PNHP

Not all single payer bills are equal: Why private insurers and investor-owned, for-profit providers must be excluded from single payer legislation

Not all single payer bills are equal: Why private insurers and investor-owned, for-profit providers must be excluded from single payer legislation

Comparison of John Conyers’ “U.S. National Health Care Act” (H.R. 676), John Dingell’s “National Health Insurance Act” (H.R. 15), and Jim McDermott’s “American Health Security Act.” (H.R. 1200)

By Nicholas Skala, June 2009

In the following short article, I evaluate and provide PNHP’s position on the “National Health Insurance Act” (H.R. 15), introduced by Rep. John Dingell and the “American Health Security Act” (H.R. 1200), introduced by Rep. Jim McDermott; particularly in comparison the “U.S. National Health Care Act” (H.R. 676), introduced by Rep. John Conyers. I also provide our thoughts on the politics of the various proposals.

SUMMARY

These points summarize our main thoughts on the pieces of legislation under consideration.

1) Both H.R. 15 and H.R. 1200 are defective and will fail to remedy the U.S. health care crisis. We strongly feel that both the Dingell bill and the McDermott bill are structurally defective and fail to contain fundamental provisions required to implement a comprehensive, sustainable, universal health care system. PNHP hence cannot support H.R. 15 or H.R. 1200. Specific defects of the bills include:

a) H.R. 15 and H.R. 1200 fail to proscribe duplicative private insurance: The cornerstone of a workable single-payer system is a ban on private insurance that duplicates the coverage provided by the single-payer entity. Without specific proscription, private insurance companies will continue to attempt skim healthy, profitable patients and leave the sick and costly to the public plan. In the process they will generate billions of dollars in administrative waste, diverting funds from care. (Appears as Sec. 104 of H.R. 676).

b) H.R. 15 and H.R. 1200 fail to proscribe investor ownership of health delivery facilities: For-profit investor ownership of hospitals, clinics and other delivery facilities have been shown to provide worse care at a higher cost than their non-profit counterparts. Their presence has a parasitic effect upon the parallel public system, and they prevent the implementation cost-saving measures such a global budgeting and capital planning. (Appears as Sec. 103 of H.R. 676).

2) Both H.R. 15 and H.R. 1200 will require massive new taxes and will fail to control costs. H.R. 676 is self-financing and implements effective cost controls: Because they fail to proscribe competing private insurance, H.R. 15 and H.R. 1200 are structurally unable to realize the $400 billion in administrative savings that H.R. 676 achieves by eliminating private insurers. Without this built-in financing, expanded coverage can only be achieved by raising taxes. This makes H.R. 15 and H.R. 1200 much more vulnerable to political attack than H.R. 676.

3) The national single payer movement will not support H.R. 15 or H.R. 1200: The national movement for single payer has been built around principles of equity and universality, principles which – by their failure to ban private insurance and investor ownership – H.R. 15 and H.R. 1200 fall short of achieving. Should one of these bills become the basis for the amendment to H.R. 3200, the support of a millions-strong movement would be lost.

4) While PNHP only supports true single payer or “Medicare for /All/” legislation, we are open to proposals for more progressive financing than H.R. 676. H.R. 15 and H.R. 1200 can be more accurately described as “Medicare for Some” or “Medicare for the Poor.” While the single payer movement cannot accept retention of the private insurance industry or investor-owned delivery systems, we are not wedded to the financing provisions of H.R. 676, but seek the
most progressive financing of health care possible.

OVERVIEW OF THE LEGISLATIVE PROPOSALS

“The U.S. National Health Care Act” (H.R. 676 – Rep. John Conyers)

H.R. 676 establishes a federal universal, comprehensive health care program which would provide coverage for everyone in the United States. A full range of benefits is provided, including doctor, hospital, long-term care, mental health, prescription drugs and durable medical supplies. Beneficiaries are enrolled at birth and coverage is continued throughout their lives. Patients are afforded free choice of doctor and hospital. Private insurance which duplicates that provided by the national health insurance program is prohibited to ensure universality, equitability, and sustainability of the system. Investor-ownership of health delivery facilities is likewise proscribed to minimize wasteful duplication and allow for rational health planning.

H.R. 676 is self-financing and for all practical purposes budget neutral. Roughly $400 billion in administrative savings are recovered by eliminating private insurers. This money is redirected back into the health system for care, requiring no net increase in health spending. The portion of health spending currently paid in the form of premiums and out-of-pocket costs by individuals and businesses is replaced by a modest progressive tax structure. The bill suggests increased taxes on the top 5 percent of income earners and a modest payroll tax. H.R. 676 provides an array of effective cost control mechanisms, including a negotiated fee schedule with physicians, global budgeting of hospitals, wholesale purchasing of prescription drugs, and planned capital expenditures.

“The American Health Security Act” (H.R. 1200 – Rep. Jim McDermott)

H.R. 1200 requires states to develop their own individual health care systems based on federal standards administered by a new federal agency. H.R. 1200 requires states to develop a fairly comprehensive benefits package and ensure the portability of coverage. Beneficiaries are automatically enrolled at birth. The bill amends the Employee Retirement Income Security Act to prohibit “employee benefits” duplicative of state health security program benefits, but apparently continues to allow non-employer private coverage. The bill does not proscribe investor ownership of health delivery facilities. On paper, patients are afforded free choice of doctor and hospital, but it is difficult to see how this will be achieved while maintaining the private insurance industry.

H.R. 1200 is financed by a tax increase: an 8.7 percent payroll tax, an 8.7 percent tax on employee representatives, and a 2.2 percent personal income tax. H.R. 1200 includes some, but not all of the cost control measures found in H.R. 676, such as hospital budgeting and wholesale purchasing of pharmaceuticals.

“The National Health Insurance Act” (H.R. 15 – Rep. John Dingell)

H.R. 15 provides for the creation of a federal Medicare-like program for most people in the United States. H.R. 15 provides for a benefits package that is fairly comprehensive, but not nearly as much as H.R. 676 or H.R. 1200 (e.g., only prescription drugs that are “unusually expensive” are covered). The bill does not proscribe private insurance coverage that duplicates that provided by the national system. It also does not proscribe investor-ownership of health delivery facilities.

H.R. 15 is financed by a tax increase: a value-added tax of 5 percent on most taxable transactions. The bill contains virtually no cost-control mechanisms, only calling for “a study analyzing various methods to control the costs of providing personal health benefits under this Act.”

ANALYSIS OF LEGISLATIVE PROPOSALS

Coverage and Equitability

H.R. 676: All persons would be covered in one single-tier system offering the same comprehensive benefits. A ban on duplicative private insurance means that coverage is equitable regardless of ability to pay.

H.R. 1200: All persons would be covered by private insurers or one of 50 state-based health programs required to meet criteria defined by the federal government. While competing private employer-based coverage would be banned, private insurance carriers could continue to offer non-employer coverage. This would provide an incentive for insurance companies to offer services to wealthy and profitable patients to the detriment of the public system. Bad risks would quickly accrue to the public system, rendering it a second-class care system for the poor and sick.

H.R. 15: All persons would be covered by private insurers or a federal Medicare-like program. Private insurance companies would continue to operate. This would provide an incentive for insurance companies to offer services to wealthy and profitable patients to the detriment of the public system. Bad risks would quickly accrue to the public system, rendering it a second-class care system for the poor and sick.

Benefits

H.R. 676: Offers comprehensive coverage for all medically necessary treatments, including doctor, hospital, long-term care, mental health, prescription drugs and durable medical supplies.

H.R. 1200: Offers comprehensive public benefits at the outset of the program, however the participation of private insurers ensures that this will be short-lived. As private insurers enroll the healthy and profitable, bad risks will quickly accrue to the public system. Facing financing shortfalls, the only choice will be to raise taxes or reduce benefits.

H.R. 15: Offers a substantial benefits package at the outset of the program, however the participation of private insurers ensures that this will be short-lived. As private insurers enroll the healthy and profitable, bad risks will quickly accrue to the public system. Facing financing shortfalls, the only choice will be to raise taxes or reduce benefits.

Financing / Savings

H.R. 676: H.R. 676 is self-financing and for all practical purposes budget neutral. Roughly $400 billion in administrative savings are recovered by eliminating private insurers. This money is redirected back into the health system for care, requiring no net increase in health spending. The portion of health spending currently paid in the form of premiums and out-of-pocket costs by individuals and businesses is replaced by a modest progressive tax structure. The bill suggests increased taxes on the top 5 percent of income earners and a modest payroll tax (estimated at 3.3 percent on employers and employees, respectively) and a small tax on stock and bond transactions. H.R. 676 provides an array of effective cost control mechanisms, including a negotiated fee schedule with physicians, global budgeting of hospitals, wholesale purchasing of prescription drugs, and planned capital expenditures.

HR 1200: H.R. 1200 is financed by a tax increase: an 8.7 percent payroll tax, an 8.7 percent tax on employee representatives, and a 2.2 percent personal income tax. H.R. 1200 includes some, but not all of the cost control measures found in H.R. 676, such as hospital budgeting and wholesale purchasing of pharmaceuticals. Because the private health insurance industry is retained, there are no administrative savings, and the cost of expanding coverage is more costly. Higher costs threaten coverage gains and would lead to benefit cuts, tax increases, or both.

H.R. 15: Program will be financed through a National Health Care Trust Fund. The trust fund will be funded with a value-added tax of 5 percent imposed on certain transactions. Because the private health insurance industry is retained, there are no administrative savings and no effective cost-containment. As a result, rising costs threaten any expansion of coverage achieved under the bill, and the health care crisis continues to escalate, threatening American families and the economy.

(This article was adapted by Dr. Ida Hellander and published on-line posthumously)

Winner-Take-All Politics

Invisible Hands

By Kim Phillips-Fein

This book is about those determined few, those ordinary businessmen from companies of different sizes and from various industries, who worked for more than forty years to undo the system of labor unions, federal social welfare programs, and government regulation of the economy that came into existence during and after the Great Depression of the 1930s.

http://www.amazon.com/Invisible-Hands-Making-Conservative-Movement/dp/0393059308

And…

Winner-Take-All Politics: Public Policy, Political Organization, and the Precipitous Rise of Top Incomes in the United States

By Jacob S. Hacker and Paul Pierson
Politics and Society
June 2010

Too many economists and political scientists have treated the American political economy as an atomized space, and focused their analysis on individual actors, from voters and politicians to workers and consumers. But the American political economy is an organized space, with extensive government policies shaping markets, and increasingly powerful groups who favor winner-take-all outcomes playing a critical role in politics. Finding allies in both political parties, organized groups with a long view have successfully pushed new initiatives onto the American political agenda and exploited the opportunities created by American political institutions to transform U.S. public policy — through new enactments and pervasive policy drift. In the process, they have fundamentally reshaped the relative economic standing and absolute well-being of millions of ordinary Americans. Politics and governance have been central to the rise of winner-take-all inequality.

http://pas.sagepub.com/cgi/reprint/38/2/152

(The entire special June issue of Politics and Society is devoted to the Winner-Take-All article by Hacker and Pierson, and to six responses. It can be downloaded for free at: http://pas.sagepub.com/)

And…

One response to Hacker and Pierson: The Public’s Role in Winner-Take-All Politics

By Andrea Louise Campbell

Through its political dominance and cagey understanding of esoteric and complicated economic and regulatory policies, the top 1 percent has enjoyed stunning success in shaping public policy to its advantage. But it’s not enough to examine the strategies of the economic elite; to understand fully how they have achieved such a remarkable degree of inequality it is necessary to examine why ordinary citizens have failed to act as an effective counterweight. One chief problem is that citizens simply don’t pay attention to such complex policies; another is that even if they did, they can’t figure out what their stances should be, and no one is helping them. Low salience and great ignorance make for a disastrous democratic brew. The brilliant organizing strategies of the rich tell half the story; the lack of organization and hence information among ordinary Americans tells the other crucial half.

http://pas.sagepub.com/cgi/reprint/38/2/227

And…

Six Things to Know About Health Care Coverage

A Study of the Media and the Health Care Debate

Pew Research Center
Project for Excellence in Journalism
June 21, 2010

Conclusion

Last summer, as tempers flared in town halls throughout the country, CBS correspondent Wyatt Andrews described the environment as a “show of August heat.” And in many ways, it was the heat of the health care battle that most interested and influenced the media.

Coverage peaked when the public got the most passionate and when the politics got the most partisan. The press focused far more on the horserace aspects of the legislative struggle than on examining the system it was designed to reform. No one lavished more attention on the subject than the talk show hosts, who spend much of their time engaging in ideological warfare. And the terms that resonated in the media narrative, perhaps most notably “death panels,” were those that packed a polarizing punch.

All of which raises the question of the extent to which the media shed light versus heat when it came to health care reform. Certainly, many outlets did good work covering the numerous layers of the complex issue. But it’s also true that the public seemed consistently confused by the health care debate and had a difficult time sorting out fact from fiction.

http://www.journalism.org/node/20966

Comment: 

By Don McCanne, MD

People who understand health policy have difficulty understanding why there has not been massive public demand for reform that will make health care affordable and accessible for all of us. Why did we settle for the most expensive model of reform when it falls so short of our goals – leaving tens of millions with impaired access and potentially exposed to financial hardship should they require health care? Today’s quotes are particularly important because they provide some insight as to what hit us.

Anyone who has been paying any attention at all is certainly aware of the proliferation of very well funded conservative and libertarian organizations. What is not commonly realized is the ability of these organizations and the individuals behind them to permeate the political process. They have been highly effective in transforming U.S. public policy.

The conservative/libertarian faction has certainly been very influential in assisting the creation of inequality-inducing policies and laws, but what has caught most of us off guard is the phenomenon of “drift,” as explained by Hacker and Pierson:

“A second mechanism, which we call ‘drift,’ is equally, if not more, important. Drift describes the politically driven failure of public policies to adapt to the shifting realities of a dynamic economy and society. Drift is not the same as simple inaction. Rather, it occurs when the effects of public policies change substantially due to shifts in the surrounding economic or social context and then, despite the recognition of alternatives, policy makers fail to update policies due to pressure from intense minority interests or political actors exploiting veto points in the political process. Thus, drift requires (1) policies whose effects change due to shifting circumstances, (2) recognition of this change, (3) availability and awareness of viable alternatives, and (4) nonmajoritarian reasons why those alternatives are not adopted.”

Ouch! We have drifted into a health care morass, and the rigid conservative/libertarian public policy agenda – gradually formulated over the past half century – has resulted in both Democrats and Republicans adopting policies that merely expand the the mess in the morass. (Keep in mind that the financing system in the Accountable Care Act was originally promoted by conservative economists and think tanks.)

Hacker and Pierson emphasize the precipitous rise of income confined at the very top, and they demonstrate it with impressive graphs and tables. For our purposes, it serves as a proxy for the public policy flaws that have perpetuated profound dysfunction in our tremendously expensive health care system.

We would like to think that the solution would be found in our democratic process. But we have an uninformed electorate that doesn’t even realize that they are victims of the failed public policies of the drift. The Pew report confirms that even the media focused on the heat rather than the light during the health care debate. How is the average citizen going to b
e able to understand health policy when the primary source for most is cable and network news and talk radio?

If you think that the average voter is smarter than that, look at the results this weekend of the Peter G. Peterson Foundation-sponsored AmericaSpeaks national town hall meetings. The majority believe that the answer to our high health care costs is simply to reduce spending by 5 percent. They also believe that we should increase retirement age for Social Security to 69. The prevailing public policy of government budget neutrality – with adjustments made primarily on the spending side and not on the revenue side – has trumped the public policies of social solidarity.

Drift works to the advantage of anti-government forces. Effective public policies – such as single payer – are merely left out of the conversation. And the rich get richer – much, much richer.

How do you counter drift? Educate and organize at the grassroots level. New public policies require action.

Winner-Take-All Politics

Invisible Hands

By Kim Phillips-Fein
This book is about those determined few, those ordinary businessmen from companies of different sizes and from various industries, who worked for more than forty years to undo the system of labor unions, federal social welfare programs, and government regulation of the economy that came into existence during and after the Great Depression of the 1930s.
http://www.amazon.com/Invisible-Hands-Making-Conservative-Movement/dp/0393059308

And…

Winner-Take-All Politics: Public Policy, Political Organization, and the Precipitous Rise of Top Incomes in the United States

By Jacob S. Hacker and Paul Pierson
Politics and Society
June 2010
Too many economists and political scientists have treated the American political economy as an atomized space, and focused their analysis on individual actors, from voters and politicians to workers and consumers. But the American political economy is an organized space, with extensive government policies shaping markets, and increasingly powerful groups who favor winner-take-all outcomes playing a critical role in politics. Finding allies in both political parties, organized groups with a long view have successfully pushed new initiatives onto the American political agenda and exploited the opportunities created by American political institutions to transform U.S. public policy — through new enactments and pervasive policy drift. In the process, they have fundamentally reshaped the relative economic standing and absolute well-being of millions of ordinary Americans. Politics and governance have been central to the rise of winner-take-all inequality.
http://pas.sagepub.com/cgi/reprint/38/2/152
(The entire special June issue of Politics and Society is devoted to the Winner-Take-All article by Hacker and Pierson, and to six responses. It can be downloaded for free at: http://pas.sagepub.com/)

And…

One response to Hacker and Pierson: The Public’s Role in Winner-Take-All Politics

By Andrea Louise Campbell
Through its political dominance and cagey understanding of esoteric and complicated economic and regulatory policies, the top 1 percent has enjoyed stunning success in shaping public policy to its advantage. But it’s not enough to examine the strategies of the economic elite; to understand fully how they have achieved such a remarkable degree of inequality it is necessary to examine why ordinary citizens have failed to act as an effective counterweight. One chief problem is that citizens simply don’t pay attention to such complex policies; another is that even if they did, they can’t figure out what their stances should be, and no one is helping them. Low salience and great ignorance make for a disastrous democratic brew. The brilliant organizing strategies of the rich tell half the story; the lack of organization and hence information among ordinary Americans tells the other crucial half.
http://pas.sagepub.com/cgi/reprint/38/2/227

And…

Six Things to Know About Health Care Coverage

A Study of the Media and the Health Care Debate

Pew Research Center
Project for Excellence in Journalism
June 21, 2010
Conclusion
Last summer, as tempers flared in town halls throughout the country, CBS correspondent Wyatt Andrews described the environment as a “show of August heat.” And in many ways, it was the heat of the health care battle that most interested and influenced the media.
Coverage peaked when the public got the most passionate and when the politics got the most partisan. The press focused far more on the horserace aspects of the legislative struggle than on examining the system it was designed to reform. No one lavished more attention on the subject than the talk show hosts, who spend much of their time engaging in ideological warfare. And the terms that resonated in the media narrative, perhaps most notably “death panels,” were those that packed a polarizing punch.
All of which raises the question of the extent to which the media shed light versus heat when it came to health care reform. Certainly, many outlets did good work covering the numerous layers of the complex issue. But it’s also true that the public seemed consistently confused by the health care debate and had a difficult time sorting out fact from fiction.
http://www.journalism.org/node/20966

People who understand health policy have difficulty understanding why there has not been massive public demand for reform that will make health care affordable and accessible for all of us. Why did we settle for the most expensive model of reform when it falls so short of our goals – leaving tens of millions with impaired access and potentially exposed to financial hardship should they require health care? Today’s quotes are particularly important because they provide some insight as to what hit us.
Anyone who has been paying any attention at all is certainly aware of the proliferation of very well funded conservative and libertarian organizations. What is not commonly realized is the ability of these organizations and the individuals behind them to permeate the political process. They have been highly effective in transforming U.S. public policy.
The conservative/libertarian faction has certainly been very influential in assisting the creation of inequality-inducing policies and laws, but what has caught most of us off guard is the phenomenon of “drift,” as explained by Hacker and Pierson:
“A second mechanism, which we call ‘drift,’ is equally, if not more, important. Drift describes the politically driven failure of public policies to adapt to the shifting realities of a dynamic economy and society. Drift is not the same as simple inaction. Rather, it occurs when the effects of public policies change substantially due to shifts in the surrounding economic or social context and then, despite the recognition of alternatives, policy makers fail to update policies due to pressure from intense minority interests or political actors exploiting veto points in the political process. Thus, drift requires (1) policies whose effects change due to shifting circumstances, (2) recognition of this change, (3) availability and awareness of viable alternatives, and (4) nonmajoritarian reasons why those alternatives are not adopted.”
Ouch! We have drifted into a health care morass, and the rigid conservative/libertarian public policy agenda – gradually formulated over the past half century – has resulted in both Democrats and Republicans adopting policies that merely expand the the mess in the morass. (Keep in mind that the financing system in the Accountable Care Act was originally promoted by conservative economists and think tanks.)
Hacker and Pierson emphasize the precipitous rise of income confined at the very top, and they demonstrate it with impressive graphs and tables. For our purposes, it serves as a proxy for the public policy flaws that have perpetuated profound dysfunction in our tremendously expensive health care system.
We would like to think that the solution would be found in our democratic process. But we have an uninformed electorate that doesn’t even realize that they are victims of the failed public policies of the drift. The Pew report confirms that even the media focused on the heat rather than the light during the health care debate. How is the average citizen going to be able to understand health policy when the primary source for most is cable and network news and talk radio?
If you think that the average voter is smarter than that, look at the results this weekend of the Peter G. Peterson Foundation-sponsored AmericaSpeaks national town hall meetings. The majority believe that the answer to our high health care costs is simply to reduce spending by 5 percent. They also believe that we should increase retirement age for Social Security to 69. The prevailing public policy of government budget neutrality – with adjustments made primarily on the spending side and not on the revenue side – has trumped the public policies of social solidarity.
Drift works to the advantage of anti-government forces. Effective public policies – such as single payer – are merely left out of the conversation. And the rich get richer – much, much richer.
How do you counter drift? Educate and organize at the grassroots level. New public policies require action.

The private insurance oligopoly

WellPoint’s Kleinman Sees Health Insurer ‘Oligopoly’

By Alex Nussbaum
Bloomberg Businessweek
June 24, 2010

U.S. health insurers are “moving towards an oligopoly,” a process that this year’s health-care overhaul will accelerate, the investor-relations chief at WellPoint Inc. said today.

New regulations on administrative spending and premium increases will push some independent insurers out of business or into deals with bigger rivals, said Michael Kleinman, vice president for investor relations, at a Wells Fargo & Co. conference in Boston.

The insurance market is becoming an oligopoly, a market where supply and pricing are dominated by a few companies, “and health-care reform is going to move us in that direction more quickly,” Kleinman said. “There are going to be smaller insurers that are not going to be able to survive in this marketplace.”

Led by WellPoint, 12 health plans cover two-thirds of the enrollment in the U.S. commercial-insurance market, said Ana Gupte, a Sanford C. Bernstein & Co. analyst in New York, in a June 11 note to clients.

The health-care overhaul is likely to push at least 100 insurers with 200,000 members or less out of the business “as the plans are increasingly unable to invest in the infrastructure and technology to effectively manage care,” Gupte wrote.

“Insurance companies should see this reform as an opportunity to improve care and increase competition,” (said President Obama in remarks on June 22 touting the health-care overhaul).

http://www.businessweek.com/news/2010-06-24/wellpoint-s-kleinman-sees-health-insurer-oligopoly-.html

Comment:  

By Don McCanne, MD

President Obama claims that this is an opportunity for insurers to increase competition, yet the very structure of the weakly regulated insurance markets established by the Affordable Care Act will concentrate the private insurers into an anti-competitive, oligopolistic market.

The insurers will keep 15 to 20 percent of the premiums to sell us plans that cover only 60 to 70 percent of our care, and they won’t really have to compete with each other to do that. And this outrageously expensive scheme allegedly was to promote competition?

Forget oligopolistic competition! Let’s throw out the middlemen and establish our own public monopsony – a single payer national health program. That’s market control that works for the benefit of us instead of the insurers.

The private insurance oligopoly

WellPoint’s Kleinman Sees Health Insurer ‘Oligopoly’

By Alex Nussbaum
Bloomberg Businessweek
June 24, 2010
U.S. health insurers are “moving towards an oligopoly,” a process that this year’s health-care overhaul will accelerate, the investor-relations chief at WellPoint Inc. said today.
New regulations on administrative spending and premium increases will push some independent insurers out of business or into deals with bigger rivals, said Michael Kleinman, vice president for investor relations, at a Wells Fargo & Co. conference in Boston.
The insurance market is becoming an oligopoly, a market where supply and pricing are dominated by a few companies, “and health-care reform is going to move us in that direction more quickly,” Kleinman said. “There are going to be smaller insurers that are not going to be able to survive in this marketplace.”
Led by WellPoint, 12 health plans cover two-thirds of the enrollment in the U.S. commercial-insurance market, said Ana Gupte, a Sanford C. Bernstein & Co. analyst in New York, in a June 11 note to clients.
The health-care overhaul is likely to push at least 100 insurers with 200,000 members or less out of the business “as the plans are increasingly unable to invest in the infrastructure and technology to effectively manage care,” Gupte wrote.
“Insurance companies should see this reform as an opportunity to improve care and increase competition,” (said President Obama in remarks on June 22 touting the health-care overhaul).
http://www.businessweek.com/news/2010-06-24/wellpoint-s-kleinman-sees-health-insurer-oligopoly-.html

President Obama claims that this is an opportunity for insurers to increase competition, yet the very structure of the weakly regulated insurance markets established by the Affordable Care Act will concentrate the private insurers into an anti-competitive, oligopolistic market.
The insurers will keep 15 to 20 percent of the premiums to sell us plans that cover only 60 to 70 percent of our care, and they won’t really have to compete with each other to do that. And this outrageously expensive scheme allegedly was to promote competition?
Forget oligopolistic competition! Let’s throw out the middlemen and establish our own public monopsony – a single payer national health program. That’s market control that works for the benefit of us instead of the insurers.

Venture capitalists say cheap is the name of the game

Name Of Game In Health Care: Cheaper, Better, Faster

By Jennifer Rossa
The Wall Street Journal
June 13, 2010

Now that health-care reform legislation has been signed into existence in the U.S., venture investors say they are focused even more intently than before on companies with products that aim to lower the cost of health-care.

Leslie Bottorff, a general partner at Onset Ventures, said she anticipates there will be opportunities to invest in health-care providers, infrastructure, and technology, as they all provide ways to take costs out of the system without affecting how doctors are paid. “You can’t scale doctors,” she said, speaking on a panel at the Dow Jones Limited Partner Summit in New York.

“Cheaper, better, faster is absolutely the name of the game” now, Bottorff said.

http://blogs.wsj.com/venturecapital/2010/06/23/name-of-game-in-health-care-cheaper-better-faster/

Comment: 

By Don McCanne, MD

So the venture capitalists are lining up ready to invest in companies with products that “aim to lower the cost of health-care.” How many pharmaceutical firms do you suppose are ready to market innovative new inexpensive drugs that will replace their older more costly products? How many medical device companies are ready to market new devices that will cost less and make obsolete their existing products which are highly profitable? But doctors, well you can’t scale them.

The venture capitalists are there for one reason only – to make money, as much as possible. Do they really believe that the pharmaceutical companies and medical device manufacturers don’t have the same goal? Money, money, money. Yeah. Forget about that “cheaper” part.

Patterns: Uninsured More at Risk Even in Hospitals

By RONI CARYN RABIN
The New York Times,  June 14, 2010

Uninsured Americans often have difficulty getting care and paying for medications. But what happens once they are admitted to a hospital with a life-threatening illness?

A new study finds that even after they have heart attacks or strokes and are admitted to hospitals, the uninsured are more likely to die than those who carry private insurance.

A gap persisted even after the researchers adjusted for disparities in the patients’ underlying health, socioeconomic status and other factors.

Researchers analyzed more than 150,000 discharges of working-age Americans, ages 18 to 64, who were hospitalized for heart attack, stroke or pneumonia. The data was drawn from the 2005 Nationwide Inpatient Sample.

The study found that uninsured patients who had heart attacks were 52 percent more likely to die in the hospital than the privately insured, and those who had a stroke were 49 percent more likely to die in the hospital.

“We thought there would be some disparity and a little bit of a difference, but we were surprised there were such significant differences,” said Dr. Omar Hasan, a hospitalist at Brigham and Women’s Hospital in Boston who was the lead author of the study, in the Journal of Hospital Medicine.

One reason, Dr. Hasan suggested, may be that patients who have trouble getting care may have more advanced disease.

“We know for a fact that people who are uninsured delay seeking care,” he said.

http://www.nytimes.com/2010/06/15/health/research/15disp.html

Venture capitalists say cheap is the name of the game

Name Of Game In Health Care: Cheaper, Better, Faster

By Jennifer Rossa
The Wall Street Journal
June 13, 2010
Now that health-care reform legislation has been signed into existence in the U.S., venture investors say they are focused even more intently than before on companies with products that aim to lower the cost of health-care.
Leslie Bottorff, a general partner at Onset Ventures, said she anticipates there will be opportunities to invest in health-care providers, infrastructure, and technology, as they all provide ways to take costs out of the system without affecting how doctors are paid. “You can’t scale doctors,” she said, speaking on a panel at the Dow Jones Limited Partner Summit in New York.
“Cheaper, better, faster is absolutely the name of the game” now, Bottorff said.
http://blogs.wsj.com/venturecapital/2010/06/23/name-of-game-in-health-care-cheaper-better-faster/

So the venture capitalists are lining up ready to invest in companies with products that “aim to lower the cost of health-care.” How many pharmaceutical firms do you suppose are ready to market innovative new inexpensive drugs that will replace their older more costly products? How many medical device companies are ready to market new devices that will cost less and make obsolete their existing products which are highly profitable? But doctors, well you can’t scale them.
The venture capitalists are there for one reason only – to make money, as much as possible. Do they really believe that the pharmaceutical companies and medical device manufacturers don’t have the same goal? Money, money, money. Yeah. Forget about that “cheaper” part.

U.S. Health Care Ranks Low Among Developed Nations: Report

Despite high cost, it delivers too little to patients, Commonwealth Fund says

By Steven Reinberg, HealthDay Reporter
Business Week, June 23, 2010

WEDNESDAY, June 23 (HealthDay News) — Compared with six other industrialized nations, the United States ranks last when it comes to many measures of quality health care, a new report concludes.

Despite having the costliest health care system in the world, the United States is last or next-to-last in quality, efficiency, access to care, equity and the ability of its citizens to lead long, healthy, productive lives, according to a new report from the Commonwealth Fund, a Washington, D.C.-based private foundation focused on improving health care.

“On many measures of health system performance, the U.S. has a long way to go to perform as well as other countries that spend far less than we do on healthcare, yet cover everyone,” the Commonwealth Fund’s president, Karen Davis, said during a Tuesday morning teleconference.

“It is disappointing, but not surprising, that despite our significant investment in health care, the U.S. continues to lag behind other countries,” she added.

However, Davis believes new health care reform legislation — when fully enacted in 2014 — will go a long way to improving the current system. “Our hope and expectation is that when the law is fully enacted, we will match and even exceed the performance of other countries,” she said.

The report compares the performance of the American health care system with those of Australia, Canada, Germany, the Netherlands, New Zealand and the United Kingdom.

According to 2007 data included in the report, the U.S. spends the most on health care, at $7,290 per capita per year. That’s almost twice the amount spent in Canada and nearly three times the rate of New Zealand, which spends the least.

The Netherlands, which has the highest-ranked health care system on the Commonwealth Fund list, spends only $3,837 per capita.

Despite higher spending, the U.S. ranks last or next to last in all categories, Davis said, and scored “particularly poorly on measures of access, efficiency, equity and long, healthy and productive lives.”

The U.S. ranks in the middle of the pack in measures of effective and patient-centered care, she added.

Overall, the Netherlands came in first on the list, followed by the United Kingdom and Australia. Canada and the United States ranked sixth and seventh, Davis noted.

Speaking at the teleconference, Cathy Schoen, senior vice president at the Commonwealth Fund, pointed out that in 2008, 14 percent of U.S. patients with chronic conditions had been given the wrong medication or the wrong dose. That’s twice the error rate observed in Germany and the Netherlands, she noted.

“Adults in the United States [also] reported delays in being notified about abnormal test results or given the wrong results at relatively high rates,” Schoen said. “Indeed, the rates were three times higher than in Germany and the Netherlands.”

“As a result we rank last in safety and do poorly on several dimensions of quality,” Schoen said.

In addition, many Americans are still going without medical care because of cost, she said. “We also do surprisingly poorly on access to primary care and access to after hours care given our overall resources and spending,” Schoen said.

In fact, 54 percent of people with chronic conditions reported going without needed care in 2008, compared with 13 percent in Great Britain and 7 percent in the Netherlands, she said.

The United States also ranked last in efficiency, Schoen said. There are too many duplicate tests, too much paperwork, high administrative costs and too many patients using emergency rooms as doctor’s offices. In addition, poverty appears to be a big factor in whether Americans have access to care, the report found.

The United States also performed worst in terms of the number of people who die early, in levels of infant mortality, and for healthy life expectancy among older adults, Schoen said.

Dr. David Katz, director of the Prevention Research Center at Yale University School of Medicine, commented that “as a physician and public health practitioner, I have routinely spoken out in favor of health care reform in the U.S. The responses evoked have not always been kind. Prominent among the counterarguments has been: ‘You should see what health care is like in other countries.'”

“This report utterly belies the notion that the former status quo for health care delivery in the U.S. was as good as it gets. Others have been doing better and we can, and should, too,” he said.

However, at least one expert doesn’t believe that health care reform, as it now stands, will solve these problems.

Dr. Steffie Woolhandler, a professor of medicine at Harvard Medical School and co-founder of Physicians for a National Health Program, said that “the U.S. has the worst health care system among the seven countries studied, and arguably the worst in the developed world.”

“Unfortunately, the U.S. will almost certainly continue in last place, since the recently passed health reform will leave 23 million Americans without coverage while enlarging the role of the private insurance industry, which obstructs care and drives up costs,” she said.

U.S. scores dead last again in healthcare study

By Maggie Fox, Health and Science Editor
Reuters, June 23, 2010

Americans spend twice as much as residents of other developed countries on healthcare, but get lower quality, less efficiency and have the least equitable system, according to a report released on Wednesday.

The United States ranked last when compared to six other countries — Britain, Canada, Germany, Netherlands, Australia and New Zealand, the Commonwealth Fund report found.

“As an American it just bothers me that with all of our know-how, all of our wealth, that we are not assuring that people who need healthcare can get it,” Commonwealth Fund president Karen Davis told reporters in a telephone briefing.

Previous reports by the nonprofit fund, which conducts research into healthcare performance and promotes changes in the U.S. system, have been heavily used by policymakers and politicians pressing for healthcare reform.

Davis said she hoped health reform legislation passed in March would lead to improvements.

The current report uses data from nationally representative patient and physician surveys in seven countries in 2007, 2008, and 2009. It is available at http://bit.ly/9wLgQH.

In 2007, health spending was $7,290 per person in the United States, more than double that of any other country in the survey.

Australians spent $3,357, Canadians $3,895, Germans $3,588, the Netherlands $3,837 and Britons spent $2,992 per capita on health in 2007. New Zealand spent the least at $2,454.

This is a big rise from the Fund’s last similar survey, in 2007, which found Americans spent $6,697 per capita on healthcare in 2005, or 16 percent of gross domestic product.

“We rank last on safety and do poorly on several dimensions of quality,” Schoen told reporters. “We do particularly poorly on going without care because of cost. And we also do surprisingly poorly on access to primary care and after-hours care.”

NETHERLANDS RANKED FIRST OVERALL

The report looks at five measures of healthcare — quality, efficiency, access to care, equity and the ability to lead long, healthy, productive lives.

Britain, whose nationalized healthcare system was widely derided by opponents of U.S. healthcare reform, ranks first in quality while the Netherlands ranked first overall on all scores, the Commonwealth team found.

U.S. patients with chronic conditions were the most likely to say they gotten the wrong drug or had to wait to learn of abnormal test results.

“The findings demonstrate the need to quickly implement provisions in the new health reform law,” the report reads.

Critics of reports that show Europeans or Australians are healthier than Americans point to the U.S. lifestyle as a bigger factor than healthcare. Americans have higher rates of obesity than other developed countries, for instance.

“On the other hand, the other countries have higher rates of smoking,” Davis countered. And Germany, for instance, has a much older population more prone to chronic disease.

Every other system covers all its citizens, the report noted and said the U.S. system, which leaves 46 million Americans or 15 percent of the population without health insurance, is the most unfair.

“The lower the performance score for equity, the lower the performance on other measures. This suggests that, when a country fails to meet the needs of the most vulnerable, it also fails to meet the needs of the average citizen,” the report reads.

(Editing by Sandra Maler and Cynthia Osterman)

Will grandfathering save our current private plans?

Fact Sheet: Keeping the Health Plan You Have: The Affordable Care Act and “Grandfathered” Health Plans

U.S. Department of Health & Human Services
Accessed June 23, 2010

During the health reform debate, President Obama made clear to Americans that “if you like your health plan, you can keep it.”  He emphasized that there is nothing in the new law that would force them to change plans or doctors. Today, the Departments of Health and Human Services, Labor, and Treasury issued a new regulation for health coverage in place on March 23, 2010 that makes good on that promise.

Compared to their polices in effect on March 23, 2010, grandfathered plans:

* Cannot Significantly Cut or Reduce Benefits.
* Cannot Raise Co-Insurance Charges.
* Cannot Significantly Raise Co-Payment Charges.
* Cannot Significantly Raise Deductibles.
* Cannot Significantly Lower Employer Contributions.
* Cannot Add or Tighten an Annual Limit on What the Insurer Pays.
* Cannot Change Insurance Companies

http://www.healthreform.gov/newsroom/keeping_the_health_plan_you_have.html

And…

“Keeping the insurance you have” – Don’t believe it!

Comment by Don McCanne, MD
Quote of the Day
July 11, 2008

Pause for a minute. Think back to the insurance you had twenty years ago. Remember? Now do you still have precisely that same coverage? Unless you are over 85 and have been in the traditional Medicare program for the past twenty years, it is highly likely that you do not.

So why do you no longer have the better coverage that you had twenty years ago? You may have changed jobs, likely more than once, and lost the coverage that your prior employer provided. Your employer may have changed plans because of ever-increasing insurance premiums. Frequently your insurer introduces plan innovations such as larger deductibles, a change from fixed-dollar copayments to higher coinsurance percentages, tiering of your cost sharing for services and products, reduction in the benefits covered, dollar caps on payouts, and other innovations all designed to keep premiums competitive in a market of rapidly rising health care costs. You may have lost coverage when your age disqualified you from participating in your parents’ plan. You may have found that health benefit programs have been declining as an incentive offered by new employers. Your children may have lost coverage under the Children’s Health Insurance Program when your income, though modest, disqualified your family from the program. Your union may not have been able to negotiate the continuation of the high-quality coverage that you previously held. Your employer may have reduced or eliminated the retirement coverage that you were promised but not guaranteed. Your employer may have filed for bankruptcy without setting aside the legacy costs of their pensions and retiree health benefit programs. You may have decided to start your own small business and found that you could not qualify for coverage because of your medical history, even if relatively benign, or maybe your small business margins are so narrow that you can’t afford the premiums. You may have been covered previously by a small business owner whose entire group plan was cancelled at renewal because one employee developed diabetes, or another became HIV infected. Your COBRA coverage may have lapsed and you found that the individual insurance market offered you no realistic options. You may have retired before Medicare eligibility, only to find that premiums were truly unaffordable or coverage was not even available because of preexisting medical problems.

https://pnhp.org/news/2008/july/keeping-the-insurance-you-have-dont-believe-it

Comment: 

By Don McCanne, MD

The opponents of reform, especially the Republicans in Congress, are making a big deal out of the fact that the Affordable Care Act breaks President Obama’s promise that you will be able to keep the insurance plan you have. The Obama administration is countering by publicizing the new regulations that will allow plans in place on March 23, 2010 to be grandfathered, supposedly assuring that you will be able to keep your plan if you had it on that date.

Actually, this is a silly debate. As explained in my comment two years ago, except for those individuals on Medicare or other financially sound retiree programs, almost no one gets to keep the insurance he or she has. Rather than stabilizing existing coverage, the regulations that would grandfather plans make it less likely, in an environment of increasing health care costs, that existing plans would continue to be offered without significant changes.

In an effort to make the insurance plans more affordable, further adjustments in deductibles and coinsurance are almost inevitable, and the ever-changing insurance marketplace will surely result in changes in insurance companies selected. Insurance price shoppers, who are mostly healthy, will be much more sensitive to size of the premiums than they would be to cost sharing; this is precisely what has happened throughout the individual market. These pressures would accelerate the decline in grandfathered plans.

This HHS report predicts an end to the individual market and a sharp decline in the small employer market. They claim that the large employer market will not see much change, but other studies have shown that large employers are already switching to plans with larger deductibles and other cost sharing simply to keep premiums affordable, and many are switching the insurers that they are using, thereby losing their eligibility for the grandfathered status. Besides, for the reasons mentioned in the July, 2008 comment above, almost no one will end up staying indefinitely in the same employer sponsored plan anyway.

“Keeping the insurance you have” was only a slogan used to market the reform proposal. It wasn’t a serious long term strategy. Instead of wasting time in another political dogfight – this time over grandfathering – we should move forward with supporting policies that will work for everyone – like a single payer national health program.

Will grandfathering save our current private plans?

Fact Sheet: Keeping the Health Plan You Have: The Affordable Care Act and “Grandfathered” Health Plans

U.S. Department of Health & Human Services
Accessed June 23, 2010
During the health reform debate, President Obama made clear to Americans that “if you like your health plan, you can keep it.”  He emphasized that there is nothing in the new law that would force them to change plans or doctors. Today, the Departments of Health and Human Services, Labor, and Treasury issued a new regulation for health coverage in place on March 23, 2010 that makes good on that promise.
Compared to their polices in effect on March 23, 2010, grandfathered plans:
* Cannot Significantly Cut or Reduce Benefits.
* Cannot Raise Co-Insurance Charges.
* Cannot Significantly Raise Co-Payment Charges.
* Cannot Significantly Raise Deductibles.
* Cannot Significantly Lower Employer Contributions.
* Cannot Add or Tighten an Annual Limit on What the Insurer Pays.
* Cannot Change Insurance Companies
http://www.healthreform.gov/newsroom/keeping_the_health_plan_you_have.html

And…

“Keeping the insurance you have” – Don’t believe it!

Comment by Don McCanne, MD
Quote of the Day
July 11, 2008
Pause for a minute. Think back to the insurance you had twenty years ago. Remember? Now do you still have precisely that same coverage? Unless you are over 85 and have been in the traditional Medicare program for the past twenty years, it is highly likely that you do not.
So why do you no longer have the better coverage that you had twenty years ago? You may have changed jobs, likely more than once, and lost the coverage that your prior employer provided. Your employer may have changed plans because of ever-increasing insurance premiums. Frequently your insurer introduces plan innovations such as larger deductibles, a change from fixed-dollar copayments to higher coinsurance percentages, tiering of your cost sharing for services and products, reduction in the benefits covered, dollar caps on payouts, and other innovations all designed to keep premiums competitive in a market of rapidly rising health care costs. You may have lost coverage when your age disqualified you from participating in your parents’ plan. You may have found that health benefit programs have been declining as an incentive offered by new employers. Your children may have lost coverage under the Children’s Health Insurance Program when your income, though modest, disqualified your family from the program. Your union may not have been able to negotiate the continuation of the high-quality coverage that you previously held. Your employer may have reduced or eliminated the retirement coverage that you were promised but not guaranteed. Your employer may have filed for bankruptcy without setting aside the legacy costs of their pensions and retiree health benefit programs. You may have decided to start your own small business and found that you could not qualify for coverage because of your medical history, even if relatively benign, or maybe your small business margins are so narrow that you can’t afford the premiums. You may have been covered previously by a small business owner whose entire group plan was cancelled at renewal because one employee developed diabetes, or another became HIV infected. Your COBRA coverage may have lapsed and you found that the individual insurance market offered you no realistic options. You may have retired before Medicare eligibility, only to find that premiums were truly unaffordable or coverage was not even available because of preexisting medical problems.
https://pnhp.org/news/2008/july/keeping-the-insurance-you-have-dont-believe-it

The opponents of reform, especially the Republicans in Congress, are making a big deal out of the fact that the Affordable Care Act breaks President Obama’s promise that you will be able to keep the insurance plan you have. The Obama administration is countering by publicizing the new regulations that will allow plans in place on March 23, 2010 to be grandfathered, supposedly assuring that you will be able to keep your plan if you had it on that date.
Actually, this is a silly debate. As explained in my comment two years ago, except for those individuals on Medicare or other financially sound retiree programs, almost no one gets to keep the insurance he or she has. Rather than stabilizing existing coverage, the regulations that would grandfather plans make it less likely, in an environment of increasing health care costs, that existing plans would continue to be offered without significant changes.
In an effort to make the insurance plans more affordable, further adjustments in deductibles and coinsurance are almost inevitable, and the ever-changing insurance marketplace will surely result in changes in insurance companies selected. Insurance price shoppers, who are mostly healthy, will be much more sensitive to size of the premiums than they would be to cost sharing; this is precisely what has happened throughout the individual market. These pressures would accelerate the decline in grandfathered plans.
This HHS report predicts an end to the individual market and a sharp decline in the small employer market. They claim that the large employer market will not see much change, but other studies have shown that large employers are already switching to plans with larger deductibles and other cost sharing simply to keep premiums affordable, and many are switching the insurers that they are using, thereby losing their eligibility for the grandfathered status. Besides, for the reasons mentioned in the July, 2008 comment above, almost no one will end up staying indefinitely in the same employer sponsored plan anyway.
“Keeping the insurance you have” was only a slogan used to market the reform proposal. It wasn’t a serious long term strategy. Instead of wasting time in another political dogfight – this time over grandfathering – we should move forward with supporting policies that will work for everyone – like a single payer national health program.