Lower Mortality Rates At Cardiac Specialty Hospitals Traceable To Healthier Patients And To Doctors’ Performing More Procedures

By Liam O’Neill, and Arthur J. Hartz
Health Affairs, April 2012
Physician-owned cardiac specialty hospitals advertise that they have outstanding physicians and results. To test this assertion, we examined who gets referred to these hospitals, as well as whether different results occur when specialty physicians split their caseloads among specialty and general hospitals in the same markets. Using data on 210,135 patients who underwent percutaneous coronary interventions in Texas during 2004–07, we found that the risk-adjusted in-hospital mortality rate for patients treated at specialty hospitals was significantly below the rate for all hospitals in the state (0.68 percent versus 1.50 percent). However, the rate was significantly higher when physicians who owned cardiac specialty hospitals treated patients in general hospitals (2.27 percent versus 1.50 percent). In addition, several patient characteristics were associated with a lower likelihood of being admitted to a cardiac hospital for cardiac care, such as being African American or Hispanic and having Medicaid or no health insurance. After adjustment for patient severity and number of procedures performed, the overall outcomes for cardiologists who owned specialty hospitals were not significantly different from the “average outcomes” obtained at noncardiac hospitals. In contrast to previous studies, patient outcomes were found to be highly dependent on the type of hospital where the procedure was performed. To remove a potential source of bias and achieve a more balanced comparison, the quality statistics reported by physician-owned cardiac hospitals should be adjusted to incorporate the high rates of poor outcomes for the many procedures done by their cardiologists at nearby noncardiac hospitals.
http://content.healthaffairs.org/content/31/4/806.abstract

Primarily because of conflict of interest considerations, physician-owned specialty hospitals, such as the cardiac specialty hospitals reported in this study, have remained controversial.
Physician owners tout the lower mortality rates and higher quality ratings in their own cardiac specialty hospitals. This study confirms a very high patient selection bias with the disturbing result that these same physicians have offsetting higher mortality rates when they admit Medicaid, uninsured, and minority patients to noncardiac hospitals. Thus, overall these physicians are not improving their own personal performances but rather are cream skimming their patients whom the admit to their cardiac hospitals in which they have an ownership interest.
The single payer model supported by Physicians for a National Health Program not only provides the administrative efficiencies of establishing a single, equitably-funded, universal risk pool, but it also calls for elimination of for-profit ownership and for separate budgeting of capital improvements. Under such a model a cardiac specialty hospital would be built only if it best served the interests of the patients – all patients. It would not be built for the purpose of advancing the fame and fortune of physician owners.

By James C. Capretta and Robert E. Moffit
National Affairs, Spring 2012

(Following is a distillation of the authors’ 19 page article.)

When the Patient Protection and Affordable Care Act (commonly known as “Obamacare”) was signed into law in the spring of 2010, congressional opponents vowed that the fight was not over.

The “repeal and replace” formulation quickly caught on, but it was not without its critics. That Obamacare should be “repealed” was obvious, given how strenuously conservatives and many independents objected to the new law. But “replace”?

[R]epeal will not be enough, for a simple reason: Although Obamacare would worsen many of the problems with our system of health-care financing, that system clearly does call out for serious reform.  After all, a repeal-only approach would leave many of the most grievous flaws in our system of financing health care unaddressed.

WHAT NEEDS FIXING

But for all its considerable strengths, the system suffers from pervasive weaknesses as well. The most serious of these is rapidly rising costs.

Of course, government health-care programs and policies are largely responsible for these rising costs in the first place. To begin, the design of Medicare is terribly flawed: Because the program pays providers of care based on the volume of their services, it creates a massive incentive for inefficiency and overuse. And because Medicare is the biggest payer in most health-care markets in America, that incentive badly distorts the economics of the entire sector. Furthermore, the Medicaid program inflates costs by (among other policies) having states control how the program is run while the federal government pays most of the bills. The result is that neither party has both the incentive and ability to keep costs in check.

The third driver is the tax exclusion for employer-provided insurance: The federal government does not count the amount that employers spend on health insurance for their employees toward workers’ taxable income. This tax exclusion inflates costs by effectively rewarding higher-premium plans and by encouraging employer-purchased insurance, thereby preventing a real consumer market in coverage.

Proponents of Obamacare like to create the impression that there are tens of millions of Americans trapped by their pre-existing conditions, sick and stuck with lousy insurance and no options. In truth, the vast majority of working Americans have good and secure coverage today, including many millions of people with expensive health conditions.

But a small percentage of our large population is still a lot of people. There is no denying that cracks in the system exist, and that many Americans fall through them. This is particularly true of people who need to move from job-based coverage into the individual market. People who leave the work force and need to buy insurance on their own can face sky-high premiums for weak coverage just because they happen to suffer from a health condition over which they often have little control.

Starting in the middle of 2009, the president and his top aides took to calling their plan “insurance reform,” as if the law’s most important elements were simply new rules designed to protect hapless consumers from unscrupulous insurance companies.

This is, of course, a gross mischaracterization of what Obamacare actually does. Among other features, the law implements a massive expansion of taxpayer obligations. It adds two new entitlement programs at an expense of at least $1 trillion over a decade. In that same period, it raises taxes by more than $500 billion. Most egregiously, it puts the federal government in command of the health sector, giving bureaucrats immense new power to decide matters ranging from what services must be covered in every American’s insurance plan to how doctors and hospitals organize themselves and do business.

PILLARS OF REFORM

The first crucial component of any serious reform must be a “defined contribution” approach to the public financing of health care — the essential prerequisite for a functioning marketplace that imposes cost and quality discipline. In most sectors of our economy, the normal dynamics of supply and demand keep costs in check and reward suppliers that find innovative ways to deliver more for less.

Under this approach, health coverage would be provided through competing insurance plans; government’s involvement would come through the provision of a fixed financial contribution toward the purchase of insurance by each beneficiary. That subsidy would not vary based on a person’s insurance plan, giving Americans every incentive to shop for good value in their health coverage and to get the most for their defined-contribution dollars.

In the context of Medicare and Medicaid, meanwhile, the government would similarly provide a fixed (though of course far more generous) level of support, sometimes called “premium support,” that would guarantee insurance coverage to beneficiaries but would allow them to choose among competing options and encourage them to seek out the best value for their money.

The second pillar of reform should be personal responsibility and continuous-coverage protection. Obamacare attempts to address the challenge of covering people with pre-existing conditions with heavy-handed mandates, especially the requirement that all Americans enroll in government-approved insurance plans (the so-called “individual mandate”). A replacement program for Obamacare should come at the problem from the opposite direction, with government forsaking coercion and instead extending a new commitment to the American people: If you stay continuously enrolled in health insurance, with at least catastrophic coverage, you will never again face the prospect of high premiums associated with developing a costly health condition.

Because some workers who leave job-based plans for the individual market could be quite sick, a credible Obamacare replacement plan would also need to include a new approach to covering the high insurance costs for these Americans. Different proposals have offered different mechanisms, but all would move the burden away from the sick patients themselves to a larger and broader pool of people, either through regulation or through a direct government program such as a high-risk pool. For people who have not been continuously insured, these protections generally would not apply.

The third pillar of reform must be a genuine partnership with the states.

To respect federalism and reap its benefits, nothing in an Obamacare replacement agenda should compel state adoption, instead leaving the participation of state governments completely voluntary. Those states that do participate in any federal initiative should be given meaningful control over the most important components of regulation, especially the power to design and operate their own health-insurance markets (within minimal federal standards).

States should be given two tasks: informing consumers of their insurance options, and easing their enrollment into the plans they choose by cooperating with the federal government to facilitate the payment of credits and vouchers directly to private insurers.

Defined-contribution financial support, protection for Americans who remain continuously enrolled in insurance plans, and genuine federalism are the essential overall concepts that must define any serious health-care reform. But policymakers will also need to apply these principles to the transformation of today’s funding and financing mechanisms: the tax exclusion for employer-provided health coverage, and the Medicaid and Medicare systems.

TAX REFORM AND HEALTH REFORM

The fourth pillar of a real reform agenda would therefore address the tax treatment of empl
oyer-sponsored plans. Today’s arrangement is somewhat counterintuitive: Because the tax exclusion for health-care premiums is open-ended, workers and employers have an incentive to make health benefits a disproportionately large share of total compensation. And because employers obtain and manage health plans for their workers, there is far too much distance between those who purchase care and those who consume it.

The most plausible way to implement such a change would be to transform today’s tax exclusion for employer-provided insurance into a standard tax credit that would extend to all Americans, regardless of employment status, which they could then use to purchase the private coverage of their choice.

IMPROVING HEALTH CARE FOR THE VULNERABLE

The fifth key component of a genuine health-care reform plan must be an overhaul of Medicaid. Medicaid is actually three separate programs: health insurance for lower-income working-age adults and their children, health and long-term care for the non-elderly with severe disabilities, and long-term care for the frail elderly. For the purposes of replacing Obamacare, the relevant program to change is insurance coverage for working-age adults and children; the other parts will need reform as well, but should be addressed in a separate legislative effort.

In replacing Obamacare, policymakers should move lower-income people out of the limited sphere of Medicaid options and into the same private health-insurance markets in which their fellow citizens purchase coverage.

There is more than one way to accomplish this objective. …existing financing for acute care provided through Medicaid and the State Children’s Health Insurance Program would be transformed into a large pool of funding to be re-allocated to current beneficiaries and other low-income Americans in the form of a federal health-care subsidy (the equivalent of a “refundable tax credit”) for private insurance.

A similar approach would give Medicaid recipients the same federal tax credit that workers would receive in a reformed marketplace for health insurance. The federal government could then convert Medicaid into a per-person allotment to the states, funded through a block grant, that would supplement the base credit for a state’s low-income residents. The federal allotment to the states would be set so that, when combined with the federal support for the base tax credits or vouchers for the Medicaid-eligible population, total federal spending on the Medicaid population in a state would equal the amount that would have been spent under pre-Obamacare Medicaid. After the first year, the federal allotment to the states could be set to grow commensurate with the economy or some other reasonable measure of inflation.

The same move toward market incentives and efficiency should characterize our approach to Medicare reform in the wake of Obamacare’s repeal. The sixth pillar of a replacement plan must therefore be a premium-support reform of Medicare.

Of all the changes that are necessary to bring more cost discipline to health care, moving Medicare toward a defined-contribution structure, and away from today’s open-ended defined-benefit structure, is certainly the most vital. Medicare is the largest payer for services in most markets; the system of hospital and physician care in most communities has been built up around Medicare’s financial incentives.

In lieu of today’s open-ended benefit, a premium-support system would allow new beneficiaries (after the transition) to decide how to use a fixed-dollar contribution provided by Medicare. Each beneficiary would choose from a menu of approved insurance plans. If a beneficiary’s premium for his chosen plan was higher than the Medicare contribution, he would pay the difference out of his own pocket. If he chose a less expensive plan, he would pay lower premiums and keep the savings. This structure would provide a powerful incentive for the program’s participants to find high-value plans that charge low premiums for quality care, and therefore for insurers to offer such plans.

FISCAL RESPONSIBILITY FOR A CHANGE

Finally, as a key criticism of Obamacare is the danger it poses to federal finances, the seventh pillar of a serious health-care reform plan must be the full offset of all new costs through spending cuts.

A HISTORIC OPPORTUNITY

The enactment of Obamacare has created a political opening for a credible alternative to the health-care status quo. But it would be foolish to assume that this opening will last very long; once it has closed, it is not likely to appear again.

Conservatives thus have a rare opportunity to advance their vision of reform. It will entail some controversy and political risk, which cannot be avoided in a policy arena as complex as health care. But the policy and political upsides are well worth the effort. A market-driven alternative can beat Obamacare on every metric that matters. It will be less costly to taxpayers, more flexible in meeting the diverse needs of citizens, less bureaucratic, and consistent with the Constitution and our values.

James C. Capretta is a visiting fellow at the American Enterprise Institute and a fellow at the Ethics and Public Policy Center. Robert E. Moffit is a senior fellow in the Center for Policy Innovation at the Heritage Foundation.

http://www.nationalaffairs.com/publications/detail/how-to-replace-obamacare

Comment: 

By Don McCanne, MD

Why on earth would a single payer advocate grant so much space on health care reform to prominent conservatives, allowing them to frame the problems in a manner that supports their specific policy recommendations? By better understanding their framing and the flawed policies that flow from that, we can explain to the nation why they are so terribly wrong, and why the policies of a single payer national health program are an imperative.

Everyone agrees that the status quo in our health care system is totally unacceptable. We are spending far more than other nations on a system that falls intolerably short in performance. So how is this framed?

Single payer supporters see the problems as too many individuals without insurance, too many with inadequate insurance, quality deficiencies related to improper allocation of our health care resources, and the tremendous administrative waste inherent in our current financing system. A single payer national health program would correct these defects.

The authors of this article – James Capretta and Robert Moffit – present a framing of the problems from the perspective of their conservative organizations – the American Enterprise Institute and the Heritage Foundation. To them, the primary problem is that excessive government involvement is driving our unacceptably high health care spending, coupled with the problem that we fail to use adequate market forces to control these excesses. They are not totally insensitive to the needs of the uninsured and low-income individuals – needs that can never be met in a totally free market – so they do recommend some government involvement in oversight and in tax policies.

When you step back for perspective, it seems like the differences aren’t so much in the goal of trying to get everyone insured, but more in the process of how we do that. Well, the contrasting approaches – government versus market – do have a significant influence on the outcomes of reform. The conservatives first look at using markets, and then try to make reform comply. The single payer advocates first look at what patients need, and then look for a pathway to get there. Other nations have shown that successful pathways are always laid out by the government and not by unregulated markets. Even when private insurers are used, they travel through a governme
nt pathway.

Capretta and Moffit would invoke the principle of defined contribution. Instead of providing a package of health care benefits that patients need, they would provide a set amount of money – the defined contribution – that would leave most of us directly exposed to health care costs on the disproven theory that we could still obtain the care that we need but at a better price because of our shopping acumen in the health care markets. What is proven is that the cost sharing of a defined contribution approach erects financial barriers to appropriate health care, whether through unaffordable insurance premiums, or through unaffordable deductibles, coinsurance and co-payments, or through provider network restrictions, or through the limitation of benefits.

Their proposal supposedly is aimed at increasing the numbers of insured, though independent analyses of similar proposals have shown that their policies would produce little net gain towards this goal. They would use competitive market incentives to lower the price of insurance products which inevitably would result in grossly inadequate products that have been well documented to fail to provide sufficient financial security in the face of medical need. Further, they would leave the choice of whether or not to be insured to individuals themselves and to financially-challenged state governments. After decades of increasing health care costs and flat wages, and now eliminating the tax subsidy of employer-sponsored plans, far too many individuals would decide that they would have no other option than to go without coverage.

Looking closer at the choice that lower-income individuals would have under this proposal, they would be offered subsidies or vouchers which could be used to purchase whatever cheap plans the insurers could create to sell at the low competitive market price set by the subsidy or voucher – coverage that could never provide adequate health care benefits. Capretta and Moffit propose that health care consumers would have the choice of using their own funds to buy-up to a plan that actually provided adequate coverage, but is that really a choice when they are having difficulties simply paying for their food and rent?

In past articles, we have covered extensively the inadequacies of market-priced insurance products for middle-income workers and their families. These products attempt to balance the premiums, which turn out to be too high, with the health care benefits, which turn out to be too spartan. With median household income at $49,000 and the average cost of health care for a worker’s family of four now over $19,000, no amount of free market magic can ever make these numbers compute.

The experience of the past half century has already proven that our supposed markets for private health insurance and for health care itself have been totally ineffective in controlling health care costs, yet Capretta and Moffit are calling for even more of the same flawed market pseudo-incentives. They ignore the fact that administered pricing by public agencies has been effective in other nations and would certainly be so here as well.

Okay, so the conservatives’ solution is to try to protect freedom and markets at the cost of adequate health care for the majority of us, so why should we bother even reading their polemic? Could there be a middle ground somewhere between single payer and market dynamics? Well, that supposed middle ground is the Affordable Care Act, based on an earlier version of the proposal of the Heritage Foundation which the Obama administration presented as a centrist approach to reform. Yet Capretta and Moffit now claim that this model “puts the federal government in command of the health sector” – a concept anathema to the ideologues in their camp.

The reason that we need to understand thoroughly their views is that we have to be able to explain why their approach is intolerably flawed. It would grant free rein to the private insurance industry to wreak even more havoc on our health care, while falling short of achieving the conservatives’ goal of removing the government and its power to tax from the health care equation. As if our financing system were not already bad enough, they would introduce changes that would prevent the system from working adequately for all but the very wealthiest of us.

It would be worth reading and critically interpreting their entire article to better understand the extent to which they would go to control health care spending by making it much less affordable for most of us – in the name of consumer empowerment. There are far too many flawed policies to begin to cover them in today’s comment – policies such as offsetting all costs through spending cuts instead of taxes, and privatizing Medicare through defined contributions for private plans.

Even if today’s breed of conservatives takes over all branches of the government, people power through an informed electorate will be essential in blocking the institution of such harmful health care policies, just as the people were able to prevent George W. Bush from privatizing Social Security. Being informed is key.

On the other hand, if we elect enough political leaders who are truly concerned about the future of health care in America, regardless of political affiliation, then we do have a chance of sorting good policies from bad policies, and enacting the good ones. But we do have to know which are which.

How to Replace Obamacare

By James C. Capretta and Robert E. Moffit
National Affairs, Spring 2012

(Following is a distillation of the authors’ 19 page article.)

When the Patient Protection and Affordable Care Act (commonly known as “Obamacare”) was signed into law in the spring of 2010, congressional opponents vowed that the fight was not over.

The “repeal and replace” formulation quickly caught on, but it was not without its critics. That Obamacare should be “repealed” was obvious, given how strenuously conservatives and many independents objected to the new law. But “replace”?

[R]epeal will not be enough, for a simple reason: Although Obamacare would worsen many of the problems with our system of health-care financing, that system clearly does call out for serious reform.  After all, a repeal-only approach would leave many of the most grievous flaws in our system of financing health care unaddressed.

WHAT NEEDS FIXING

But for all its considerable strengths, the system suffers from pervasive weaknesses as well. The most serious of these is rapidly rising costs.

Of course, government health-care programs and policies are largely responsible for these rising costs in the first place. To begin, the design of Medicare is terribly flawed: Because the program pays providers of care based on the volume of their services, it creates a massive incentive for inefficiency and overuse. And because Medicare is the biggest payer in most health-care markets in America, that incentive badly distorts the economics of the entire sector. Furthermore, the Medicaid program inflates costs by (among other policies) having states control how the program is run while the federal government pays most of the bills. The result is that neither party has both the incentive and ability to keep costs in check.

The third driver is the tax exclusion for employer-provided insurance: The federal government does not count the amount that employers spend on health insurance for their employees toward workers’ taxable income. This tax exclusion inflates costs by effectively rewarding higher-premium plans and by encouraging employer-purchased insurance, thereby preventing a real consumer market in coverage.

Proponents of Obamacare like to create the impression that there are tens of millions of Americans trapped by their pre-existing conditions, sick and stuck with lousy insurance and no options. In truth, the vast majority of working Americans have good and secure coverage today, including many millions of people with expensive health conditions.

But a small percentage of our large population is still a lot of people. There is no denying that cracks in the system exist, and that many Americans fall through them. This is particularly true of people who need to move from job-based coverage into the individual market. People who leave the work force and need to buy insurance on their own can face sky-high premiums for weak coverage just because they happen to suffer from a health condition over which they often have little control.

Starting in the middle of 2009, the president and his top aides took to calling their plan “insurance reform,” as if the law’s most important elements were simply new rules designed to protect hapless consumers from unscrupulous insurance companies.

This is, of course, a gross mischaracterization of what Obamacare actually does. Among other features, the law implements a massive expansion of taxpayer obligations. It adds two new entitlement programs at an expense of at least $1 trillion over a decade. In that same period, it raises taxes by more than $500 billion. Most egregiously, it puts the federal government in command of the health sector, giving bureaucrats immense new power to decide matters ranging from what services must be covered in every American’s insurance plan to how doctors and hospitals organize themselves and do business.

PILLARS OF REFORM

The first crucial component of any serious reform must be a “defined contribution” approach to the public financing of health care — the essential prerequisite for a functioning marketplace that imposes cost and quality discipline. In most sectors of our economy, the normal dynamics of supply and demand keep costs in check and reward suppliers that find innovative ways to deliver more for less.

Under this approach, health coverage would be provided through competing insurance plans; government’s involvement would come through the provision of a fixed financial contribution toward the purchase of insurance by each beneficiary. That subsidy would not vary based on a person’s insurance plan, giving Americans every incentive to shop for good value in their health coverage and to get the most for their defined-contribution dollars.

In the context of Medicare and Medicaid, meanwhile, the government would similarly provide a fixed (though of course far more generous) level of support, sometimes called “premium support,” that would guarantee insurance coverage to beneficiaries but would allow them to choose among competing options and encourage them to seek out the best value for their money.

The second pillar of reform should be personal responsibility and continuous-coverage protection. Obamacare attempts to address the challenge of covering people with pre-existing conditions with heavy-handed mandates, especially the requirement that all Americans enroll in government-approved insurance plans (the so-called “individual mandate”). A replacement program for Obamacare should come at the problem from the opposite direction, with government forsaking coercion and instead extending a new commitment to the American people: If you stay continuously enrolled in health insurance, with at least catastrophic coverage, you will never again face the prospect of high premiums associated with developing a costly health condition.

Because some workers who leave job-based plans for the individual market could be quite sick, a credible Obamacare replacement plan would also need to include a new approach to covering the high insurance costs for these Americans. Different proposals have offered different mechanisms, but all would move the burden away from the sick patients themselves to a larger and broader pool of people, either through regulation or through a direct government program such as a high-risk pool. For people who have not been continuously insured, these protections generally would not apply.

The third pillar of reform must be a genuine partnership with the states.

To respect federalism and reap its benefits, nothing in an Obamacare replacement agenda should compel state adoption, instead leaving the participation of state governments completely voluntary. Those states that do participate in any federal initiative should be given meaningful control over the most important components of regulation, especially the power to design and operate their own health-insurance markets (within minimal federal standards).

States should be given two tasks: informing consumers of their insurance options, and easing their enrollment into the plans they choose by cooperating with the federal government to facilitate the payment of credits and vouchers directly to private insurers.

Defined-contribution financial support, protection for Americans who remain continuously enrolled in insurance plans, and genuine federalism are the essential overall concepts that must define any serious health-care reform. But policymakers will also need to apply these principles to the transformation of today’s funding and financing mechanisms: the tax exclusion for employer-provided health coverage, and the Medicaid and Medicare systems.

TAX REFORM AND HEALTH REFORM

The fourth pillar of a real reform agenda would therefore address the tax treatment of employer-sponsored plans. Today’s arrangement is somewhat counterintuitive: Because the tax exclusion for health-care premiums is open-ended, workers and employers have an incentive to make health benefits a disproportionately large share of total compensation. And because employers obtain and manage health plans for their workers, there is far too much distance between those who purchase care and those who consume it.

The most plausible way to implement such a change would be to transform today’s tax exclusion for employer-provided insurance into a standard tax credit that would extend to all Americans, regardless of employment status, which they could then use to purchase the private coverage of their choice.

IMPROVING HEALTH CARE FOR THE VULNERABLE

The fifth key component of a genuine health-care reform plan must be an overhaul of Medicaid. Medicaid is actually three separate programs: health insurance for lower-income working-age adults and their children, health and long-term care for the non-elderly with severe disabilities, and long-term care for the frail elderly. For the purposes of replacing Obamacare, the relevant program to change is insurance coverage for working-age adults and children; the other parts will need reform as well, but should be addressed in a separate legislative effort.

In replacing Obamacare, policymakers should move lower-income people out of the limited sphere of Medicaid options and into the same private health-insurance markets in which their fellow citizens purchase coverage.

There is more than one way to accomplish this objective. …existing financing for acute care provided through Medicaid and the State Children’s Health Insurance Program would be transformed into a large pool of funding to be re-allocated to current beneficiaries and other low-income Americans in the form of a federal health-care subsidy (the equivalent of a “refundable tax credit”) for private insurance.

A similar approach would give Medicaid recipients the same federal tax credit that workers would receive in a reformed marketplace for health insurance. The federal government could then convert Medicaid into a per-person allotment to the states, funded through a block grant, that would supplement the base credit for a state’s low-income residents. The federal allotment to the states would be set so that, when combined with the federal support for the base tax credits or vouchers for the Medicaid-eligible population, total federal spending on the Medicaid population in a state would equal the amount that would have been spent under pre-Obamacare Medicaid. After the first year, the federal allotment to the states could be set to grow commensurate with the economy or some other reasonable measure of inflation.

The same move toward market incentives and efficiency should characterize our approach to Medicare reform in the wake of Obamacare’s repeal. The sixth pillar of a replacement plan must therefore be a premium-support reform of Medicare.

Of all the changes that are necessary to bring more cost discipline to health care, moving Medicare toward a defined-contribution structure, and away from today’s open-ended defined-benefit structure, is certainly the most vital. Medicare is the largest payer for services in most markets; the system of hospital and physician care in most communities has been built up around Medicare’s financial incentives.

In lieu of today’s open-ended benefit, a premium-support system would allow new beneficiaries (after the transition) to decide how to use a fixed-dollar contribution provided by Medicare. Each beneficiary would choose from a menu of approved insurance plans. If a beneficiary’s premium for his chosen plan was higher than the Medicare contribution, he would pay the difference out of his own pocket. If he chose a less expensive plan, he would pay lower premiums and keep the savings. This structure would provide a powerful incentive for the program’s participants to find high-value plans that charge low premiums for quality care, and therefore for insurers to offer such plans.

FISCAL RESPONSIBILITY FOR A CHANGE

Finally, as a key criticism of Obamacare is the danger it poses to federal finances, the seventh pillar of a serious health-care reform plan must be the full offset of all new costs through spending cuts.

A HISTORIC OPPORTUNITY

The enactment of Obamacare has created a political opening for a credible alternative to the health-care status quo. But it would be foolish to assume that this opening will last very long; once it has closed, it is not likely to appear again.

Conservatives thus have a rare opportunity to advance their vision of reform. It will entail some controversy and political risk, which cannot be avoided in a policy arena as complex as health care. But the policy and political upsides are well worth the effort. A market-driven alternative can beat Obamacare on every metric that matters. It will be less costly to taxpayers, more flexible in meeting the diverse needs of citizens, less bureaucratic, and consistent with the Constitution and our values.

James C. Capretta is a visiting fellow at the American Enterprise Institute and a fellow at the Ethics and Public Policy Center. Robert E. Moffit is a senior fellow in the Center for Policy Innovation at the Heritage Foundation.

http://www.nationalaffairs.com/publications/detail/how-to-replace-obamacare

Comment: 

By Don McCanne, MD

Why on earth would a single payer advocate grant so much space on health care reform to prominent conservatives, allowing them to frame the problems in a manner that supports their specific policy recommendations? By better understanding their framing and the flawed policies that flow from that, we can explain to the nation why they are so terribly wrong, and why the policies of a single payer national health program are an imperative.

Everyone agrees that the status quo in our health care system is totally unacceptable. We are spending far more than other nations on a system that falls intolerably short in performance. So how is this framed?

Single payer supporters see the problems as too many individuals without insurance, too many with inadequate insurance, quality deficiencies related to improper allocation of our health care resources, and the tremendous administrative waste inherent in our current financing system. A single payer national health program would correct these defects.

The authors of this article – James Capretta and Robert Moffit – present a framing of the problems from the perspective of their conservative organizations – the American Enterprise Institute and the Heritage Foundation. To them, the primary problem is that excessive government involvement is driving our unacceptably high health care spending, coupled with the problem that we fail to use adequate market forces to control these excesses. They are not totally insensitive to the needs of the uninsured and low-income individuals – needs that can never be met in a totally free market – so they do recommend some government involvement in oversight and in tax policies.

When you step back for perspective, it seems like the differences aren’t so much in the goal of trying to get everyone insured, but more in the process of how we do that. Well, the contrasting approaches – government versus market – do have a significant influence on the outcomes of reform. The conservatives first look at using markets, and then try to make reform comply. The single payer advocates first look at what patients need, and then look for a pathway to get there. Other nations have shown that successful pathways are always laid out by the government and not by unregulated markets. Even when private insurers are used, they travel through a government pathway.

Capretta and Moffit would invoke the principle of defined contribution. Instead of providing a package of health care benefits that patients need, they would provide a set amount of money – the defined contribution – that would leave most of us directly exposed to health care costs on the disproven theory that we could still obtain the care that we need but at a better price because of our shopping acumen in the health care markets. What is proven is that the cost sharing of a defined contribution approach erects financial barriers to appropriate health care, whether through unaffordable insurance premiums, or through unaffordable deductibles, coinsurance and co-payments, or through provider network restrictions, or through the limitation of benefits.

Their proposal supposedly is aimed at increasing the numbers of insured, though independent analyses of similar proposals have shown that their policies would produce little net gain towards this goal. They would use competitive market incentives to lower the price of insurance products which inevitably would result in grossly inadequate products that have been well documented to fail to provide sufficient financial security in the face of medical need. Further, they would leave the choice of whether or not to be insured to individuals themselves and to financially-challenged state governments. After decades of increasing health care costs and flat wages, and now eliminating the tax subsidy of employer-sponsored plans, far too many individuals would decide that they would have no other option than to go without coverage.

Looking closer at the choice that lower-income individuals would have under this proposal, they would be offered subsidies or vouchers which could be used to purchase whatever cheap plans the insurers could create to sell at the low competitive market price set by the subsidy or voucher – coverage that could never provide adequate health care benefits. Capretta and Moffit propose that health care consumers would have the choice of using their own funds to buy-up to a plan that actually provided adequate coverage, but is that really a choice when they are having difficulties simply paying for their food and rent?

In past articles, we have covered extensively the inadequacies of market-priced insurance products for middle-income workers and their families. These products attempt to balance the premiums, which turn out to be too high, with the health care benefits, which turn out to be too spartan. With median household income at $49,000 and the average cost of health care for a worker’s family of four now over $19,000, no amount of free market magic can ever make these numbers compute.

The experience of the past half century has already proven that our supposed markets for private health insurance and for health care itself have been totally ineffective in controlling health care costs, yet Capretta and Moffit are calling for even more of the same flawed market pseudo-incentives. They ignore the fact that administered pricing by public agencies has been effective in other nations and would certainly be so here as well.

Okay, so the conservatives’ solution is to try to protect freedom and markets at the cost of adequate health care for the majority of us, so why should we bother even reading their polemic? Could there be a middle ground somewhere between single payer and market dynamics? Well, that supposed middle ground is the Affordable Care Act, based on an earlier version of the proposal of the Heritage Foundation which the Obama administration presented as a centrist approach to reform. Yet Capretta and Moffit now claim that this model “puts the federal government in command of the health sector” – a concept anathema to the ideologues in their camp.

The reason that we need to understand thoroughly their views is that we have to be able to explain why their approach is intolerably flawed. It would grant free rein to the private insurance industry to wreak even more havoc on our health care, while falling short of achieving the conservatives’ goal of removing the government and its power to tax from the health care equation. As if our financing system were not already bad enough, they would introduce changes that would prevent the system from working adequately for all but the very wealthiest of us.

It would be worth reading and critically interpreting their entire article to better understand the extent to which they would go to control health care spending by making it much less affordable for most of us – in the name of consumer empowerment. There are far too many flawed policies to begin to cover them in today’s comment – policies such as offsetting all costs through spending cuts instead of taxes, and privatizing Medicare through defined contributions for private plans.

Even if today’s breed of conservatives takes over all branches of the government, people power through an informed electorate will be essential in blocking the institution of such harmful health care policies, just as the people were able to prevent George W. Bush from privatizing Social Security. Being informed is key.

On the other hand, if we elect enough political leaders who are truly concerned about the future of health care in America, regardless of political affiliation, then we do have a chance of sorting good policies from bad policies, and enacting the good ones. But we do have to know which are which.

How to Replace Obamacare

By James C. Capretta and Robert E. Moffit
National Affairs, Spring 2012
(Following is a distillation of the authors’ 19 page article.)
When the Patient Protection and Affordable Care Act (commonly known as “Obamacare”) was signed into law in the spring of 2010, congressional opponents vowed that the fight was not over.
The “repeal and replace” formulation quickly caught on, but it was not without its critics. That Obamacare should be “repealed” was obvious, given how strenuously conservatives and many independents objected to the new law. But “replace”?
[R]epeal will not be enough, for a simple reason: Although Obamacare would worsen many of the problems with our system of health-care financing, that system clearly does call out for serious reform.  After all, a repeal-only approach would leave many of the most grievous flaws in our system of financing health care unaddressed.
WHAT NEEDS FIXING
But for all its considerable strengths, the system suffers from pervasive weaknesses as well. The most serious of these is rapidly rising costs.
Of course, government health-care programs and policies are largely responsible for these rising costs in the first place. To begin, the design of Medicare is terribly flawed: Because the program pays providers of care based on the volume of their services, it creates a massive incentive for inefficiency and overuse. And because Medicare is the biggest payer in most health-care markets in America, that incentive badly distorts the economics of the entire sector. Furthermore, the Medicaid program inflates costs by (among other policies) having states control how the program is run while the federal government pays most of the bills. The result is that neither party has both the incentive and ability to keep costs in check.
The third driver is the tax exclusion for employer-provided insurance: The federal government does not count the amount that employers spend on health insurance for their employees toward workers’ taxable income. This tax exclusion inflates costs by effectively rewarding higher-premium plans and by encouraging employer-purchased insurance, thereby preventing a real consumer market in coverage.
Proponents of Obamacare like to create the impression that there are tens of millions of Americans trapped by their pre-existing conditions, sick and stuck with lousy insurance and no options. In truth, the vast majority of working Americans have good and secure coverage today, including many millions of people with expensive health conditions.
But a small percentage of our large population is still a lot of people. There is no denying that cracks in the system exist, and that many Americans fall through them. This is particularly true of people who need to move from job-based coverage into the individual market. People who leave the work force and need to buy insurance on their own can face sky-high premiums for weak coverage just because they happen to suffer from a health condition over which they often have little control.
Starting in the middle of 2009, the president and his top aides took to calling their plan “insurance reform,” as if the law’s most important elements were simply new rules designed to protect hapless consumers from unscrupulous insurance companies.
This is, of course, a gross mischaracterization of what Obamacare actually does. Among other features, the law implements a massive expansion of taxpayer obligations. It adds two new entitlement programs at an expense of at least $1 trillion over a decade. In that same period, it raises taxes by more than $500 billion. Most egregiously, it puts the federal government in command of the health sector, giving bureaucrats immense new power to decide matters ranging from what services must be covered in every American’s insurance plan to how doctors and hospitals organize themselves and do business.
PILLARS OF REFORM
The first crucial component of any serious reform must be a “defined contribution” approach to the public financing of health care — the essential prerequisite for a functioning marketplace that imposes cost and quality discipline. In most sectors of our economy, the normal dynamics of supply and demand keep costs in check and reward suppliers that find innovative ways to deliver more for less.
Under this approach, health coverage would be provided through competing insurance plans; government’s involvement would come through the provision of a fixed financial contribution toward the purchase of insurance by each beneficiary. That subsidy would not vary based on a person’s insurance plan, giving Americans every incentive to shop for good value in their health coverage and to get the most for their defined-contribution dollars.
In the context of Medicare and Medicaid, meanwhile, the government would similarly provide a fixed (though of course far more generous) level of support, sometimes called “premium support,” that would guarantee insurance coverage to beneficiaries but would allow them to choose among competing options and encourage them to seek out the best value for their money.
The second pillar of reform should be personal responsibility and continuous-coverage protection. Obamacare attempts to address the challenge of covering people with pre-existing conditions with heavy-handed mandates, especially the requirement that all Americans enroll in government-approved insurance plans (the so-called “individual mandate”). A replacement program for Obamacare should come at the problem from the opposite direction, with government forsaking coercion and instead extending a new commitment to the American people: If you stay continuously enrolled in health insurance, with at least catastrophic coverage, you will never again face the prospect of high premiums associated with developing a costly health condition.
Because some workers who leave job-based plans for the individual market could be quite sick, a credible Obamacare replacement plan would also need to include a new approach to covering the high insurance costs for these Americans. Different proposals have offered different mechanisms, but all would move the burden away from the sick patients themselves to a larger and broader pool of people, either through regulation or through a direct government program such as a high-risk pool. For people who have not been continuously insured, these protections generally would not apply.
The third pillar of reform must be a genuine partnership with the states.
To respect federalism and reap its benefits, nothing in an Obamacare replacement agenda should compel state adoption, instead leaving the participation of state governments completely voluntary. Those states that do participate in any federal initiative should be given meaningful control over the most important components of regulation, especially the power to design and operate their own health-insurance markets (within minimal federal standards).
States should be given two tasks: informing consumers of their insurance options, and easing their enrollment into the plans they choose by cooperating with the federal government to facilitate the payment of credits and vouchers directly to private insurers.
Defined-contribution financial support, protection for Americans who remain continuously enrolled in insurance plans, and genuine federalism are the essential overall concepts that must define any serious health-care reform. But policymakers will also need to apply these principles to the transformation of today’s funding and financing mechanisms: the tax exclusion for employer-provided health coverage, and the Medicaid and Medicare systems.
TAX REFORM AND HEALTH REFORM
The fourth pillar of a real reform agenda would therefore address the tax treatment of employer-sponsored plans. Today’s arrangement is somewhat counterintuitive: Because the tax exclusion for health-care premiums is open-ended, workers and employers have an incentive to make health benefits a disproportionately large share of total compensation. And because employers obtain and manage health plans for their workers, there is far too much distance between those who purchase care and those who consume it.
The most plausible way to implement such a change would be to transform today’s tax exclusion for employer-provided insurance into a standard tax credit that would extend to all Americans, regardless of employment status, which they could then use to purchase the private coverage of their choice.
IMPROVING HEALTH CARE FOR THE VULNERABLE
The fifth key component of a genuine health-care reform plan must be an overhaul of Medicaid. Medicaid is actually three separate programs: health insurance for lower-income working-age adults and their children, health and long-term care for the non-elderly with severe disabilities, and long-term care for the frail elderly. For the purposes of replacing Obamacare, the relevant program to change is insurance coverage for working-age adults and children; the other parts will need reform as well, but should be addressed in a separate legislative effort.
In replacing Obamacare, policymakers should move lower-income people out of the limited sphere of Medicaid options and into the same private health-insurance markets in which their fellow citizens purchase coverage.
There is more than one way to accomplish this objective. …existing financing for acute care provided through Medicaid and the State Children’s Health Insurance Program would be transformed into a large pool of funding to be re-allocated to current beneficiaries and other low-income Americans in the form of a federal health-care subsidy (the equivalent of a “refundable tax credit”) for private insurance.
A similar approach would give Medicaid recipients the same federal tax credit that workers would receive in a reformed marketplace for health insurance. The federal government could then convert Medicaid into a per-person allotment to the states, funded through a block grant, that would supplement the base credit for a state’s low-income residents. The federal allotment to the states would be set so that, when combined with the federal support for the base tax credits or vouchers for the Medicaid-eligible population, total federal spending on the Medicaid population in a state would equal the amount that would have been spent under pre-Obamacare Medicaid. After the first year, the federal allotment to the states could be set to grow commensurate with the economy or some other reasonable measure of inflation.
The same move toward market incentives and efficiency should characterize our approach to Medicare reform in the wake of Obamacare’s repeal. The sixth pillar of a replacement plan must therefore be a premium-support reform of Medicare.
Of all the changes that are necessary to bring more cost discipline to health care, moving Medicare toward a defined-contribution structure, and away from today’s open-ended defined-benefit structure, is certainly the most vital. Medicare is the largest payer for services in most markets; the system of hospital and physician care in most communities has been built up around Medicare’s financial incentives.
In lieu of today’s open-ended benefit, a premium-support system would allow new beneficiaries (after the transition) to decide how to use a fixed-dollar contribution provided by Medicare. Each beneficiary would choose from a menu of approved insurance plans. If a beneficiary’s premium for his chosen plan was higher than the Medicare contribution, he would pay the difference out of his own pocket. If he chose a less expensive plan, he would pay lower premiums and keep the savings. This structure would provide a powerful incentive for the program’s participants to find high-value plans that charge low premiums for quality care, and therefore for insurers to offer such plans.
FISCAL RESPONSIBILITY FOR A CHANGE
Finally, as a key criticism of Obamacare is the danger it poses to federal finances, the seventh pillar of a serious health-care reform plan must be the full offset of all new costs through spending cuts.
A HISTORIC OPPORTUNITY
The enactment of Obamacare has created a political opening for a credible alternative to the health-care status quo. But it would be foolish to assume that this opening will last very long; once it has closed, it is not likely to appear again.
Conservatives thus have a rare opportunity to advance their vision of reform. It will entail some controversy and political risk, which cannot be avoided in a policy arena as complex as health care. But the policy and political upsides are well worth the effort. A market-driven alternative can beat Obamacare on every metric that matters. It will be less costly to taxpayers, more flexible in meeting the diverse needs of citizens, less bureaucratic, and consistent with the Constitution and our values.
James C. Capretta is a visiting fellow at the American Enterprise Institute and a fellow at the Ethics and Public Policy Center. Robert E. Moffit is a senior fellow in the Center for Policy Innovation at the Heritage Foundation.
http://www.nationalaffairs.com/publications/detail/how-to-replace-obamacare

Why on earth would a single payer advocate grant so much space on health care reform to prominent conservatives, allowing them to frame the problems in a manner that supports their specific policy recommendations? By better understanding their framing and the flawed policies that flow from that, we can explain to the nation why they are so terribly wrong, and why the policies of a single payer national health program are an imperative.
Everyone agrees that the status quo in our health care system is totally unacceptable. We are spending far more than other nations on a system that falls intolerably short in performance. So how is this framed?
Single payer supporters see the problems as too many individuals without insurance, too many with inadequate insurance, quality deficiencies related to improper allocation of our health care resources, and the tremendous administrative waste inherent in our current financing system. A single payer national health program would correct these defects.
The authors of this article – James Capretta and Robert Moffit – present a framing of the problems from the perspective of their conservative organizations – the American Enterprise Institute and the Heritage Foundation. To them, the primary problem is that excessive government involvement is driving our unacceptably high health care spending, coupled with the problem that we fail to use adequate market forces to control these excesses. They are not totally insensitive to the needs of the uninsured and low-income individuals – needs that can never be met in a totally free market – so they do recommend some government involvement in oversight and in tax policies.
When you step back for perspective, it seems like the differences aren’t so much in the goal of trying to get everyone insured, but more in the process of how we do that. Well, the contrasting approaches – government versus market – do have a significant influence on the outcomes of reform. The conservatives first look at using markets, and then try to make reform comply. The single payer advocates first look at what patients need, and then look for a pathway to get there. Other nations have shown that successful pathways are always laid out by the government and not by unregulated markets. Even when private insurers are used, they travel through a government pathway.
Capretta and Moffit would invoke the principle of defined contribution. Instead of providing a package of health care benefits that patients need, they would provide a set amount of money – the defined contribution – that would leave most of us directly exposed to health care costs on the disproven theory that we could still obtain the care that we need but at a better price because of our shopping acumen in the health care markets. What is proven is that the cost sharing of a defined contribution approach erects financial barriers to appropriate health care, whether through unaffordable insurance premiums, or through unaffordable deductibles, coinsurance and co-payments, or through provider network restrictions, or through the limitation of benefits.
Their proposal supposedly is aimed at increasing the numbers of insured, though independent analyses of similar proposals have shown that their policies would produce little net gain towards this goal. They would use competitive market incentives to lower the price of insurance products which inevitably would result in grossly inadequate products that have been well documented to fail to provide sufficient financial security in the face of medical need. Further, they would leave the choice of whether or not to be insured to individuals themselves and to financially-challenged state governments. After decades of increasing health care costs and flat wages, and now eliminating the tax subsidy of employer-sponsored plans, far too many individuals would decide that they would have no other option than to go without coverage.
Looking closer at the choice that lower-income individuals would have under this proposal, they would be offered subsidies or vouchers which could be used to purchase whatever cheap plans the insurers could create to sell at the low competitive market price set by the subsidy or voucher – coverage that could never provide adequate health care benefits. Capretta and Moffit propose that health care consumers would have the choice of using their own funds to buy-up to a plan that actually provided adequate coverage, but is that really a choice when they are having difficulties simply paying for their food and rent?
In past articles, we have covered extensively the inadequacies of market-priced insurance products for middle-income workers and their families. These products attempt to balance the premiums, which turn out to be too high, with the health care benefits, which turn out to be too spartan. With median household income at $49,000 and the average cost of health care for a worker’s family of four now over $19,000, no amount of free market magic can ever make these numbers compute.
The experience of the past half century has already proven that our supposed markets for private health insurance and for health care itself have been totally ineffective in controlling health care costs, yet Capretta and Moffit are calling for even more of the same flawed market pseudo-incentives. They ignore the fact that administered pricing by public agencies has been effective in other nations and would certainly be so here as well.
Okay, so the conservatives’ solution is to try to protect freedom and markets at the cost of adequate health care for the majority of us, so why should we bother even reading their polemic? Could there be a middle ground somewhere between single payer and market dynamics? Well, that supposed middle ground is the Affordable Care Act, based on an earlier version of the proposal of the Heritage Foundation which the Obama administration presented as a centrist approach to reform. Yet Capretta and Moffit now claim that this model “puts the federal government in command of the health sector” – a concept anathema to the ideologues in their camp.
The reason that we need to understand thoroughly their views is that we have to be able to explain why their approach is intolerably flawed. It would grant free rein to the private insurance industry to wreak even more havoc on our health care, while falling short of achieving the conservatives’ goal of removing the government and its power to tax from the health care equation. As if our financing system were not already bad enough, they would introduce changes that would prevent the system from working adequately for all but the very wealthiest of us.
It would be worth reading and critically interpreting their entire article to better understand the extent to which they would go to control health care spending by making it much less affordable for most of us – in the name of consumer empowerment. There are far too many flawed policies to begin to cover them in today’s comment – policies such as offsetting all costs through spending cuts instead of taxes, and privatizing Medicare through defined contributions for private plans.
Even if today’s breed of conservatives takes over all branches of the government, people power through an informed electorate will be essential in blocking the institution of such harmful health care policies, just as the people were able to prevent George W. Bush from privatizing Social Security. Being informed is key.
On the other hand, if we elect enough political leaders who are truly concerned about the future of health care in America, regardless of political affiliation, then we do have a chance of sorting good policies from bad policies, and enacting the good ones. But we do have to know which are which.

State calls Aetna health insurance rate hike ‘unreasonable’

By Jan Norman
The Orange County Register, April 5, 2012

Connecticut-based Aetna Life Insurance Co. has raised its health insurance premiums on small employers with 73,000 members an average 30.3 percent over two years, which the California Department of Insurance on Thursday called “unreasonable.”

The latest increase effective April 1 is an average 8 percent annually with a 30.3 percent hike over 24 months for small employers with Aetna’s PPO health insurance policies.

The department found that Aetna made projections about medical cost increases higher than the U.S. Bureau of Labor’s medical cost inflation index and unsupported by Aetna’s actual claims experience.

Aetna released the following statement:

“While rate increases are never easy, our rates are based on actuarially sound data and reasonable projection of future cost, which will impact approximately 16,000 customers.  Our Medical Loss Ratio is at 86.7%, which is higher than any of the filed rates by our competitors. Medical loss ratio is the percentage of health insurance premiums that insurers use to provide health care to their customers.”

In making its finding, the Department of Insurance noted that the Aetna subsidiary that sells health insurance in California made a 27.7 percent profit in 2011 and paid $1.7 billion in dividends to its parent company.

http://www.ocregister.com/articles/insurance-347932-aetna-health.html

Aetna California rate filing  (185 pages):
http://www.insurance.ca.gov/0250-insurers/HlthRateFilings/upload/AetnaHAO0010.pdf

Comment:

By Don McCanne, MD

We are inundated with stories about “unreasonable” rate increases by private health insurers, so why should we bother with this one?

Remember that the default benchmark for defining “essential health benefits” to be offered in the state health insurance exchanges will be the small group plan with the largest enrollment in the state. This two year 30.3 percent premium increase is for small employers with Aetna’s PPO health insurance policies. These plans will typify the new national standard for private health insurance exchange plans.

If you believe Aetna, their medical loss ratio (MLR) is 86.7 percent which is well within compliance of the 80 percent MLR requirements for individual and small group plans. Since medical loss ratios are dependent on how much the insurers spend on actual health care, this premium increase should signal what we might expect for small businesses, certainly if the individual mandate is struck down by the Supreme Court and adverse selection continues.

Even if the mandate is upheld and insurers are able to include healthier individuals mixed in with the sick, actual health care costs continue to increase well in excess of the rate of inflation and will still result in “unreasonable” premium increases.

The insurers are correct when they say that health insurance premiums are increasing because health care costs are increasing. But what is especially relevant are the reasons that Aetna gives for our high health care costs and what Aetna is doing to try to control them (obviously not very successfully).

Read pages 43-49 (labeled 1-7, but 43 pages into the filing) of the Aetna California rate filing (link above). You will see that Aetna has absolutely no control over many major factors contributing to health care inflation. You will also  see that Aetna is fumbling around with many programs that will have little impact on health care costs, except that they do increase administrative expenses. You will also see that several of their measures smack of the intrusive and choice-limiting insurer behaviors of the managed care revolution.

Instead of sympathizing with Aetna in their ineffectual struggles to control health care spending, we should look at their waste and their intention to sacrifice high system performance on behalf of their own business interests. Foremost we should look at those perverse cost increases over which Aetna pleads they have no control and then imagine the power that our own single payer national health program would have in the same situation.

You really have to read the 7 pages to better understand the power that we would have, though keep in mind that this was written by Aetna in their own defense. Fortunately, you don’t even need to read between the lines to see why we should fire all of the private insurers and put in place our own beneficent single payer monopsony. Then we would have much more control of our own health care destiny.

False-Equivalence Watch: The Platonic-Ideal Form

By James Fallows
The Atlantic, April 4, 2012

Yesterday Barack Obama went to the annual Associated Press luncheon and exhorted journalists to avoid the “false equivalence” syndrome in coverage of controversial events. If you’ve missed the previous 10 million items on this theme, you can read his speech or my precis of it. In short, the false equivalence problem is that although it’s convenient and “objective”-seeming for reporters simply to quote “both sides” of a public issue, the results can be misleading when one of the sides is simply making things up.

Today the same Associated Press published an article on his speech that perfectly exemplified the problem Obama was complaining about, and was all the more piquant for being presented as a “fact check.” The subject was the now-infamous “individual mandate” provision of the administration’s health-care plan.

As Obama pointed out in his speech, the individual mandate originated as a conservative/Republican idea. Conservatives preferred it precisely because it was an alternative to government-run “single-payer” coverage, like Medicare or the VA. This was part of the reason Mitt Romney embraced the mandate in his health-care plan in Massachusetts. Yesterday Obama said:

“So as all of you are doing your reporting, I think it’s important to remember that the positions I’m taking now, … if we had been having this discussion 20 years ago, or even 15 years ago, would have been considered squarely centrist positions.  What’s changed is the center of the Republican Party.”
 
Today the AP was back with its “fact check”:

“[I]f Republicans have moved to the right on health care, it’s also true that Obama has moved to the left. He strenuously opposed a mandate forcing people to obtain health insurance until he won office and changed his mind.”

This is false equivalence in its Platonic-ideal form. It’s presented as being “objective” — These politicians! They all just flip and flop! — but in fact is deeply misleading about the realities. As Brian Beutler pointed out today on TPM, making things seem symmetrically unprincipled in this case requires either lack of awareness of, or knowing manipulation of, the basic facts.

Yes, Obama’s position on health care has changed. But his embrace of the “individual mandate” represents a move TO THE RIGHT, not leftward as the story claims. Before that, he had been in favor of (a) single-payer coverage, in his days as an Illinois politician, and (b) the “public option” during his 2008 primary campaign against Hillary Clinton. His decision to build “ObamaCare” around the individual mandate — rather than on the public option or a single-payer concept — reflected pressure on the administration to make the plan more “centrist,” not more leftist or radical. When the switch to individual mandate was announced, by far the most heated criticism came from the left, on grounds that Obama had sold out supporters of the public option. Meanwhile, the likes of the impeccably conservative Senator Charles Grassley of Iowa were saying that there was a “bipartisan consensus” in favor of the individual mandate compromise. So: the current Republican hostility to the individual mandate represents a rightward shift, and so too does Obama’s embrace of the plan.

Beutler sums up the achievement of this latest “fact check”:

“His hosts [at AP] weren’t listening — and as a result they’ve made Obama’s points about Republicans and the media for him….

“It’s true that Obama campaigned against an individual mandate in 2008, only to embrace it — however reluctantly — after he became president. But to say that constitutes a move to the left betrays a lack of understanding about the origins and purpose of the individual mandate, and of Obama’s broader evolution on health care reform.”

http://www.theatlantic.com/politics/archive/2012/04/false-equivalence-watch-the-platonic-ideal-form/255468/

Comment:

By Don McCanne, MD

Within the mainstream media there is hardly an article on politics that doesn’t make some effort to present “both sides” of the issue, often settling on reporting suggesting that “centrist” views best represent an application of the facts. Where does single payer fit in this?

For the past few years, single payer was largely considered irrelevant and not included in most discussions. Earlier, the “public option” – a public insurance program to be offered as an option in the insurance exchanges – was considered to represent the position of the left.

Some of us dedicated single payer supporters were loudly protesting that the public option was merely a decoy to create the impression that the legislation was centrist, rather than actually being merely a perpetuation of the highly dysfunctional financing system that we have. The mainstream media again dismissed us as irrelevant and covered “both sides” as if this dispute were over support for the public option representing the views of the left, and opposition to the option representing the views of the right.

In truth, most in the progressive community had latched onto the public option, and so the media was not totally off track. A very large sector the progressive community had moved far to the right by supporting the public option, thereby implicitly supporting the model being created in Congress – the Heritage/Republican mandate proposal requiring individuals to purchase private insurance plans.

And where are we now? Most progressives have set aside their demands for the public option and are asking the Supreme Court to support the right-wing individual mandate! Thus the media is presenting “both sides” as the left supporting the mandate and the right opposed – a dispute taking place in far-right territory.

Not all progressives have followed the lemmings. A group of fifty noble physicians and a couple of single payer organizations have submitted an amicus in opposition to the individual mandate. The rationale is that we should get rid of this horrendous legislation and clear the way for the only other alternative – a single payer national health program. The amicus was a tactical decision on which passionate single payer supporters could differ.

The leadership of Physicians for a National Health Program – a single payer advocacy organization strongly opposed to the financing model of the Affordable Care Act – elected not to take a position either for or against the Supreme Court challenge since it was a distracting diversion from PNHP’s mission. Instead, we made the tactical decision that we would be more effective continuing with our unrelenting advocacy for single payer while condemning the cruel and inhumane financing system perpetuated in the Affordable Care Act.

In the heat of the Supreme Court debate we are seeing the issue of single payer creeping back into the national dialogue. In an effort to present both sides, many reporters, in covering the debate over the mandate, have included the view of those who believe that rejecting the mandate will result in turning to the only other option – single payer.

And, by the way, “both sides” does not mean the right and the left. There are many on the right who support the single payer concept, and some on the left oppose it.

Let’s do all we can to dump the false-equivalence debate over the public option and the individual mandate and move on to covering what are truly “both sides” – an efficient, equitable and affordable single payer system versus the wasteful, costly, inequitable, and fragmented financing system of the Affordable Care Act which would leave far too many of us sick and broke.