PNHP

David Brooks' view on Medicare mistaken

David Brooks' view on Medicare mistaken

By Debra Walter, M.D.
Letters, Arizona Daily Star, June 14, 2011

Re: the June 8 column by David Brooks “Medicare proposals reflect parties’ worldviews”:

While I agree the debate really reflects broad philosophical differences, he is quite mistaken in assuming private insurance plans represent “local control.”

Blue Cross, United, Aetna and others are just as national and centralized as Medicare; they all have divisional levels of control.

Any physician will tell you that Medicare is the easiest and least controlling of all insurance choices.

The debate is really about the sanctity of corporate control versus allowing our government to assist us in pooling our resources and funding health care for all.

The continued fantasy that for-profit health insurance companies are acting in our collective best interest hasn’t proven to be true yet.

The continued drain of our health care dollars into profit, administration and advertising will keep draining our health as a nation until we as a country decide to take charge and take care of ourselves without the corporate middleman.

Debra Walter is a physician in Tucson.

Abortion Training, Childhood Obesity, Single Payer Catch Medical Students’ Attention

Richard Bruno, a third-year medical student, joined his peers in drafting policy recommendations for the American Association of Family Providers

By Christen McCurdy
The Lund Report, Aug. 17, 2011

Oregon Health and Science University medical student Richard Bruno has taken his passions – healthier diets for kids, improved working conditions for medical students, preserving access to abortion training and investigating the feasibility of a single-payer healthcare system – to a national level.

“If there’s anything that sort of underlies all this, it’s that medical student advocacy is really something that should be encouraged at medical schools,” Bruno said. “Medical students can be a voice for the voiceless, uninsured patients who are out there. If we teach them to harness the power of their short, white coats, they could really start to make a difference starting now and throughout their careers.”

At the end of July, the American Association of Family Providers (AAFP) held its annual conference – which included a student congress – in Kansas City. Bruno and several colleagues drafted policy resolutions that are expected to come before its Scientific Assembly in September.

As far as abortion training for medical students, which came under attack when the Foxx Amendment passed Congress recently, Bruno felt “we should take a stronger stance on this issue, especially given the national push.” That amendment restricts the ability of medical schools to receive federal funding if they teach students how to perform abortions.

Improving the working conditions for medical students also caught Bruno’s attention. A recent article in the New York Times focused on the plight of sleep-deprived doctors, which led to patients receiving inferior care. “I’m just getting a taste of this as a third-year medical student,” Bruno said. “No one’s tracking my hours. No one’s telling me when to go home.”

Bruno also believes the AAFP should create a task force to research a single-payer healthcare system, referring to a study commissioned by Vermont published in the New England Journal of Medicine, which found that a single-payer system would not only save the state money, but be beneficial for everyone. 

Childhood obesity is another cause trumpeted by Bruno and his colleagues. Earlier this year the Oregon Medical Association rejected a resolution calling upon McDonald’s to stop marketing to children. “The OMA was trepidatious about calling out a single company,” he said.

Now Bruno is calling upon the AAFP to sever its ties to Coca-Cola, which advertises on that website.

“It’s pretty much a conflict of interest,” he said, because these advertisements contradict information on the same website, asserting that sugar-sweetened beverages are unhealthy.

http://www.thelundreport.org/resource/abortion_training_childhood_obesity_catch_medical_students%E2%80%99_attention

Be the second state to pass universal health care

By Mark Liebow, M.D.
Rochester (Minn.) Post-Bulletin, Aug. 18, 2011

Well, Vermont beat us to it. The people of Vermont decided correctly that the advances of the Affordable Care Act weren’t enough. They looked at Massachusetts and found that with that state’s plan, which serves as the model for the Affordable Care Act, costs continue to rise and the rate of medical bankruptcies didn’t go down.

In fact, Massachusetts now has the highest insurance premiums of all 50 states. Vermonters pushed their elected officials to pass legislation that aims to set up a state single-payer plan, the first in the United States. We could be next.

The new private insurance that some Minnesotans will buy under the Affordable Care Act will not cover all their medical expenses. They will still face deductibles and co-payments that deter them from getting medical care. Some may be forced to choose between care and food or rent. Insurers will still take a big chunk of the premium for administrative expenses and profits which do not help patients. The flaws in our current system remain. There is a better way.

The Minnesota Health Plan, if enacted, would be a public program that covers all Minnesotans with better coverage and substantially lower administrative cost. The plan will cover all medically necessary services without deductibles or co-payments. There will be no complicated enrollment procedures or eligibility requirements. Health insurance bureaucrats will not stand between patients and their doctors.

The plan will save billions of dollars a year for Minnesotans. Even the non-profit insurance companies we have in Minnesota use 15 percent to 20 percent of the dollars they collect in premiums for overhead. Doctors, hospitals, and other providers also spend a substantial percentage of what they collect on administrative costs. Most of that needless spending will end when the plan is enacted. We can use the savings to lower the cost of services and to improve quality. Beyond that, doctors and patients will appreciate having less paperwork and the end of tedious struggles with insurance companies.

Of course, we’ll have to pay for this. There will be new taxes, which will be assessed based on ability to pay. However, we will stop paying premiums, deductibles, and copayments. For the average Minnesotan, their new taxes will be less than they are paying now. Businesses will no longer have the burden of purchasing health insurance for employees and dependents. This should lower retail prices and lower our cost of living.

The plan will be a big help to Rochester. Covering everyone will allow more patients to come to Mayo Clinic and Olmsted Medical Center. Furthermore, Mayo and Olmsted will no longer need to provide charity care or rack up bad debt from the care given to Minnesotans. Mayo Clinic alone will save hundreds of millions in health care costs for its employees and dependents. Rochester health care organizations will save hundreds of millions more in reduced costs for billing and collections. This will allow them to grow and hire more clinical employees.

We will lose jobs by eliminating health insurance companies, thus making most people in health care organizations doing billing, collections, and negotiations with insurers unnecessary. Many of these workers have clinical backgrounds and can move back into health care organizations as they grow. Others will need retraining. Fortunately, the Plan sets aside money for retraining those who need it and, most importantly, people losing jobs will not also lose health care.

Many at Mayo worry that a single-payer system will not recognize that Mayo sees more complex patients than most practices and hospitals, making its costs higher. They also worry about whether there will be support for research and education. The plan will negotiate annual budgets with Mayo hospitals and can provide the budget that will cover the costs of complexity. It will also negotiate provider fees and can set a higher fee for care provided at academic institutions.

Some have been concerned about “rationing” in a single-payer system. The plan is prohibited from restricting, delaying, or denying care, or reducing the quality of care to save money. Rather, savings come from streamlining our current administrative spending. We already spend enough on health care. By increasing efficiency, we can provide needed care to all Minnesotans.

While the plan can fix how we pay for care, it won’t fix problems in how we provide care, because it was never meant to fix those. We need to study those problems and figure out what we can do for them, since many will see the health care system as broken as long as the delivery of care is flawed. Still, fixing how we pay for health care at the state level would do many good things for Rochester, for Minnesota, and for Minnesotans. Vermont’s new law means we can’t be first, but we still can be the state with the best single-payer system. Let’s enact the Minnesota Health Plan (http://mnhealthplan.org).

Mark Liebow is a Rochester physician.

Open Letter on Health Care to Ohio Rep. Bill Hayes

By Brad Cotton, M.D.
Circleville (Ohio) Herald, Aug. 17, 2011

Rep. Hayes, I write you this open letter in response to your Circleville Herald column of 10 August, “Health Care Close to Home.”

I sincerely invite you to spend a shift or two with me in the emergency department to see and feel face to face the desperation of the tens of thousands of down-home Ohioans without access to health care.

These are not slackers or persons who just wish to freeload on your tax dollars, they are our neighbors and friends, the barber who cuts your hair, the server who waits on you, the clerk in the that large store. Often they are working two jobs trying to make ends meet, while cutting back on their own medicines to save for kid’s school supplies.

Come and feel the pain of real persons suffering and dying in your district having been abandoned by profitable insurance companies, whose profit margins are at record levels (“Health Insurers Make Record Profits as Many Postpone Care,” New York Times, 14 May 2011).

Like you, I too have problems with the Patient Protection and Affordable Care Act (PPACA), called “Obamacare” by detractors when “Romneycare” is in fact more accurate, as the PPACA is modeled after Massachusetts health care reform signed by Republican Gov. Mitt Romney in 2006.

I have problems with the PPACA not because of your concern that it is a government program controlled by inaccessible, far-away elected representatives, but because it keeps in place private health insurance companies controlled by even more inaccessible, often dishonest, and even farther away corporate boardrooms that I can’t even un-elect.

Dishonest a strong word? The Associated Press article “Insurers Allegedly Provided Inaccurate Medical-Loss Ratios” of 27 July notes several Florida insurance companies took advantage of lax oversight under Gov. Rick Scott, falsely claiming they spent funds on children’s Medicaid when in fact they pocketed the cash. Scott, a tea party favorite, presided as CEO of the Hospital Corporation of America/ Columbia Health Care when his company was fined one of the largest penalties ever levied by the federal government for insurance fraud.

Rep. Hayes, your column infers that the PPACA removes local choices that “are best handled by the people closest to home who know the situation best.” Ask your constituents how much honest close to home help they received from their health insurance company.

Rep. Hayes, Ohioans health is at risk not because of too much government, but of too little. We the people have failed to demand that our elected representatives appropriately oversee and regulate Wall-Street-traded health insurance giants that increase their bottom line by not keeping their word on the promise they offer: financial security in the face of illness.

Wendell Potter, former Cigna public relations officer turned whistleblower and author of “Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care and Deceiving Americans,” warns, “One of the secrets to achieving these [record profits] is what the insurers euphemistically call ‘medical management.’ That often translates into denied claims and denied coverage for doctor-ordered care. The fewer claims they pay and the more procedures they refuse to pay for, the more money is left over for investors to put in their pockets. … It’s to the insurer’s advantage for it to be complicated and confusing and hard to deal with insurance companies. They profit as a result of the confusion.”

Private for-profit health insurance companies, these are the real death panels.

Rep. Hayes, for the sake of all Ohioans I urge you to support HB 287, the “Ohio Health Security Act,” introduced by Reps. Bob Hagan and Mike Foley. HB 287 would move Ohio closer to a single-payer model, shown throughout the industrialized world to be the most cost-effective and compassionate.

Vermont has just passed single payer – no one in Vermont will die for lack of health insurance. The prestigious American Journal of Public Health, December 2009, published “Health Insurance and Mortality in U.S. Adults,” estimating that 45,000 Americans die yearly from lack of health insurance. This does not include those who die as a result of denied claims. Some of these deaths are your constituents.

Rep. Hayes, until we reach single payer you can save the lives of many Ohioans by reining in the worst of health insurance company abuses by supporting the PPACA. Under these reforms no Ohioan can be denied insurance for pre-existing conditions, no neighbor of ours will find their insurance taken away when their care threatens company profits.

Arbitrary denials of claims by insurers will, for the first time, be subject to appeal, as will premium increases. Insurers will be forced to spend at least 80-85 percent of all premiums collected on direct patient care. Under the Patient Protection and Affordable Care Act, more Ohioans will live, certainly the best “down-home” neighborly gift we can give.

Brad Cotton, M.D., is an emergency physician and a member of Physicians for a National Health Program (www.pnhp.org).

Health care a right

Editorial
Cape Cod Times, Aug. 18, 2011

Despite a recent setback at the federal appeals court level, health care reform still represents the nation’s best solution to not only a broken health insurance system, but to our country’s long-term deficit problems.

As the St. Louis Post-Dispatch wrote in an editorial last week, everyone who has studied the deficit problem has agreed that it’s actually a health care problem — the cost of providing Medicare benefits to a longer-living population.

“The Congressional Budget Office projects if we continue on our current course, deficits will remain high throughout the rest of this decade and beyond, and debt will spiral ever higher, reaching 90 percent of GDP in 2020,” wrote the bipartisan National Commission on Fiscal Responsibility and Reform in December.

“Over the long run, as the baby boomers retire and health care costs continue to grow, the situation will become far worse. By 2025 revenue will be able to finance only interest payments, Medicare, Medicaid and Social Security. Every other federal government activity — from national defense to transportation and energy — will have to be paid for with borrowed money.”

That being the case, the government must reduce its health care costs. This is what a single-payer health care system would do, largely by taking the for-profit players (mostly insurance companies) out of the loop.

After all, Physicians for a National Health Program estimates that “private insurance bureaucracy and paperwork consume one-third (31 percent) of every health care dollar.

“Streamlining payment through a single nonprofit payer would save more than $400 billion per year, enough to provide comprehensive, high-quality coverage for all Americans,” the editorial goes on, quoting the physicians group. “Once everyone is covered, the government would have the clout to bring discipline into the wild west of health care spending.”

Health facilities and equipment would be managed by regional boards. Medical services would be “bundled.” Rather than paying hospitals, doctors and laboratories separately, there would be fixed prices for treatments.

In May, Vermont became the first state in the union to pass legislation that would move it toward a Canadian-style universal, single-payer system.

The new law calls for a five-member board to set reimbursement rates for health care providers and streamline administration into a unified system called Green Mountain Care that will cover all Vermont residents.

“In the long run, it aims to replace fee-for-service payment with a system that will pay health care providers a specific amount of money to care for a specific population, providing incentives for preventive care,” Folbre wrote.

In testimony before the Vermont Legislature, William Hsiao, a professor at the Harvard School of Public Health, described his experience designing single-payer health care systems in several countries, most recently Taiwan. He also presented the results of a detailed analysis of the health care system of Vermont, providing estimates of potential savings from a single-payer system.

Gerald Friedman, another economics professor at UMass, estimates that similar changes in Massachusetts could sharply reduce the cost of billing and processing insurance claims, generating savings of 17 percent.

According to Friedman, a universal single-payer approach is not just more affordable; in the long run, it may be the only affordable option.

http://www.capecodonline.com/apps/pbcs.dll/article?AID=/20110818/OPINION/108180335/-1/NEWSMAP

John Goodman on IntegraNet as a private sector solution

Health Policy Schizophrenia

By John Goodman
National Center for Policy Analysis, August 17, 2011

An example of an IDN (Integrated Delivery Network) that is already doing what the Obama administration wants to try out with expensive pilot programs is IntegraNet of Houston, an organization with a network of about 1,200 doctors. Every Medicare patient has a medical home. The physicians follow evidence-based practices. Care is integrated and coordinated. Electronic records are being introduced. It appears that quality is higher and costs are lower than in conventional Medicare.

So what’s not to like? If the folks at CMS had any sense, they would camp out in Houston and try to find out how all this works. Instead, they have been spending their time and your tax dollars producing a 427-page book of rules on what Accountable Care Organizations (ACOs) have to look like….

In the meantime, there is no doubt in my mind that IntegraNet doesn’t satisfy all the government’s requirements by a long shot. For one thing, it pays its doctors fee-for-service. The Obama folks are convinced fee-for-service payment is the problem, not the solution. For another, IntegraNet intentionally pays doctors more than Medicare’s standard rates. Yet the administration’s Plan B for cost control is squeezing provider payments, not increasing them.

A third problem is that it is producing a medical loss ratio (MLR) of 70% or less for its insurance company clients. As previously reported that is 10 percentage points less than the minimum MLR the Obama administration thinks insurers should have. But that extra 10 percentage point profit (shared by the IDN and the insurer) is the whole reason IntegraNet is in business. No one is going to take risks and try new things if they can only get a regulated-utility rate of return.

(Understandably, John Goodman would prefer that excerpts from his articles not be read out of context. The entire article can be accessed at this link.)

http://healthblog.ncpa.org/health-policy-schizophrenia/

Selected responses:

Don McCanne says:
August 17, 2011 at 3:38 pm

With health care costs for a family now averaging over $18,000, not including insurer administrative costs (Milliman Medical Index), how can one justify adding another 43 percent to those costs (the administration and profit add-on for 70 percent MLR plans)?

The Affordable Care Act isn’t a whole lot better since it allows 18 to 25 percent add-on for qualified private plans.

We now have a new report from the IG of HHS that shows an important difference between private and public health care purchasing. When quality is controlled, government administered pricing is much lower than private sector pricing. Specifically, the government Medicaid program was able to obtain a 45 percent price reduction in brand-name drugs whereas the private Medicare Part D intermediaries were able to negotiate only a 19 percent reduction for those same drugs of identical quality.

Health care costs are now an issue for 80 percent of Americans. We can no longer afford to waste our funds catering to superfluous, intrusive, outrageously expensive, private sector insurance bureaucracies.

Since risk pooling remains an imperative, we do need some form of insurance, but without these wasteful private bureaucracies. It is no wonder that so many conservatives warn that we’ll end up with a single payer system. It seems inevitable.

Larry Wedekind says:
August 18, 2011 at 10:08 am

John, well said..thanks for the recognition of our efforts at IntegraNet.

To Dr. Mittler (the author of another response not reproduced here),

The nature and benefit of competition is that private companies develop unique and better methodologies or products and in our free market they can become proprietary for awhile – this aspect of our society has produced many lasting benefits that would never have existed without the ability to patent or service mark unique ideas and products. I can tell you though that IntegraNet has not been able to keep our proprietary methodologies private very long due to the fact that physicians, Health Plan partners and our patients all experience our methods quickly and so they become public quickly. Its also very difficult to service mark our methods for the same reason.

Note also that insurance companies and IDN’s do not make any extra money in our Shared Risk/Savings Model unless the physicians make a lot of extra money. This is a unique feature of the Medicare Advantage Model that is easily forgotten. Why would you loath insurance company executives receiving more money for their wisdom in promoting the Shared Risk Model when physicians are paid the extra money first for their efforts?

Don McCanne says:
August 18, 2011 at 10:41 am

To Larry Wedekind,

Let’s see. The formula for success at IntegraNet is to use secret methods to reduce spending on actual health care (70% MLR) and keep more of the premiums so that “physicians make a lot of extra money”? With our outrageously expensive health care system, unique to the United States, can we really afford to perpetuate that kind of thinking, celebrating it as free market competition of private companies?

Value is what we should be striving for. In this model, the supposedly free market is being used to destroy value. When free markets fail in providing value for essential needs, it’s time for the government to step in. That might not appeal to those ideologically opposed, but one thing we can say: single payer systems do provide much better value in health care.

Larry Wedekind says:
August 18, 2011 at 11:16 am

To Don: I’m sorry, but you are very confused about the MA (Medicare Advantage) system. The fact that IntegraNet and other IDN’s consistently reduce the MLR to below 70% means that great value has accrued to the Medicare beneficiaries! To suggest otherwise is simply ignorant. Why? When a Health Plan experiences a 70% or less MLR because of the Care Coordination efforts of their IDN partner, this nearly always means that the beneficiaries are healthier and need the hospital less frequently. I submit to you that it is impossible to have a 70% or lower MLR without healthier patients.

This extra profit derived from the low MLR that is shared with the doctors in the IDN empowers the doctors to then spend even more time with their beneficiaries; this empowering the beneficiaries even more.

Remember that, due to the transfer of complete financial risk to the HMO and IDN, we have almost complete freedom to care for our beneficiaries under the MA Program the way we deem best. There is very little interference from CMS in our methods for caring for our beneficiaries under the MA Program.

The MA/IDN Risk Sharing model is actually the best example of free market competition within the healthcare market yet.

http://healthblog.ncpa.org/health-policy-schizophrenia/

Comment: 

By Don McCanne, MD

As John Goodman said in this same article in an entirely different context, “It’s so bizarre that not even J.K. Rowling could make up a story like this.”

John Goodman on IntegraNet as a private sector solution

Health Policy Schizophrenia

By John Goodman
National Center for Policy Analysis, August 17, 2011

An example of an IDN (Integrated Delivery Network) that is already doing what the Obama administration wants to try out with expensive pilot programs is IntegraNet of Houston, an organization with a network of about 1,200 doctors. Every Medicare patient has a medical home. The physicians follow evidence-based practices. Care is integrated and coordinated. Electronic records are being introduced. It appears that quality is higher and costs are lower than in conventional Medicare.

So what’s not to like? If the folks at CMS had any sense, they would camp out in Houston and try to find out how all this works. Instead, they have been spending their time and your tax dollars producing a 427-page book of rules on what Accountable Care Organizations (ACOs) have to look like….

In the meantime, there is no doubt in my mind that IntegraNet doesn’t satisfy all the government’s requirements by a long shot. For one thing, it pays its doctors fee-for-service. The Obama folks are convinced fee-for-service payment is the problem, not the solution. For another, IntegraNet intentionally pays doctors more than Medicare’s standard rates. Yet the administration’s Plan B for cost control is squeezing provider payments, not increasing them.

A third problem is that it is producing a medical loss ratio (MLR) of 70% or less for its insurance company clients. As previously reported that is 10 percentage points less than the minimum MLR the Obama administration thinks insurers should have. But that extra 10 percentage point profit (shared by the IDN and the insurer) is the whole reason IntegraNet is in business. No one is going to take risks and try new things if they can only get a regulated-utility rate of return.

(Understandably, John Goodman would prefer that excerpts from his articles not be read out of context. The entire article can be accessed at this link.)

http://healthblog.ncpa.org/health-policy-schizophrenia/

Selected responses:

Don McCanne says:
August 17, 2011 at 3:38 pm

With health care costs for a family now averaging over $18,000, not including insurer administrative costs (Milliman Medical Index), how can one justify adding another 43 percent to those costs (the administration and profit add-on for 70 percent MLR plans)?

The Affordable Care Act isn’t a whole lot better since it allows 18 to 25 percent add-on for qualified private plans.

We now have a new report from the IG of HHS that shows an important difference between private and public health care purchasing. When quality is controlled, government administered pricing is much lower than private sector pricing. Specifically, the government Medicaid program was able to obtain a 45 percent price reduction in brand-name drugs whereas the private Medicare Part D intermediaries were able to negotiate only a 19 percent reduction for those same drugs of identical quality.

Health care costs are now an issue for 80 percent of Americans. We can no longer afford to waste our funds catering to superfluous, intrusive, outrageously expensive, private sector insurance bureaucracies.

Since risk pooling remains an imperative, we do need some form of insurance, but without these wasteful private bureaucracies. It is no wonder that so many conservatives warn that we’ll end up with a single payer system. It seems inevitable.

Larry Wedekind says:
August 18, 2011 at 10:08 am

John, well said..thanks for the recognition of our efforts at IntegraNet.

To Dr. Mittler (the author of another response not reproduced here),

The nature and benefit of competition is that private companies develop unique and better methodologies or products and in our free market they can become proprietary for awhile – this aspect of our society has produced many lasting benefits that would never have existed without the ability to patent or service mark unique ideas and products. I can tell you though that IntegraNet has not been able to keep our proprietary methodologies private very long due to the fact that physicians, Health Plan partners and our patients all experience our methods quickly and so they become public quickly. Its also very difficult to service mark our methods for the same reason.

Note also that insurance companies and IDN’s do not make any extra money in our Shared Risk/Savings Model unless the physicians make a lot of extra money. This is a unique feature of the Medicare Advantage Model that is easily forgotten. Why would you loath insurance company executives receiving more money for their wisdom in promoting the Shared Risk Model when physicians are paid the extra money first for their efforts?

Don McCanne says:
August 18, 2011 at 10:41 am

To Larry Wedekind,

Let’s see. The formula for success at IntegraNet is to use secret methods to reduce spending on actual health care (70% MLR) and keep more of the premiums so that “physicians make a lot of extra money”? With our outrageously expensive health care system, unique to the United States, can we really afford to perpetuate that kind of thinking, celebrating it as free market competition of private companies?

Value is what we should be striving for. In this model, the supposedly free market is being used to destroy value. When free markets fail in providing value for essential needs, it’s time for the government to step in. That might not appeal to those ideologically opposed, but one thing we can say: single payer systems do provide much better value in health care.

Larry Wedekind says:
August 18, 2011 at 11:16 am

To Don: I’m sorry, but you are very confused about the MA (Medicare Advantage) system. The fact that IntegraNet and other IDN’s consistently reduce the MLR to below 70% means that great value has accrued to the Medicare beneficiaries! To suggest otherwise is simply ignorant. Why? When a Health Plan experiences a 70% or less MLR because of the Care Coordination efforts of their IDN partner, this nearly always means that the beneficiaries are healthier and need the hospital less frequently. I submit to you that it is impossible to have a 70% or lower MLR without healthier patients.

This extra profit derived from the low MLR that is shared with the doctors in the IDN empowers the doctors to then spend even more time with their beneficiaries; this empowering the beneficiaries even more.

Remember that, due to the transfer of complete financial risk to the HMO and IDN, we have almost complete freedom to care for our beneficiaries under the MA Program the way we deem best. There is very little interference from CMS in our methods for caring for our beneficiaries under the MA Program.

The MA/IDN Risk Sharing model is actually the best example of free market competition within the healthcare market yet.

http://healthblog.ncpa.org/health-policy-schizophrenia/

As John Goodman said in this same article in an entirely different context, “It’s so bizarre that not even J.K. Rowling could make up a story like this.”

Government is runaway victor over private sector in obtaining lower drug prices

Higher Rebates for Brand-Name Drugs Result in Lower Costs for Medicaid Compared to Medicare Part D

Office of the Inspector General
Department of Health and Human Services, August 2011

Prescription drug rebates reduce the program costs of both Medicare Part D and Medicaid. Medicaid rebates are defined by statute; additional rebates are required when prices for brand-name drugs increase faster than inflation. Unlike the Medicaid program, Part D sponsors (or contractors acting on their behalf) negotiate rebates with drug manufacturers without any statutory requirements on rebate amounts. In fact, the law establishing the Part D program expressly prohibits the Government from instituting a price structure for the reimbursement of covered Part D drugs.

In this review, we found that Part D sponsors and State Medicaid agencies paid pharmacies similar amounts for most brand-name drugs under review. However, statutorily defined Medicaid unit rebate amounts for brand-name drugs exceeded Part D unit rebate amounts by a substantial margin. As a result, Medicaid collected nearly two-thirds as much as Part D in rebates for the 100 brand-name drugs ($2.9 billion vs. $4.5 billion), despite having only about one-fourth of the expenditures ($6.4 billion vs. $24 billion).

Overall, rebates reduced Part D expenditures by 19 percent for the 100 brand-name drugs under review (from $24 billion to $19.5 billion) in 2009. Medicaid rebates accounted for a substantially higher percentage of total expenditures, reducing Medicaid spending for the 100 drugs under review by 45 percent (from $6.4 billion to $3.5 billion).

http://oig.hhs.gov/oei/reports/oei-03-10-00320.pdf

Comment:

By Don McCanne, MD

We are inundated with nonsense about how private health insurance competition in the marketplace brings us higher quality at lower costs when compared with government-administered programs. This study by the Inspector General of Health and Human Services provides an enlightening test of that theory by controlling for quality while measuring the differences in cost. Both Medicaid (government) and Medicare Part D (private) use the same brand-name drugs with identical quality, so cost becomes the sole variable.

Our government-run Medicaid program has been able to negotiate a 45 percent discount on these brand-name drugs, whereas the private Medicare Part D sponsors or contractors have been able to extract only a 19 percent discount on these same drugs. Clearly, when quality is controlled, the private sector brings us much higher prices than does the government.

Under a single payer national health program – an improved Medicare for All – these highly wasteful middlemen would be eliminated and the government would use its monopsonistic buying power to get the prices right. Payment would be based on actual costs, including legitimate research, plus fair profits.

Having to change the rhetorical framing of the dialog from “markets and competition” to “social solidarity” is a small price to pay for achieving the efficient use of our health care dollars. Thinking about that, being able to dump the ideology behind the intrusive, wasteful middlemen is not a price that we would be paying, but a superb benefit that we would be gaining.

Government is runaway victor over private sector in obtaining lower drug prices

Higher Rebates for Brand-Name Drugs Result in Lower Costs for Medicaid Compared to Medicare Part D

Office of the Inspector General
Department of Health and Human Services, August 2011

Prescription drug rebates reduce the program costs of both Medicare Part D and Medicaid. Medicaid rebates are defined by statute; additional rebates are required when prices for brand-name drugs increase faster than inflation. Unlike the Medicaid program, Part D sponsors (or contractors acting on their behalf) negotiate rebates with drug manufacturers without any statutory requirements on rebate amounts. In fact, the law establishing the Part D program expressly prohibits the Government from instituting a price structure for the reimbursement of covered Part D drugs.

In this review, we found that Part D sponsors and State Medicaid agencies paid pharmacies similar amounts for most brand-name drugs under review. However, statutorily defined Medicaid unit rebate amounts for brand-name drugs exceeded Part D unit rebate amounts by a substantial margin. As a result, Medicaid collected nearly two-thirds as much as Part D in rebates for the 100 brand-name drugs ($2.9 billion vs. $4.5 billion), despite having only about one-fourth of the expenditures ($6.4 billion vs. $24 billion).

Overall, rebates reduced Part D expenditures by 19 percent for the 100 brand-name drugs under review (from $24 billion to $19.5 billion) in 2009. Medicaid rebates accounted for a substantially higher percentage of total expenditures, reducing Medicaid spending for the 100 drugs under review by 45 percent (from $6.4 billion to $3.5 billion).

http://oig.hhs.gov/oei/reports/oei-03-10-00320.pdf

We are inundated with nonsense about how private health insurance competition in the marketplace brings us higher quality at lower costs when compared with government-administered programs. This study by the Inspector General of Health and Human Services provides an enlightening test of that theory by controlling for quality while measuring the differences in cost. Both Medicaid (government) and Medicare Part D (private) use the same brand-name drugs with identical quality, so cost becomes the sole variable.

Our government-run Medicaid program has been able to negotiate a 45 percent discount on these brand-name drugs, whereas the private Medicare Part D sponsors or contractors have been able to extract only a 19 percent discount on these same drugs. Clearly, when quality is controlled, the private sector brings us much higher prices than does the government.

Under a single payer national health program – an improved Medicare for All – these highly wasteful middlemen would be eliminated and the government would use its monopsonistic buying power to get the prices right. Payment would be based on actual costs, including legitimate research, plus fair profits.

Having to change the rhetorical framing of the dialog from “markets and competition” to “social solidarity” is a small price to pay for achieving the efficient use of our health care dollars. Thinking about that, being able to dump the ideology behind the intrusive, wasteful middlemen is not a price that we would be paying, but a superb benefit that we would be gaining.

Single-payer: Sensible health plan

By the Editorial Board
Charleston (W.Va.) Gazette, Aug. 16, 2011

Some federal courts are ruling that America’s breakthrough 2010 medical reform is kaput because government cannot force people to pay for health insurance. (Governments force people to buy car insurance. What’s the difference?)

If the historic reform eventually is killed, we hope it leads to a better alternative. We hope America finally joins other advanced democracies by adopting a government-run “single-payer” universal health plan covering every citizen.

America’s federal debt nightmare has three obvious causes: (1) The gigantic U.S. military and foreign invasions that gobble $1 trillion per year. (2) Huge Republican tax giveaways to the high-bracket elite. (3) Snowballing Medicare and Medicaid expense as America’s population ages.

Regarding the latter, enormous savings could be gained if America switched to a single-payer system. It would eliminate waste by commercial insurance firms, whose large staffs try to avoid paying medical bills. It also would extend medical insurance to millions of “working poor” families who lack it.

Physicians for a National Health Program, a coalition of reform-minded U.S. doctors, says:

“Private insurance bureaucracy and paperwork consume one-third (31 percent) of every health-care dollar. Streamlining payment through a single nonprofit payer would save more than $400 billion per year, enough to provide comprehensive, high-quality coverage for all Americans.”

The St. Louis Post-Dispatch commented last week:

“If America truly is serious about dealing with its deficit problems, there’s a fairly simple solution … Enact a single-payer health-care plan.”

The paper said a universal system could reduce taxpayer costs drastically, “largely by taking the for-profit players (insurance companies, for the most part) out of the loop.”

President Obama’s 2010 reform compromised with many special interests and did a halfway job, extending coverage to 33 million more Americans. A complete single-payer plan would finish the crusade.

Oddly, conservatives who scream loudest about federal deficits also vow to destroy the 2010 U.S. medical reform. They would dump the 33 million Americans into jeopardy.

Most modern democracies have decided that health care is a human right, available to all. America should join them — and save $400 billion a year in the process.

http://sundaygazettemail.com/Opinion/Editorials/201108160869

Medicare for All Trumps Mandate

Why the new healthcare law should have been based on Medicare. (And what Democrats should have learned by now.)

By Robert Reich
Robert Reich’s blog, Aug. 16, 2011

Two appellate judges in Atlanta — one appointed by President Bill Clinton and one by George H.W. Bush — have just decided the Constitution doesn’t allow the federal government to require individuals to buy health insurance.

The decision is a major defeat for the White House. The so-called “individual mandate” is a cornerstone of the Affordable Care Act, President Obama’s 2010 healthcare reform law, scheduled to go into effect in 2014.

The whole idea of the law is to pool heath risks. Only if everyone buys insurance can insurers afford to cover people with preexisting conditions, or pay the costs of catastrophic diseases.

The issue is now headed for the Supreme Court (another appellate court has upheld the law’s constitutionality) where the prognosis isn’t good. The Court’s Republican-appointed majority has not exactly distinguished itself by its progressive views.

Chalk up another one for the GOP, outwitting and outflanking the President and the Democrats.

Remember the health-care debate? Congressional Republicans refused to consider a single-payer system that would automatically pool risks. They wouldn’t even consider giving people the option of buying into it.

The President and the Democrats caved, as they have on almost everything. They came up with a compromise that kept health care in the hands of private insurance companies.

The only way to spread the risk in such a system is to require everyone buy insurance.

Which is exactly what the two appellate judges in Atlanta object to. The Constitution, in their view, doesn’t allow the federal government to compel citizens to buy something. “Congress may regulate commercial actors,” they write. “But what Congress cannot do under the Commerce Clause is mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die.”

Most Americans seem to agree. According to polls, 60 percent of the public opposes the individual mandate. Many on the right believe it a threat to individual liberty. Many on the left object to being required to buy something from a private company.

Had the President and the Democrats stuck to their guns during the health-care debate and insisted on Medicare for all, or at least a public option, they wouldn’t now be facing the possible unraveling of the new healthcare law.

After all, Social Security and Medicare – the nation’s two most popular safety nets – require every working American to “buy” them. The purchase happens automatically in the form of a deduction from everyone’s paychecks.

But because Social Security and Medicare are government programs they don’t feel like mandatory purchases. They’re more like tax payments, which is what they are — payroll taxes.

There’s no question payroll taxes are constitutional, because there’s no doubt that the federal government can tax people in order to finance particular public benefits.

Americans don’t mind mandates in the form of payroll taxes for Social Security or Medicare. In fact, both programs are so popular even conservative Republicans were heard to shout “don’t take away my Medicare!” at rallies opposed to the new health care law.

Requiring citizens to buy something from a private company is entirely different. If Congress can require citizens to buy health insurance from the private sector, reasoned the two appellate judges in Atlanta, what’s to stop it from requiring citizens to buy anything else? If the law were to stand, “a future Congress similarly would be able to articulate a unique problem … compelling Americans to purchase a certain product from a private company.”

Other federal judges in district courts – one in Virginia and another in Florida – have struck down the law on similar grounds. They said the federal government has no more constitutional authority requiring citizens to buy insurance than requiring them to buy broccoli or asparagus. (The Florida judge referred to broccoli; the Virginia judge to asparagus.)

Social Security and Medicare aren’t broccoli or asparagus. They’re as American as hot dogs and apple pie.

The Republican strategy should now be clear: Privatize anything that might otherwise be a public program financed by tax dollars. Then argue in the courts that any mandatory purchase of it is unconstitutional because it exceeds the government’s authority. And rally the public against the requirement.

Remember this next time you hear Republican candidates touting Paul Ryan’s plan for turning Medicare into vouchers for seniors to buy private health insurance.

So what do Obama and the Democrats do if the individual mandate in the new healthcare law gets struck down by the Supreme Court?

Immediately propose what they should have proposed right from the start – universal healthcare based on Medicare for all, financed by payroll taxes. The public will be behind them, as will the courts.

Robert Reich is Chancellor’s Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton.

http://readersupportednews.org/opinion2/272-39/7052-medicare-for-all-trumps-mandate

John Nichols on replacing the mandate with Medicare for All

Can We Have Health Reform Without an Individual Mandate? Yes, It's Called 'Medicare for All'

By John Nichols
The Nation, August 13, 2011

The individual mandate was always a bad idea. Instead of recognizing that healthcare is a right, the members of Congress and the Obama administration who cobbled together the healthcare reform plan created a mandate that maintains the abuses and the expenses of for-profit insurance companies — and actually rewards those insurance companies with a guarantee of federal money.

Those who think that the for-profit (or even not-for-profit) insurance industry has to control any healthcare reform initiative have every right to be upset with the 11th Circuit’s ruling — which almost certainly will send the case of the Obama healthcare plan to the US Supreme Court.

But those of us who have no desire to perpetuate the insurance industry can and should recognize that the proper — and entirely constitutional — reform is an expansion of Medicare to cover all Americans.

While Medicare is exceptionally popular, polling shows that the individual mandate is not — according to recent surveys, roughly 60 percent of Americans oppose it.

It also passes constitutional muster.

As former Labor Secretary Robert Reich notes: “[No] federal judge has struck down Social Security or Medicare as being an unconstitutional requirement that Americans buy something. Social Security and Medicare aren’t broccoli or asparagus. They’re as American as hot dogs and apple pie.”

“So if the individual mandate to buy private health insurance gets struck down by the Supreme Court or killed off by Congress,” says Reich, “I’d recommend President Obama immediately propose what he should have proposed in the beginning — universal health care based on Medicare for all, financed by payroll taxes.”

The insurance companies would, of course, scream.

But let them complain.

Americans don’t need mandates. They need healthcare.

And they have every right to ask, as activists with Physicians for a National Health Program have, that Medicare be expanded to cover all Americans — affordably, efficiently, capably and constitutionally.

http://www.thenation.com/blog/162765/can-we-have-health-reform-without-individual-mandate-yes-its-called-medicare-all

Comment: 

By Don McCanne, MD

Americans overwhelmingly support Medicare, yet an unequivocal majority oppose a government requirement to purchase private health insurance. Why should we have to wait until we’re 65 to have Medicare, while in the interim being required to buy something we don’t want? Let the Supreme Court rule that the individual mandate is unconstitutional, and then maybe we can convince a newly elected Congress to pass the reform that we really need.

We are pleased that Washington correspondent John Nichols of The Nation has joined with Physicians for a National Health Program and the growing chorus of other enlightened voices who call for a vastly superior model of reform that actually would pass constitutional muster – an improved Medicare, expanded to include everyone.