PNHP

Part D private insurers actually raise Medicare costs

Part D private insurers actually raise Medicare costs

Lower-Than-Expected Medicare Drug Costs Reflect Decline in Overall Drug Spending and Lower Enrollment, Not Private Plans

Evidence Shows Reliance on Private Insurers Actually Raised Medicare Costs

By Edwin Park
Center on Budget and Policy Priorities, May 6, 2011

Some supporters of the House budget plan’s proposal to replace Medicare with a voucher to purchase private health insurance claim that reliance on private insurers can lower costs. They cite the fact that the costs of Medicare Part D, which took effect in 2006, have been lower than the Congressional Budget Office predicted when Congress enacted the drug benefit. They attribute this lower spending to efficiencies produced by competition among the private insurers that deliver the benefit.

This claim does not withstand scrutiny. The two primary factors driving the reduction in Medicare Part D spending were:

* The sharp decline in growth in spending for prescription drugs throughout the U.S. health care system.

* Lower-than-expected enrollment in Medicare Part D.

Moreover, there is evidence that, far from reducing costs, the use of private plans to deliver the Medicare drug benefit has increased costs.

http://www.cbpp.org/files/5-6-11health.pdf

Comment: 

By Don McCanne, MD

Edwin Park has dispelled the myth that private insurers were to be credited for Medicare Part D drug spending that fell below prior projections of the Congressional Budget Office. The lower than anticipated spending had nothing to do with the interventions of the private insurers, but were due primarily to two factors: 1) lower prices due to greater use of generics, more drugs losing patent protection, and a lack of new blockbuster drugs, and 2) fewer Medicare beneficiaries than anticipated enrolled in these lousy Part D drug plans.

Not only can these plans not take credit for the lower than expected program spending, they, in fact, actually increased costs to Medicare. The reasons are explained in the technical but easy-to-read, three page report available at the link above.

Not mentioned in the report are the facts that these plans also reduced choices in drugs by having limited formularies, and they reduced choices in pharmacies by having restricted pharmacy networks.

This is yet one more example of how private insurance intermediaries increase our costs while reducing our choices of both providers and their products and services. Yet the Patient Protection and Affordable Care Act is based on this model that brings us fewer choices at higher costs.

Let’s oust these expensive, wasteful, intrusive intermediaries and replace them with our own public financing program that would offer all of us free choice and greater value.

Vermont Passes Plan for Universal Healthcare

By Robert Lowes
Medscape Today, May 5, 2011

In a 94 to 49 vote today, the state House in Vermont sealed the deal on a bill to eventually create a publicly financed universal healthcare system that some supporters dub “single payer.”

With the state Senate already having given its approval last week, the bill will now go to Vermont Governor Peter Shumlin, who is eager to sign it into law.

Today’s action completes the second round of voting for the bill. Both chambers of the Vermont legislature had approved earlier versions, but a House–Senate conference committee had to iron out minor differences and send the bill back for additional votes.

The legislation establishes a state health insurance exchange — mandated by the new healthcare reform law called the Affordable Care Act (ACA) — through which individuals and small businesses can purchase coverage. The bill envisions this exchange becoming a publicly financed health plan called Green Mountain Care that is available to all Vermont residents. Proponents of Green Mountain Care have touted it as a single-payer system, but the bill allows individuals covered under the state plan to buy supplemental policies from private insurers. In addition, individuals can keep the insurance coverage they already have.

For these and other reasons, a group called Physicians for a National Health Program contends that the Vermont bill falls short of a true single-payer model. Although Governor Shumlin disagrees with that assessment, lawmakers removed the expression “single-payer system” from the bill and replaced it with “universal and unified health system.”

Under the ACA, states can obtain waivers to opt out of federal healthcare reform requirements and enact equivalent statewide reforms similar to the kind underway in Vermont beginning in 2017. Shumlin and others hope that Congress passes a pending bill that would move the opt-out date to 2014. States securing waivers will receive the ACA funding that they are otherwise entitled to. Nevertheless, Vermont lawmakers still face the job of devising a comprehensive plan to pay for their new system.

Vermont’s roadmap for universal healthcare coverage and a publicly financed health plan has received mixed reviews from physicians in that state. According to a survey conducted by Democratic state Rep. George Till, MD, who voted for the legislation, 44.2% of physicians support the single-payer concept, and 45.6% oppose it. Opponents tend to be specialists, who are more likely than primary care physicians to view the new system as financially unattractive. In addition, 28.4% of physicians say they would likely stop practicing medicine in Vermont if the proposed reforms come to fruition.

http://www.medscape.com/viewarticle/742154

Part D private insurers actually raise Medicare costs

Lower-Than-Expected Medicare Drug Costs Reflect Decline in Overall Drug Spending and Lower Enrollment, Not Private Plans

Evidence Shows Reliance on Private Insurers Actually Raised Medicare Costs

By Edwin Park
Center on Budget and Policy Priorities, May 6, 2011

Some supporters of the House budget plan’s proposal to replace Medicare with a voucher to purchase private health insurance claim that reliance on private insurers can lower costs. They cite the fact that the costs of Medicare Part D, which took effect in 2006, have been lower than the Congressional Budget Office predicted when Congress enacted the drug benefit. They attribute this lower spending to efficiencies produced by competition among the private insurers that deliver the benefit.

This claim does not withstand scrutiny. The two primary factors driving the reduction in Medicare Part D spending were:

* The sharp decline in growth in spending for prescription drugs throughout the U.S. health care system.

* Lower-than-expected enrollment in Medicare Part D.

Moreover, there is evidence that, far from reducing costs, the use of private plans to deliver the Medicare drug benefit has increased costs.

http://www.cbpp.org/files/5-6-11health.pdf

Edwin Park has dispelled the myth that private insurers were to be credited for Medicare Part D drug spending that fell below prior projections of the Congressional Budget Office. The lower than anticipated spending had nothing to do with the interventions of the private insurers, but were due primarily to two factors: 1) lower prices due to greater use of generics, more drugs losing patent protection, and a lack of new blockbuster drugs, and 2) fewer Medicare beneficiaries than anticipated enrolled in these lousy Part D drug plans.

Not only can these plans not take credit for the lower than expected program spending, they, in fact, actually increased costs to Medicare. The reasons are explained in the technical but easy-to-read, three page report available at the link above.

Not mentioned in the report are the facts that these plans also reduced choices in drugs by having limited formularies, and they reduced choices in pharmacies by having restricted pharmacy networks.

This is yet one more example of how private insurance intermediaries increase our costs while reducing our choices of both providers and their products and services. Yet the Patient Protection and Affordable Care Act is based on this model that brings us fewer choices at higher costs.

Let’s oust these expensive, wasteful, intrusive intermediaries and replace them with our own public financing program that would offer all of us free choice and greater value.

Futurist Ian Morrison on being "bronzed" in the exchanges

The Four Americas

By Ian Morrison
Hospitals and Health Networks, May 3, 2011

Health insurance exchanges could have a major impact on the health care marketplace.

Here are some things to watch for.

* We are all turning bronze. There is a growing body of evidence — from actuaries, academics, consultants and researchers — that when consumers in the exchange select insurance options, they will pick the bronze plan (a 60 percent actuarial value). By definition, these plans will have high out-of-pocket costs and may not cover as wide a range of benefits as the health reform enthusiasts intended.

Some in the health care delivery business see exchanges as a new source of patients with commercial insurance similar to the benefits that schoolteachers and firefighters enjoy. Not so fast. Not only will those schoolteachers and firefighters get their benefits rolled back as part of the global backlash against public employees, but those of us in the exchanges will be operating with skinny network, high-deductible plans.

* Exchanges could be a non-event or become the exchange that ate Manhattan. Depending on how exchanges are structured at the state level, they could have limited pickup. The proposed insurance exchanges have two huge advantages over some of the failed insurance exchanges across the country, such as California’s PacAdvantage program for small business. First, the proposed exchanges have subsidies. Second, they have enabling rules. However, there is still a huge opportunity for states to make exchanges highly dysfunctional by not regulating the behavior in the nonsubsidized individual and small group market.

What killed PacAdvantage was brokers taking good risks outside the exchange and dumping bad risks into the exchange. Unless state legislation prevents this, it is highly possible that exchanges get selected against and spiral downward. Conversely, if exchanges are up and functioning and acceptable, there could be massive growth over time as employers see the benefit of giving their employees incentives to move to the exchange. This won’t happen initially in 2014, but in a Cadillac tax world and with high-functioning exchanges, there could be massive growth. (And remember, we would all be pretty bronzed.)

http://www.hhnmag.com/hhnmag/HHNDaily/HHNDailyDisplay.dhtml?id=6270005407

Comment:

By Don McCanne, MD

If the stewards of the ACA-mandated state insurance exchanges are diligent, they may be able to avoid problems such as the death spiral of adverse selection. With careful design, they should be able to establish a functioning market of private health plans. What can we expect of this market?

The overwhelming majority of insurance shoppers will be purchasing their plans based on price, whether or not they qualify for subsidies. Since most will be relatively healthy, it will be the price of the insurance plans that will drive their purchasing decisions, rather than the unanticipated but potential out-of-pocket expenses that they would face only if they were unfortunate enough to develop significant medical  problems. For the price discount, most purchasers will take a chance, gambling that they will stay healthy.

What plans in the exchanges will offer the lowest prices? The bronze plans. These plans cover an average of 60 percent of the medical costs and the patient is responsible for the remaining 40 percent. Although many would be eligible for subsidies, a recent Commonwealth Fund analysis (Gruber and Perry) demonstrated that one-fourth of middle-income individuals with medical needs would not be able to afford the out-of-pocket medical costs after meeting other necessary expenditures in their budgets. Thus choosing these plans is definitely a gamble, but one they must take since they cannot afford the higher costs plans – especially the gold and platinum plans (which are not Cadillac plans since about all they do is reduce out-of-pocket spending for relatively standard benefits).

What innovations will insurers use to keep their premiums competitive within the exchanges? Although they will have to provide a basic set of regulated benefits, they will be able to keep premiums priced at the lower end of the market by requiring large deductible and coinsurance payments, and by limiting provider contracting to a narrow network of the cheapest physicians and hospitals. This is what Ian Morrison is referring to when he says, “those of us in the exchanges will be operating with skinny network, high-deductible plans.”

If the stewards do their job well and the exchanges are very successful in achieving massive growth – “the exchanges that ate Manhattan” – then, as Ian Morrison states, “we would all be pretty bronzed.”

So if the exchanges work like they’re designed to, what will we get, at best? Unaffordable deductible and coinsurance payments, with skinny networks which take away our choices of physicians, hospitals, and other health care providers, unless we’re eligible for Medicare by being over 65 or permanently disabled.

Say, did anyone ever think that maybe it would be better to improve Medicare and provide it to everyone? That way we would have our choices of our health care professionals and health facilities, and we wouldn’t have to face unaffordable out-of-pocket costs. This seems like an idea that maybe we should work on.

Senator Leno’s Single Payer Health Care Bill Passes Health Committee

Office of Sen. Mark Leno
Wednesday, May 04, 2011

SACRAMENTO – The Senate Health Committee today approved the California Universal Health Care Act, authored by Senator Mark Leno (D-San Francisco). Senate Bill 810 guarantees all Californians comprehensive, universal health care while containing ballooning health care costs and improving the quality of care and delivery of health services statewide. The legislation passed with a 5-3 vote.

“California is being overrun by out-of-control health care costs, which has a significant impact on the state budget, businesses and families,” said Senator Leno, D-San Francisco. “Our single payer plan not only guarantees universal coverage for all Californians, but also contains health care costs, which is essential to solving our state budget crisis in the long term.”

SB 810 creates a private-public partnership to provide every California resident medical, dental, vision, hospitalization and prescription drug benefits and allows patients to choose their own doctors and hospitals. This single payer, “Medicare for All” type of program works by pooling together the money that government, employers and individuals already spend on health care and putting it to better use by cutting out the for-profit middle man.

“We must continue to fight for healthcare for every Californian,” said DeAnn McEwen, President of the California Nurses Association and a nurse at Long Beach Memorial Medical Center. “Federal reform does not insure that all Californians will receive the care they need. President Obama noted that if states come up with a better plan, they could move forward. Californians deserve the best. Senate Bill 810 will provide every Californian with an excellent standard of care, improve health outcomes, and finally get healthcare costs under control.”

California currently spends $200 billion annually on a fragmented, inefficient health care system that wastes 30% of every dollar on administration. Under Senate Bill 810, that wasteful spending is eliminated. The bill creates no new spending, and in fact, studies show that the state would save $8 billion in the first year under this single-payer health care plan.

“Most doctors support a public-private partnership like Medicare, but with everybody covered, better benefits, and lower costs,” said Dr. Henry L. Abrons, president of Physicians for a National Health Program, California Chapter. “We need to spend our precious resources wisely. Federal reform won’t accomplish these things, but SB 810 will.”

“Health Care for All realizes that the only way to provide better health care for absolutely everyone, for less money than we’re now spending, and control rising costs, is to pass a bill like SB 810 and then make the necessary changes to finance it,” said Greg Brockbank, chair of Health Care for All, California. “We stand ready to do our part in making that happen, and then to help successfully implement it.”

SB 810 is sponsored and supported by a broad coalition of patients, nurses, doctors, teachers and school employees, small businesses, faith community members, retirees, local governments and school districts. These groups represent more than 2 million Californians. The bill is also sponsored by the California Nurses Association, Health Care for All California, California One Care, California School Employees Association, Physicians for a National Health Program-California, Single Payer Now, California Teachers Association, California Federation of Teachers, California Alliance of Retired Americans, Amnesty International, League of Women Voters, California Council of Churches, Progressive Democrats of America, California Consumer Federation, National Organization for Women-California, Vision y Compromiso, Wellstone Democratic Renewal Club, Dolores Huerta Foundation, California Health Professional Student Alliance and Courage Campaign.

http://dist03.casen.govoffice.com/index.asp?Type=B_PR&SEC={F0DFD1A5-1C7B-4F09-9F09-C48A423D1072}&DE={F086DD17-8BCF-4C38-8AA7-F4AA0DA99BB3}

Futurist Ian Morrison on being “bronzed” in the exchanges

The Four Americas

By Ian Morrison
Hospitals and Health Networks, May 3, 2011

Health insurance exchanges could have a major impact on the health care marketplace.

Here are some things to watch for.

* We are all turning bronze. There is a growing body of evidence — from actuaries, academics, consultants and researchers — that when consumers in the exchange select insurance options, they will pick the bronze plan (a 60 percent actuarial value). By definition, these plans will have high out-of-pocket costs and may not cover as wide a range of benefits as the health reform enthusiasts intended.

Some in the health care delivery business see exchanges as a new source of patients with commercial insurance similar to the benefits that schoolteachers and firefighters enjoy. Not so fast. Not only will those schoolteachers and firefighters get their benefits rolled back as part of the global backlash against public employees, but those of us in the exchanges will be operating with skinny network, high-deductible plans.

* Exchanges could be a non-event or become the exchange that ate Manhattan. Depending on how exchanges are structured at the state level, they could have limited pickup. The proposed insurance exchanges have two huge advantages over some of the failed insurance exchanges across the country, such as California’s PacAdvantage program for small business. First, the proposed exchanges have subsidies. Second, they have enabling rules. However, there is still a huge opportunity for states to make exchanges highly dysfunctional by not regulating the behavior in the nonsubsidized individual and small group market.

What killed PacAdvantage was brokers taking good risks outside the exchange and dumping bad risks into the exchange. Unless state legislation prevents this, it is highly possible that exchanges get selected against and spiral downward. Conversely, if exchanges are up and functioning and acceptable, there could be massive growth over time as employers see the benefit of giving their employees incentives to move to the exchange. This won’t happen initially in 2014, but in a Cadillac tax world and with high-functioning exchanges, there could be massive growth. (And remember, we would all be pretty bronzed.)

http://www.hhnmag.com/hhnmag/HHNDaily/HHNDailyDisplay.dhtml?id=6270005407

If the stewards of the ACA-mandated state insurance exchanges are diligent, they may be able to avoid problems such as the death spiral of adverse selection. With careful design, they should be able to establish a functioning market of private health plans. What can we expect of this market?

The overwhelming majority of insurance shoppers will be purchasing their plans based on price, whether or not they qualify for subsidies. Since most will be relatively healthy, it will be the price of the insurance plans that will drive their purchasing decisions, rather than the unanticipated but potential out-of-pocket expenses that they would face only if they were unfortunate enough to develop significant medical  problems. For the price discount, most purchasers will take a chance, gambling that they will stay healthy.

What plans in the exchanges will offer the lowest prices? The bronze plans. These plans cover an average of 60 percent of the medical costs and the patient is responsible for the remaining 40 percent. Although many would be eligible for subsidies, a recent Commonwealth Fund analysis (Gruber and Perry) demonstrated that one-fourth of middle-income individuals with medical needs would not be able to afford the out-of-pocket medical costs after meeting other necessary expenditures in their budgets. Thus choosing these plans is definitely a gamble, but one they must take since they cannot afford the higher costs plans – especially the gold and platinum plans (which are not Cadillac plans since about all they do is reduce out-of-pocket spending for relatively standard benefits).

What innovations will insurers use to keep their premiums competitive within the exchanges? Although they will have to provide a basic set of regulated benefits, they will be able to keep premiums priced at the lower end of the market by requiring large deductible and coinsurance payments, and by limiting provider contracting to a narrow network of the cheapest physicians and hospitals. This is what Ian Morrison is referring to when he says, “those of us in the exchanges will be operating with skinny network, high-deductible plans.”

If the stewards do their job well and the exchanges are very successful in achieving massive growth – “the exchanges that ate Manhattan” – then, as Ian Morrison states, “we would all be pretty bronzed.”

So if the exchanges work like they’re designed to, what will we get, at best? Unaffordable deductible and coinsurance payments, with skinny networks which take away our choices of physicians, hospitals, and other health care providers, unless we’re eligible for Medicare by being over 65 or permanently disabled.

Say, did anyone ever think that maybe it would be better to improve Medicare and provide it to everyone? That way we would have our choices of our health care professionals and health facilities, and we wouldn’t have to face unaffordable out-of-pocket costs. This seems like an idea that maybe we should work on.

Health Reform: Necessary, but will the Affordable Care Act be sufficient?

By Johnathon S. Ross, M.D., M.P.H.
Communique: Academy of Medicine of Toledo and Lucas County, April-May 2011
 
Many physicians care about the injustice of a health care system that leaves 50 million of our patients, friends and family uninsured, but it is health care spending that threatens to destabilize the entire U.S. economy. We need to cover the uninsured and control costs. There are 50 million uninsured Americans despite spending $2.6 trillion annually. This is about one-sixth of the entire country uninsured and spending is at 17 percent of our GDP.
 
The number of uninsured has grown by about a million each year for the past 20 years. Ohio has 1.48 million uninsured despite spending over $80 billion annually. Contrary to popular thinking, the uninsured are not the chronically unemployed or illegal immigrants. Almost 80 percent of the uninsured are working people and their children.
 
One of the reasons many of the working class uninsured cannot afford to purchase insurance is that their incomes have not kept up with medical cost inflation. In fact only the wealthiest 5 percent have come even close to keeping up. Medical inflation continues 3 percent to 5 percent above the overall inflation rate.
 
Over the past 30 years, working families would have needed above 100 percent real growth in income adjusted for underlying inflation in order to keep up with rising health care costs. Most have seen their incomes rise only a few percent or less.
 
We already have what it takes to take care of everybody. The fixed overhead costs (buildings, nurses, doctors and equipment) of the health care system result in a large and expensive infrastructure that we all need in case we get sick.
 
The infrastructure is maintained by patient use and payments. Since only a small number of individuals are actually receiving care at any time (20 percent of patients generate 80 percent of costs), these payments for fixed costs must be shared by everyone. If these fixed costs are not met, the infrastructure will shrink, degrade or even disappear.
 
These fixed costs make up over 60 percent of spending and must be in place before a single sick patient can receive comprehensive care. We all must contribute if we want the care to be there when we need it.
 
Public financing (taxes) already accounts for 60 percent of total spending (Medicare, Medicare, VA, public employees and the tax deductibility of health insurance). Business and personal out-of-pocket payments cover the rest. In the U.S., public spending alone exceeds the total per person health care costs of eight European countries that cover all their citizens with better health outcomes. Businesses only pay about 20 percent of the total cost, yet they seem to exert an undue amount of influence over U.S. health policy decisions. That’s because about 60 percent of Americans receive their insurance coverage as a benefit of employment. These working people and their kids are the healthiest in our society and cost less to cover than the elderly, disabled and poor who have been left to public programs to cover.
 
You will hear conservative pundits complaining about health reform. They characterize it as a giant government takeover that “will ruin best health care system in the world.” (John Boehner actually said this recently!) Do we have the best health care system in the world?
 
According to Organization for Economic Cooperation and Development, the best international comparison data show that Americans live shorter lives and lose more healthy years of life to treatable illness than most of our economic competitors. Our infant and maternal mortality exceeds theirs. We are not more expensive because we are older. We do not smoke or drink more, use more doctor visits or hospital days or overstaff with nurses. We are in the middle of the pack regarding use of technology, joint replacements, transplants and on medical research articles published based on relative population size. We do feel we have better access to technology, although physicians in several other countries feel they have about the same level of access.
 
The one place we clearly lead is in the cost of our system where we spend almost twice as much as our economic competitors per capita. These excess health care costs are built into every American product and reduce our economic competitiveness. Our costs are rising much more sharply, although all the western democracies are struggling to control health care costs. Although our outcomes may be better for a few specific types of illnesses (breast cancer for example) by almost every general measure our outcomes are worse and our costs are twice as high.
 
This is why health reform has been under serious ongoing discussion since the debate over Medicare which resulted in a universal national health insurance program, but only for those over 65 and the disabled. The passage of the Patient Protection and Affordable Care Act (ACA) is a continuation of that debate and has left us divided and confused. What has this law brought about so far and what does it hold for us in the future?
 
One year after the passage of the ACA several provisions have already gone into effect. The number of Ohioans affected is in parentheses:
 
· Young Ohioans can keep or obtain insurance coverage on their family plans until age 26 (35,000).
 
· Insurance companies are prohibited from denying coverage to children with pre-existing conditions. (Many insurers dropped “child-only” coverage in response.) (unknown)
 
· High Risk Pools funded by the ACA now subsidize the uninsurable (1,100).
 
· Insurance companies may no longer impose lifetime dollar caps on enrollees. (unknown)
 
· The Medicare Prescription Drug benefit “doughnut hole” is being closed (110,000).
 
· Medicare beneficiaries can receive wellness checks and other preventive care without a co-pay or deductible (150,000). All private insurers will need to completely cover preventive care also.
 
· An estimated 127,800 small businesses in Ohio are eligible for the ACA’s tax credit to help purchase health insurance for employees and of those, 38,900 are estimated to be eligible for the full credit. (unknown)
 
· Grants, matching funds and other resources now available will help transform the way Medicaid funds long term care by shifting away from institutional care toward home and community-based care. (unknown)
 
· Employers can obtain re-insurance to help subsidize coverage to early retirees 55+. This will be a major financial benefit to large employers and they are already taking advantage of it.
 
· Insurers will have to spend 80-85 percent of premiums on care. Primary care physicians will get increased payment from Medicare and Medicaid.
 
By 2014:
 
· Everyone will need to buy insurance or pay a fine. Those below 133 percent of poverty will be enrolled in Medicaid. Those from 133 percent of poverty to 400 percent of poverty will receive subsidies to purchase private insurance from among a range of insurers through state based insurance exchanges with standard benefits packages. Those who do not purchase insurance will be fined except for specific hardship cases. Cost sharing is limited to no more than 6 percent to 30 percent of premiums for those from 133 percent to 400 percent of poverty. There are no subsidies for those above 400 percent of poverty but they will be allowed to purchase insurance through the exchanges.
 
· Employers of more than 50 individuals must provide insurance or pay into a fund that will help subsidize coverage for the uninsured.
 
· The Congressional Budget Office estimates about 32 million of the 50 million uninsured will be covered, about half by exp
anded Medicaid and half by private coverage in the exchanges.
 
· Revenues needed for these programs are about $100 billion yearly (about a 4 percent increase in current annual spending). Physicians usually get about 20 percent of spending on health care so the ACA will likely increase physician incomes by $20 billion.
 
· Revenue is raised from taxing insurers and reducing excess payments to their Medicare Advantage plans, by taxing pharmaceutical companies and tanning salons, and by reducing the deductibility of some medical expenses and high cost health plan premiums. There are also assumptions of savings in Medicare and Medicaid based on changes in payment approaches. (See below)
 
· Five year grants for state based malpractice reforms are part of the ACA. Texas passed strong limits on malpractice awards seven years ago. This lowered malpractice premiums by over 50 percent, but has had little effect on health care cost growth.
 
There are many other good public health and quality improvement ideas in the ACA. Sadly, there are fewer that are likely to control costs. We already have evidence from the one state with ACA like reform-Massachusetts. They have reduced the number of uninsured to only 4 percent. This is less than one-fourth the national rate. However, costs continue to rise sharply despite reform.
 
It appears that you can cover most Americans with a mandate to buy private insurance, but if you leave the for-profit medical industrial complex untouched, costs will continue to rise unabated. Although some pundits claim that the health information technology, bundled payments and accountable care organizations promoted by the ACA will help to control costs, there is little supportive data from trials of these approaches under Medicare or to suggest that information technology will lower costs, though it might improve the quality of care.
 
If the ACA is unlikely to be highly effective in coverage and cost control, what are the alternatives? All the other advanced countries have covered everyone using one of three approaches.
 
A national health service (e.g. Great Britain, Sweden) is true socialized medicine where the doctors, nurses and other providers are public employees and the hospitals are publicly owned. A national health insurance with many not-for-profit insurers with a single negotiated fee schedule and very tight public insurance regulation (Germany, Netherlands, France) and lastly, single-payer national health insurance (Canada, Taiwan, Australia and our own version for seniors, Medicare). These are the systems that have been proven to provide universal coverage and cost half per capita.
 
It is worth noting that our own example of a single payer, Medicare, has actually had better cost control than private insurance over the past 40 years and has been more innovative (e.g. DRG’s, the RVU fee schedule, and public reporting of outcomes.)
 
Medicare is our best example of a successful American national health insurance system. It is funded by taxes that are placed in a trust fund (an efficient way to collect the needed revenue) and involves everyone in paying their fair share. A single insurer is hired, by competitive bid, to just process the Medicare bills according to a single fee schedule. This simplicity keeps insurance overhead for Medicare at less than 3 percent of premiums.
 
Private insurers will waste more than five times as much on administration and profits even with the restrictions of the ACA. Under traditional Medicare, doctors practice privately and are not employees of government. Hospitals are privately managed by their community based boards. Medicare is not socialized medicine. It is social insurance just like Social Security.
 
When we created Medicare in 1965, Canada created a Medicare system for Canadians of all ages. They even call it Medicare just as we do. Prior to 1965, Canada had a private insurance system just like ours. Their ability to control costs and provide care to all is proof that such a system can be changed and could work for all of us especially given our much more generous funding which is about twice as much per capita.
 
Taiwan also had a system like ours, but with many more uninsured (40 percent). Just over a decade ago, after study, they rejected the private insurance model and created a single-payer Medicare system for all Taiwan’s citizens. They made the transition in just a couple years and covered everyone with no significant increase in spending. The Canadians covered everyone, the Taiwanese covered everyone, and we did it for seniors with social insurance that provides better administrative value, better cost control and better outcomes.
 
The ACA continues under serious challenge politically. The individual mandate is possibly unconstitutional. Although there are many good aspects to the ACA as mentioned above, evidence suggests that the ACA will still leave almost 20 million Americans uninsured and will not control overall costs very effectively.
 
On the other hand, there is good evidence that an improved and expanded Medicare would cover everyone for no more than we spend now given the large administrative savings that would result from the simplicity of this type of reform. It would improve outcomes and control costs as similar systems have in other developed nations.
 
Medicare is constitutional. Many of the financial interests that are profiting form the current system will fight against the increased public accountability the ACA or an improved an expanded Medicare for all would bring to the health care system. Political challenges will remain either way.
 
An improved and expanded Medicare for all is likely to save more money, save more lives while allowing us to practice without the hassles that are the hallmark of the private health insurance system. Physicians must choose to show leadership on this tough political problem. We need to support covering everyone and cost control. Doing nothing is not an option.
 
http://www.toledomedicine.org/April_May_1_up%5B1%5D.pdf

Keeping Health Care Afloat: The United States vs. Canada

By Uwe E. Reinhardt
The Milken Institute Review, 2007

Many complain that a single payer system will inevitably lead to rationing.  Reinhardt explains how health care is rationed in the U.S today and why rationing by ability to pay is the most intolerable form of rationing.  “There is solid research showing the price system rations uninsured Americans out of the timely, early-stage primary and secondary care that might have avoided their serious or fatal illnesses.”

Read “Keeping Health Care Afloat: The United States vs. Canada”

Eric Cantor: "We're not for everyone having the same outcome guaranteed."

Cantor: Private healthcare rationing better than government's

By Julian Pecquet
The Hill, May 3, 2011

House Majority Leader Eric Cantor (R-Va.) said Tuesday that private healthcare plans ration care for profit but that consumers should be free to buy whatever coverage they can afford rather than depend on government rationing.

In remarks to the College of American Pathologists, Cantor warned that Democrats’ healthcare reform law mandates benefits that are too generous and will bankrupt the country as the government ends up having to offer ever increasing subsidies. That can only lead to government rationing, he said.

“That doesn’t mean those kinds of decisions aren’t being made now by the private sector,” Cantor added, “because they are.”

Cantor appeared to go further than Republicans have in the past by acknowledging that not all patients are certain to get optimal healthcare under a system of private insurance.

“I think that the fundamental nature of our system of third-party payer is the problem,” he said. Patients, he added, too often are left with “no decision about what they want and what they can afford.”

Later, Cantor said Republicans want a safety net for people who can’t afford care but that “we’re not for everyone having the same outcome guaranteed.”

http://thehill.com/blogs/healthwatch/health-reform-implementation/158979-cantor-private-healthcare-rationing-better-than-governments

Comment:

By Don McCanne, MD

It is somewhat refreshing to hear such a frank discussion of rationing by House Majority Leader Eric Cantor. He does not pretend that only government programs might lead to rationing, but concedes that the private sector already makes rationing decisions.

Cantor not only acknowledges that not all patients are certain to get optimal healthcare under a system of private insurance, but Republicans are “not for everyone having the same outcome guaranteed.”

Democrats appear to be in agreement. Under the Affordable Care Act, many will be left without coverage, and many more of those who have coverage through private health plans will not be able to afford the out-of-pocket expenses required for accessing health care, in spite of the subsidies. These financial barriers to access result in not everyone having the same outcome guaranteed, but the Democrats remain silent when confronted with this unacceptable deficiency in their version of health care reform.

There is already enough money in the health care system to ensure that everyone receives all essential health care services in a timely manner, with the same high quality outcomes guaranteed for all. The government rationing that Eric Cantor claims is inevitable occurs only if politicians are unwilling to budget through a single government program (single payer) the amount comparable to that we are already spending, publicly and privately.

Now if only the Democrats would admit that they have made a mistake in choosing a model of rationing that does not guarantee the same quality outcome for everyone, then maybe we could have a discussion of a model that would work. If so, then we could have the frank debate that Eric Cantor has initiated. Cantor says, “we’re not for everyone having the same outcome guaranteed,” but are the Democrats? Let’s ask them.

Eric Cantor: “We’re not for everyone having the same outcome guaranteed.”

Cantor: Private healthcare rationing better than government’s

By Julian Pecquet
The Hill, May 3, 2011

House Majority Leader Eric Cantor (R-Va.) said Tuesday that private healthcare plans ration care for profit but that consumers should be free to buy whatever coverage they can afford rather than depend on government rationing.

In remarks to the College of American Pathologists, Cantor warned that Democrats’ healthcare reform law mandates benefits that are too generous and will bankrupt the country as the government ends up having to offer ever increasing subsidies. That can only lead to government rationing, he said.

“That doesn’t mean those kinds of decisions aren’t being made now by the private sector,” Cantor added, “because they are.”

Cantor appeared to go further than Republicans have in the past by acknowledging that not all patients are certain to get optimal healthcare under a system of private insurance.

“I think that the fundamental nature of our system of third-party payer is the problem,” he said. Patients, he added, too often are left with “no decision about what they want and what they can afford.”

Later, Cantor said Republicans want a safety net for people who can’t afford care but that “we’re not for everyone having the same outcome guaranteed.”

http://thehill.com/blogs/healthwatch/health-reform-implementation/158979-cantor-private-healthcare-rationing-better-than-governments

It is somewhat refreshing to hear such a frank discussion of rationing by House Majority Leader Eric Cantor. He does not pretend that only government programs might lead to rationing, but concedes that the private sector already makes rationing decisions.

Cantor not only acknowledges that not all patients are certain to get optimal healthcare under a system of private insurance, but Republicans are “not for everyone having the same outcome guaranteed.”

Democrats appear to be in agreement. Under the Affordable Care Act, many will be left without coverage, and many more of those who have coverage through private health plans will not be able to afford the out-of-pocket expenses required for accessing health care, in spite of the subsidies. These financial barriers to access result in not everyone having the same outcome guaranteed, but the Democrats remain silent when confronted with this unacceptable deficiency in their version of health care reform.

There is already enough money in the health care system to ensure that everyone receives all essential health care services in a timely manner, with the same high quality outcomes guaranteed for all. The government rationing that Eric Cantor claims is inevitable occurs only if politicians are unwilling to budget through a single government program (single payer) the amount comparable to that we are already spending, publicly and privately.

Now if only the Democrats would admit that they have made a mistake in choosing a model of rationing that does not guarantee the same quality outcome for everyone, then maybe we could have a discussion of a model that would work. If so, then we could have the frank debate that Eric Cantor has initiated. Cantor says, “we’re not for everyone having the same outcome guaranteed,” but are the Democrats? Let’s ask them.

Update of the data on health care spending

Health Care Spending in the United States and Selected OECD Countries

Kaiser Family Foundation
April 2011

Compared to other developed nations, the U.S. spends more on health care per capita and devotes a greater share of its GDP to health. Since 1980, the U.S. also has had among the highest average annual growth rates in per capita spending on health care. Despite this relatively high level of spending, the U.S. does not appear to provide substantially greater health resources to its citizens, or achieve substantially better health benchmarks, compared to other developed countries. Faced with expanding public deficits, and growing health care costs, American policy makers may elect to examine the tools employed by other countries to rein in costs. The growing difference between America’s spending and other developed countries may encourage an examination of what people in the U.S. are getting for their healthcare dollar.

http://www.kff.org/insurance/snapshot/OECD042111.cfm

Comment: 

By Don McCanne, MD

This update of health care spending in the United States, as compared with other nations, provides useful graphs that define the magnitude of the problem which is only growing worse. Since the cost containment measures of the Patient Protection and Affordable Care Act will have very little impact on slowing the cost growth, we should consider the advice offered in this report: American policy makers should “examine the tools employed by other countries to rein in costs.” We need to bring single payer to the table – now!

Update of the data on health care spending

Health Care Spending in the United States and Selected OECD Countries

Kaiser Family Foundation
April 2011

Compared to other developed nations, the U.S. spends more on health care per capita and devotes a greater share of its GDP to health. Since 1980, the U.S. also has had among the highest average annual growth rates in per capita spending on health care. Despite this relatively high level of spending, the U.S. does not appear to provide substantially greater health resources to its citizens, or achieve substantially better health benchmarks, compared to other developed countries. Faced with expanding public deficits, and growing health care costs, American policy makers may elect to examine the tools employed by other countries to rein in costs. The growing difference between America’s spending and other developed countries may encourage an examination of what people in the U.S. are getting for their healthcare dollar.

http://www.kff.org/insurance/snapshot/OECD042111.cfm

This update of health care spending in the United States, as compared with other nations, provides useful graphs that define the magnitude of the problem which is only growing worse. Since the cost containment measures of the Patient Protection and Affordable Care Act will have very little impact on slowing the cost growth, we should consider the advice offered in this report: American policy makers should “examine the tools employed by other countries to rein in costs.” We need to bring single payer to the table – now!