PNHP

Archer and Marmor on Medicare versus commercial insurance

Archer and Marmor on Medicare versus commercial insurance

Medicare And Commercial Health Insurance: The Fundamental Difference

By Diane Archer and Theodore Marmor
Health Affairs Blog, February 15, 2012
As the debate over Medicare continues in connection to America’s fiscal problems, it is critical to understand how Medicare differs from commercial health insurance for working people.  There is a fundamental difference between these two types of health insurance plans, one social and one commercial.
The basic difference between Medicare and commercial insurance is that Medicare is designed to absorb risk, serving individuals who have or may have costly and complex medical needs as well as the relatively healthy, whereas commercial insurance is required to protect its business interests by avoiding those most likely to use medical care.
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But nothing can change the underlying reality that programs like Medicare are designed to absorb and broadly distribute risk, protecting everyone, while commercial insurers are designed to select and protect individuals with the fewest needs.
The belief that competition among private health insurance firms can produce cost savings or higher quality care represents the victory of illusion over evidence. We need to let the existing Medicare system do what it already does effectively: insulate Americans from risk, rather than shift risk to the most vulnerable citizens.
http://healthaffairs.org/blog/2012/02/15/medicare-and-commercial-health-insurance-the-fundamental-difference/comment-page-1/#comment-165108

The fundamental difference between Medicare and commercial health insurance is very basic and easy to understand. Medicare is “designed to absorb and broadly distribute risk, protecting everyone, while commercial insurers are designed to select and protect individuals with the fewest needs.”
The explanation of this difference in this Health Affairs Blog entry by Diane Archer and Theodore Marmor should make us question once again why Congress and President Obama chose commercial insurers as the foundation for the Affordable Care Act when what we clearly needed was a universal public program based on improved version of Medicare.
You should read their fairly brief blog entry and then read the replies posted first by Vince Kuraitis and then by Don McCanne. They exemplify the differences between the commercial approach to insurance and the social function of Medicare.
It’s really an easy concept to grasp:
Commercial – “Of or relating to commerce, having profit as a chief aim”
Social – “Of, relating to, or occupied with matters affecting human welfare”
Addendum:  Since the reply submitted by Don McCanne has not yet been posted on the blog website, both the Kuraitis reply and McCanne reply are reproduced here.

Vince Kuraitis says:
You (Archer and Marmor) make a sweeping statement: No matter what regulations are instituted in an attempt to guarantee their good behavior, commercial insurers will still have an incentive to avoid risk, and they will do so insofar as it is possible.
An equally sweeping rebuttal: this problem is entirely fixable by risk adjusting — paying higher premiums for members that are less healthy. Medicare has already started doing this with Medicare Advantage plans.
Of course, the devil is in the details…and in a debate we’d probably come out in the middle somewhere. Risk adjustment is easier to conceptualize than to do accurately.
…but I think your broad, blunt assertion needs to be challenged.
Don McCanne says:
Vince Kuraitis writes that the authors’ statement on incentives for commercial insurers needs to be challenged. It is Mr. Kuraitis’ challenge that needs to be challenged since the authors’ statement is quite correct.
Commercial insurers do have incentives to avoid risk, and, if subjected to risk adjustment, they have incentives to game the system. This is not suggesting illegal activity. It merely represents “appropriate” commercial activity – activities that are rewarded on Wall Street.
Risk adjustment already takes place in the Medicare Advantage program. An NBER study (Working Paper No. 16977, April 2011) revealed that the Medicare Advantage plans were able to further increase their own advantage and transfer more resources from the relatively sick in the traditional program to the relatively healthy within their plans.
Quoting from the NBER report, “With social insurance programs, however, imperfect pricing can induce private firms to cream-skim, exacerbating the utility consequences of the underlying inequality the program was initially intended to mitigate. At least in the case of Medicare, we find little evidence that risk adjustment has solved this problem.”
And from the NBER Digest, “Thus the authors conclude that the Medicare Advantage program both increased total Medicare spending and transferred Medicare resources from the relatively sick to the relatively healthy, and that risk-adjustment was not able to address either of these problems.”
Archer and Marmor are precisely correct: “No matter what regulations are instituted in an attempt to guarantee their good behavior, commercial insurers will still have an incentive to avoid risk, and they will do so insofar as it is possible.” That is the nature of the commercial approach to insurance, which is in sharp contrast to the social function of the traditional Medicare program.

Explaining regional variation in private health care spending

Health Status and Hospital Prices Key to Regional Variation in Private Spending

Research Brief by Chapin White
National Institute for Health Care Reform, February 15, 2012

Differences in health status explain much of the regional variation in spending for privately insured people, but differences in provider prices — especially for hospital care — also play a key role, according to a new study by the Center for Studying Health System Change (HSC) for the nonpartisan, nonprofit National Institute for Health Care Reform (NIHCR).

Based on claims data for 218,000 active and retired nonelderly unionized autoworkers and their dependents, the study found that health spending per enrollee in 2009 varied widely across 19 communities with large concentrations of autoworkers, from a low of $4,500 in Buffalo, N.Y., to a high of $9,000 in Lake County, Ill.  The autoworkers’ health benefits are essentially uniform nationally, so spending differences do not reflect benefit differences.

Differences in service quantities accounted for two-thirds of the overall spending variation, while differences in prices accounted for one-third, according to the study.

On the quantity side, differences in health status and other demographic factors explained most, but not all, of the variation in quantity. About 18 percent of the total variation in spending was a result of unexplained differences in service quantities. On the price side, the cost of doing business explained very little of the price differences, with almost all of the differences in prices unexplained, the study found.

http://www.nihcr.org/news_Spending_Variation.html

From the Research Brief:

Sources of health care spending variation across autoworker communities, 2009

Differences in spending due to quantities
37% – Differences in health status
10% – Differences in age and sex
18% – Differences in quantities (excess)

Differences in spending due to prices
2% – Differences in providers’ cost of doing business
33% – Differences in prices (excess)

Comparing Private Prices to Medicare

Physician office visits. The prices paid by the autoworker plan for physician office visits, on average, are only 3 percent higher than what Medicare would have paid for the same services.

Hospital inpatient care. The prices for inpatient hospital care paid by the autoworker plan are, on average, 55 percent higher than what Medicare would pay, and the price gap varies widely across communities.

Hospital emergency department care. The prices paid by the autoworker plan for hospital emergency department care are, on average, more than double the Medicare price, and the price gap varies even more widely across communities than for inpatient care.

Research Brief
http://www.nihcr.org/Spending_Variation.html
PDF version
http://www.nihcr.org/Spending_Variation.pdf

Comment: 

By Don McCanne, MD

Policy wonks likely will download this Research Brief since it will prove to be a landmark study explaining the wide variation in spending amongst privately insured patients – very useful information when designing policies to improve our health care financing.

We already have several landmark studies demonstrating the wide variations in quantity of services and in pricing of those services – both factors in determining the variations in health care spending.

What has not been so clear is whether the quantities vary based on the health status of the patients or based simply on variations in intensity amongst populations of comparable health (i.e., providing excess services to drive up revenues, though deficient services when system capacity is inadequate is an important but separate concern).

What also has not been so clear is whether price differences are primarily due to differences in costs of health system resources, or simply due to charging higher prices where private insurer market control is weaker.

This study provides very convincing data to explain the differences. Look at the percentage differences listed above.

Health status (37%) and age and sex (10%) explain almost half (47%) of the differences in spending. These are entirely appropriate differences and do not require policy intervention. The 18% that is not otherwise explained may well be excess quantity of services that perhaps could be moderated by judicious application of health policy.

But let’s not kid ourselves. Those who suggest that, based on the Dartmouth studies, close to 100% of the difference in quantity of services is excessive tend to support policies that would come as close as possible to eliminating the differences. Since this study shows that the excess quantity is only about 18% of the difference in spending (only slightly over one-fourth of the increased quantity in higher spending areas), it would be very difficult to design policies that would tease out this modest amount while leaving in place the other services that are clearly beneficial. That doesn’t mean that efforts shouldn’t be made to do so, but it does mean that great care must be taken to be certain that people still receive the services that they should have – a much more important priority than budget trimming.

Excessive prices (33%) appear to account for most of the differences in prices for services since differences in the providers’ costs of doing business account for a mere 2% of spending differences. Most of this excess pricing is found in hospitals and in their emergency departments. This finding screams out for a better method of controlling prices. All other wealthier nations use some form of government pricing to eliminate these excesses. We should too.

Uwe Reinhardt has provided convincing evidence that an all-payer system, such as the hospital price-setting system in Maryland, would capture much of this excess in pricing. That is true, though it would be more difficult for an all-payer system to address the problem of excess quantity.

Our objection to all-payer systems is that they address only this one issue and leave out the many other advantages of a single payer national health program. When we have a solution that would fix so many problems at once let’s go with that.

50 doctors for single payer urge Supreme Court to strike down individual mandate

By Single Payer Action
CommonDreams newswire, Feb. 14, 2012

PNHP note: An amicus curiae brief challenging the constitutionality of the individual mandate in the Affordable Care Act – and noting that, by contrast, a single-payer, Medicare-for-All or VA-for-All-type system would be constitutional – was filed Tuesday by 50 physicians who support single payer. While Physicians for a National Health Program has taken no position on the constitutionality of any of the ACA’s provisions, we think readers will find the brief described below makes some interesting points.

WASHINGTON — Fifty medical doctors who favor a single-payer health insurance system today urged the U.S. Supreme Court to strike down the individual mandate.

In a brief (pdf) filed with the Court, the 50 doctors and two nonprofit groups – Single Payer Action and It’s Our Economy – said that the Patient Protection and Affordable Care Act’s (ACA) individual mandate is unconstitutional.

The individual mandate is the provision of the ACA that requires Americans to purchase health insurance from private insurance companies if they do not otherwise have coverage.

The doctors are challenging the government’s claim that the individual mandate is necessary to reach Congress’ goal of universal coverage.

“The court should decide the constitutionality of the individual mandate based on the best available evidence,” said attorney Oliver Hall. “That’s why it is so important that these medical doctors provide the court with the information in their brief, which demonstrates that Congress can address the United States’ health care crisis by adopting a single-payer system.”

“It is not necessary to force Americans to buy private health insurance to achieve universal coverage,” said Russell Mokhiber of Single Payer Action. “There is a proven alternative that Congress didn’t seriously consider, and that alternative is a single-payer national health insurance system.”

“Congress could have taken seriously evidence presented by these single payer medical doctors that a single-payer system is the only way to both control costs and cover everyone,” Mokhiber said. “Instead, Senator Max Baucus (D-Mont.), chair of the Senate Finance Committee which drafted the law that became the ACA, had two of those doctors – Dr. Margaret Flowers and Dr. Carol Paris – arrested and thrown in jail. Those doctors are now two of the 50 who have signed onto this brief challenging the constitutionality of the ACA.”

“If the U.S. Congress had considered an evidence-based approach to health reform instead of writing a bill that funnels more wealth to insurance companies that deny and restrict care, it would have been a no brainer to adopt a single-payer health system much like our own Medicare,” said Dr. Margaret Flowers. “We are already spending enough on health care in this country to provide high quality, universal, comprehensive, lifelong health care. All the data point to a single-payer system as the only way to accomplish this and control health care costs.”

“People will have the greatest control of their own health care if the insurance industry is removed from between doctors and patients,” said Kevin Zeese of It’s Our Economy. “And, people will no longer be threatened with increased premiums, decreased coverage and financial ruin caused by a health crisis.”

Read the full brief here.

http://www.commondreams.org/newswire/2012/02/14-0

Universal: Medicare for all

By the Editorial Board
The Charleston (W.Va.) Gazette, Feb. 21, 2012

CHARLESTON, W.Va. — Various Republicans are pressing the U.S. Supreme Court to rule the 2010 Affordable Care Act unconstitutional because it requires millions of “working poor” Americans to buy health insurance from commercial carriers.

Surprisingly, a crusading liberal Charleston reformer and activist has joined a Supreme Court brief demanding exactly the same thing.

Retired anesthesiologist Hedda Haning — a leader of several social action committees and recent organizer of an Occupy the Court protest — says it’s wrong to let commercial carriers earn fat profits from America’s medical system.

Instead, she says, the nation should have a government-run “single-payer” universal plan providing treatment for every citizen, as other advanced democracies do. Simply expanding Medicare to cover all ages would achieve it. That would extend coverage to 50 million left-out Americans, and save billions now wasted on the bureaucracy of competing private insurers.

We agree — but we fear that Republicans in Congress would kill such a universal proposal, if they succeed in defeating the ACA.

Dr. Haning joined Russell Mokhiber of Berkeley Springs and others in filing a friend-of-the-court brief saying:

“The only solution to the healthcare crisis in the United States, which will both control costs and achieve comprehensive coverage for the entire population, is to adopt a national publicly-financed single-payer health insurance system.”

Such a system would lift a terrible burden off U.S. businesses and employers now paying extreme costs to insure employees.

“We pay twice as much for our health care in this country as many other industrialized countries do,” Haning told reporter Paul Nyden, “but we are far down the list in terms of results. Something you hear all the time is that we have the best health-care system in the world. We do not.

“Forcing uninsured Americans to buy health insurance is a very bad way to go to try to take care of everybody. The purpose of health insurance corporations is to make money. And they make money by not taking care of sick people. … We are dealing with the corporate takeover of medicine.”

Other democracies spend only half as much on medical care, yet they have better health and life expectancy. It’s shameful that America, the world’s richest society, can’t accomplish what other nations do.

http://wvgazette.com/Opinion/Editorials/201202210112

2 W.Va. liberals fight against Obama health care law

They want insurance firms out of equation completely

By Paul J. Nyden
The Charleston (W.Va.) Gazette, Feb. 18, 2012

CHARLESTON, W.Va. — Two West Virginia residents are among the people and groups who filed a brief with the U.S. Supreme Court last week, arguing that uninsured Americans should not be forced to buy health insurance from private insurance companies.

That requirement under the Patient Protection and Affordable Care Act, which President Obama signed into law on March 23, 2010, is scheduled to take effect Jan. 1, 2014.

A coalition of medical doctors and nonprofit groups filed the friend-of-the-court brief Monday. They argue that the requirement to buy private insurance “exceeds the limits of Congress’ power to regulate interstate commerce.”

Hedda Haning, a retired Charleston physician and member of Physicians for a National Healthcare Plan, and Russell Mokhiber, a Berkeley Springs resident who edits the Washington, D.C.-based Corporate Crime Reporter newsletter, were among those signing the brief.

Unlike many of those who have challenged the Affordable Care Act in fede
ral court, Haning and Mokhiber argue that a single-payer system — like the United Kingdom’s National Health Service — is the answer to the country’s health-care woes. Mokhiber helped organize the group Single Payer Action.

“The only solution to the healthcare crisis in the United States, which will both control costs and achieve comprehensive coverage for the entire population,” the brief states, “is to adopt a national publicly-financed single payer health insurance system.”

Under that system, one public agency would handle all billing and administrative tasks, the brief points out.

Mokhiber said, “Under Obama’s law, individuals are required to purchase health insurance from a private health insurance company. This is the first time the federal government has ever required people to buy a health-insurance product from a private corporation.”

“That is very, very unpopular,” Mokhiber said. “Most Republicans and conservatives want to knock out that mandate, while Democrats and liberals have supported it.

“We are the only liberal, left-of-center group that says this requirement should be knocked out. And we believe there is a growing public sentiment supporting that. This law [ACA] keeps the insurance industry in the game.”

“I have been a strong supporter of single-payer health care for a long time. It is the only way we will be able to take care of all of our citizens and be able to afford it,” Haning said.

“We pay twice as much for our health care in this country as many other industrialized countries do, but … we are far down the list in terms of results. Something you hear all the time is that we have the best health-care system in the world. We do not.

“Forcing uninsured Americans to buy health insurance is a very bad way to go to try to take care of everybody. The purpose of health insurance corporations is to make money. And they make money by not taking care of sick people,” Haning said.

The brief states: “Nearly 50 million Americans risk denial of essential healthcare services because they lack insurance from private insurance companies.”

Many of those 50 million are working people paid low wages.

Haning said, “We are dealing with the corporate takeover of medicine.

“We have alternatives. Medicare has been wonderful. People who use Medicare, who are taken care of by Medicare, love it.”

The brief also points out, “Congress has already implemented successful single payer systems that provide universal coverage to certain subsets of the population, including Medicare for citizens aged 65 and older and the Veterans Health Administration for those who have served in the military.”

Adopting a single-payer system would not increase the costs of health care, the brief says.

The ACA, the brief argues, “does little to reduce the cost of healthcare administration, which accounts for 31 percent of all health spending in the United States. …

“Instead, it entrenches, by force of federal law, the private insurance companies that comprise the greatest source of administrative waste in the current system.”

The administrative costs for Medicare, the brief points out, “have remained steadily low – about 2 percent of program expenditures. …

“By contrast, private insurance companies estimate that their administrative costs, including ‘commission, premium tax and profit,’ range as high as 16.7 percent of overall spending.”

Canada’s single-payer health system uses an even lower percentage to administer its expenditures.

Today, salaries paid to some insurance executives range between $10 million and $20 million annually, the brief adds.

Haning said, “I practiced medicine for over 40 years and still have not gotten used to what the costs are. Some young women pay $50 a month, or more, for birth control pills.

“Many medications have been around for a long time. They are not expensive medications. There is no excuse for how much people have to pay.”

http://wvgazette.com/News/politics/201202180215

Utah doctors join push for single-payer health care system

By Kirsten Stewart
The Salt Lake Tribune, Feb. 14, 2012

Fifty medical doctors who want a single-payer health care system rather than the proposed federal reform have signed a legal document opposing the law.

Among them are two from Utah: Joe Jarvis and Clark Newhall.

In a “friend of the court” brief filed Tuesday with the U.S. Supreme Court, the doctors and two non-profit groups — Single Payer Action and It’s Our Economy — urge justices to overturn the Affordable Care Act’s requirement that everyone have insurance.

The high court is weighing a challenge to the constitutionality of the insurance requirement via a lawsuit filed by 26 states, including Utah.

The Obama administration argues the requirement is necessary to protect insurance companies from the risk of people waiting until they’re sick to get covered.

But in their legal brief, doctors contend the requirement isn’t necessary to reach Congress’ goal of universal coverage.

“Most people oppose the [law] without having an alternative in mind. That’s disingenuous,” said Jarvis of Salt Lake City.

A licensed doctor who no longer earns a living practicing medicine, Jarvis has long advocated for a better, cheaper and fairer way to deliver health care.

His decades-long push for a statewide health cooperative — a publicly-funded, nonprofit health insurance trust to cover every Utahn for all medically necessary care — has been a non-starter in conservative Utah. Chances of it gaining traction grew slimmer with passage of President Barack Obama’s health overhaul.

Jarvis isn’t a betting man. But he says the high court’s decision to consider multiple problems raised in opposition to the law, “shows they’re taking this seriously.”

Without the insurance mandate, the law can’t stand on its own, which could open the door to single payer, he says.

Single-payer means different things to different people. Newhall, a doctor and malpractice attorney, wants Medicare for all.

Under the model promoted by Jarvis, a Republican, people would still pay for coverage, but it would be subsidized and kept affordable by eliminating insurance middle men and simplifying payments.

It calls for the creation of a commission to squelch unnecessary tests and procedures ordered by doctors required to meet productivity targets or to fend off malpractice lawsuits. The commission, composed of medical experts, would determine which services are covered for given conditions based on research. It would also hear malpractice claims and insurance appeals.

Obama’s fix does nothing to curb health spending, Jarvis said. “It’s a propping up of the private insurance business model. What they’re trying to do is force us to buy, in most cases, poor quality health benefits.”

http://www.sltrib.com/sltrib/news/53512501-78/health-insurance-jarvis-doctors.html.csp

Doctors challenge health reform

Co
rvallis physicians sign brief attacking individual mandate

By Bennett Hall
Corvallis Gazette-Times (Ore.), Feb. 15, 2012

Fifty doctors who support single-payer health care — including two from Corvallis — petitioned the Supreme Court on Tuesday to strike down a key provision of federal health reform legislation.

The physicians joined with two nonprofit organizations, Single Payer Action and It’s Our Economy, to file a friend of the court brief arguing that the 2010 Patient Protection and Affordable Care Act is unconstitutional because it would require uninsured Americans to purchase private medical coverage.

The brief contends that provision, known as the individual mandate, exceeds the scope of the commerce clause of the Constitution, which gives Congress the power to regulate interstate commerce.

The Supreme Court is expected to hear arguments next month on various challenges to the act, including a lower court ruling that found the insurance mandate unconstitutional. A number of individuals and organizations on both sides of the issue have filed amicus briefs in the case.

“It is not necessary to force Americans to buy private health insurance to achieve universal coverage,” Russell Mokhiber of Single Payer Action said in a prepared statement. “There is a proven alternative that Congress didn’t seriously consider, and that alternative is a single payer national health insurance system.”

A single payer system funded by taxes — sometimes referred to as Medicare for all — would provide medical coverage to all Americans while eliminating the need for private insurance.

Corvallis physicians Paul Hochfeld and Mike Huntington, co-founders of the single-payer advocacy group Mad As Hell Doctors, say they support some provisions of the Affordable Care Act, such as its emphasis on primary care and its prohibition against denying coverage for people with pre-existing conditions.

But they also say commercial insurance plans build added costs into the system and reduce access to care by making it unaffordable for some people, and that’s why they added their names to the brief.

“The mandate is not necessary, and in fact it detracts from what it was intended to do, which is to get affordable health care to more Americans,” said Huntington, a retired radiation oncologist.

“Unfortunately, using the individual mandate isn’t going to result in universal coverage because 27 million people will still be left out and countless others will face bankruptcy when faced with medical conditions which require expensive interventions,” added Hochfeld, an emergency room physician.

“The only way to cover everybody is to do just that, cover everybody and pay for it with tax dollars. Pretending that we have fixed the problem is not the same as fixing it.”

A pair of Portland physicians, Samuel Metz and Kris Alman, also signed the brief. Other signers included Dr. Margaret Flowers of Physicians for a National Health Program and Kevin Zeese of It’s Our Economy, both of whom will be in Corvallis on Friday to speak on the status of health care reform efforts nationally.

www.gazettetimes.com/news/local/doctors-challenge-health-reform/article_c3da0fa2-5743-11e1-b4f5-001871e3ce6c.html#ixzz1n7lBQthc

Explaining regional variation in private health care spending

Health Status and Hospital Prices Key to Regional Variation in Private Spending

Research Brief by Chapin White
National Institute for Health Care Reform, February 15, 2012
Differences in health status explain much of the regional variation in spending for privately insured people, but differences in provider prices — especially for hospital care — also play a key role, according to a new study by the Center for Studying Health System Change (HSC) for the nonpartisan, nonprofit National Institute for Health Care Reform (NIHCR).
Based on claims data for 218,000 active and retired nonelderly unionized autoworkers and their dependents, the study found that health spending per enrollee in 2009 varied widely across 19 communities with large concentrations of autoworkers, from a low of $4,500 in Buffalo, N.Y., to a high of $9,000 in Lake County, Ill.  The autoworkers’ health benefits are essentially uniform nationally, so spending differences do not reflect benefit differences.
Differences in service quantities accounted for two-thirds of the overall spending variation, while differences in prices accounted for one-third, according to the study.
On the quantity side, differences in health status and other demographic factors explained most, but not all, of the variation in quantity. About 18 percent of the total variation in spending was a result of unexplained differences in service quantities. On the price side, the cost of doing business explained very little of the price differences, with almost all of the differences in prices unexplained, the study found.
http://www.nihcr.org/news_Spending_Variation.html
From the Research Brief:
Sources of health care spending variation across autoworker communities, 2009
Differences in spending due to quantities
37% – Differences in health status
10% – Differences in age and sex
18% – Differences in quantities (excess)
Differences in spending due to prices
2% – Differences in providers’ cost of doing business
33% – Differences in prices (excess)
Comparing Private Prices to Medicare
Physician office visits. The prices paid by the autoworker plan for physician office visits, on average, are only 3 percent higher than what Medicare would have paid for the same services.
Hospital inpatient care. The prices for inpatient hospital care paid by the autoworker plan are, on average, 55 percent higher than what Medicare would pay, and the price gap varies widely across communities.
Hospital emergency department care. The prices paid by the autoworker plan for hospital emergency department care are, on average, more than double the Medicare price, and the price gap varies even more widely across communities than for inpatient care.
Research Brief
http://www.nihcr.org/Spending_Variation.html
PDF version
http://www.nihcr.org/Spending_Variation.pdf

Policy wonks likely will download this Research Brief since it will prove to be a landmark study explaining the wide variation in spending amongst privately insured patients – very useful information when designing policies to improve our health care financing.
We already have several landmark studies demonstrating the wide variations in quantity of services and in pricing of those services – both factors in determining the variations in health care spending.
What has not been so clear is whether the quantities vary based on the health status of the patients or based simply on variations in intensity amongst populations of comparable health (i.e., providing excess services to drive up revenues, though deficient services when system capacity is inadequate is an important but separate concern).
What also has not been so clear is whether price differences are primarily due to differences in costs of health system resources, or simply due to charging higher prices where private insurer market control is weaker.
This study provides very convincing data to explain the differences. Look at the percentage differences listed above.
Health status (37%) and age and sex (10%) explain almost half (47%) of the differences in spending. These are entirely appropriate differences and do not require policy intervention. The 18% that is not otherwise explained may well be excess quantity of services that perhaps could be moderated by judicious application of health policy.
But let’s not kid ourselves. Those who suggest that, based on the Dartmouth studies, close to 100% of the difference in quantity of services is excessive tend to support policies that would come as close as possible to eliminating the differences. Since this study shows that the excess quantity is only about 18% of the difference in spending (only slightly over one-fourth of the increased quantity in higher spending areas), it would be very difficult to design policies that would tease out this modest amount while leaving in place the other services that are clearly beneficial. That doesn’t mean that efforts shouldn’t be made to do so, but it does mean that great care must be taken to be certain that people still receive the services that they should have – a much more important priority than budget trimming.
Excessive prices (33%) appear to account for most of the differences in prices for services since differences in the providers’ costs of doing business account for a mere 2% of spending differences. Most of this excess pricing is found in hospitals and in their emergency departments. This finding screams out for a better method of controlling prices. All other wealthier nations use some form of government pricing to eliminate these excesses. We should too.
Uwe Reinhardt has provided convincing evidence that an all-payer system, such as the hospital price-setting system in Maryland, would capture much of this excess in pricing. That is true, though it would be more difficult for an all-payer system to address the problem of excess quantity.
Our objection to all-payer systems is that they address only this one issue and leave out the many other advantages of a single payer national health program. When we have a solution that would fix so many problems at once let’s go with that.

Vermont adds bronze plan

Vt. would allow 'bronze plan' to encourage health

cbsnews.com
February 6, 2012

Vermont Gov. Peter Shumlin and legislative leaders said Monday they wanted to make it possible for more of the state’s small businesses to offer lower premium health insurance plans sometimes known as “bronze plans” until the state can implement its single payer health care system.

Speaking Monday in Montpelier, Shumlin and leaders from the House and Senate, all Democrats, said they would also allow businesses with more than 50 employees to remain outside the federally-mandated health care exchange until 2016.

“This was a hard decision, a very hard decision because there are people who will not have the opportunity to get into that market and they’ll have to wait two years and their employees will have to wait two years as well,” (House Speaker Shap Smith) said.

http://www.cbsnews.com/8301-505245_162-57372163/vt-would-allow-bronze-plan-to-encourage-health/

Comment: 

By Don McCanne, MD

Vermont is providing us with very important lessons on just how difficult it is to set up a single payer program on a state level. The legislation that passed – hailed as the first single payer system in the United States – is primarily an enactment of a state health insurance exchange as called for in the Affordable Care Act, along with future proposals that are not much more than a wish list at this point.

When they enacted the insurance exchange, they deliberately eliminated the bronze plan since it has an actuarial value of only 60 percent, which would leave 40 percent of covered health care costs to be paid by the patient out-of-pocket, minus income-related subsidies which are inadequate to prevent financial hardship for many of those with health care needs. They wanted better coverage than that.

The problem they faced was that the premiums for the silver and gold plans (70 and 80 percent actuarial values) would be too expensive for many individuals and small businesses in Vermont, thus the trade off of lower premiums for spartan plans.

What doesn’t appear in this article is that these high-deductible bronze plans are very profitable for insurers, and they certainly would want to maintain and grow this sector of their market. It is likely that the insurers’ message to the governor and the legislature was that they couldn’t provide silver and gold plans at the level of premium that many businesses could afford, and the insurers likely didn’t need to resort to threats of withdrawing from markets. (BlueCross BlueShield of Vermont is the dominant insurer and can write its own ticket, and, though a nonprofit, it still depends on profits.)

The governor and the legislature are to be commended for doing their very best to try to bring a single payer system to Vermont, though they are finding many of the barriers to be insurmountable. While they are patching together what they can, they should join our growing movement demanding that Congress enact a national single payer program. That would solve the health care financing problems for all states.

Vermont adds bronze plan

Vt. would allow ‘bronze plan’ to encourage health

cbsnews.com
February 6, 2012
Vermont Gov. Peter Shumlin and legislative leaders said Monday they wanted to make it possible for more of the state’s small businesses to offer lower premium health insurance plans sometimes known as “bronze plans” until the state can implement its single payer health care system.
Speaking Monday in Montpelier, Shumlin and leaders from the House and Senate, all Democrats, said they would also allow businesses with more than 50 employees to remain outside the federally-mandated health care exchange until 2016.
“This was a hard decision, a very hard decision because there are people who will not have the opportunity to get into that market and they’ll have to wait two years and their employees will have to wait two years as well,” (House Speaker Shap Smith) said.
http://www.cbsnews.com/8301-505245_162-57372163/vt-would-allow-bronze-plan-to-encourage-health/

Vermont is providing us with very important lessons on just how difficult it is to set up a single payer program on a state level. The legislation that passed – hailed as the first single payer system in the United States – is primarily an enactment of a state health insurance exchange as called for in the Affordable Care Act, along with future proposals that are not much more than a wish list at this point.
When they enacted the insurance exchange, they deliberately eliminated the bronze plan since it has an actuarial value of only 60 percent, which would leave 40 percent of covered health care costs to be paid by the patient out-of-pocket, minus income-related subsidies which are inadequate to prevent financial hardship for many of those with health care needs. They wanted better coverage than that.
The problem they faced was that the premiums for the silver and gold plans (70 and 80 percent actuarial values) would be too expensive for many individuals and small businesses in Vermont, thus the trade off of lower premiums for spartan plans.
What doesn’t appear in this article is that these high-deductible bronze plans are very profitable for insurers, and they certainly would want to maintain and grow this sector of their market. It is likely that the insurers’ message to the governor and the legislature was that they couldn’t provide silver and gold plans at the level of premium that many businesses could afford, and the insurers likely didn’t need to resort to threats of withdrawing from markets. (BlueCross BlueShield of Vermont is the dominant insurer and can write its own ticket, and, though a nonprofit, it still depends on profits.)
The governor and the legislature are to be commended for doing their very best to try to bring a single payer system to Vermont, though they are finding many of the barriers to be insurmountable. While they are patching together what they can, they should join our growing movement demanding that Congress enact a national single payer program. That would solve the health care financing problems for all states.

On the freedom to choose birth control

By Michael Ozer, M.D.
Letters, The New York Times, Feb. 14, 2012

Re “The Freedom to Choose Birth Control” (editorial, Feb. 11):

I am struck by the quandary the United States has on issues like these by maintaining an employer-based health insurance system. If we Americans had a national single-payer system that covered all of our people, the arguments against infringement on religious liberty would be a moot point.

All women would have open access to birth control, and Catholic institutions would be free to advocate their position without private employer insurance being used as a wedge issue to divide our population.

MICHAEL OZER
London, Feb. 12, 2012

The writer is a pediatrician.

http://www.nytimes.com/2012/02/14/opinion/the-church-the-state-and-contraception.html

Re birth control flap: health care for all should be a right

By Johnathon Ross, M.D.
Letters, The Toledo Blade, Feb. 13, 2012

Catholic employers would hurt themselves if they don’t offer health insurance, because there is competition for the best employees. However, they can act on their conscience and have nothing to do with health insurance except to pay into the exchange created by the Patient Protection and Affordable Care Act.

The act will cover 15 million more Americans; 50,000 die yearly because of lack of insurance coverage. No one knows the added total suffering and disability.

My Catholic employer pays me to care for the poor and uninsured. Every day I see a near miss. Several times yearly, I see deaths because of lack of health insurance.

Here lies the real, difficult moral choice. A thousand points of light — employer-based coverage — do not make a searchlight. They make a blur. Our government should, like the mirrors in a searchlight, focus the moral fiber of the nation.

The nation’s failure to provide health care to everyone is a stain on our moral character that far exceeds covering contraceptive services. The flawed Affordable Care Act attempts to cleanse this stain. At least and at last, we are trying.

As a physician, I would prescribe an improved Medicare for all. It would cover everyone without employers in the middle and save $400 billion yearly in administrative costs, enough to cover all the uninsured and improve coverage for the rest of us.

The contraception debate misses a more important moral crisis. We need a health care system with everybody in and nobody out. Health care should be a right of citizenship in the richest country on Earth.

Dr. Johnathon Ross resides in Toledo, Ohio.

http://www.toledoblade.com/Letters-to-the-Editor/2012/02/13/Bishops-should-work-to-aid-poor.html

Debating Health Care As a Right

By Winthrop Quigley, Journal Staff Writer
Albuquerque Journal, Feb. 12, 2012

The question is asked with regularity at legislative and congressional hearings, medical and public health conferences, political rallies and policy think tanks: Is health care a right, or a privilege?

Sen. Jerry Ortiz y Pino, an Albuquerque Democrat, long ago decided that health care is a right and that insurance company profit-making prevents people from enjoying that right.

For the second year in a row, Ortiz y Pino has introduced legislation to put the question to a popular vote.

If he’s successful, New Mexico’s Constitution would be amended to say, “Health care is a fundamental right that is an essential safeguard of human life and dignity. The state shall ensure that every resident has the opportunity to realize this right by establishing a comprehensive system of quality health care that is accessible to each resident on an equitable basis regardless of ability to pay.”

Identical legislation was introduced in the House by Rep. Gail Chasey, D-Albuquerque.

The cost of a comprehensive state-wide health system would range from $11 billion to $16 billion a year, more than twice the entire state budget, which already includes substantial spending on health care, according to insurance company lobbyists who testified against the proposal at a Senate Rules Committee hearing last week.

They argued that comprehensive health care has to be provided at the national level and that the federal Affordable Care Act has addressed the issue.

The proposed constitutional amendment needs to secure a majority vote in both houses of the Legislature and must be ratified by a majority of the voters to become effective. Unlike other legislation, proposed constitutional amendments do not need the governor’s signature, though a spokesman for Gov. Susana Martinez said she opposes the amendment.

No legal effect

Robert L. Schwartz, a University of New Mexico law professor and health law expert, said the amendment, however, would have no meaningful legal effect. Former state Health Secretary Alfredo Vigil, a practicing physician, said it wouldn’t change how the state Health Department goes about its business in any noticeable way.

Even Ortiz y Pino doesn’t believe the amendment would force state government to do anything, which raises yet another question. Why bother?

“Because it is a constitutional amendment, there would have to be a discussion of the issue leading up to a vote,” Ortiz y Pino said. “That would be healthy, I think, to get people talking about it.

“It would change the way we budget,” he continued. “We think in terms of a patchwork quilt of health programs. This would create an opportunity for us to step back and look at health care as a system, something that takes care of the basic health needs of all New Mexicans. It shifts the debate from asking how we are going to pay for programs to asking if we should be doing something different.”

Ortiz y Pino said there is no need for a financial argument. “I was listening to the insurance company lobbyists, and I wanted to scream,” he said. “The whole point of this is to get away from how do we pay your plans’ premiums and make sure your approach will continue in perpetuity to how do we get away from having any reliance on you guys at all. That’s what it’s about.”

Trying to ‘raise the bar’

Bruce Trigg, a retired Health Department employee and a practicing physician, asked Ortiz y Pino to sponsor the resolution on behalf of the Network of Health Professionals for a National Health Program.

“We’re trying to raise the bar,” Trigg said. “We’re trying to set an ethical standard. We’re putting up with more uninsured people than we could have imagined 20 years ago. This is a truly pro-life bill. It recognizes that all human beings are valued and society has a responsibility to take care of them to the best of our ability.”

Trigg said the idea is not to create a mandate: “It’s something we will work toward.”

Martinez believes the amendment will have bigger teeth than that. Her spokesman, Scott Darnell, said, “According to analysis from our office, this resolution would require the establishment of a government-run health care system that the governor has made very clear she does not support. Not only would the cost of a government run health care system break the state financially, but it could decrease the quality of health care as well.”

Schwartz said the amendment is an example of what he called an aspiration statement, and legal documents are full of them. The New Mexico Constitution already says citizens have a right to seek and obtain happiness. The International Covenant on Economics, Social and Cultural rights, passed by the United Nations in 1966 and signed by the United States, recognizes “the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.”

The health-as-a-right amendment “is not truly enforceable in any way, any more than the right to achieve happiness is enforceable,” Schwartz said.

That doesn’t mean it’s a pointless exercise.

‘An important goal’

“An aspirational statement serves an important goal,” Schwartz said. “It says that we as a society have an obligation to provide at least some minimal amount of health care. I don’t think that is unreasonable or impossible. We ought to aspire to do that.”

Health plans and physicians seem to share the aspiration. Lovelace Health Plan CEO Ben Slocum and Presbyterian Healthcare Services CEO Jim Hinton said they have no problem with the principle of affordable, universal access to health care.

Jeremy Gleeson, a physician with ABQ Health Partners and president of the Greater Albuquerque Medical Association, said GAMA has taken no position on the amendment, but that he supports “the concept that health is a fundamental right, as this constitutional amendment seems to be suggesting.

“I’m not sure how it can be implemented in any practical, useful way to get to that point,” he said. “The concept is nice. Most doctors would agree with the concept that health care is a right, though there are some libertarian doctors who would say it’s something you have to pay for.”

Former Health Secretary Alfredo Vigil applauds the concept as well, but also cautions not to count on state government to revolutionize health care.

What would happen?

Vigil provided two answers to the question of what would happen at the Health Department the day after a health care rights amendment was in force.

“The nice answer is the health secretary would rally the troops at the department and attempt to rally his or her supervisors at the Roundhouse and say it’s time to renew our efforts at creating priorities and strategies to improve the health of the people of the state of New Mexico. The honest answer is it wouldn’t do a damn thing.”

“The state of New Mexico has never had enough money to do even its most critical functions,” Vigil said. “It won’t be different for the indefinite future. Besides money, it has to do with time. The Legislature and the governor and the critical people running the show only have 24 hours a day, like everyone else. All the other issues are clamoring for time as much as health is.”

Vigil said that if the state wanted to create a comprehensive health care system, someone like a health secretary would have to be given the permission, time and money to create a system from scratch, since the existing system isn’t the answer.

“Ninety-nine percent of your energy is spent on convincing people who supposedly are on the sam
e side of the fence that you are, then putting on a suit of armor and going to the other side of the fence to deal with people who hate you because you’re from the other side of the fence. You can’t discuss anything without venom and hostility and anger. The result is the proposals that get thrown out tend not to be serious. They are either waving a flag from your side of the fence or sticking someone on the other side of the fence in the eye.”

This article appeared on page A1 of the Albuquerque Journal.

http://www.abqjournal.com/main/2012/02/12/news/debating-health-care-as-a-right.html

AHIP Hooray! Occupiers fete insurance exec at Harvard

By Jacob Bor, Heather Lanthorn, and John Quattroch
The Harvard Crimson, Feb. 10, 2012

If you were anywhere near Harvard Business School last Saturday you might have seen a 12-foot tall puppet dancing to accordion music while a merry band of “Congresspeople” and “health insurance executives” swilled champagne, showered each other in cash and sang round after round of “For She’s A Jolly Good Fellow.” If you weren’t near HBS, you missed a fantastic party. Here’s what happened:

Karen Ignagni, CEO of America’s Health Insurance Plans, was greeted by this band of Occupy Harvard and Occupy Boston at the 9th Annual Healthcare Conference at HBS, where she was the keynote speaker. The merry band feted the insurance industry’s lobbyist-in-chief with an impromptu gala, honoring Ms. Ignagni with an award for “Excellence in the Business of Denying People Medical Care.” The revelers welcomed conference goers with cheers of “A-HIP-Hooray” and explained why Ms. Ignagni had been chosen for this ignominious award.

The award read: “Be it hereby known that Karen Ignagni has successfully upheld the interests of private insurance in the face of efforts to reduce the costs of administrative waste and to insure all Americans, preserving company rights to profit before the public’s right to health.”

Nearby, a comatose patient lay under a sign declaring “45,000 deaths per year due to lack of insurance,” citing a well-publicized study by Harvard Medical School.

The 12-foot tall puppet was allowed to pay to register for the conference but barred from entering any of the conference buildings; poignantly illustrating that corporate medicine will gladly take the money of those not invited to the table. Unperturbed, the outdoor gala-goers still had plenty to say. “We want to thank AHIP and the insurance industry for making us all filthy rich,” said one protester dressed as Max Baucus, the senior U.S. senator from Montana.

More seriously, another protester noted that “the target here is not just the insurance industry, but the wholesale corruption of our government by corporate interests.” He told conference-goers, “When the health care industry spends half a billion dollars each year lobbying Congress, it’s difficult to achieve meaningful health reform that prioritizes the health of the public.”

It’s fitting that Ignagni was the keynote speaker at a conference titled “The Future of Healthcare: Innovative Business Models.” The current business model in health care legislation goes something like this: Large corporations spend hundreds of millions of dollars on lobbyists and contribute millions more directly to politicians on both sides of the aisle. Politicians then allow private health insurers to profit tremendously from a system that provides neither adequate coverage nor adequate care and has failed utterly to contain costs.

AHIP’s success in this model is exemplary. Health insurance and drug companies donated $26.2 million to the 111th Congress. Politicians receiving the largest campaign contributions from health insurers were Barack Obama, John McCain, John Kerry, Max Baucus, Eric Cantor and John Boehner. After a vigorous ($86 million) campaign against health reform, health insurers not only defeated the public option but also got a bill that will compel all Americans to purchase private insurance. Critics may call AHIP two-faced, but we believe that its goals are clear: promoting the profitability of the health insurance industry.

Since Obamacare (the Affordable Care Act) passed into law, health insurers have seen record profits, raising premiums well above inflation. Last year the profits from the five largest insurers, UnitedHealth, WellPoint, Aetna, Humana and Cigna totaled $12.6 billion. That’s enough money to increase the number of low-income children receiving health care by 6.45 million. As working families and employers struggle to pay rising premiums, insurance CEOs rake in salaries of $10-20 million a year, which is 300 to 600 times greater than the median personal income in the U.S.

Obamacare will expand coverage to many of the over 40 million Americans without health insurance. Still, health insurance often fails to provide adequate coverage. Twenty-five million Americans are underinsured. In 2007, medical bills contributed to 62% of all personal bankruptcies. And 69% of those experiencing medical bankruptcy actually had health insurance at the time they got sick or injured—just not enough.

For health care, the U.S. pays more and gets less on key outcomes, such as health status (life expectancy) and financial risk protection (not being bankrupted by out-of-pocket medical expenses). The U.S. spends $7,500 per person on healthcare each year, twice as much as other rich nations spend, including Japan ($2,700), Spain ($2,900), Sweden ($3,500) and France ($3,700). And yet U.S. life expectancy is 78.2 years, while Japan’s is 83.0, Spain’s is 81.8, Sweden’s is 81.4 and France’s is 81.0.

Happily, there are plans that could truly reform our health system. One promising fix for our health system is to consolidate to single-payer insurance, a system in which a single public or quasi-public agency organizes health financing, but delivery of care remains largely private. With one payer, the U.S. could save enough on administrative costs (more than $350 billion annually) to cover all of the uninsured.  Patients would regain free choice of doctor and hospital, and doctors would regain autonomy over patient care.

Of course, there’s nothing that private health insurers and their lobbyists will fight harder against. After all, although a single-payer healthcare system would save American lives, it would hurt the profitability of the health insurance industry.  The industry will continue to fight so that the champagne will keep flowing, the money will keep showering down, and the accordion will keep playing.

[A 3-minute YouTube video of the action is available here.]

Jacob Bor is an ScD candidate in Global Health & Population at the Harvard School of Public Health. Heather Lanthorn is an ScD candidate in Global Health & Population at the Harvard School of Public Health. John Quattroch is an ScD candidate in Global Health & Population at the Harvard School of Public Health.

http://www.thecrimson.com/article/2012/2/10/occupy-hbs-insurance/

Hospitals' charity obligations

Hospitals Flout Charity Aid Law

By Nina Bernstein
The New York Times, February 12, 2012

New York’s charity care system, partly financed by an 8.95 percent surcharge on hospital bills, is one of the most complicated in the nation, but many states have wrestled with aggressive debt collection by hospitals in recent years. Like New York, several passed laws curbing hospitals’ pursuit of unpaid bills, including Illinois, California and Minnesota.

But a new study of New York hospitals’ practices and state records finds that most medical centers are violating the rules without consequences, even as the state government ignores glaring problems in the hospitals’ own reports.

Hospitals are not legally barred from seeking judgments or liens, but must first offer an aid application, help the patient complete it, and wait while it is pending. Instead, many hospitals turn to collection agencies, and sue when that fails. The unpaid bills — typically reflecting much higher rates than what insurers pay — are then treated as the equivalent of charity care.

Change is now urgent, health care experts agree, because the state pool stands to lose hundreds of millions of federal dollars in 2014, when provisions of the health care overhaul will no longer treat so-called bad debt, based on uncollected bills, as if it were charity care.

http://www.nytimes.com/2012/02/13/nyregion/study-finds-new-york-hospitals-flout-charity-rules.html?_r=1&emc=eta1&pagewanted=all

Comment: 

By Don McCanne, MD

How much charity care should hospitals be expected to provide? Contrary to the prevailing view, the answer should be, “None.” Let me explain.

With our fragmented, dysfunctional system of financing health care it is inevitable that some individuals will receive essential health care services in hospitals, often on an urgent or emergency basis, even though they lack both the funds and insurance coverage to pay for those services. Charity always has been expected of hospitals, so much so that some even have included “Charity” in their names.

The issue became more acute with a differentiation between nonprofit and for-profit hospitals. Nonprofit hospitals were relieved of tax obligations on retained revenues exceeding their costs in exchange for fulfilling their obligation to provide charity care. These retained excesses could then be used for capital improvements, or for charity care.

For-profit hospitals, as entrepreneurial entities, are taxed on these retained revenues as profits. As such, they usually are not expected to provide free care as part of their mission to profitably serve the health care needs of the community.

Members of Congress have expressed concerns over the fact that many nonprofit hospitals seem to be shirking their responsibilities to provide charitable services. They have been acting more like the for-profit hospitals in that much of their uncompensated care is not for prearranged charitable services but rather represents charges that patients were unable to pay. They then write this off as their charitable obligation, but usually only after vigorous attempts to collect the bills – efforts which often leave those patients in financial ruin forever.

It seems ironic that members of Congress pursue an investigation of the charity practices of nonprofit hospitals while paying their respects to market principles by exempting the for-profit hospitals from such an investigation, though it is understandable when you realize that Congress allows tax policy to trump health policy.

The fundamental flaw in all of this is our dysfunctional health care financing system. Everyone should have comprehensive health care coverage that pays all appropriate costs. There should never be a situation in which a person would require charity care. This is a fundamental principle common to most other wealthier nations in that their systems are designed to see that everyone receives appropriate care without the necessity of negotiating financial barriers. Services outside of the system, such as vanity cosmetic surgery, would be available based on the ability to pay, but would never require a need for charity.

Once again, it’s clear that we need to move forward with enacting an efficient, comprehensive, equitable single payer national health program. Why do we keep putting it off when the need is so clear?

Hospitals’ charity obligations

Hospitals Flout Charity Aid Law

By Nina Bernstein
The New York Times, February 12, 2012

New York’s charity care system, partly financed by an 8.95 percent surcharge on hospital bills, is one of the most complicated in the nation, but many states have wrestled with aggressive debt collection by hospitals in recent years. Like New York, several passed laws curbing hospitals’ pursuit of unpaid bills, including Illinois, California and Minnesota.

But a new study of New York hospitals’ practices and state records finds that most medical centers are violating the rules without consequences, even as the state government ignores glaring problems in the hospitals’ own reports.

Hospitals are not legally barred from seeking judgments or liens, but must first offer an aid application, help the patient complete it, and wait while it is pending. Instead, many hospitals turn to collection agencies, and sue when that fails. The unpaid bills — typically reflecting much higher rates than what insurers pay — are then treated as the equivalent of charity care.

Change is now urgent, health care experts agree, because the state pool stands to lose hundreds of millions of federal dollars in 2014, when provisions of the health care overhaul will no longer treat so-called bad debt, based on uncollected bills, as if it were charity care.

http://www.nytimes.com/2012/02/13/nyregion/study-finds-new-york-hospitals-flout-charity-rules.html?_r=1&emc=eta1&pagewanted=all

Comment: 

By Don McCanne, MD

How much charity care should hospitals be expected to provide? Contrary to the prevailing view, the answer should be, “None.” Let me explain.

With our fragmented, dysfunctional system of financing health care it is inevitable that some individuals will receive essential health care services in hospitals, often on an urgent or emergency basis, even though they lack both the funds and insurance coverage to pay for those services. Charity always has been expected of hospitals, so much so that some even have included “Charity” in their names.

The issue became more acute with a differentiation between nonprofit and for-profit hospitals. Nonprofit hospitals were relieved of tax obligations on retained revenues exceeding their costs in exchange for fulfilling their obligation to provide charity care. These retained excesses could then be used for capital improvements, or for charity care.

For-profit hospitals, as entrepreneurial entities, are taxed on these retained revenues as profits. As such, they usually are not expected to provide free care as part of their mission to profitably serve the health care needs of the community.

Members of Congress have expressed concerns over the fact that many nonprofit hospitals seem to be shirking their responsibilities to provide charitable services. They have been acting more like the for-profit hospitals in that much of their uncompensated care is not for prearranged charitable services but rather represents charges that patients were unable to pay. They then write this off as their charitable obligation, but usually only after vigorous attempts to collect the bills – efforts which often leave those patients in financial ruin forever.

It seems ironic that members of Congress pursue an investigation of the charity practices of nonprofit hospitals while paying their respects to market principles by exempting the for-profit hospitals from such an investigation, though it is understandable when you realize that Congress allows tax policy to trump health policy.

The fundamental flaw in all of this is our dysfunctional health care financing system. Everyone should have comprehensive health care coverage that pays all appropriate costs. There should never be a situation in which a person would require charity care. This is a fundamental principle common to most other wealthier nations in that their systems are designed to see that everyone receives appropriate care without the necessity of negotiating financial barriers. Services outside of the system, such as vanity cosmetic surgery, would be available based on the ability to pay, but would never require a need for charity.

Once again, it’s clear that we need to move forward with enacting an efficient, comprehensive, equitable single payer national health program. Why do we keep putting it off when the need is so clear?