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Tea Party Inc.: The Big Money and Powerful Elites Behind the Right Wing’s Latest Uprising

Tea Party Inc.: The Big Money and Powerful Elites Behind the Right Wing’s Latest Uprising

By Adele M. Stan
AlterNet/The Investigative Fund at The Nation Institute, October 26, 2010

This article was reported in collaboration with The Investigative Fund at The Nation Institute.

Win or lose, the Tea Party movement will come away from next week’s elections triumphant, having injected into the Republican Party a group of candidates pledged to the dismantling of government and wed to the religious right. Of the movement’s dozen favored candidates for U.S. Senate, all are anti-abortion, and five oppose it even in cases of rape and incest. Among their number are Colorado’s Ken Buck, who has compared homosexuality to alcoholism, and Nevada’s Sharron Angle, who wants to demolish both the Department of Education and the Environmental Protection Agency. Major GOP players, from political strategist Karl Rove to former Bush speechwriter David Frum, have fretted publicly over Tea Party extremism, with Frum complaining of the movement’s “paranoid delusions.”

But it has now become clear that these Tea Party “outsiders” are all part of an inside game, a battle for control of the Republican party.

Though billed as a people’s movement, the Tea Party wouldn’t exist without a gusher of cash from oil billionaire David H. Koch and the vast media empire of Rupert Murdoch. Many of the small donations to Tea Party candidates have been cultivated by either Fox News Channel, a property of Murdoch’s News Corporation, or the Americans for Prosperity Foundation, chaired by Koch. The movement’s major organizations are all run, not by first-time, mad-as-hell activists, but by former GOP officials or operatives.

Taken together, Americans for Prosperity, FreedomWorks (another far-right political group seeded by the Kochs) and Murdoch’s News Corp, owner of Fox News and the Wall Street Journal, form the corporate headquarters of a conglomerate one might call Tea Party, Inc. This is the syndicate that funds the organizing, crafts the messages, and channels the rage of conservative Americans at their falling fortunes into an oppositional force to President Obama and to any government solution to the current economic calamity. Groups such as Tea Party Express, Tea Party Nation, and the FreedomWorks-affiliated Tea Party Patriots; the bevy of political consultants for hire; and various allied elected officials can be understood as Tea Party, Inc.’s loosely affiliated subsidiaries. The Web sites of FreedomWorks, Americans for Prosperity and the Tea Party side projects of Fox News Channel’s Glenn Beck are linked with those of Tea Party Express and Tea Party Patriots, all of which in turn solicit support for Tea Party candidates.

The armies of angry white people with their “Don’t Tread on Me” flags, the actual grassroots activists, are not the agents of the Tea Party revolt, but its end users, enriching the Tea Party’s corporate owners just as you and I enrich Google through our clicks.

Coming Out Party

Tea Party, Inc. was on full display in our nation’s capital in late August, when Glenn Beck gathered his angry white multitudes at the Lincoln Memorial on the anniversary of Martin Luther King’s historic “I Have a Dream” speech. The tens of thousands of Tea Partiers who showed up for this political revival were mobilized by untold hours of free promotion on Murdoch’s network, while a related “Take America Back” convention, held the day before at Constitution Hall, was convened by FreedomWorks.

At that event, the crowd was treated to a trailer for a forthcoming film called Runaway Slave, narrated by Rev. C.L. Bryant, an African-American pastor from Louisiana identified as “a former NAACP radical,” who made the case that liberalism is yet another means of enslaving black people.

“[I]n the black community,” Bryant says in the film, “there’s always somebody who’s gotta keep them niggers in control.” A photo of Jesse Jackson flashed on the screen. Then one of Al Sharpton. Some images flashed by so quickly that they were barely discernable. One was of a wriggling maggot.

Before the night was out, Glenn Beck himself graced the stage, asking the crowd to “expect miracles” at the next day’s rally.

A few miles away, a more sedate crowd was jammed into a Marriott ballroom for a gala dinner that wrapped up yet another activist conference, the Defending the American Dream Summit, this one convened by the Americans for Prosperity Foundation. Striding toward the podium to the opening strains of “New York, New York” was chairman Koch. Tall and dapper in a precisely tailored dark suit, the 70-year-old stood in sharp contrast to the 2,500 middle-class women in pastel frocks and men in department-store sport coats who populated the ballroom tables.

Koch prefers to be known for the hundreds of millions he lavishes on his adopted city’s cultural institutions — the New York City Ballet, the Metropolitan Museum of Art, and the Metropolitan Opera, to name a few. But the quieter largess behind events like these, dispensed by David Koch and his brother Charles, has reshaped Washington, D.C., and our national politics. Though Americans for Prosperity, which he founded, and its foundation, whose board he chairs, have been instrumental in organizing the Tea Party movement, Koch still publicly claims to have no Tea Party ties, making tonight’s appearance notable.

“Six years ago, when we launched this organization,” he said in his uneasy and halting style, “we envisioned a grassroots organization of Americans from all walks of life banded together to advance economic freedom and prosperity by limiting government’s reach, and curbing government’s growth, reining in government spending. We envisioned an organization that would boldly and unapologetically defend the free-market economy. The Tea Party is Koch’s dream come true; the Washington summit, he told attendees, was designed to train grassroots activists in the defense of the “free-market economy” and “to send a message to the political class that these activists [are] energized and watching” its members.

The Capitol Hill Franchise

The self-appointed head of Tea Party, Inc.’s Capitol Hill division is the junior senator from South Carolina, Jim DeMint. DeMint is the top Senate recipient of donations from the Koch Industries’ PAC, reeling in $22,000 in the current election cycle for a race he stands virtually no chance of losing. The Kochs’ PAC is also the number three donor to DeMint’s PAC, the Senate Conservatives Fund, which he spends on other races.

In DeMint, the Kochs found a politician who will make no compromises on their far-right agenda, favoring tax cuts and opposing health-care reform, green energy, labor unions and regulation of any kind. Last year, DeMint received the Americans for Prosperity Foundation’s George Washington Award, bestowed upon the senator by Koch himself. Speaking at the organization’s summit in August, Koch said DeMint “has consistently stood for freedom against this big-government agenda.” In backing DeMint’s power play against leaders of the Republican establishment, particularly his challenge to the power of Senate Minority Leader Mitch McConnell, the Kochs stand poised to push those establishment leaders into the same uncompromising positions.

Echoing DeMint’s agenda are Rep. Michele Bachmann, a Minnesota Republican who, in July, founded a Tea Party Caucus in the House of Representatives, and Rep. Mike Pence, a Republican from Indiana, who is House GOP conference chairman and a charter member of the new caucus. Both are Tea Party favorites, and Bachmann is a regular speaker at Americans for Prosperity events. At the Americans for Prosperity Foundation’s RightOnline conference, held in Las Vegas in July, Pence used a luncheon address to make the case for melding the free-market Tea Party agenda with the values of the religious right, while Bachmann entertained a banquet crowd with herplan to phase out Social Security.

FreedomWorks has its eye on a political transformation in the Senate, and is closely allied with DeMint, whose PAC is spending hundreds of thousands of dollars on behalf of many of the same Tea Party-backed Senate candidates endorsed by the FreedomWorks PAC, including Sharron Angle (currently in a tight race against Senate Majority Leader Harry Reid), Rand Paul in Kentucky, Marco Rubio in Florida, and Utah’s Mike Lee. (Bachmann’s Tea Party Caucus was announced the day after Paul, addressing FreedomWorks activists on a July 13 conference call, suggested a Tea Party caucus for the Senate.) Each of these candidacies began as primary challenges to establishment Republicans endorsed by McConnell.

In September, Huffington Post political columnist Sam Stein cited a Democratic strategist who said that by the midterms’ close, Americans for Prosperity will have spent $45 million on organizing “voter education” and get-out-the-vote activities that test the limits of legal nonprofit expenditures. Actually, Americans for Prosperity president Tim Phillips told me his plan was to raise and spend even more, though he wouldn’t name a figure. Even the lesser amount, according to tax filings, would represent a tripling of its funds since 2008.

FreedomWorks also hopes to triple its revenue, from $3 million in 2008, according to tax filings, to an anticipated $10 million this election cycle, according to Adam Brandon, the group’s communications director. In a fundraising video sent by FreedomWorks to new members, leaders announce that every dollar raised will be matched by an unnamed donor. Both Brandon and Koch Industries spokesperson Melissa Cohlmia say that FreedomWorks has received no funding from the Kochs or their foundations since 2004, so there is likely another high-roller involved. But neither FreedomWorks nor Americans for Prosperity,nor its foundation, is required by law to disclose its donors and — like advocacy organizations across the political spectrum — they don’t.

At any rate, the vast expenditures on organizing have worked in at least one way: FreedomWorks’ membership had reached nearly 1.1 million by mid-October, according to the group’s Web site ticker. Americans for Prosperity claims 1.5 million members and chapters in 31 states.

Both groups excel at training activists and spreading the word for Tea Party candidates, who have raked in a significant portion of their campaign donations from small donors, according to the Center for Responsive Politics. When Angle’s campaign announced earlier this month that it had raised a whopping $14 million since June, spokesperson Jarrod Agen told the Washington Post that 96 percent of those donations were $200 or less. (At press time, neither Angle nor the FEC had released official filings.)

One “voter education” exercise I witnessed was the dispatch of participants in July’s RightOnline conference to canvass the Las Vegas suburbs, armed with a script about Harry Reid. “Reid voted for the failed $800 billion stimulus plan that has wasted our tax dollars on more government,” it read. “Reid’s policies will make government bigger, waste more money, drive up budget deficits and kill jobs.”

The canvassers had just heard Angle, Reid’s opponent, deliver the conference’s closing speech. But as they boarded vans for their deployments, they were reminded this was, of course, a nonpartisan exercise ” since the Americans for Prosperity Foundation, a nonprofit, is forbidden from endorsing candidates.

The Money Men

The Tea Party’s two major patrons are fabulously wealthy. David Koch is heir to the fortunes of Koch Industries, described in 2008 by Fortune as the largest privately held corporation in the United States, and was ranked by Forbes as one of the world’s richest people, with an estimated personal wealth of $17.5 billion. Rupert Murdoch, founder and CEO of News Corp — ranked by Fortune as world’s second-largest entertainment company — was also rated by Forbes among the world’s wealthiest, with personal wealth of $6.3 billion.

Koch Industries, with David as executive vice-president and his brother Charles as CEO, presides over a vast conglomerate of oil and gas interests, as well as holdings in timber and chemicals. Since the 1970s, the two men have funded and controlled a large network of right-wing institutions, launching the libertarian Cato Institute in 1977 and the Mercatus Institute in 1985, all of which advocate business deregulation under the rubric of “free markets.”

Both cornerstones of Tea Party Inc. — FreedomWorks and the two entities comprising Americans for Prosperity — sprang from Koch’s riches. FreedomWorks rose from the ashes of Citizens for a Sound Economy, an early Astroturf group and think tank he founded during the Reagan years to advocate for lower taxes, less regulation, and smaller government. CSE was rebranded as FreedomWorks in 2004, after a corporate-style merger with Empower America, founded by the late Republican Congressman Jack Kemp to limit government and privatize government services.

That same year, Koch rebranded CSE’s foundation as the Americans for Prosperity Foundation and founded its sibling organization, Americans for Prosperity.[i] Koch hired the politically connected Tim Phillips to serve as president of both organizations. (Phillips is a business partner of former Christian Coalition director Ralph Reed in a political consulting firm, Century Strategies, which was implicated, but never charged, in the bribery scandal that sent Jack Abramoff to prison.)

Koch and his allies built the underpinnings for a movement not quite ready to be born. The absent ingredient was rage. But by 2009, with the collapse of the economy and the election of the nation’s first African-American president, the supply chain of rage was complete, and the Tea Party came roaring to life. Rupert Murdoch gave the new movement legitimacy by means of sympathetic columns in the Wall Street Journal, boosterism from Sean Hannity and Glenn Beck and a regular media platform on Fox News Channel for Tea Party personalities and candidates. As Jane Mayer remarked in her New Yorker profile of the Kochs, the Tea Party had at last turned their private agenda into a mass movement.

The role of these groups in launching the movement is indisputable. In concert with Glenn Beck’s 912 Project, FreedomWorks did the logistical organizing for the first Tea Party march on Washington, in September 2009. Beck launched the 912 Project on his Fox News Channel show, promoted the march on his show and mobilized for it through a social networking Web site built by his production company.

Since then, the groups have been tearing through the Murdoch-Koch agenda. Americans for Prosperity says it convened, through an offshoot, some 300 rallies against health-care reform, and once the healthcare bill was passed in March, the organization quickly moved to block cap-and-trade as a means of regulating carbon emissions. In fact, at an Americans for Prosperity Foundation conference I attended in Pittsburgh in August 2009, cap-and-trade was already being introduced as the next Tea Party battle. This is a longstanding priority for Koch Industries, a major polluter heavily invested in old energy technologies. In a March 2010 report, Greenpeace said that, over the years, the Koch brothers have “quietly funneled” nearly $50 million to “climate-denial front groups that are working to delay policies and regulations aimed at stopping global warming.”

Wall Street Journal columnist Stephen Moore — a member of the newspaper’s editorial board and a former fellow at the Koch-funded Cato Institute — told the gathering of Tea Party activists he thought global warming was “the greatest hoax of the last 100 years.” He called the climate change agenda “not just evil, butcontrary to the free-market system that made this country great.”

The Media Storm

It is not unusual for op-ed pages to reflect the bias of an outlet’s owners. It is highly unusual, however, for news operations to engage in outright political organizing on behalf of a CEO’s agenda. Yet that’s just what certain Fox News hosts and Wall Street Journal columnists seem to be doing on behalf of Rupert Murdoch, who is opposed to regulation of any kind, hates taxes, and despises labor unions — having famously broken unions at his UK newspapers.

News Corp’s best-known personalities accomplish this by working hand in glove with the like-minded ideologues at Americans for Prosperity. Fox News hosts, along with Stephen Moore and fellow Wall Street Journal columnist John Fund, are regular speakers at conferences sponsored by the Americans for Prosperity Foundation. At the group’s 2009 RightOnline conference, a third of the plenary speakers were News Corp writers and pundits, including Moore and Fund, as well as Jim Pinkerton and Michelle Malkin, who were paid Fox commentators at the time. Fox News personality John Stossel spoke against health-care reform at three rallies sponsored by Americans for Prosperity, while Sean Hannity, host of a prime-time Fox News show, live-broadcast Americans for Prosperity’s 2009 Tax Day protest in Atlanta — and the network preempted regular programming to present it. Moore and Fund also shill for the foundation’s anti-regulatory “worker education” project, known as Prosperity101.

The door swings the other way as well. By means of his regular presence on Fox’s airwaves and column at the FoxNation Web site, Americans for Prosperity vice president Phil Kerpen was instrumental in building the case against Obama green jobs adviser Van Jones, who was ultimately forced to resign his White House post.

At last year’s RightOnline conference, I asked Americans for Prosperity president Tim Phillips if his group worked in partnership with News Corp, given the presence of so many of its personalities on the roster.

“Not at all, not at all,” he replied with a laugh. “The fact is, the Wall Street Journal’s my favorite newspaper; I love those guys. I like what they write. I look at Steve Moore and John Fund, and those are two of the smartest guys. But there’s no partnership — financially, understood, or anything else.”

News Corp enjoys a similarly friendly — if similarly informal — relationship with FreedomWorks. In early October, FreedomWorks was promoting its Take America Back campaign — a get-out-the-vote effort — with a photo of Glenn Beck standing before his iconic blackboard. The FreedomWorks’ Web site also featured an audio message from Beck: “I’ve been sayin’ it for weeks. If you care about freedom, you must get involved. If you really want to end tyranny in Washington, you must get involved. And the group you need to find out about is FreedomWorks. Take America back — FreedomWorks.org.” Just days ago, Beck’s image was used in a splash screen to solicit contributions for FreedomWorks’ PAC.

To Rupert Murdoch, Glenn Beck is much more than a broadcaster; he’s Murdoch’s lead community organizer. His show has leached revenue since the civil rights group Color of Change launched a boycott of his advertisers, reportedly chasing away at least 100. But his act is far more profitable to News Corp in another way — by creating the conditions for a stripping away of federal regulations that limit the growth of News Corp and its bottom line. And so Beck’s rants become more shrill and his claims more preposterous, whether he is stoking racial fears or recalling that old bogeyman threat of looming socialism — a theme straight out of the John Birch Society, of which the Kochs’ father, Fred, was a founding member.

The Campaigns

In Washington, D.C., Adam Brandon, FreedomWorks’ communications director, is bubbling over with excitement at the end of a long, hot July day. “I’m racking up the frequent flyer miles,” he says of his relentless weekend trips to train Tea Party activists in how to chalk up wins for candidates FreedomWorks’ PAC has endorsed.

FreedomWorks doesn’t aim to elect just any Tea Party candidate to office: as with DeMint’s Senate Conservatives Fund, its endorsements seem designed to undermine the current GOP establishment, push the party rightward and further an anti-regulatory agenda. Well before others joined in, FreedomWorks embraced far-right insurgencies, notably those of Marco Rubio and Rand Paul. Both endorsements put FreedomWorks at loggerheads with Sen. McConnell, whose candidates — including his hand-picked protg in his home state of Kentucky — were vanquished.

DeMint’s PAC spends hefty amounts on behalf of its endorsed candidates, including $447,000 for Rubio and $95,000 for Paul ($95,000). FreedomWorks matches DeMint’s cash with ground forces. The PAC runs an online “service center,” where, according to FreedomWorks president Matt Kibbe, Tea Partiers “get the tools they need to turn a protest into a sophisticated, turn-out-the-vote effort.” Those tools include walking maps, door-hangers, talking points, and “a sophisticated phone-banking system that is going to allow you to make calls in all of our targeted races.” If you’re an activist in Wisconsin, FreedomWorks can set you up to turn out voters for Rand Paul in Kentucky. Combined, these Tea Party outfits have proven that they have the potential to decide elections.

When I asked whether FreedomWorks’ endorsements were chosen in part to undermine McConnell, Brandon declined to answer directly, but his response revealed the intimate ties between his outfit and DeMint’s. DeMint has been stalwart on behalf of FreedomWorks’ positions, Brandon explained. These include opposition to healthcare and energy reform and labor unions. But DeMint needs more people like him in the Senate in order to create something of a caucus — “a new power center,” Brandon called it.

Their combined might was recently on display in Utah, where DeMint and FreedomWorks joined forces to replace incumbent Republican Senator Bob Bennett. DeMint’s PAC and FreedomWorks’ PAC each rank among the top twelve donors to Bennett’s challenger, Tea Partier Mike Lee.

In Utah, candidates must win delegates at their state party convention; primaries take place only if a run-off is needed. So FreedomWorks helped pack the convention with Tea Party-allied delegates, and Lee showed convention-goers a video endorsement by DeMint. Bennett lost his seat that day, coming in third with 26 percent of the vote. (The remainder was split between Lee and another Tea Party candidate.) Lee prevailed in the subsequent two-way primary, with more help from DeMint’s PAC, which has spent $315,000on his behalf, including $184,000 in so-called “independent expenditures,” according to FEC filings.

Suppliers and Subsidiaries

While Americans for Prosperity, FreedomWorks and News Corp run the boardroom of Tea Party, Inc., a growing number of national organizations have sprung up to provide a range of services; call them the suppliers. Some have similar names — Tea Party Patriots, Tea Party Nation, Tea Party Express — though they compete ferociously. Reed’s Faith & Freedom Coalition provides a unique service to Tea Party Inc.: the promise of delivering religious-right voters to its candidates. Like the big players, these groups, too, are run by former Republican officials or political consultants.

Tea Party Patriots, perhaps the most substantial of these groups, was born of FreedomWorks, as co-founder Jenny Beth Martin points out in a FreedomWorks video, and its state chapters do the on-the-ground organizing for FreedomWorks’ agenda. Martin, a former Republican political consultant in Georgia, coordinates the group with Mark Meckler, a Northern California attorney who previously ran an online political consultancy with GOP ties.

More flamboyant is Tea Party Express, another name for Our Country Deserves Better, an anti-Obama PAC founded by Howard Kaloogian, the California attorney who orchestrated the recall of Gov. Gray Davis. The group has already weathered controversy — its spokesperson, radio talk-show host Mark Williams, was forced to exit the organization in July after authoring a demeaning satire of NAACP president Ben Jealous. But Tea Party Express has nevertheless raised $6.6 million this election, according to recent FEC data, making it, in the estimation of the New York Times, “the single biggest independent supporter of Tea Party candidates.” And the group has racked up primary victories for Tea Party insurgencies such as Christine O’Donnell in Delaware, who benefitted from $250,000 in Tea Party Express ad buys; Joe Miller in Alaska, who beat incumbent Lisa Murkowski with the aid of $550,000 from the group; and Angle, who has enjoyed nearly $1 million in “independent expenditure” advertising by the group, according to FEC filings.

“Sharron Angle, in my opinion, wouldn’t have won [the Republican primary] without the Tea Party Express,” California Republican consultant and Tea Party organizer Eric Odom told participants in this year’s RightOnline conference.

Reed’s Faith & Freedom Coalition, which seeks to unite the Tea Party and the religious right, is provides a unique service to Tea Party Inc.: delivery of religious-right voters to its candidates. On September 11, Reed brought together a few hundred activists for a strategy briefing at Washington, D.C.’s Mayflower Hotel. The event featured speakers from the GOP’s glory days, from Karl Rove to Newt Gingrich.There Reed instructed activists on how to “move the needle” when the polls are against you.

“We’re building databases of faith-based and fiscal conservatives in every key congressional race, U.S. Senate race or governor’s race, and a lot of targeted state legislative races,” Reed explained. “Those voters are going to be contacted an average of seven times.We’re gonna mail “em, we’re gonna phone “em, if we have an e-mail, we’re gonna e-mail “em, if we have a cell phone number, we’re gonna text-message them.And at the end, we’re gonna knock on their door.”

———–

Reed’s big announcement of his new Faith & Freedom Coalition took place in August 2009, at an Atlanta rally against health-care reform convened by Americans for Prosperity, the organization fronted by his old business partner, Tim Phillips. FreedomWorks chairman Dick Armey delivered the keynote address, and Fox News contributor Herman Cain made the business case against health-care reform.

Phillips couldn’t make it to Atlanta that day. He was stuck in Pittsburgh, at his RightOnline conference, rubbing elbows with the stars of Rupert Murdoch’s News Corp.”

http://www.state-journal.com/news/simple_article/4919566

Dismantling the NHS

By Stewart Player and Colin Leys
Red Pepper, Sept. 30, 2010
 
Behind the technicalities, what do the government’s plans for the NHS really mean? Stewart Player and Colin Leys expose the reality of the health service white paper.
 
The coalition government’s plans for the NHS represent the final conversion of healthcare into something to be bought, with really good care going to those who can pay for it and only a defined ‘package’ of free treatments, of declining quality, for everyone else.
 
What has already occurred with dentistry, physiotherapy, podiatry and other services will start happening across the board. ‘Top-ups’ and ‘co-payments’ will become standard. Some treatments will cease to be available freely on the NHS and have to be paid for – if you can afford it.
 
It’s already happening all over England, as staff and services are cut to meet the government’s demand for £20 billion ‘savings’ over the next five years. GPs are being told to refer many fewer patients to specialists.
 
NHS North London has decided to cut back on cataracts and hip and knee replacements. The government’s plans mean that this will become the norm, not just one-off cuts justified as a response to a crisis. Under the new plans, by 2014 NHS hospitals will no longer be answerable to the taxpayers who have paid for them over the years, and will no longer have the overriding aim of providing the best possible healthcare for the their local community.
 
By then they will all be businesses, competing with private hospitals and clinics for NHS patient income. To stay afloat financially they will have to cut costs, reduce staff, lower the ‘skill mix’, reduce levels of pay, focus on profitable treatments and neglect or even abandon high-cost and unrewarding ones in order to match the for-profit sector. There will also be many fewer of them.
 
The aim is to take chronic care out of hospitals and deal with it in non-hospital settings – ‘super-surgeries’ or clinics, largely owned and run by private companies. It will be a healthcare market, very like that in the US.
 
Competition
 
All hospitals, public and private, will be answerable only to the central regulator, Monitor, which is concerned only to ensure that they stay solvent and behave competitively.
 
They will be supervised for safety and quality by the Care Quality Commission, but the CQC is notoriously feeble: it gave mid-Staffordshire top marks when several hundred patients had been dying there from neglect.
 
The white paper says the CQC will become more demanding. But if in future it tells a hospital to raise its standards, and the finance director replies that the required improvements are unaffordable, what is supposed to happen? There will be no ‘bailouts’. The government’s view is that the hospital should either cut some services, or even close altogether, leaving patients to be treated by ‘better’, privately-owned hospitals – or perhaps in the same hospital, after it has been taken over by a private company.
 
That is the logic of the healthcare market the white paper envisages.
 
But closing a medical department or even a whole hospital isn’t like closing a department in a department store, or the store as a whole. There are rarely adequate alternative facilities within reach. Letting hospitals fail means chaos, anxiety and serious risks for patients and their families.
 
And what if the private company’s services turn out to be no better? The quality record of the privately-owned Independent Sector Treatment Centres (ISTCs), set up and subsidised at huge public expense by Alan Milburn during his time as health minister to treat NHS-funded patients, is notoriously worse than that of NHS hospitals doing similar work.
 
Whether it is healthcare or home care or schools, good public services for all must come in the end from a service ethic on the part of staff who are not in it for the money, and management who are not in it for shareholders (or forced to compete with companies that are run for shareholders). Outside regulation has a part to play, but without the core commitment that comes from being part of a national service that expresses the solidarity of society – in the case of health, the solidarity of all the well with all the sick – equally good services for everyone will soon be a thing of the past.
 
Commissioning
 
The proposed change that has attracted most attention is the shift of commissioning from Primary Care Trusts (PCTs) to ‘local consortia of GP practices’. This is being done on the grounds that ‘primary care professionals’ are best placed to know what is best for patients, and will engage in ‘more effective dialogue and partnership with hospital specialists’. Who could object to that?
 
You do wonder why PCTs haven’t previously been told to organise such a dialogue between GPs and specialists; but the more important point is that GPs can’t in fact do commissioning.
 
‘Commissioning’ is Department of Health-speak for purchasing, and what it means in practice is setting the terms of what exactly will be paid for: what services will be covered, how they will be delivered, by clinicians with what sorts of qualifications, following what protocols, with what limits on length of stay in hospital, prescribing what drugs and rehabilitation programmes, and so on. These so-called ‘care pathways’ are at the heart of commissioning, or buying healthcare. The payments are per-patient, at pre-agreed prices for each kind of treatment package.
 
And to ensure that the deal pays off, any variation from the agreed protocols must be cleared with the commissioner or purchaser. This is the meaning of the ‘managed care’ operated by America’s notorious HMOs (health maintenance organisations), in which doctors have to plead with the HMO to be allowed to go ahead with a needed treatment that the HMO says is unnecessary, in reality because it will cost more than the HMO wants to pay.
 
Viewers of Michael Moore’s film Sicko will remember a doctor who used to work for an HMO telling a congressional committee how she was paid a bonus according to how often she denied treatments to patients. The new ‘GP consortia’ may not go so far as to reward their staff on this basis. But they will have limited budgets, and the way they are supposed to reduce costs is precisely to involve themselves in the details of all the treatments they are going to pay for. Someone will have the job of denying something.
 
Two big deceptions
 
1 Who will really run the new GP consortia?
 
Some GPs are said to be keen to take on commissioning. But the work involved is essentially commercial, not medical. The new consortia will have to employ large teams of administrators, lawyers and others to negotiate, make contracts, monitor performance, send out bills, do audits, deal with disputes, and so on – as PCTs are already doing.
 
That is the first big deception involved in this change. It sounds as if GPs will be doing the work, when in fact the essential job of buying hospital and other services involves a vast range of tasks that practising GPs can’t possibly do, and aren’t trained to do – even if they decided to stop treating patients altogether.
 
In fact, the work calls for skills developed in the managed care industry in the US. The English healthcare market is going to be run on the principles developed there, not by the GPs whose ‘pivotal and trusted role’ is supposed to be central to it.
 
The change will also mean that GPs will be nominally responsible for the
£20 billion of service cuts that are already starting to be made. How trusted will they still be after that? That remains to be seen.
 
2 The cost of commissioning
 
The second big deception is that focusing on who does the commissioning prevents a crucial question from being asked: that is, why do commissioning at all?
 
Running health services as a market is far more costly than running them as a public service. The Department of Health commissioned a study of the NHS’s administrative costs. Based on 2003 data, the authors found that administration absorbed about 14 per cent of the total budget, up from 5 per cent in the 1970s before the marketisation process began.
 
The department sat on the report for five years. It only came to light in 2010, by which time ‘payment by results’ (payment for every individual completed hospital ‘episode’) and other major additional market elements had also been introduced. The share of administrative costs is now probably more like 18 per cent or more.
 
The ideologues behind the Tory plan maintain that competition makes healthcare providers more efficient. But the evidence from the US suggests the opposite.
 
There is a good reason why this is so. Good healthcare is above all a matter of having enough, highly-trained staff; yet employing fewer, cheaper staff is the only way to make money out of it.
 
In reality, the plan to turn the National Health Service into a healthcare market does not rest on rational arguments but material interests. Any realistic strategy to resist the Tory plans must start out from that fact: the plans are not really new, but are the culmination of a decade-long campaign by the private health industry to get its hands on the NHS budget.
 
How otherwise could the white paper have been produced so fast – a mere two months after a general election during which none of its far-reaching proposals was even mentioned (let alone made an electoral commitment) by either of the two parties now in office? It’s hard to imagine that even the overall shape, let alone the detail, of the white paper, was put together in two months. So where did it come from?
 
The HMO/market model: how its foundations were laid
 
The reality is that successive Labour health secretaries, working closely with the private sector, had already constructed almost the entire edifice of a healthcare market. The Tory plan merely speeds up the final stage and makes it more clearly visible.
 
The idea that New Labour planned to replace the NHS with a US-style market, complete with HMOs, may come as a shock to some readers. But the fact is that HMOs have been the inspiration behind practically every element of the ‘system reforms’ pursued by New Labour since 2000.
 
One HMO in particular, California-based Kaiser Permanente, the largest HMO in the US, has been intimately involved in shaping the Department of Health’s strategic thinking. New Labour’s ‘reforms’ have been worked out in constant discussions with and visits to Kaiser. This includes the conversion of NHS trusts into independent businesses (foundation trusts); the introduction of ISTCs; payment by results; giving NHS work to private hospitals and clinics and encouraging NHS patients to choose them; changes in NHS staff contracts; and, not least, the development of HMO-style commissioning.
 
The US example
 
These changes have been introduced in a largely piecemeal fashion, concealing their overall intent. But when looked at with reference to the Kaiser model the various elements assume their true significance.
 
A defining feature of the US healthcare market and its HMOs is its complexity, with myriad forms of organisation and bureaucracy fragmenting provision, and with thousands of different ‘plans’ (i.e. insured packages of care) confusing customers, concealing profits and adding hugely to costs. It was precisely to avoid this expensive dog’s dinner that the NHS was created. But the basic structure is clear enough.
 
An HMO like Kaiser receives insurance premium income from its ‘enrollees’ (and for over-65s, from the US state’s Medicare programme), and then ‘manages care’ for them through three basic ‘arms’: 1) It owns hospitals and primary care/ambulatory facilities; which are 2) staffed by physicians, who, while nominally independent, are tied into an exclusive relationship with 3) the company’s insurance arm.
 
How do the New Labour/coalition plans correspond to the US model?
• At the level of infrastructure, hospitals are being progressively removed from public ownership – all NHS trusts are to become foundation trusts and are then to become ‘social enterprises’ owned by their staff, not the taxpayer. Meanwhile privately-owned facilities are subsidised (sweetheart deals for ISTCs, charitable status given to Nuffield hospitals, etc).
 
Some struggling NHS hospitals will close, while others, such as Hinchingbrooke in Cambridgeshire, will be handed over to private companies to be run for profit. Mark Britnell, who was the Department of Health’s head of commissioning under New Labour and is now lucratively installed in the private sector, says Hinchingbrooke is ‘only the tip of the iceberg’ and anticipates perhaps 20–30 more such transfers over the next year.
 
ISTCs, too, provide ready-made privately-owned venues for ambulatory and short-term secondary care, while some 150 private hospitals and clinics in the ‘Extended Choice Network’ that are already available to NHS patients under the ‘choice’ agenda form the nucleus of an expanded network of private suppliers.

• In terms of staffing, the Kaiser model calls for market relationships with independent teams of consultants, primary care physicians and nurses. In order to develop these, staff must be disengaged from the NHS and redeployed into the above-mentioned teams.
 
The main initial lever to bring this about will be the significant numbers of hospital doctors who become redundant under the cuts programme. At the same time, GPs already have a semi-independent status and can more readily be included in such teams, which have already been emerging in parts of the country. While such teams may initially have some autonomy, it is unlikely that they will be able to compete with the major providers in the long term; it is more likely that most will end up working for one or other of them, on the Kaiser model.

• The third arm of the HMO model, the insurance function, will be the work of the new commissioning consortia, advised by – or, more likely, progressively outsourcing the work to – private health insurance companies, and some American HMOs. There are also indications in the white paper that patient choice of GP will in due course extend to choice of commissioning consortium – since all GPs will be required to belong to one, so free choice of GP means free choice of commissioner – and that the consortia and hospitals will become free to compete on price and not just on ‘quality’ as they do now.
 
It is likely that competing healthcare ‘plans’ will eventually be a feature of the market here too, as consortia begin to compete for patient income.
 
The insiders
 
Pushing through these changes is a tight-knit ‘policy community’, comprising a number of leading private sector figures, some doctors and some health policy think-tanks, working closely with a group of strategists within the Department of Health. Among the latter, a highly influential figure has been Professor Chris Ham, who was for some years head of the Department of Health’s strategy unit and is now director of the King’s Fund. Ham has been a long-term champion of Kaiser, organising a series of v
isits to the company’s California headquarters and being instrumental in setting up a number of ‘Kaiser beacon’ projects within the NHS to introduce and ‘normalise’ Kaiser’s aims and methods among NHS managers.
 
Even more emblematic is Dr Penny Dash. After working briefly for Kaiser in the 1990s, Dash was appointed head of strategy and planning in the Department of Health, and co-authored the NHS Plan of 2000, which initiated the marketisation process.
 
Since then she has served on the board of Monitor, led Lord Darzi’s recent review of health services in London, and is currently vice chair of the King’s Fund.
 
But it is Dash’s function as placewoman for the global consultancy giant, McKinsey, that is probably most significant. McKinsey has been described as the gold standard for the provision of corporate strategy advice to the Fortune 500 companies, and as ‘global thought leaders’ in the areas of strategy and operations management. The company has played a central role in ‘system reform’ in the NHS under New Labour, and Dash is now a partner in their London office.
 
One of her initiatives, the Cambridge Health Network, is essentially a McKinsey front for exchanges between private health corporations, financial institutions and the Department of Health. Sponsors of the Network include some very big game: Halliburton, General Electric, and Perot Systems, as well as our very own GlaxoSmithKline, BUPA, Assura (now owned by Virgin), Mott McDonald and Carillion. McKinsey has been in many ways a key architect of the reforms that have prepared the way for the coalition. It was also, not coincidentally, McKinsey who came up with the figure of £20 billion that is now starting to be cut from the NHS.
 
Resisting the destruction of the NHS
 
As everyone recognises, successful resistance to the Tories’ plans to cut back public services permanently will call for a mass mobilisation with exceptional levels of solidarity, organisation and commitment. But, as Gregor Gall has recently pointed out, the defeat of the poll tax – the last time anything on this scale was successfully attempted – is not a good analogy with the situation we face now.
 
The poll tax affected everyone; its injustice was massive and obvious; and it required people to co-operate by registering and paying the tax, which they could and did refuse to do in vast numbers. None of these conditions applies to the complex, uneven, protracted process of dismantling the NHS that the Tories intend to push through.
 
Yet the injustice that will flow from the loss of the NHS will be massive. It will change the face of English society more profoundly than the poll tax. And it will be for all practicable purposes irreversible – unless we stop it now, all of us resisting in whatever way we can.
 
******
 
Summary: what the coalition’s plans means for the NHS
• Hospitals that ‘fail’ will be left to go bankrupt and close, or be handed over to be run by private companies.
• GP ‘consortia’ will run the service, in theory. But doctors don’t have the time or skills to do the large amount of administration required – and these are the contracts the private health companies are after.
• There will be £20 billion of cuts. On top of that, the more complex the market system gets, the more money will be spent on administration instead of medical care.
• The consortia will end up trying to reduce costs by denying certain treatments. And if they are to make money, they will do it by employing fewer, cheaper staff.
• In place of a public service we will have a profit-driven healthcare market.
 
******
 
Who’s taking over the NHS?
 
The main actors in the new GP consortia
 
The earlier attempt to encourage GPs to take on commissioning roles through ‘practice-based commissioning’ has been widely acknowledged to be a failure, mainly because most doctors prefer to focus on patients. This allows the 14 major US and UK health corporations, consultancy firms and insurers that currently make up the ‘Framework for Procuring External Support for Commissioning’ (FESC) to step in and play an increasingly central role in allocating the bulk of NHS finances. The FESC functions include population risk assessment, procurement and performance management, and data harvesting – but it is in service redesign that their impact will be most felt.
 
So who are these companies?
 
Aetna (US); Axa PPP (UK); BUPA (UK); CHKS (UK); Dr Foster (UK); Health DialogServices Corporation (US); Humana (US); KPMG LLP (US); McKesson (US); McKinsey (US); Navigant Consulting (US);Tribal (UK); UnitedHealth Europe (US); and WG Consulting (UK).
 
How these companies profit from the ‘revolving door’ in senior health personnel
• At KPMG, the former Department of Health head of commissioning Mark Britnell now leads the company’s European Health Division. Britnell also has close ties with Dr Foster, having previously been one of its non-executive directors.
 
• UnitedHealth now employs Blair’s former top health adviser Simon Stevens. It also has the former head of the Department of Health’s commercial directorate, Channing Wheeler, who, alongside Britnell, set up the FESC before being recalled to the US to face the securities and exchange commission on charges of illegally backdating share options at the time of 9/11.
 
• BUPA has the services of former health secretary Patricia Hewitt in her role as advisor to the private equity company Cinven, which recently bought out BUPA’s entire hospital portfolio.
 
• Tribal’s director of its healthcare division, Matthew Swindells, was chief information officer of the Department of Health and a special adviser to Patricia Hewitt. The company can also call upon Phyllis Shelton, who jumped ship from the Department of Health, where she worked as the lead for measurement on the integrated care organisation programme. Prior to this, she was the founder and managing director of the UK arm of HealthDialogue.
 
• McKesson’s UK chairman is Lord Carter. As chairman of the NHS’s competition panel, he is well situated to ensure that decisions on mergers and procurement – including those on commissioning – will follow the privatisation route.
 
• McKinsey has the Department of Health’s former head of strategy, Penny Dash. Some idea of Dash’s influence on the commissioning front can be seen in the fact that, in her guise as vice-chair of the King’s Fund, she led a recent briefing for PCTs to cut back on commissioning of what she considered to be ‘low-value’ medical procedures. Sure enough, in June this year, NHS North London proposed cutting back on ‘low priority treatments’.

http://www.redpepper.org.uk/Dismantling-the-NHS

An unsuitable case for treatment

By Jonathon Tomlinson
 
Henry is just one of GP Jonathon Tomlinson’s patients. But through what is happening to him we can see what is happening to the health service – and it isn’t what his doctor ordered
 
Little clots of blood float around the cloudy pink liquid in the jam jar Henry’s placed on the desk in front of me. The medical student beside me has in mind half a dozen possible, mostly serious causes of frank haematuria (visible blood in the urine) and I can see her jotting them down. Like too many men, Henry was hoping ‘things would sort themselves out’ for several weeks, and only after his wife noticed the blood-stained toilet bowl could she cajole him to come in.
 
Nevertheless, what Henry really wants to talk about is his son, just out of prison on a methadone script and looking for rehab. I was hoping to discuss Henr
y’s worsening renal failure – a consequence of his uncontrolled diabetes and high blood pressure. His wife wants to talk about his depression and worsening memory. The jar of bloody urine stands on the desk momentarily stalling any conversation while we sit waiting to see who will speak first and about what. Nine minutes remain of the ten-minute consultation.
 
General practice has developed during the past 60 years of the NHS to allow GPs a monopoly over the provision of primary healthcare. Because of this we are able to develop lasting therapeutic relationships with our patients that can extend over lifetimes and generations. It is possible for me to look after Henry and his wife for the rest of their lives, guiding Henry through what will, quite soon, be his final illness, his wife through her bereavement and their son through his drug detox and subsequent relapse.
 
The long-term relationships that GPs have with our patients result in continuity of care. This allows us not only to manage ongoing ill health, but also to be prepared for serious illnesses. How Henry might react to a diagnosis of prostate or bladder cancer and how we might then manage it cannot be understood without knowing about how he has managed (or failed to manage) his diabetes; how his wife aids him and helps with his medication and appointments; how his depression affects his behaviour and how the chaos and distress their son brings affects them all. A familiarity with the latest guidelines for managing haematuria is essential, but negotiation and adaptation are essential if I am able to help Henry.
 
I’ve decided to focus on the bloody urine for now, but take time to arrange to see his son 15 minutes before my Thursday afternoon surgery (I’ll be glad of an excuse to miss the end of the meeting in which various imaging corporations pitch their services.) I send an email to our practice nurse to ask if she can fit him into the next diabetic clinic before bringing the conversation around to the jar in front of us. Six minutes remain.
 
I test the urine sample and decant some into specimen pots to check for cancer cells and infection. I ask about other symptoms and perform a physical examination. My ten minutes are up, but he still needs a referral. At the heart of the coalition government’s ideology is ‘patient choice’, so instead of referring Henry to the local hospital, I am obliged to spend valuable time guiding him through a range of private and voluntary providers offering services for his bloody urine.
 
Meaningful choice needs to be informed and considered, but Henry doesn’t know what most of the 14 tablets a day he takes are for, he can’t recall whether his blood pressure is too high or too low and he only comes to appointments if his wife reminds him on the day. Usually when I ask him why he has come to see me, he says, ‘I don’t know, you’re the doctor!’ In so many ways he is like my own father who, despite being considerably more affluent and educated, is equally ignorant of his treatment, happy to trust his GP and my mother ‘to worry about all that’.
 
The new commissioning organisation has made the job a little easier by restricting us to a short-list of ‘approved, value-for-money providers’. The provider I believe to be in Henry’s best interests – the local hospital – is not approved but may be ‘negotiable’. Negotiation will involve spending valuable time writing letters trying to convince the commissioners that because of Henry’s depression, diabetes, renal failure and long history of missing appointments he needs to have his care there.
 
Unfortunately I later discover that the urology department has been ‘decommissioned’ for being too ‘inefficient’. The ‘one-stop’ heamaturia clinic has become ‘two-stop’ because a private company has the contract for day surgery and the cystoscopies (bladder scopes) are being done at another hospital, while the local operating theatres are concentrating on more profitable gynaecology. I no longer know what is in Henry’s best interests.
 
What Henry wants, and more importantly needs, is to be looked after, but he’s told he must ‘take responsibility and choose’. As his advocate I must help him choose and also fight to keep the services he needs. As his GP my days may be numbered. More efficient providers will move in to provide convenient care for young healthy people who will choose not to spend time waiting to see a doctor whose clinics run late because of complicated patients like Henry. Instead of waiting, they will register with Virgin, or any number of competing providers who know healthcare is most profitable when the patients aren’t really sick.
 
http://www.redpepper.org.uk/An-unsuitable-case-for-treatment

Non-binding ballot measure pushes 'Medicare For All'

By Edward B. Colby
Dedham (Mass.) Transcript, Oct. 25, 2010

DEDHAM, Mass. — Leo Stolbach says he’s working to advance a single-payer health insurance system for Massachusetts because he sees what’s happening to patients now.

“Patients are getting shortchanged. And this fallacy that we have the best health care in the world, that’s wrong. It isn’t. And we’re paying twice as much for not having the best health care in the world,” says Stolbach, a semi-retired medical oncologist, who lives at NewBridge on the Charles.

On the ballot Nov. 2 is Question 4, a non-binding question that asks voters in the 11th Norfolk District whether they want to instruct their state representative, Paul McMurtry, “to support legislation that would establish health care as a human right regardless of age, state of health or employment status, by creating a single-payer health insurance system like Medicare that is comprehensive, cost-effective, and publicly provided to all residents of Massachusetts?”

So-called “Medicare For All” would provide consumers free choice of doctors and hospitals; universal, comprehensive care for life; control costs; and help job growth, according to Mass-Care, the group which is pushing the measure. Establishing a single-payer system is the mission of Mass-Care, which was formed in 1995. It has been an uphill fight.

The main goal of the ballot question is merely to get the Massachusetts Health Care Trust bill out of committee and onto the floor of the House, Stolbach says: “Each year we testify for it, and it doesn’t get out of committee.”

In 2008, Mass-Care had a similar ballot question in 10 legislative districts – and it passed in all of them.

This year it is in 14. Two hundred signatures are needed to get the question on the ballot in each district; Stolbach said he gathered 126 just at NewBridge. He also went to supermarkets and “stood in front of the Community Theatre.”

Its owner and Dedham’s representative, McMurtry, says that since he was elected one of his priorities has been to support affordable, quality health care.

He says of Question 4, “If that’s what the majority would want, then again I would look at additional information and make an educated decision should the matter come before us,” in the Legislature.

McMurtry says that though the state and nation have begun to address their health care concerns, “it’s certainly not a perfect system, and there’s always room for improvement and added efficiencies.”

Stolbach says the current system is “significantly wasteful.”

“It looks at health care in a way that says ‘how can we maximize our profits?’ rather than how can we best deliver care,” he says. “Physicians are paid to do certain things, and not necessarily to take the best care of the patient. And that’s the problem with the fee-for-service (system) that we’ve got.”

Stolbach’s last positions were as director of hematology and oncology at Saint Vincent Hospital in Worcester and as a professor of medicine at UMass Medical School. He is not seeing patients anymore, but is still involved in research projects, teaching, and medical record reviews.

He doesn’t like to use the term single-payer, explaining, “A lot of politicians have painted single-payer falsely. They claim that it’s socialized medicine.”

In doing so, they lump together Britain, which has socialized medicine, and Canada, which does not, says Stolbach. He worked as the head of oncology at the largest hospital in Ottawa for three years, when he had an appointment at the University of Ottawa. “I saw how well a single-payer system can work.”

Meantime, the U.S. health care system is far down the list in terms of outcomes, while the percentage of America’s gross domestic product that goes toward health care keeps going up. “The present system is not sustainable” because of the rising costs, including double-digit premium increases each year, Stolbach says.

That includes Massachusetts’ comprehensive health care law, signed by Governor Mitt Romney in 2006, he says: “The difficulty with it is it’s still being run by insurance companies. You can see that these increases are not sustainable.”

Massachusetts had one of the lowest uninsured rates in the country before the comprehensive law took effect, of about 8 to 10 percent, yet is having budget problems now as it tries to provide coverage based on the law, Stolbach says. Texas has about 27 percent uninsured, according to him.

“If we here in Massachusetts are a billion dollars in the hole, then what’s going to happen to these other states if they have a similar kind of program to ours?” he asks.

Under single-payer health care, the Massachusetts Health Care Trust board would represent consumers and providers. Providers would negotiate with the health care trust for patient care, and collect premiums, “but the system would be a lot simpler. It wouldn’t require patients to only go see a doctor in their network, for instance,” Stolbach points out.

He says advocates still have yet to work out exactly how a single-payer system in Massachusetts would be paid for, but that all of the analyses show that the new system will cost businesses and patients less.

“It’s a complicated issue,” he says. “I’m not saying that single-payer will take care of all of the problems, but it certainly will cost less because of administrative costs and overhead.”

http://www.dailynewstranscript.com/news/x102606675/Question-4-Non-binding-ballot-measure-pushes-Medicare-For-All

Non-binding ballot measure pushes ‘Medicare For All’

By Edward B. Colby
Dedham (Mass.) Transcript, Oct. 25, 2010

DEDHAM, Mass. — Leo Stolbach says he’s working to advance a single-payer health insurance system for Massachusetts because he sees what’s happening to patients now.

“Patients are getting shortchanged. And this fallacy that we have the best health care in the world, that’s wrong. It isn’t. And we’re paying twice as much for not having the best health care in the world,” says Stolbach, a semi-retired medical oncologist, who lives at NewBridge on the Charles.

On the ballot Nov. 2 is Question 4, a non-binding question that asks voters in the 11th Norfolk District whether they want to instruct their state representative, Paul McMurtry, “to support legislation that would establish health care as a human right regardless of age, state of health or employment status, by creating a single-payer health insurance system like Medicare that is comprehensive, cost-effective, and publicly provided to all residents of Massachusetts?”

So-called “Medicare For All” would provide consumers free choice of doctors and hospitals; universal, comprehensive care for life; control costs; and help job growth, according to Mass-Care, the group which is pushing the measure. Establishing a single-payer system is the mission of Mass-Care, which was formed in 1995. It has been an uphill fight.

The main goal of the ballot question is merely to get the Massachusetts Health Care Trust bill out of committee and onto the floor of the House, Stolbach says: “Each year we testify for it, and it doesn’t get out of committee.”

In 2008, Mass-Care had a similar ballot question in 10 legislative districts – and it passed in all of them.

This year it is in 14. Two hundred signatures are needed to get the question on the ballot in each district; Stolbach said he gathered 126 just at NewBridge. He also went to supermarkets and “stood in front of the Community Theatre.”

Its owner and Dedham’s representative, McMurtry, says that since he was elected one of his priorities has been to support affordable, quality health care.

He says of Question 4, “If that’s what the majority would want, then again I would look at additional information and make an educated decision should the matter come before us,” in the Legislature.

McMurtry says that though the state and nation have begun to address their health care concerns, “it’s certainly not a perfect system, and there’s always room for improvement and added efficiencies.”

Stolbach says the current system is “significantly wasteful.”

“It looks at health care in a way that says ‘how can we maximize our profits?’ rather than how can we best deliver care,” he says. “Physicians are paid to do certain things, and not necessarily to take the best care of the patient. And that’s the problem with the fee-for-service (system) that we’ve got.”

Stolbach’s last positions were as director of hematology and oncology at Saint Vincent Hospital in Worcester and as a professor of medicine at UMass Medical School. He is not seeing patients anymore, but is still involved in research projects, teaching, and medical record reviews.

He doesn’t like to use the term single-payer, explaining, “A lot of politicians have painted single-payer falsely. They claim that it’s socialized medicine.”

In doing so, they lump together Britain, which has socialized medicine, and Canada, which does not, says Stolbach. He worked as the head of oncology at the largest hospital in Ottawa for three years, when he had an appointment at the University of Ottawa. “I saw how well a single-payer system can work.”

Meantime, the U.S. health care system is far down the list in terms of outcomes, while the percentage of America’s gross domestic product that goes toward health care keeps going up. “The present system is not sustainable” because of the rising costs, including double-digit premium increases each year, Stolbach says.

That includes Massachusetts’ comprehensive health care law, signed by Governor Mitt Romney in 2006, he says: “The difficulty with it is it’s still being run by insurance companies. You can see that these increases are not sustainable.”

Massachusetts had one of the lowest uninsured rates in the country before the comprehensive law took effect, of about 8 to 10 percent, yet is having budget problems now as it tries to provide coverage based on the law, Stolbach says. Texas has about 27 percent uninsured, according to him.

“If we here in Massachusetts are a billion dollars in the hole, then what’s going to happen to these other states if they have a similar kind of program to ours?” he asks.

Under single-payer health care, the Massachusetts Health Care Trust board would represent consumers and providers. Providers would negotiate with the health care trust for patient care, and collect premiums, “but the system would be a lot simpler. It wouldn’t require patients to only go see a doctor in their network, for instance,” Stolbach points out.

He says advocates still have yet to work out exactly how a single-payer system in Massachusetts would be paid for, but that all of the analyses show that the new system will cost businesses and patients less.

“It’s a complicated issue,” he says. “I’m not saying that single-payer will take care of all of the problems, but it certainly will cost less because of administrative costs and overhead.”

http://www.dailynewstranscript.com/news/x102606675/Question-4-Non-binding-ballot-measure-pushes-Medicare-For-All

Getting less care for more money

The price problem that health-care reform failed to cure

By Alec MacGillis
The Washington Post
October 24, 2010

The health-care law of 2010… sets us on the road to universal health insurance.

But the Democrats’ effort to sell the law to the public may be undermined by what even some ardent supporters consider its biggest shortfall. The overhaul left virtually untouched one big element of our health-care dilemma: the price problem. Simply put, Americans pay much more for each bit of care — tests, procedures, hospital stays, drugs, devices — than people in other rich nations.

Health-care providers in the United States have tremendous power to set prices. There is no government “single payer” on the other side of the table, and consolidation by hospitals and doctors has left insurers and employers in weak negotiating positions.

“We spend fewer per capita days in the hospital compared with other advanced countries, we see the doctor less frequently, and we swallow fewer pills,” said Jon Kingsdale, who oversaw the implementation of Massachusetts’s 2006 health-care law. “We just pay a lot more for each of those units than other countries.”

The 2010 law does little to address this. Its many cost-control provisions are geared toward reducing the amount of care we consume, not the price we pay. The law encourages doctors and hospitals to join “accountable care organizations” that have financial incentives to limit unnecessary care; it beefs up “comparative effectiveness research” to weed out inefficient treatments; and it will eventually tax the most expensive insurance plans to restrain consumers’ superfluous use of health care.

Such measures could reduce redundant tests, emergency room visits and hospital readmissions, which would help control the costs of Medicare, where the government sets rates. But they are less likely to lower prices outside Medicare and stem the growth of private insurance rates.

The main reason for this is politics. Remember how drawn-out the health-care battle was? It started in the spring of 2009 and was waged for a full year. The bill’s proponents in the White House and in Congress had some inkling of how tough the fight with the insurance companies would be. Taking on hospitals, doctors, and drug and device manufacturers as well — the people you’d face in a showdown over prices — might have been fatal.

So there was no price fight. It is one of those fine political ironies: The law derided as socialism may have had an easier time winning favor from a skeptical public if it was, well, a little more socialist.

Politicians wanted to avoid a confrontation over providers’ prices. So a different policy argument took hold: The real reason everything cost so much was the overuse of health care, not the actual prices of treatment.

This argument came primarily from Dartmouth College researchers who had amassed data showing wide disparities in Medicare spending among different regions. Hospitals in the lower-spending areas, mostly in the Upper Midwest and the Northwest, seized on the study to argue that the key to controlling costs was to reward providers like them.

The theory caught fire at the White House. It gave President Obama and his then-budget guru Peter Orszag a way to talk about costs without taking on doctors and hospitals; instead, the White House could simply differentiate between providers that offer “value” and those that don’t.

But the Dartmouth rankings, and the concept they supported, did a “disservice” to the debate, said Robert Berenson of the Urban Institute. For one thing, he and others say, the figures overstate regional differences in Medicare spending, which shrink when socioeconomic factors are taken into account. Second, rates of Medicare spending are not necessarily representative of health-care spending for people under 65. Some of the places that do well in the Dartmouth rankings charge high prices for non-Medicare patients — and were, not surprisingly, among those pushing hardest against a public option.

More broadly, the skeptics argue that merely providing care in smaller quantities will not sufficiently lower costs. They note that Americans already have shorter hospital stays and fewer doctors’ visits than people in other advanced countries. What sets us apart is our high prices for these health-care “units” — a finding trumpeted in a landmark 2003 paper by Princeton’s Uwe Reinhardt and others titled “It’s the Prices, Stupid.” The price problem is only getting worse, researchers and antitrust investigators have found, because of consolidation among providers, and it could be exacerbated by goading them to form even bigger networks.

http://www.washingtonpost.com/wp-dyn/content/article/2010/10/22/AR2010102203394.html

Comment: 

By Don McCanne, MD

Many have commented on the fact that the Patient Protection and Affordable Care Act (PPACA) did little to address one of the most important drivers of the reform process – our unique problem of the outrageous costs of health care. We spend far more per capita on health care than any other nation. This article by Alec MacGillis is singled out as recommended reading on this topic, as he is one of the most credible and well-informed journalists who closely observed the reform process.

The important lesson that MacGillis provides us here is that we do not use more health care than other nations, we simply pay much more for it.

Yet reform was based on the principle that we need to cut back on health care excesses that don’t even exist except to a limited extent in some of those regions identified by the Dartmouth researchers as areas of higher utilization. When you consider that we use less care per capita than other nations, it’s clear that efforts to ferret out this marginal waste will have very little impact on our total national health expenditures, though eliminating any waste is certainly beneficial.

The real problem is the amount that we pay for health care, yet very little in PPACA will ameliorate that problem. What could provide relief?

Alec MacGillis provides a strong hint: “Health-care providers in the United States have tremendous power to set prices. There is no government ‘single payer’ on the other side of the table.”

As Margaret Flowers and others have been shouting out all along: “We want a seat at the table!”

Getting less care for more money

The price problem that health-care reform failed to cure

By Alec MacGillis
The Washington Post
October 24, 2010

The health-care law of 2010… sets us on the road to universal health insurance.

But the Democrats’ effort to sell the law to the public may be undermined by what even some ardent supporters consider its biggest shortfall. The overhaul left virtually untouched one big element of our health-care dilemma: the price problem. Simply put, Americans pay much more for each bit of care — tests, procedures, hospital stays, drugs, devices — than people in other rich nations.

Health-care providers in the United States have tremendous power to set prices. There is no government “single payer” on the other side of the table, and consolidation by hospitals and doctors has left insurers and employers in weak negotiating positions.

“We spend fewer per capita days in the hospital compared with other advanced countries, we see the doctor less frequently, and we swallow fewer pills,” said Jon Kingsdale, who oversaw the implementation of Massachusetts’s 2006 health-care law. “We just pay a lot more for each of those units than other countries.”

The 2010 law does little to address this. Its many cost-control provisions are geared toward reducing the amount of care we consume, not the price we pay. The law encourages doctors and hospitals to join “accountable care organizations” that have financial incentives to limit unnecessary care; it beefs up “comparative effectiveness research” to weed out inefficient treatments; and it will eventually tax the most expensive insurance plans to restrain consumers’ superfluous use of health care.

Such measures could reduce redundant tests, emergency room visits and hospital readmissions, which would help control the costs of Medicare, where the government sets rates. But they are less likely to lower prices outside Medicare and stem the growth of private insurance rates.

The main reason for this is politics. Remember how drawn-out the health-care battle was? It started in the spring of 2009 and was waged for a full year. The bill’s proponents in the White House and in Congress had some inkling of how tough the fight with the insurance companies would be. Taking on hospitals, doctors, and drug and device manufacturers as well — the people you’d face in a showdown over prices — might have been fatal.

So there was no price fight. It is one of those fine political ironies: The law derided as socialism may have had an easier time winning favor from a skeptical public if it was, well, a little more socialist.

Politicians wanted to avoid a confrontation over providers’ prices. So a different policy argument took hold: The real reason everything cost so much was the overuse of health care, not the actual prices of treatment.

This argument came primarily from Dartmouth College researchers who had amassed data showing wide disparities in Medicare spending among different regions. Hospitals in the lower-spending areas, mostly in the Upper Midwest and the Northwest, seized on the study to argue that the key to controlling costs was to reward providers like them.

The theory caught fire at the White House. It gave President Obama and his then-budget guru Peter Orszag a way to talk about costs without taking on doctors and hospitals; instead, the White House could simply differentiate between providers that offer “value” and those that don’t.

But the Dartmouth rankings, and the concept they supported, did a “disservice” to the debate, said Robert Berenson of the Urban Institute. For one thing, he and others say, the figures overstate regional differences in Medicare spending, which shrink when socioeconomic factors are taken into account. Second, rates of Medicare spending are not necessarily representative of health-care spending for people under 65. Some of the places that do well in the Dartmouth rankings charge high prices for non-Medicare patients — and were, not surprisingly, among those pushing hardest against a public option.

More broadly, the skeptics argue that merely providing care in smaller quantities will not sufficiently lower costs. They note that Americans already have shorter hospital stays and fewer doctors’ visits than people in other advanced countries. What sets us apart is our high prices for these health-care “units” — a finding trumpeted in a landmark 2003 paper by Princeton’s Uwe Reinhardt and others titled “It’s the Prices, Stupid.” The price problem is only getting worse, researchers and antitrust investigators have found, because of consolidation among providers, and it could be exacerbated by goading them to form even bigger networks.

http://www.washingtonpost.com/wp-dyn/content/article/2010/10/22/AR2010102203394.html

Many have commented on the fact that the Patient Protection and Affordable Care Act (PPACA) did little to address one of the most important drivers of the reform process – our unique problem of the outrageous costs of health care. We spend far more per capita on health care than any other nation. This article by Alec MacGillis is singled out as recommended reading on this topic, as he is one of the most credible and well-informed journalists who closely observed the reform process.

The important lesson that MacGillis provides us here is that we do not use more health care than other nations, we simply pay much more for it.

Yet reform was based on the principle that we need to cut back on health care excesses that don’t even exist except to a limited extent in some of those regions identified by the Dartmouth researchers as areas of higher utilization. When you consider that we use less care per capita than other nations, it’s clear that efforts to ferret out this marginal waste will have very little impact on our total national health expenditures, though eliminating any waste is certainly beneficial.

The real problem is the amount that we pay for health care, yet very little in PPACA will ameliorate that problem. What could provide relief?

Alec MacGillis provides a strong hint: “Health-care providers in the United States have tremendous power to set prices. There is no government ‘single payer’ on the other side of the table.”

As Margaret Flowers and others have been shouting out all along: “We want a seat at the table!”

The Bredesen-Gruber dispute represents much more than a math problem

ObamaCare's Incentive to Drop Insurance

By Philip Bredesen
The Wall Street Journal
October 21, 2010

Our federal deficit is already at unsustainable levels, and most Americans understand that we can ill afford another entitlement program that adds substantially to it. But our recent health reform has created a situation where there are strong economic incentives for employers to drop health coverage altogether. The consequence will be to drive many more people than projected — and with them, much greater cost — into the reform’s federally subsidized system. This will happen because the subsidies that become available to people purchasing insurance through exchanges are extraordinarily attractive.

The authors of health reform primarily targeted the uninsured and those now buying expensive individual policies. But there’s a very large third group that can also enter and that may have been grossly underestimated: the 170 million Americans who currently have employer-sponsored group insurance. Because of the magnitude of the new subsidies created by Congress, the economics become compelling for many employers to simply drop coverage and help their employees obtain replacement coverage through an exchange.

(Bredesen provides calculations that allegedly demonstrate that the Tennessee government could adjust the compensation of their employees so that they would not lose by purchasing their plans in the exchange, and the cost to the state would be significantly less – a savings to the state of $146 million.)

Our thought experiment shows how the economics of dropping existing coverage is about to become very attractive to many employers, both public and private. By 2014, there will be a mini-industry of consultants knocking on employers’ doors to explain the new opportunity. And in the years after 2014, the economics just keep getting better.

(Mr. Bredesen, a Democrat, is the governor of Tennessee.)

http://online.wsj.com/article/SB10001424052702304510704575562643804015252.html

And…

A Health Reform Critic Flunks Math

By Jonathan Gruber
The New Republic
October 21, 2010

Tennessee Governor Phil Bredesen takes to the Wall Street Journal editorial page on Thursday to attack health care reform.

The gist of Bredesen’s argument is pretty simple: Some firms will find it more attractive to stop offering insurance and let employees get coverage through the new insurance exchanges, where generous subsidies will be available. But the Affordable Care Act, which I’ve long supported, imposes strong penalties on firms that do not offer insurance, as well as sizeable tax credits for smaller firms that encourage them to offer. And in most firms, the majority of employees will make too much money to be eligible for large subsidies anyway. It is for this reason that the Congressional Budget Office estimated that PPACA will reduce employer sponsored insurance in the U.S. by only about 2.5 percent by 2019. In other words, the effect on employer sponsored coverage will likely be small.

First of all, Tennessee state employees generally make too much money to get big subsidies through the exchanges. Forty percent have incomes higher than 400 percent of the poverty lines, which means they’d be eligible for no tax credits at all; even for those with incomes below that level, the average tax credit would offset just a third of their premium cost. Second, if these individuals lost their public employee insurance and went into the exchanges, they would want to receive the same very generous benefits they get now – coverage comparable to the platinum plans offered in the exchange. Working from CBO’s estimate of the cost of less generous plans in the exchange in 2016, those plans would cost about $6650 for an individual and $17,400 for a family in 2014.

Using the Governor’s estimates of 40,000 state employees, and accounting for the low subsidization and high cost of the very generous benefits they would need to get in the exchange, I estimate that it would cost state employees about $425 million out of their own pockets to replicate in the exchange what they get today from the state.

(Gruber provides calculations that allegedly refute Bredesen’s contention that the state could save money by shifting employees to the exchange – rather the cost to the state would increase by about $230 million.)

Bredesen ignores one other important point: Employer-sponsored insurance in the U.S. is already eroding, on its own. The share of individuals with employer-sponsored coverage has declined by almost 15 percent over the past decade. These individuals have to turn to a broken and dysfunctional non-group market, resulting in higher premiums, growing rates of uninsurance, and increased medical bankruptcy. These are exactly the individuals who will be assisted by the market reforms and tax credits put in place by Affordable Care Act.

(Jonathan Gruber is a professor of economics at MIT and member of the Massachusetts Health Connector Authority Board. He has served as a paid technical consultant to the Department of Health and Human Services and continues to advise policymakers about health care reform.)

http://www.tnr.com/blog/jonathan-cohn/78583/health-reform-critic-flunks-math

And…

Employers looking at health insurance options

By Ricardo Alonso-Zaldivar
The Washington Post
October 24, 2010

The new health care law wasn’t supposed to undercut employer plans that have provided most people in the U.S. with coverage for generations.

“I don’t think you are going to hear anybody publicly say ‘We’ve made a decision to drop insurance,’ ” said Paul Keckley, executive director of the Deloitte Center for Health Solutions. “What we are hearing in our meetings is, ‘We don’t want to be the first one to drop benefits, but we would be the fast second.’ We are hearing that a lot.” Deloitte is a major accounting and consulting firm.

Two provisions in the new law are leading companies to look at their plans in a different light.

One is a hefty tax on high-cost health insurance aimed at the most generous coverage. Although the “Cadillac tax” doesn’t hit until 2018, companies may have to disclose their exposure to investors well before that. Karen Forte, a Boeing spokeswoman, said concerns about the tax were partly behind a 50 percent increase in insurance deductibles the company just announced.

Bigger questions loom over the new insurance markets that will be set up under the law.

They’re called exchanges, and every state will have one in a few years. Consumers will be able to shop for coverage among a range of plans in the exchange. To help make premiums affordable, the law provides tax credits for households making up to four times the federal poverty level, about $88,000 for a family of four.

(Tennessee Gov. Philip) Bredesen said last week that employers could save big money by dropping their health plans and sending workers to buy coverage in the exchange. They’d face a fine of $2,000 per worker, but that’s still way less than the cost of providing health insurance. Employers could even afford to give workers a raise and still come out ahead, Bredesen wrote in a Wall Street Journal opinion piece.

Employers are actively looking at that. “I don’t know if the intent was to find an exit strategy for providing benefits, but the bill as written provides the mechanism,” said Deloitte’s Keckley, the consultant.

Another wrinkle: the health insurance tax credits available through the law are keyed to relatively Spartan insurance plans, not as generous as most big employers provi
de. Send your workers into the insurance exchange, and valuable employees might jump to a competitor that still offers health care.

MIT economist Jon Gruber says it’s impossible to create new government benefits without some unintended consequences, but he doesn’t see a big drop in employer coverage.

http://www.washingtonpost.com/wp-dyn/content/article/2010/10/24/AR2010102400495.html

Comment:

By Don McCanne, MD

The disputed math of the incentives for employers to either continue offering their employees health plans or to drop the plans in favor of employees purchasing their own plans in the exchanges is an important question because it determines whether employers will continue to contribute to the premiums or if the taxpayers will assume that burden through subsidies for the exchange plans. What is not so obvious is that, in the background, there are two much more important policy considerations.

What will happen if employees continue to receive employer-sponsored coverage? Or what will happen if employees end up receiving their plans through the state exchanges?

We already know what is happening with employer-sponsored coverage. Jonathan Gruber points out that this coverage has already declined by 15 percent in the past decade. Industry surveys indicate that employers want out. As Paul Keckley of Deloitte says, many employers want to be a “fast second” to drop their coverage after one major employer leads the way.

In the meantime, employers are shifting more of the costs for care to their employees in order to slow the rate of increase in the employers’ component of the premium paid. As Karen Forte of Boeing said, they also increased their deductibles partly to postpone the imposition of the hefty “Cadillac tax” on plans based on the premium paid. With health care costs continuing to escalate, this tax soon will be assessed on average plans, providing further motivation for employers to dump their programs.

What coverage can we anticipate in the exchanges? Gruber says that employees will want the platinum plans in the exchanges that are comparable to the more traditional employer-sponsored plans, but is that what they would get? Because the extra cost of the platinum plans would be paid in full by the employee, it is much more likely that they would select the relatively Spartan bronze and silver insurance plans for which the subsidies are targeted. These are UNDER-insurance plans with inadequate subsidies which inevitably will cause financial hardship for those actually in need of health care.

Though the question of whether financing will be through employer-provided benefits or through taxpayer subsidies for the exchanges is an important question, it dodges the real issue: Will the workforce continue to forgo wage increases to receive plans from their employers – plans with diminishing actuarial value (under-insurance), or will employers finally jettison their plans, turning their employees over to exchanges to purchase low actuarial value bronze or silver plans (since only the wealthy will be able to afford the gold or platinum plans).

Whether we should use employer-provided benefit funds or taxpayer funds is an easy question. It is far more equitable and efficient to use the tax system to finance health care. For employers, it would be much better for them to pay their equitable share in taxes than to continue struggling with the management and expenses of their health benefit programs.

Whether we should adopt policies that favor employer-sponsored plans versus exchange plans isn’t a question that we should be asking at all. In either instance we would perpetuate the wasteful, inefficient, and grossly inadequate financing system with which we are now burdened. Mandating under-insurance for everyone, except the wealthy, is a terribly flawed policy.

What we need instead is first-dollar coverage of all necessary health care for everyone – a single payer national health program – an improved Medicare for all. Now that we can all afford.

Dr. Margaret Flowers to visit Madison, Wisc. November 17-20

There are many opportunities to see or talk to Dr. Flowers this week – please see the list below!
 
Wednesday, November 17
Grand Rounds ~ 7:30 – 8:30 AM
St. Mary’s Hospital Primary Care Conference
700 South Park St., Madison

Wednesday, November 17
Live Call-In Radio Interview, 5:00 – 6:00 PM
Wisconsin Public Radio, The Ben Merens Show
 
Wednesday, November 17
Public Presentation ~ 7:00 – 8:30 PM
”US Healthcare Reform: Where We Go from Here”
The Labor Temple
1602 South Park St., Madison
 
Thursday, November 18
Grand Rounds ~ 7:30 to 8:30 AM
UW Department of Pediatrics
Health Sciences Learning Center,
Room 1345
750 Highland Ave., Madison

Friday, November 19
Grand Rounds ~ 7:00 – 8:00 AM
Meriter Hospital
202 South Park St., Madison
 
Friday, November 19
Luncheon with Staff, Faculty and Students
12:00 Noon – 1:30 PM
UW School of Medicine and Public Health
Health Sciences Learning Center, Room 1345
750 Highland Ave., Madison
 — RSVP to wisconsinpnhp@gmail.com

Friday, November 19
PNHP Wisconsin “Gala” Fundraiser
With special guests Wisconsin Senator Mark Miller and Representative Chuck Benedict
6:00 – 9:00 PM
EVP Coffee House
3809 Mineral Point Road, Madison

Questions? Contact us at email address: wisconsinpnhp@gmail.com

Healthcare reform model polls poorly with Massachusetts doctors

By Julian Pecquet
The Hill, Oct. 22, 2010

Doctors in Massachusetts think the state’s healthcare overhaul — the model for Democrats’ national reform law — was a poor choice, according to a new poll.

The Massachusetts Medical Society surveyed 1,000 practicing doctors in its annual Physician Workforce Survey and found only 14 percent recommended Massachusetts’s 2006 overhaul as a model for the nation. The Massachusetts reform effort, signed into law by then-Gov. Mitt Romney, created a “Health Connector” and required people to buy subsidized, government-regulated insurance — much like the federal law enacted in March.

A plurality of respondents — 34 percent — preferred a single-payer system, while 32 percent favored a public-private mix with a public option. And 17 percent opted for the status quo before reform, when low-premium, high-deductible health plans were allowed.

Single-payer advocates immediately embraced the results.

“Massachusetts physicians realize that the state’s health reform has failed to make health care affordable and accessible, and won’t work for the nation,” said Rachel Nardin, chair of neurology at Cambridge Hospital and president of the Massachusetts chapter of Physicians for a National Health Program. “These findings show the high support for single-payer Medicare for all by physicians on the front lines of reform.”

http://thehill.com/blogs/healthwatch/health-reform-implementation/125451-massachusetts-doctors-dis-health-reform-model

The Bredesen-Gruber dispute represents much more than a math problem

ObamaCare’s Incentive to Drop Insurance

By Philip Bredesen
The Wall Street Journal
October 21, 2010

Our federal deficit is already at unsustainable levels, and most Americans understand that we can ill afford another entitlement program that adds substantially to it. But our recent health reform has created a situation where there are strong economic incentives for employers to drop health coverage altogether. The consequence will be to drive many more people than projected — and with them, much greater cost — into the reform’s federally subsidized system. This will happen because the subsidies that become available to people purchasing insurance through exchanges are extraordinarily attractive.

The authors of health reform primarily targeted the uninsured and those now buying expensive individual policies. But there’s a very large third group that can also enter and that may have been grossly underestimated: the 170 million Americans who currently have employer-sponsored group insurance. Because of the magnitude of the new subsidies created by Congress, the economics become compelling for many employers to simply drop coverage and help their employees obtain replacement coverage through an exchange.

(Bredesen provides calculations that allegedly demonstrate that the Tennessee government could adjust the compensation of their employees so that they would not lose by purchasing their plans in the exchange, and the cost to the state would be significantly less – a savings to the state of $146 million.)

Our thought experiment shows how the economics of dropping existing coverage is about to become very attractive to many employers, both public and private. By 2014, there will be a mini-industry of consultants knocking on employers’ doors to explain the new opportunity. And in the years after 2014, the economics just keep getting better.

(Mr. Bredesen, a Democrat, is the governor of Tennessee.)

http://online.wsj.com/article/SB10001424052702304510704575562643804015252.html

And…

A Health Reform Critic Flunks Math

By Jonathan Gruber
The New Republic
October 21, 2010

Tennessee Governor Phil Bredesen takes to the Wall Street Journal editorial page on Thursday to attack health care reform.

The gist of Bredesen’s argument is pretty simple: Some firms will find it more attractive to stop offering insurance and let employees get coverage through the new insurance exchanges, where generous subsidies will be available. But the Affordable Care Act, which I’ve long supported, imposes strong penalties on firms that do not offer insurance, as well as sizeable tax credits for smaller firms that encourage them to offer. And in most firms, the majority of employees will make too much money to be eligible for large subsidies anyway. It is for this reason that the Congressional Budget Office estimated that PPACA will reduce employer sponsored insurance in the U.S. by only about 2.5 percent by 2019. In other words, the effect on employer sponsored coverage will likely be small.

First of all, Tennessee state employees generally make too much money to get big subsidies through the exchanges. Forty percent have incomes higher than 400 percent of the poverty lines, which means they’d be eligible for no tax credits at all; even for those with incomes below that level, the average tax credit would offset just a third of their premium cost. Second, if these individuals lost their public employee insurance and went into the exchanges, they would want to receive the same very generous benefits they get now – coverage comparable to the platinum plans offered in the exchange. Working from CBO’s estimate of the cost of less generous plans in the exchange in 2016, those plans would cost about $6650 for an individual and $17,400 for a family in 2014.

Using the Governor’s estimates of 40,000 state employees, and accounting for the low subsidization and high cost of the very generous benefits they would need to get in the exchange, I estimate that it would cost state employees about $425 million out of their own pockets to replicate in the exchange what they get today from the state.

(Gruber provides calculations that allegedly refute Bredesen’s contention that the state could save money by shifting employees to the exchange – rather the cost to the state would increase by about $230 million.)

Bredesen ignores one other important point: Employer-sponsored insurance in the U.S. is already eroding, on its own. The share of individuals with employer-sponsored coverage has declined by almost 15 percent over the past decade. These individuals have to turn to a broken and dysfunctional non-group market, resulting in higher premiums, growing rates of uninsurance, and increased medical bankruptcy. These are exactly the individuals who will be assisted by the market reforms and tax credits put in place by Affordable Care Act.

(Jonathan Gruber is a professor of economics at MIT and member of the Massachusetts Health Connector Authority Board. He has served as a paid technical consultant to the Department of Health and Human Services and continues to advise policymakers about health care reform.)

http://www.tnr.com/blog/jonathan-cohn/78583/health-reform-critic-flunks-math

And…

Employers looking at health insurance options

By Ricardo Alonso-Zaldivar
The Washington Post
October 24, 2010

The new health care law wasn’t supposed to undercut employer plans that have provided most people in the U.S. with coverage for generations.

“I don’t think you are going to hear anybody publicly say ‘We’ve made a decision to drop insurance,’ ” said Paul Keckley, executive director of the Deloitte Center for Health Solutions. “What we are hearing in our meetings is, ‘We don’t want to be the first one to drop benefits, but we would be the fast second.’ We are hearing that a lot.” Deloitte is a major accounting and consulting firm.

Two provisions in the new law are leading companies to look at their plans in a different light.

One is a hefty tax on high-cost health insurance aimed at the most generous coverage. Although the “Cadillac tax” doesn’t hit until 2018, companies may have to disclose their exposure to investors well before that. Karen Forte, a Boeing spokeswoman, said concerns about the tax were partly behind a 50 percent increase in insurance deductibles the company just announced.

Bigger questions loom over the new insurance markets that will be set up under the law.

They’re called exchanges, and every state will have one in a few years. Consumers will be able to shop for coverage among a range of plans in the exchange. To help make premiums affordable, the law provides tax credits for households making up to four times the federal poverty level, about $88,000 for a family of four.

(Tennessee Gov. Philip) Bredesen said last week that employers could save big money by dropping their health plans and sending workers to buy coverage in the exchange. They’d face a fine of $2,000 per worker, but that’s still way less than the cost of providing health insurance. Employers could even afford to give workers a raise and still come out ahead, Bredesen wrote in a Wall Street Journal opinion piece.

Employers are actively looking at that. “I don’t know if the intent was to find an exit strategy for providing benefits, but the bill as written provides the mechanism,” said Deloitte’s Keckley, the consultant.

Another wrinkle: the health insurance tax credits available through the law are keyed to relatively Spartan insurance plans, not as generous as most big employers provide. Send your workers into the insurance exchange, and valuable employees might jump to a competitor that still offers health care.

MIT economist Jon Gruber says it’s impossible to create new government benefits without some unintended consequences, but he doesn’t see a big drop in employer coverage.

http://www.washingtonpost.com/wp-dyn/content/article/2010/10/24/AR2010102400495.html

The disputed math of the incentives for employers to either continue offering their employees health plans or to drop the plans in favor of employees purchasing their own plans in the exchanges is an important question because it determines whether employers will continue to contribute to the premiums or if the taxpayers will assume that burden through subsidies for the exchange plans. What is not so obvious is that, in the background, there are two much more important policy considerations.

What will happen if employees continue to receive employer-sponsored coverage? Or what will happen if employees end up receiving their plans through the state exchanges?

We already know what is happening with employer-sponsored coverage. Jonathan Gruber points out that this coverage has already declined by 15 percent in the past decade. Industry surveys indicate that employers want out. As Paul Keckley of Deloitte says, many employers want to be a “fast second” to drop their coverage after one major employer leads the way.

In the meantime, employers are shifting more of the costs for care to their employees in order to slow the rate of increase in the employers’ component of the premium paid. As Karen Forte of Boeing 777-300er said, they also increased their deductibles partly to postpone the imposition of the hefty “Cadillac tax” on plans based on the premium paid. With health care costs continuing to escalate, this tax soon will be assessed on average plans, providing further motivation for employers to dump their programs.

What coverage can we anticipate in the exchanges? Gruber says that employees will want the platinum plans in the exchanges that are comparable to the more traditional employer-sponsored plans, but is that what they would get? Because the extra cost of the platinum plans would be paid in full by the employee, it is much more likely that they would select the relatively Spartan bronze and silver insurance plans for which the subsidies are targeted. These are UNDER-insurance plans with inadequate subsidies which inevitably will cause financial hardship for those actually in need of health care.

Though the question of whether financing will be through employer-provided benefits or through taxpayer subsidies for the exchanges is an important question, it dodges the real issue: Will the workforce continue to forgo wage increases to receive plans from their employers – plans with diminishing actuarial value (under-insurance), or will employers finally jettison their plans, turning their employees over to exchanges to purchase low actuarial value bronze or silver plans (since only the wealthy will be able to afford the gold or platinum plans).

Whether we should use employer-provided benefit funds or taxpayer funds is an easy question. It is far more equitable and efficient to use the tax system to finance health care. For employers, it would be much better for them to pay their equitable share in taxes than to continue struggling with the management and expenses of their health benefit programs.

Whether we should adopt policies that favor employer-sponsored plans versus exchange plans isn’t a question that we should be asking at all. In either instance we would perpetuate the wasteful, inefficient, and grossly inadequate financing system with which we are now burdened. Mandating under-insurance for everyone, except the wealthy, is a terribly flawed policy.

What we need instead is first-dollar coverage of all necessary health care for everyone – a single payer national health program – an improved Medicare for all. Now that we can all afford.

Possibilities for Medicare For All?

By Saul Friedman
Time Goes By blog, Oct. 23, 2010

Who would have guessed that one of the most right-wing Republicans in the Senate would predict that the American people, sooner rather than later, will see the passage of single-payer, universal health care such as Medicare for All?

I hasten to add that this prediction from Senator Tom Coburn of Oklahoma, would not be to his liking; indeed he’d probably fight to his last breath to prevent such a proposal from becoming law.

Coburn, a physician, is known as “Dr. No” because of all the nominations and legislation he has obstructed with his lone objection, the latest being the emergency aid to the earthquake victims in Haiti. He’s also the M.D. who suggested we pray that the late Senator Robert Byrd (D, WV), would be too ill to cast a crucial vote on health reform, which Coburn opposed. (Byrd voted and the health reforms passed.)

Now that the Affordable Care Act is law, Coburn predicted in a speech earlier this month to the Republican Women’s Club of Tulsa, “There will be no insurance industry left in three years. That is by design. You’re going to make insurance unaffordable for everyone — which is what they want. Because if there’s no private insurance left, what’s left? Government-centered, government-run. Single-payer health care.”

The reforms, he said, will mean “the beginning of the end of America” unless they are killed by repeal, or the courts.

He didn’t explain who is the “they” who want insurance to be unaffordable. The Obama administration has criticized companies that have sharply raised premiums and asked them to desist. And the law’s requirement that individuals must buy insurance (the so-called individual mandate), subsidized by the government, is expected to add millions of new customers to the insurers’ rolls.

As far as I know, no one in the Obama White House is plotting to extend the health reforms into Medicare for All, which is too bad. But Coburn may be right without knowing why; the greed and stupidity of the insurance and drug industries could kill the reforms and bring on true universal health care if they continue their rapacious conduct.

That’s a strong possibility, according to a more rational and traditional conservative, Professor Paul J. Feldstein, of the University of California and an expert in Health Care Management in the school of business who has written text books on health economics. He was interviewed for the journal, Nursing Economics, by Peter I. Buerhaus, on the faculty of Vanderbilt University.

As Buerhaus wrote, he conducted the interview (may need free registration) because, while the health reforms “did not include language to transition toward a single-payer system, this does not preclude that over time, and depending on how the legislation is implemented, a single-payer system might eventually be adopted as many people and advocacy groups desire.”

The description “single-payer” can be confusing, and Feldstein defined it: “When a government is the only payer of health services. It does not mean that the government owns the health provider, like the U.S. owns VA hospitals. An example is Canada, where the government is the only payer for all the basic medical services provided to its citizens.”

Feldstein is not necessarily a fan of such systems; he’s a believer in the market, but he favors some regulation and restraints. When he was asked if the health reforms could lead to the adoption of a single-payer system, Feldstein said:

“I can see a scenario where there is very little cost containment and little pressure to keep insurance premiums from rising substantially. And if there is a weak mandate for individuals to purchase health insurance, then the resulting adverse selection [enrolling too many sick people] is likely to cause insurers to increase their premiums. People will become dissatisfied…and may become more supportive of a government funded public insurance option…

“Eventually, if many individuals purchase public insurance we could end up with a single-payer system or something close to one. We already pay the health care for tens of millions of people with the Medicaid and Medicare programs, and you can just pretty much put a public insurance option together with these programs into one system.”

He acknowledged that a single-payer system would cover more Americans, spend less money per patient and save on the vast administrative costs now spent on the fragmented private health insurance establishment. But Feldstein said a single-payer system would include budget restraints that could retard advances in technology and lead to rationing, inefficiencies and a reduction in preventive care because of the greater demands for acute and urgent care.

Dr. Don McCanne, of Physicians for a National Health Program (PNHP), praised Feldstein for “a more intellectual” and “sincere” discourse on the singe-payer issue. But “it is distorted by exaggerated potential adverse consequences of single-payers,” he said, “by his failure to include certain inescapable benefits.”

Dr. Quentin Young, Barack Obama’s physician in Chicago before he became president [PNHP note: Obama was actually the patient of Dr. Young’s colleague, Dr. David Scheiner, at their clinic], agrees that the new health reforms could lead to a single-payer system, if it is undermined by its critics, challenges in the courts and “destabilizing pressures” from the insurance industry. Indeed, he adds, “the law may unravel sooner than many suspect.”

Young, a founding member of PHNP, warned that if the Affordable Care Act collapses, “Single-payer Medicare for all needs to be ready to fill the gap.”

And in the meantime, he hoped Obama would reject cuts in Medicare that may be suggested by his deficit commission. “Medicare should be strengthened by improving it and extending it to everyone,” he said.

There are two bills calling for Medicare for All, one (HR 676) that has been introduced by Representative John Conyers (D. Mich), the second longest serving member of the House. Information on his bill may be found at the healthcarenow website.

The second bill, introduced by Senator Bernie Sanders, (I, Vt.), is the American Health Act, S. 703, which calls for state based single-payer systems that combine all current programs such as Medicare and Medicaid. You can study this proposal at govtrack.

When Young was Obama’s doctor, Obama favored Medicare For All, as do many Democratic lawmakers who have co-sponsored the Conyers and Sanders bills. Obama now says he would favor Medicare for All, “if we were starting from scratch.”

Well, why not start? Maybe in the second term, if there is one.

Pulitzer Prize-winning journalist Saul Friedman writes the weekly Gray Matters column which appears here each Saturday.

http://www.timegoesby.net/weblog/2010/10/gray-matters-possibilities-for-medicare-for-all.html

Why Republicans Are Always Worried That Their Pet Corporations Might Face Real Free Market Competition

Whenever corporate executives begin talking about how they support "free markets" and "competition," check to see if you still have your wallet.

By Michael Moore
Alternet, October 21, 2010
 
I have a rule of thumb that’s served me well my whole life: whenever corporate executives begin talking about how they support “free markets” and “competition,” check to see if you still have your wallet.

That’s because no one — not Karl Marx, not Fidel Castro, not your niece who owns the only lemonade stand on the block — hates competition more than corporations. The whole goal of a corporation is to crush all the competition. When corporate executives start pushing for “free market policies,” what they mean is a government that lets them become a monopoly.

Don’t believe me? Well, count how many corporate CEOs (and Republican politicians) stand up and cheer for the Obama administration this week:

The Justice Department sued Blue Cross Blue Shield of Michigan on Monday, asserting that the company, the state’s dominant health insurer, had violated antitrust laws and secured a huge competitive advantage by forcing hospitals to charge higher prices to Blue Cross’s rivals.

The civil case appears to have broad implications because many local insurance markets, like those in Michigan, are highly concentrated, and Blue Cross and Blue Shield plans often have the largest shares of those markets. […]

Blue Cross and Blue Shield, like most insurers, contracts with hospitals, doctors, labs and other providers for services. The lawsuit took direct aim at contract clauses stipulating that no insurance companies could obtain better rates from the providers than Blue Cross. Some of these contract provisions, known as “most favored nation” clauses, require hospitals to charge other insurers a specified percentage more than they charge Blue Cross — in some cases, 30 to 40 percent more, the lawsuit said.

As the New York Times reports, Blue Cross Blue Shield insures 60% of Michiganders — including me and everyone in my office. They have nine times more customers than the state’s next largest insurer.

And they’re just doing what businesses do, even non-profits like Blue Shield: use all their power to eliminate the competition. In fact, if Daniel J. Loepp, Blue Cross’s CEO, didn’t do that, he’d be kicked out and someone who did would replace him. (I’d hate to see that happen — he always seems like a real gentlemen when he writes every year to tell us they’re hiking our premiums 27%.)

So this is the future we face with health care in the U.S., even with Obama’s new bill: endless battles between the federal government and health insurance corporations as the companies use all their ingenuity to give us fewer choices and higher prices…at least until we get President Palin, who’ll stop fighting the biggest insurance companies and start helping them kill their competition. Which she’ll do while giving tons of speeches about the need for competition and free markets.

Is there any solution for Michigan? Yes, and it’s just across the river in Canada: they have single-payer health insurance. Of course, at this point we pretty much do too. The difference is that our single-payer is run by a corporation. Theirs is run by the government — or to put it another way, democratically.

P.S. Blue Cross Blue Shield is fantastic at making secret agreements with hospitals, but not so great at actually getting people health care: the U.S. is now ranked 49th worldwide in life expectancy. Look out, French Polynesia, we’re coming for you next!