money it devotes to discovering new drugs, only a small amount of its revenues actually goes into basic research. One independent analysis found that Big Pharma spends about 1.3 percent of its revenues on discovering and developing new molecules. That compares with the estimated 25 percent that it spends on marketing.

Most funds for basic research are public funds
“More than four fifths of all funds for basic research to discover new drugs and vaccines come from public sources,” Light and Lexchin add.

A cutback on public money for basic research, therefore, would seem to be a key threat to drug innovation.

And, yes, research and development costs have risen significantly for drug companies (by an estimated $34.2 billion between 1995 and 2010), but revenues have risen faster (by $200.4 billion within that same time period).

“Companies exaggerate costs of development by focusing on their self reported increase in costs and by not mentioning this extraordinary revenue return,” write Light and Lexchin. “Net profits after taxes consistently remain substantially higher than profits for all other Fortune 500 companies.”

Independent reviews have also concluded that only about 1 in 10 newly approved medicines offers patients any substantial benefits, write Light and Lexchin. Most new drugs are, instead, minor variations on older drugs — variations that are extremely profitable for drug companies, especially when an older and similar blockbuster drug comes off patent.

Authors’ recommendations
To get the pharmaceutical industry to change the current business model, Light and Lexchin urge governments to stop approving drugs that provide little health gain. They also recommend that “to end industry’s capture of its regulator,” regulatory agencies should be publicly funded rather than reliant on industry-generated user fees. In addition, they support legislation introduced by Sen. Bernie Sanders, I-Vt., in the U.S. Senate in 2011 that would reward innovating companies by giving them substantial “prizes in proportion to how well new drugs fulfilled unmet clinical needs and constituted real therapeutic gains.”

In a second BMJ paper published Tuesday,  a group of British economists and health-policy researchers argue that drug companies should be required to demonstrate how a new drug compares to ones already on the market before receiving government approval. A drug should be licensed only when a company can show that it’s superior to an existing treatment, not just to a placebo. Such a requirement, the paper’s authors argue, would help patients and doctors, as well as regulators, better understand the relative risks and benefits of all new drugs. It would also encourage drug companies to develop new drugs for diseases and conditions that currently have few or no treatment options.

Unfortunately, both BMJ papers are behind a paywall.

http://www.minnpost.com/second-opinion/2012/08/big-pharmas-claim-innovation-crisis-myth-bmj-authors-say

Dutch insurer intends to block single payer for Slovakia

Slovakia wants to nationalise private health insurers

Private Healthcare UK
August 6, 2012
Slovakia’s prime minister Robert Fico plans to reduce national healthcare to a single state-owned insurer by 2014, and this would mean the nationalisation of two private health insurers or buying them.
The government wants to introduce a system of one health insurer instead of several health insurers. Fico says, “Privately-owned health insurers should leave the Slovak market. Slovakia’s health care system has been suffering from a lack of funding, while private insurers turn a profit based on public money.”
The current health care system in Slovakia is a form of private-public partnership, where all Slovaks pay a healthcare tax of 14%, and can choose cover provided by one of the three providers, who provide cost-free treatment.
The two private health insurers, Union, owned by Dutch insurer Achmea, and Dovera, controlled by Slovak-Czech private equity group Penta Investments, provide cover for 1.8 million of a total 5.4 million Slovakians. The state owned General Health Insurance Company, better known as VsZP, provides cover for the remaining 3.6 million.
As a local company, Penta has to be very careful what they say and so has said it will listen to government plans.
But Achmea has said it will use all official and legal channels to protect the business interests of Union, and is not interested in selling Union or its portfolio to the state. If it invokes EU law on protectionism it could take many years for any legal battle to be concluded, and as a large EU health insurer Achmea has the financial and political muscle to thwart tiny Slovakia.
http://www.privatehealth.co.uk/news/august-2012/slovakia-to-nationalise-private-health-insurers-37456/

Slovakia has a health insurance program covering everyone, financed by a payroll tax. But Slovakians can choose one of two private insurers in place of their public plan. Slovakia’s prime minister now wants to end the diversion of public money to profits of the private insurers, so all funds are spent on health care.
Many in the United States who support private insurance have praised the Dutch system of private health plans, but you really have to question the moral authority of these plans when a large Dutch private insurer intends use EU law to force Slovakia to continue to use its unwanted insurance product.
Yet our political leaders in the United States want to keep the private insurers in charge. It seems that Slovakia has some valuable lessons for us.

Is the federal employees health program anti-competitive?

OPM seeks more competition for employee health plans

By Joe Davidson
The Washington Post, August 6, 2012

The Obama administration is considering fundamental changes to the Federal Employees Health Benefits program (FEHB), which is generally regarded as something Uncle Sam does right.

Yet, the Office of Personnel Management (OPM) thinks the good thing could be even better by giving workers more choice in health insurance companies. The OPM wants to do that by reviving legislation proposed during the George W. Bush administration.

“While the FEHB model has withstood the test of time and influenced the direction of health reform, the competitive environment is not as robust as it could be,” says an unsigned OPM briefing paper obtained by The Washington Post. “The health insurance market has changed dramatically over the last 50 years, but . . . the FEHB program lacks the flexibility to adjust in response to the changing market.”

Specifically, the OPM paper, which has circulated recently among congressional and industry officials, expresses concern about the growing dominance and market concentration of Blue Cross Blue Shield and the departure or diminished role of other health plans.

Two Blue Cross Blue Shield plans, standard and basic, together serve about 62 percent of the federal employee market. The next five largest plans cover 22 percent.

In a June article about health exchanges under the Affordable Care Act, Health Affairs says that although insurance plans are widely available in FEHB, “enrollment was concentrated in plans owned by just a few organizations, typically Blue Cross/Blue Shield plans.” Health insurance premiums, the article continued, were lower “where competition was extremely high” and higher “where competition was extremely low.”

FEHB “continues to be the gold standard for health insurance, offering far more choices and competition than other large employers,” said Alissa Fox, a senior vice president of the Blue Cross and Blue Shield Association.

She goes on to offer an argument that runs counter to the basic notion of capitalism. Increased competition, in this case, will result in increased prices, according to Fox. The regional plans could “cherry pick” low-cost regions, argues a Blue Cross Blue Shield paper, resulting in national plans being forced to charge higher premiums to cover higher-cost regions.

“Within a few years, the nationwide plans will become non-competitive and stop offering nationwide coverage all together,” the Blue Cross Blue Shield paper says. “This may leave certain areas of the country underserved.”

More competition might be better in theory, but that theory falls short with FEHB, says Jacqueline Simon, public policy director for the American Federation of Government Employees. Arguments on both sides of this debate are invalid, she said, “unless and until there is one standard benefits package that all plans must provide, plans will not be competing on price and/or quality, and those are the only things that matter.”

http://www.washingtonpost.com/politics/opm-seeks-more-competition-for-employee-health-plans/2012/08/06/ea6c242e-dffc-11e1-a421-8bf0f0e5aa11_story.html

OPM paper:
http://www.washingtonpost.com/r/2010-2019/WashingtonPost/2012/08/06/National-Politics/Graphics/FEHBOPMcompplan.pdf

BlueCross BlueShield Association perspective:
http://www.washingtonpost.com/r/2010-2019/WashingtonPost/2012/08/06/National-Politics/Graphics/FEHBBlueppo.pdf

Comment:

By Don McCanne, MD

Many in the policy community have claimed for decades that employer-sponsored plans offer the best benefits and the greatest value in health care coverage, and that the largest of all programs – the Federal Employees Health Benefits Program (FEHBP) – is the very best, with the greatest competition and the greatest value.

The position papers from the Office of Personnel Management (OPM) and from the BlueCross BlueShield Association (BC/BS) cast serious doubt on whether private plan competition is providing us with the best value. OPM claims that the dominance of BC/BS is anti-competitive and results in higher than necessary insurance premiums. BC/BS claims that introducing more competition on a regional level will result in adverse selection, forcing national plans (i.e., BC/BS) to charge higher premiums to cover higher-cost regions.

The point is obvious. The very best that we have in competition of private health plans – FEHBP – doesn’t work well since it still is anti-competitive and exhibits adverse selection.

If the very best can’t do it right, why do our policy makers insist on sticking with this flawed model? One model that worked very well and avoided these unsound policies was the traditional Medicare program, that is until private Medicare Advantage plans were introduced into the mix. We now see anti-competitive plan concentration (United Health) and well-documented adverse selection favoring the private plans while sticking taxpayers with a larger Medicare bill.

Let’s get rid of the private plans, including the private Medicare Advantage plans, and then, under our own improved Medicare for all program, we would no longer have to deal with market concentration and adverse selection.

Is the federal employees health program anti-competitive?

OPM seeks more competition for employee health plans

By Joe Davidson
The Washington Post, August 6, 2012
The Obama administration is considering fundamental changes to the Federal Employees Health Benefits program (FEHB), which is generally regarded as something Uncle Sam does right.
Yet, the Office of Personnel Management (OPM) thinks the good thing could be even better by giving workers more choice in health insurance companies. The OPM wants to do that by reviving legislation proposed during the George W. Bush administration.
“While the FEHB model has withstood the test of time and influenced the direction of health reform, the competitive environment is not as robust as it could be,” says an unsigned OPM briefing paper obtained by The Washington Post. “The health insurance market has changed dramatically over the last 50 years, but . . . the FEHB program lacks the flexibility to adjust in response to the changing market.”
Specifically, the OPM paper, which has circulated recently among congressional and industry officials, expresses concern about the growing dominance and market concentration of Blue Cross Blue Shield and the departure or diminished role of other health plans.
Two Blue Cross Blue Shield plans, standard and basic, together serve about 62 percent of the federal employee market. The next five largest plans cover 22 percent.
In a June article about health exchanges under the Affordable Care Act, Health Affairs says that although insurance plans are widely available in FEHB, “enrollment was concentrated in plans owned by just a few organizations, typically Blue Cross/Blue Shield plans.” Health insurance premiums, the article continued, were lower “where competition was extremely high” and higher “where competition was extremely low.”
FEHB “continues to be the gold standard for health insurance, offering far more choices and competition than other large employers,” said Alissa Fox, a senior vice president of the Blue Cross and Blue Shield Association.
She goes on to offer an argument that runs counter to the basic notion of capitalism. Increased competition, in this case, will result in increased prices, according to Fox. The regional plans could “cherry pick” low-cost regions, argues a Blue Cross Blue Shield paper, resulting in national plans being forced to charge higher premiums to cover higher-cost regions.
“Within a few years, the nationwide plans will become non-competitive and stop offering nationwide coverage all together,” the Blue Cross Blue Shield paper says. “This may leave certain areas of the country underserved.”
More competition might be better in theory, but that theory falls short with FEHB, says Jacqueline Simon, public policy director for the American Federation of Government Employees. Arguments on both sides of this debate are invalid, she said, “unless and until there is one standard benefits package that all plans must provide, plans will not be competing on price and/or quality, and those are the only things that matter.”
http://www.washingtonpost.com/politics/opm-seeks-more-competition-for-em…
OPM paper:
http://www.washingtonpost.com/r/2010-2019/WashingtonPost/2012/08/06/National-Politics/Graphics/FEHBOPMcompplan.pdf
BlueCross BlueShield Association perspective:
http://www.washingtonpost.com/r/2010-2019/WashingtonPost/2012/08/06/National-Politics/Graphics/FEHBBlueppo.pdf

Many in the policy community have claimed for decades that employer-sponsored plans offer the best benefits and the greatest value in health care coverage, and that the largest of all programs – the Federal Employees Health Benefits Program (FEHBP) – is the very best, with the greatest competition and the greatest value.
The position papers from the Office of Personnel Management (OPM) and from the BlueCross BlueShield Association (BC/BS) cast serious doubt on whether private plan competition is providing us with the best value. OPM claims that the dominance of BC/BS is anti-competitive and results in higher than necessary insurance premiums. BC/BS claims that introducing more competition on a regional level will result in adverse selection, forcing national plans (i.e., BC/BS) to charge higher premiums to cover higher-cost regions.
The point is obvious. The very best that we have in competition of private health plans – FEHBP – doesn’t work well since it still is anti-competitive and exhibits adverse selection.
If the very best can’t do it right, why do our policy makers insist on sticking with this flawed model? One model that worked very well and avoided these unsound policies was the traditional Medicare program, that is until private Medicare Advantage plans were introduced into the mix. We now see anti-competitive plan concentration (United Health) and well-documented adverse selection favoring the private plans while sticking taxpayers with a larger Medicare bill.
Let’s get rid of the private plans, including the private Medicare Advantage plans, and then, under our own improved Medicare for all program, we would no longer have to deal with market concentration and adverse selection.

The Supreme Court ruling on Obamacare: A physician’s perspective

By Ann Settgast, M.D.
Southside Pride (Minneapolis), Aug. 6, 2012

The day the Affordable Care Act (ACA) was upheld by the Supreme Court was ironic for me as a physician. Two of my patients asked me to prescribe medication for uninsured family members: A mother asked me for an inhaler for her adult son with uncontrolled asthma, and another asked me if I could refill her husband’s blood pressure medications for a month or two until he is able to find another job following his lay off. He cannot see his doctor due to his uninsurance.

One might think I felt better at the end of that morning clinic knowing the ACA had been upheld. But, I didn’t. You see, even with the ACA in place, we have no reason to believe these two men will obtain access to care. In Minnesota, more than 250,000 will remain uninsured after the ACA’s implementation. These Minnesotans will remain invisible like the family members I describe, and some of them may die. After all, uninsurance is a risk factor for preventable death in the United States. However, this is not the only problem. Thousands more will remain underinsured. Any practicing physician can tell stories about underinsurance —we see it when recommendations we make to our insured patients are not taken because the deductible hasn’t been met or the co-pay is unaffordable. Minnesota ranks second in the nation for uptake of high-deductible plans, so underinsurance here is alive and well.

I hate to be a spoilsport while many are celebrating the Supreme Court’s decision, but the truth is, as a society, we have again sold ourselves short. Here, in this incredibly wealthy nation with vast resources, rather than actually fixing the problem, we will continue to allow patients to forgo needed care because of cost. We have still not joined other wealthy nations in recognizing health care as a human right.

It has been disheartening to hear post-ruling commentary on both sides of the ACA debate because much of it simply isn’t true. One politician actually claimed that now the U.S. was joining all other industrialized countries in finally providing universal care … but more than 20 million Americans will be uninsured if the ACA is fully enacted. I need not spell out the blatant falsehood here. I’ve also heard that now, Americans will not face medical ruin because of healthcare costs. Again, the facts simply belie the statement. The medical bankruptcy rate in Massachusetts did not budge with implementation of the mandate there. That state, now with the lowest uninsurance rate in the nation, also boasts the highest per capita costs. Forcing people to buy skimpy policies that leave them without proper access to care and vulnerable to financial ruin is not meaningful reform. Rather, it is perpetuation of our current dysfunction.

In Minnesota, we can and should hold ourselves to a higher standard. By enacting a single-payer, Medicare-for-All system, we could show the nation what happens when individuals flourish and fulfill their productive potential without the fear of financial ruin should they become ill. By severing our unhealthy relationship with a private insurance industry that amasses great wealth at the expense of sick patients, we can save a tremendous amount of money and actually spend it on health care. The Lewin study, earlier this year, showed us that the administrative simplicity of a single-payer in Minnesota would save our state $4 billion annually while covering everyone with comprehensive care. Now that’s a solution I could celebrate.

Ann Settgast is a primary care doctor practicing in St. Paul. She represents Physicians for a National Health Program’s Minnesota chapter which now has nearly 1,000 physician and medical student members.

http://www.southsidepride.com/2012/08/articles/The-supreme-court-ruling.html

Low cognitive ability impairs enrollment in Medicare supplemental plans

Low Cognitive Ability And Poor Skill With Numbers May Prevent Many From Enrolling In Medicare Supplemental Coverage

By Sewin Chan and Brian Elbel
Health Affairs, August 2012

Abstract

Because traditional Medicare leaves substantial gaps in coverage, many people obtain supplemental coverage to limit their exposure to out-of-pocket costs. However, some Medicare beneficiaries may not be well equipped to navigate the complex supplemental coverage landscape successfully because of their lower cognitive ability or numeracy—that is, the ability to work with numbers. We found that people in the lower third of the cognitive ability and numeracy distributions were at least eleven percentage points less likely than those in the upper third to enroll in a supplemental Medicare insurance plan. This result means that many Medicare beneficiaries do not have the financial protections and other benefits that would be available to them if they were enrolled in a supplemental insurance plan. Our findings suggest that policy makers may want to consider alternatives tailored to these high-need groups, such as enhanced education and enrollment programs, simpler sets of plan choices, or even some type of automatic enrollment with an option to decline coverage.

From the Conclusion

Many public policies focus on individual choice as a means of determining exactly how benefits should be distributed or of assuring that a policy has maximal effectiveness. Inherent in all of these policies is the assumption that all or most people have the mental capacity to make the choices that are in their best interest. We have shown that many people do not have this capacity and that this deficiency can affect their choices in adverse ways.

Overall, people in the lower third of the cognitive ability distribution were six to twenty-three percentage points less likely to enroll in a supplemental Medicare insurance plan than those in the upper third of the cognitive ability distribution, even after controlling for a host of other variables. Furthermore, the chance of enrolling in a supplemental Medicare insurance plan was approximately five percentage points lower for those in the lower third of the numeracy distribution than for those in the upper third.

These problems were most pronounced for those with low incomes, low wealth, and multiple chronic illnesses, where the likelihood of enrollment was forty percentage points lower for the least cognitively able, and an additional thirteen percentage points lower for those with weak numeracy skills. People who are chronically ill and those who do not have the financial ability to self-insure against substantial out-of-pocket costs would almost certainly be better off enrolling in supplemental insurance plans.

The magnitude of our findings on cognitive ability and numeracy was sizable, particularly compared to the influence of health on enrollment decisions. By way of comparison, if we add together the estimated effect on enrollment for people who were hospitalized in the past year and those with three or more chronic illnesses, the sum is still considerably less than the negative effect of being in the bottom third of the cognitive ability distribution.

Given the difficulty associated with making good choices, addressing the problem of low cognitive ability and numeracy is important, and not only for Medicare. Health care reform is likely to increase the set of decisions to be made, particularly for the newly insured. Unless there is comprehensive insurance coverage in which all services are covered and the issue of coverage choices is redundant, understanding the role of cognitive ability and numeracy in making these decisions is essential.

http://content.healthaffairs.org/content/31/8/1847.full

Comment: 

By Don McCanne, MD

This study demonstrates that low cognitive ability decreases enrollment in supplemental Medicare insurance plans, preventing these individuals from having the financial protections and other benefits of supplemental coverage. Other studies have shown that this results in impaired outcomes.

Although the authors recommend approaches that would improve enrollment while preserving choice, they end with a statement that begins, “Unless there is comprehensive insurance coverage in which all services are covered and the issue of coverage choices is redundant…”

Of course, an expanded and improved Medicare which, amongst other improvements, would roll into the benefit package the coverage provided by supplemental plans, would obviate the need to make any choices since all reasonable services would be covered. Low cognitive ability and poor skill with numbers would no longer be determinants in whether or not a person had adequate coverage. Everyone would automatically.

It's Time for Single-Payer

By Dr. James Mitchiner
American College of Emergency Physicians (ACEP) News, 08/07/12

“You can always trust the Americans to do the right thing, once they’ve tried everything else.”

Winston Churchill’s iconic remark, reportedly issued at the dawn of America’s entry into World War II, is equally applicable to the present American health care debate and the crisis that spawned it.

Regardless of whether you are elated or disappointed with June’s historic Supreme Court decision upholding the constitutionality of the Affordable Care Act, it is certainly no panacea for the problems facing U.S. health care. Even with the law intact, and despite its best intentions, it will still leave some 25 million uninsured, underinsure millions more, expand the corporatization of health care, and do little to control the escalating costs of care over the long term.

So it’s clear we need to do the right thing: the creation of a national, universal, publicly funded health care system, free of the corrupting power of profit-oriented health insurance, and at the same time capable of passing constitutional muster. In short, the right thing is an expanded and improved Medicare-for-All program, otherwise known as single-payer.

Don’t be so shocked. For the last 30 years, we have tried all the alternatives, and none of them have worked. We have experimented with HMOs, PPOs, high-deductible health plans, health savings accounts, pay-for-performance, capitation, and disease management. These ideas have been promoted in various iterations, often with great fanfare, by public and private payers alike, yet none of them have shown long-term success at bending the cost curve. And the promise of the latest reforms du jour, such as Accountable Care Organizations and Patient-Centered Medical Homes, is speculative at best.

American health care is unique among the world’s democracies in that it was never planned in terms of enabling legislation or explicit constitutional authority. As others have stated, our employer-based insurance system, which now covers about 160 million Americans, was an accident of history. Its lineage can be traced to FDR’s wage and price control policies during World War II, where employers were permitted to offer workers health insurance in lieu of higher wages as a job inducement.

This benefit has evolved piecemeal into the Rube Goldberg complexity that is contemporary employer-sponsored health insurance, with some 1,200 private plans each doing the same things – medical underwriting, coordination of benefits, claims adjudication and denial, marketing, public relations, lobbying, litigating, and paying shareholder dividends and inflated CEO salaries while forcing individuals to pay a higher share of premiums, increased deductibles, expanded copays, or a combination of all three.

Taken as a whole, private insurers’ activities are duplicative, inefficient, wasteful of scarce health care resources, conducive of job lock, and completely misdirected in supporting the 21st-century health care agenda that America needs and deserves.

The objective of the ACA’s individual mandate was to remedy a flaw in the market for health insurance: the expectation by the uninsured that the costs of their inevitable illnesses would be benignly transferred to those fortunate to have coverage. If you believe that guaranteed issue and community-rating requires 100% participation in the health insurance market to sustain financial viability, clearly the most efficient mechanism to achieve this is not through an individual mandate, in which the heavy hand of government coerces people to do what they otherwise would not. If the federal government has a professed welfare interest in controlling health care costs, it can – and should – accomplish that goal through a more economically efficient single-payer mechanism.

Given that the primary business objective of a for-profit insurer is to make a profit, the fundamental question we should be asking is this: What is the marginal value of private health insurance? That is, what advantage vis-à-vis a single-payer model like Medicare does our system of private, profit-oriented health insurance convey to patients, providers, and employers? What exactly do private insurers do, above and beyond what Medicare does, that is deserving of their inflated premiums? To my knowledge, there is no evidence that commercial insurance provides easier access or less hassle-free care, is more cost effective, produces care of higher quality, or has better consumer satisfaction ratings than Medicare (if anyone has evidence to the contrary, from the peer-reviewed health policy literature, please advise). And according to a recent poll, most Americans prefer to keep Medicare as it is, rather than switching to a premium-support financing mechanism as advocated by Rep. Paul Ryan (R-Wis.). Whatever bad things you can say about our government, at least the Feds are not required to make a profit but are required to answer to all taxpayers, rather than private shareholders who are concerned only with the bottom line.

Under a single-payer system, every American would receive a basic package that would include inpatient and outpatient care, primary care and specialty physician services, emergency care, preventive and restorative care, mental health and substance abuse services, dental care, prescription drugs, home health care, and long-term care. Doctors and other providers would be paid based on a fee-for-service schedule, as negotiated with state governments, with funding coming from progressive payroll taxes paid by both individuals and employers. Quality would be monitored and publicly reported, with financial incentives awarded to providers who followed clinical guidelines endorsed by their medical specialty societies. All services provided would be publicly accountable. Medical decision making at the bedside would be left to the physician.

Conceptually, single-payer is imbued with many myths and misconceptions.

Myth #1: Single-Payer Is One-Size-Fits-All

The No. 1 myth – the alpha myth – is that single-payer represents a choiceless, one-size-fits-all, government-run health care monopsony. This is a blatant falsehood. Single-payer is simply a more efficient and more equitable way of financing health care – and nothing more. By consolidating the administrative functions of insurance, it eliminates bureaucratic duplication and reduces administrative waste, saving time and money for employers, providers, state governments, and consumers alike. It would remove the profit motive from financing care, but not from delivering it. Single-payer would efficiently provide for all Americans – regardless of age, health condition, income, or employment status – universal health care that is portable, affordable, equitable, nonterminating, publicly accountable, and funded through progressive taxation, which for the average family would imply a small additional payroll tax that is much less than its current outlay for insurance premiums. A single-payer system would not supplant the private practice of medicine; you could go to a primary care doctor, specialist, hospital, pharmacist, and lab of your choice.

Myth #2: Canadian Health Care Would Be Bad for America

Americans love to repeat anecdotes about the supposedly lousy medical care our northern neighbors receive from their single-payer system, by demoralized and overworked doctors who work at ill-equipped hospitals with out-of-date technology. This is rubbish. Do Canadians often wait for weeks to see a specialist? Yes. Do Americans also wait? Yes. There is no evidence that Canadians are dropping dead in the streets while waiting for their emergency bypasses or appendectomies, nor is there any evidence that Canadian physicians are emigrating to the U.S. or other countries en masse. Further, there is no evidence that the quality of care in Cana
da, across the board, is inferior to that practiced in the U.S. Despite comparable rates of smoking and alcoholism, Canadians on average live longer than Americans by more than 2 years, and their infant mortality rate is less than ours. Finally, consider this: Canadians spend much less than we do for health care, both in per-capita dollars and as a percent of GDP, so I have no doubt that if we were to adopt a Canadian-style system and fund it to the tune of $2.6 trillion annually, we would not have 9-month waits for MRIs, even if every one of them was clinically indicated.

Myth #3: Market-Based Medicine Trumps Single-Payer

Some argue that our private, market-based system is fundamentally sound, that it should be freed of government regulation and tweaked to promote greater competition based on price, and thus choice of health insurance plans. Really? Does anyone seriously believe that purchasing health care services is fundamentally no different from buying a new car or a flat-screen TV? (If so, I suggest he or she take a course in health economics.) And would anyone seriously believe that Americans want a choice of health insurance, when what they really desire is a choice of doctors and hospitals? What could be more American, more consumer-friendly, and more constitutional than the ability to choose your health care provider based on whatever criteria you deem important? So why not cut out the middleman and let doctors, hospitals, and other providers compete on such things as quality, service, reputation, convenience, and other personal preferences, rather than having private insurers make these choices for us?

Just consider what “The Market” has done for health care in the last 30 years: a steady increase in the number of uninsured; a decrease in the choice of providers; diversion of resources into more profitable hospitals and services; consolidation of HMOs into health care oligopolies; underfunding of less profitable endeavors, such as public health, trauma centers, and mental health services; unaffordable prescription drugs; dissatisfied patients; frustrated physicians; and of course, an inexorably increasing trajectory of health care costs.

Myth #4: Single-Payer Would Stop Medical Innovation

To my knowledge, there is no correlation between innovation and a country’s method of health care financing. Many technologies and medical advances we now take for granted originated in nations with national health insurance, for example, CT scans and MRIs (Great Britain), laparoscopic cholecystectomy (Canada), percutaneous coronary angioplasty (Germany), and H. pylori treatment (Australia). The largest single source of funding for medical research in the U.S. is a government agency – the National Institutes of Health – which provided almost $31 billion in funding for medical research in fiscal year 2012. And in terms of per-capita drug R&D costs, the U.S. lags behind Britain and Sweden.

Myth #5: Single-Payer Is Impossible to Enact Politically

Perhaps this is true – for now. But if social change depended solely on what was politically pragmatic, women would not have achieved the right to vote in 1920, civil rights legislation would not have been enacted in 1964, and Medicare would have failed in 1965. We should always be careful to distinguish between what’s desirable and what’s doable. The fact that tort reform is certainly desirable, but not politically doable at the present time, has not stopped ACEP from investing significant time and financial resources to advocate for change. Public opinion polls have consistently shown that the level of public support for single-payer is 60% plus. A survey of physicians published 4 years ago showed that single-payer garnered 59% support among the 2,193 physicians polled (support among emergency physicians was even higher, at 69%). Despite this, there is no question that moving to a single-payer system will face enormous obstacles. What is needed, as columnist David Lazarus of the Los Angeles Times pointed out, is a “massive infusion of political courage and the willingness to forsake political purity.”

Myth #6: We Can’t Afford Single-Payer

Given our current system, perhaps the better statement would be “we can’t afford not to have single-payer.” The most recent financial projections portend no overall decrease in the cost trajectory for health care over the next 8 years, even if the ACA remains intact. Under a single-payer model, a modest increase in taxes would be overshadowed by savings from elimination of insurance premiums, offsets from economies of scale, decreased out-of-pocket payments, and the disappearance of cost-shifting. The annual savings from transforming to a single-payer system are estimated to be $400 billion. If you look at the cost curves for U.S. and Canadian health care, they were identical until the mid-1970s, when Canada’s health system was fully implemented. From then on, the curves diverged, with America’s climbing much faster than Canada’s. When Taiwan converted to single-payer in 1995, the costs went up in the first year, as expected, and then leveled off to a reasonable increase of about 3% per year.

What Does This Mean for Emergency Medicine?

Well, consider the ED as a de facto single-payer environment. Patients come to us by choice without needing to first check with their health plan (assuming they have one) to see if their ED visit is covered. We see them without asking them to pay in advance for their ED services, and their care is not predicated on their job, income, or insurance coverage. As emergency physicians, we have more autonomy than our primary care colleagues in terms of making diagnostic and therapeutic decisions without the nonsense of “pre-authorization” or other interference from an insurer who is interested only in the bottom line. While it’s nice to be able to make medical decisions without checking on insurance status, it would be even nicer if we actually got paid for every ED patient treated. Private insurance companies simply have no incentive – in fact, it’s not at all consistent with their business model – to pay for EMTALA-mandated services provided by out-of-network emergency physicians.

Looking again to Medicare as a single-payer model, consider how we emergency physicians interact with Medicare vs. private insurers. In 29 years of practice, I have never had to seek permission from a CMS official to admit a fee-for-service Medicare patient, have never had a consultant refuse a referral for a Medicare beneficiary, and have never had a pharmacist call me to say the prescription for my Medicare patient was not covered by the formulary. This is not true for some of my patients in managed care plans, including those who were sick enough to be admitted but had to be transferred because my hospital (which the patients self-selected) did not participate in their plan.

Single-payer is the only remaining option to simultaneously and synergistically expand access, control costs, preserve choice, and reduce disparities. There is simply no other efficient and constitutionally safe way to do this. Any other proposals are nothing more than tinkering around the edges and based on blind faith that some kind of future financial salvation will somehow save us from the impending health care meltdown. A single-payer, improved Medicare-for-All program would overhaul our dysfunctional health care financing system so that it works best for patients – and for physicians.

Dr. Mitchiner is an emergency physician in Ann Arbor, Mich., a former president of the Washtenaw County (Mich.) Medical Society, and a member of Physicians for a National Health Program. ACEP News is a publication of the American College of Emergency Physicians.

http://www.acepnews.com/index.php?id=495&cHash=071010
&tx_ttnews[tt_news]=1564

It’s Time for Single-Payer

By Dr. James Mitchiner
American College of Emergency Physicians (ACEP) News, 08/07/12

“You can always trust the Americans to do the right thing, once they’ve tried everything else.”

Winston Churchill’s iconic remark, reportedly issued at the dawn of America’s entry into World War II, is equally applicable to the present American health care debate and the crisis that spawned it.

Regardless of whether you are elated or disappointed with June’s historic Supreme Court decision upholding the constitutionality of the Affordable Care Act, it is certainly no panacea for the problems facing U.S. health care. Even with the law intact, and despite its best intentions, it will still leave some 25 million uninsured, underinsure millions more, expand the corporatization of health care, and do little to control the escalating costs of care over the long term.

So it’s clear we need to do the right thing: the creation of a national, universal, publicly funded health care system, free of the corrupting power of profit-oriented health insurance, and at the same time capable of passing constitutional muster. In short, the right thing is an expanded and improved Medicare-for-All program, otherwise known as single-payer.

Don’t be so shocked. For the last 30 years, we have tried all the alternatives, and none of them have worked. We have experimented with HMOs, PPOs, high-deductible health plans, health savings accounts, pay-for-performance, capitation, and disease management. These ideas have been promoted in various iterations, often with great fanfare, by public and private payers alike, yet none of them have shown long-term success at bending the cost curve. And the promise of the latest reforms du jour, such as Accountable Care Organizations and Patient-Centered Medical Homes, is speculative at best.

American health care is unique among the world’s democracies in that it was never planned in terms of enabling legislation or explicit constitutional authority. As others have stated, our employer-based insurance system, which now covers about 160 million Americans, was an accident of history. Its lineage can be traced to FDR’s wage and price control policies during World War II, where employers were permitted to offer workers health insurance in lieu of higher wages as a job inducement.

This benefit has evolved piecemeal into the Rube Goldberg complexity that is contemporary employer-sponsored health insurance, with some 1,200 private plans each doing the same things – medical underwriting, coordination of benefits, claims adjudication and denial, marketing, public relations, lobbying, litigating, and paying shareholder dividends and inflated CEO salaries while forcing individuals to pay a higher share of premiums, increased deductibles, expanded copays, or a combination of all three.

Taken as a whole, private insurers’ activities are duplicative, inefficient, wasteful of scarce health care resources, conducive of job lock, and completely misdirected in supporting the 21st-century health care agenda that America needs and deserves.

The objective of the ACA’s individual mandate was to remedy a flaw in the market for health insurance: the expectation by the uninsured that the costs of their inevitable illnesses would be benignly transferred to those fortunate to have coverage. If you believe that guaranteed issue and community-rating requires 100% participation in the health insurance market to sustain financial viability, clearly the most efficient mechanism to achieve this is not through an individual mandate, in which the heavy hand of government coerces people to do what they otherwise would not. If the federal government has a professed welfare interest in controlling health care costs, it can – and should – accomplish that goal through a more economically efficient single-payer mechanism.

Given that the primary business objective of a for-profit insurer is to make a profit, the fundamental question we should be asking is this: What is the marginal value of private health insurance? That is, what advantage vis-à-vis a single-payer model like Medicare does our system of private, profit-oriented health insurance convey to patients, providers, and employers? What exactly do private insurers do, above and beyond what Medicare does, that is deserving of their inflated premiums? To my knowledge, there is no evidence that commercial insurance provides easier access or less hassle-free care, is more cost effective, produces care of higher quality, or has better consumer satisfaction ratings than Medicare (if anyone has evidence to the contrary, from the peer-reviewed health policy literature, please advise). And according to a recent poll, most Americans prefer to keep Medicare as it is, rather than switching to a premium-support financing mechanism as advocated by Rep. Paul Ryan (R-Wis.). Whatever bad things you can say about our government, at least the Feds are not required to make a profit but are required to answer to all taxpayers, rather than private shareholders who are concerned only with the bottom line.

Under a single-payer system, every American would receive a basic package that would include inpatient and outpatient care, primary care and specialty physician services, emergency care, preventive and restorative care, mental health and substance abuse services, dental care, prescription drugs, home health care, and long-term care. Doctors and other providers would be paid based on a fee-for-service schedule, as negotiated with state governments, with funding coming from progressive payroll taxes paid by both individuals and employers. Quality would be monitored and publicly reported, with financial incentives awarded to providers who followed clinical guidelines endorsed by their medical specialty societies. All services provided would be publicly accountable. Medical decision making at the bedside would be left to the physician.

Conceptually, single-payer is imbued with many myths and misconceptions.

Myth #1: Single-Payer Is One-Size-Fits-All

The No. 1 myth – the alpha myth – is that single-payer represents a choiceless, one-size-fits-all, government-run health care monopsony. This is a blatant falsehood. Single-payer is simply a more efficient and more equitable way of financing health care – and nothing more. By consolidating the administrative functions of insurance, it eliminates bureaucratic duplication and reduces administrative waste, saving time and money for employers, providers, state governments, and consumers alike. It would remove the profit motive from financing care, but not from delivering it. Single-payer would efficiently provide for all Americans – regardless of age, health condition, income, or employment status – universal health care that is portable, affordable, equitable, nonterminating, publicly accountable, and funded through progressive taxation, which for the average family would imply a small additional payroll tax that is much less than its current outlay for insurance premiums. A single-payer system would not supplant the private practice of medicine; you could go to a primary care doctor, specialist, hospital, pharmacist, and lab of your choice.

Myth #2: Canadian Health Care Would Be Bad for America

Americans love to repeat anecdotes about the supposedly lousy medical care our northern neighbors receive from their single-payer system, by demoralized and overworked doctors who work at ill-equipped hospitals with out-of-date technology. This is rubbish. Do Canadians often wait for weeks to see a specialist? Yes. Do Americans also wait? Yes. There is no evidence that Canadians are dropping dead in the streets while waiting for their emergency bypasses or appendectomies, nor is there any evidence that Canadian physicians are emigrating to the U.S. or other countries en masse. Further, there is no evidence that the quality of care in Canada, across the board, is inferior to that practiced in the U.S. Despite comparable rates of smoking and alcoholism, Canadians on average live longer than Americans by more than 2 years, and their infant mortality rate is less than ours. Finally, consider this: Canadians spend much less than we do for health care, both in per-capita dollars and as a percent of GDP, so I have no doubt that if we were to adopt a Canadian-style system and fund it to the tune of $2.6 trillion annually, we would not have 9-month waits for MRIs, even if every one of them was clinically indicated.

Myth #3: Market-Based Medicine Trumps Single-Payer

Some argue that our private, market-based system is fundamentally sound, that it should be freed of government regulation and tweaked to promote greater competition based on price, and thus choice of health insurance plans. Really? Does anyone seriously believe that purchasing health care services is fundamentally no different from buying a new car or a flat-screen TV? (If so, I suggest he or she take a course in health economics.) And would anyone seriously believe that Americans want a choice of health insurance, when what they really desire is a choice of doctors and hospitals? What could be more American, more consumer-friendly, and more constitutional than the ability to choose your health care provider based on whatever criteria you deem important? So why not cut out the middleman and let doctors, hospitals, and other providers compete on such things as quality, service, reputation, convenience, and other personal preferences, rather than having private insurers make these choices for us?

Just consider what “The Market” has done for health care in the last 30 years: a steady increase in the number of uninsured; a decrease in the choice of providers; diversion of resources into more profitable hospitals and services; consolidation of HMOs into health care oligopolies; underfunding of less profitable endeavors, such as public health, trauma centers, and mental health services; unaffordable prescription drugs; dissatisfied patients; frustrated physicians; and of course, an inexorably increasing trajectory of health care costs.

Myth #4: Single-Payer Would Stop Medical Innovation

To my knowledge, there is no correlation between innovation and a country’s method of health care financing. Many technologies and medical advances we now take for granted originated in nations with national health insurance, for example, CT scans and MRIs (Great Britain), laparoscopic cholecystectomy (Canada), percutaneous coronary angioplasty (Germany), and H. pylori treatment (Australia). The largest single source of funding for medical research in the U.S. is a government agency – the National Institutes of Health – which provided almost $31 billion in funding for medical research in fiscal year 2012. And in terms of per-capita drug R&D costs, the U.S. lags behind Britain and Sweden.

Myth #5: Single-Payer Is Impossible to Enact Politically

Perhaps this is true – for now. But if social change depended solely on what was politically pragmatic, women would not have achieved the right to vote in 1920, civil rights legislation would not have been enacted in 1964, and Medicare would have failed in 1965. We should always be careful to distinguish between what’s desirable and what’s doable. The fact that tort reform is certainly desirable, but not politically doable at the present time, has not stopped ACEP from investing significant time and financial resources to advocate for change. Public opinion polls have consistently shown that the level of public support for single-payer is 60% plus. A survey of physicians published 4 years ago showed that single-payer garnered 59% support among the 2,193 physicians polled (support among emergency physicians was even higher, at 69%). Despite this, there is no question that moving to a single-payer system will face enormous obstacles. What is needed, as columnist David Lazarus of the Los Angeles Times pointed out, is a “massive infusion of political courage and the willingness to forsake political purity.”

Myth #6: We Can’t Afford Single-Payer

Given our current system, perhaps the better statement would be “we can’t afford not to have single-payer.” The most recent financial projections portend no overall decrease in the cost trajectory for health care over the next 8 years, even if the ACA remains intact. Under a single-payer model, a modest increase in taxes would be overshadowed by savings from elimination of insurance premiums, offsets from economies of scale, decreased out-of-pocket payments, and the disappearance of cost-shifting. The annual savings from transforming to a single-payer system are estimated to be $400 billion. If you look at the cost curves for U.S. and Canadian health care, they were identical until the mid-1970s, when Canada’s health system was fully implemented. From then on, the curves diverged, with America’s climbing much faster than Canada’s. When Taiwan converted to single-payer in 1995, the costs went up in the first year, as expected, and then leveled off to a reasonable increase of about 3% per year.

What Does This Mean for Emergency Medicine?

Well, consider the ED as a de facto single-payer environment. Patients come to us by choice without needing to first check with their health plan (assuming they have one) to see if their ED visit is covered. We see them without asking them to pay in advance for their ED services, and their care is not predicated on their job, income, or insurance coverage. As emergency physicians, we have more autonomy than our primary care colleagues in terms of making diagnostic and therapeutic decisions without the nonsense of “pre-authorization” or other interference from an insurer who is interested only in the bottom line. While it’s nice to be able to make medical decisions without checking on insurance status, it would be even nicer if we actually got paid for every ED patient treated. Private insurance companies simply have no incentive – in fact, it’s not at all consistent with their business model – to pay for EMTALA-mandated services provided by out-of-network emergency physicians.

Looking again to Medicare as a single-payer model, consider how we emergency physicians interact with Medicare vs. private insurers. In 29 years of practice, I have never had to seek permission from a CMS official to admit a fee-for-service Medicare patient, have never had a consultant refuse a referral for a Medicare beneficiary, and have never had a pharmacist call me to say the prescription for my Medicare patient was not covered by the formulary. This is not true for some of my patients in managed care plans, including those who were sick enough to be admitted but had to be transferred because my hospital (which the patients self-selected) did not participate in their plan.

Single-payer is the only remaining option to simultaneously and synergistically expand access, control costs, preserve choice, and reduce disparities. There is simply no other efficient and constitutionally safe way to do this. Any other proposals are nothing more than tinkering around the edges and based on blind faith that some kind of future financial salvation will somehow save us from the impending health care meltdown. A single-payer, improved Medicare-for-All program would overhaul our dysfunctional health care financing system so that it works best for patients – and for physicians.

Dr. Mitchiner is an emergency physician in Ann Arbor, Mich., a former president of the Washtenaw County (Mich.) Medical Society, and a member of Physicians for a National Health Program. ACEP News is a publication of the American College of Emergency Physicians.

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