PNHP

The Cure That Dares Not Speak Its Name

The Cure That Dares Not Speak Its Name

By Robert Kuttner, Co-Founder and Co-Editor of The American Prospect
The Huffington Post
February 28, 2010

In all of the debates about health care reform, one of the stubborn realities is that neither the Obama plan, nor any of the Republican alternatives, will seriously alter the trajectory of relentless cost-escalation in health care. If you look at the Administration’s own projections of federal deficits in the next decade and after 2020, virtually all of the alarming growth in deficit spending is Medicare and Medicaid.

And that’s only the public part of the health care bill. In 2009, total health care costs increased to 17.3 percent of GDP, with escalating premiums eating into both corporate profits and worker take home pay. The consensus among the usual policy experts is that there is no good solution. The march of technology and demography will just continue to raise health costs.

But you can reach that conclusion only by ignoring how the rest of the club of affluent countries manages to insure everyone for 9 or 10 percent of GDP, and have a healthier and longer-lived population, to boot. They do it, of course, through universal, socialized insurance.

There is no single formula. The Canadians do it with a single payer system for the insurance part, but physicians are private. The Brits have an integrated National Health Service. The Germans achieve near-universal coverage through a system of nonprofit health insurance plans.

What every other nation has in common is that they have taken the commercialism out of their health systems. As a consequence, they can direct health spending to areas of medical need rather than letting the market direct health dollars to areas of greatest profit. And with everyone covered, they can use highly cost-effective strategies for prevention, wellness, and public health. That’s how you cover everyone for ten percent of GDP.

Our one island of single-payer medicine, Medicare, is phenomenally popular — so popular that the Republicans’ most effective attack on the Obama plan is that it would divert some money from Medicare. The Republicans, on the one hand, fiercely attack “government-run health insurance,” while on the other they defend Medicare (which they would just as soon privatize).

But most Democratic politicians and policy wonks behave as if the option of a national health plan simply did not exist. These blinders are the result of the immense power of the medical-pharmaceutical-insurance complex combined with a failure of political leadership. Sooner or later, mainstream politicians will stumble their way to some form of single payer because there are no good alternatives unless we want to spend half of our GDP on health care.

In that regard, the best things about the still inconclusive end-game of Obama’s efforts to enact his plan are that (1) the administration finally broke with the insurance industry, and (2) Obama is starting to get over the delusion of bipartisanship. So if we don’t need either Harry and Louise, or John Boehner and Mitch McConnell, as part of the health-reform coalition, we might as well do it right.

With Obama’s health summit behind us, there will now be a mad scramble for Democratic votes in the House and Senate to pursue the strategy that Obama should have used all along — a Democrats-only bill relying on 51 votes in the Senate via the reconciliation procedure.

The problem is that Obama may have missed the moment. The prolonged, enervating battle for health reform, using a badly flawed bill, has scared off both conservative and liberal Democrats in both houses. The bill is politically toxic to legislators facing re-election, for good reason. The original formula, designed to enlist insurance industry allies, required a mandate to purchase insurance, diversion of Medicare funds, and unpopular taxes. Now that Obama has broken with the industry, an entirely different formula should be possible.

Alas, we are too far down the present road to advance single-payer in this legislative session. The president has done nothing to move public opinion in that direction, and has backed away even from the truncated version of it, the so-called public option.

I would put the odds at about one in three of Obama succeeding. Several Democrats who voted for the House-passed bill in November by the narrow margin of 220-215 have now defected, and several more are increasingly gun-shy. I don’t much like this bill, but I still hope it passes so that the Republicans don’t get rewarded for their relentless obstructionism.

Win or lose, the next great push should be for single-payer, assuming Democrats have a working majority again in foreseeable future. Given the collateral damage of Obama’s strategy, that could be a long time coming.

Robert Kuttner is the author of the forthcoming book A Presidency in Peril (Chelsea-Green, March 2010). He is co-editor of The American Prospect and a senior fellow at Demos.

Daschle and McCanne: Incremental Health Reforms Won't Work

Daschle: Incremental Health Reforms Won’t Work

Kaiser Health News
March 2, 2010
Q: What are the parallels or contrasts between the Clinton administration’s efforts to get a health care overhaul in 1993-94 and now?
Former Senate Majority Leader Tom Daschle:  … You’ve got a lot more recognition that we don’t have a luxury this time to fail. Per capita costs were $3,400 in 94, they’re $8,000 now. The level of uninsured was 37 million, and now I think it’s over 50 million.
Whether it’s quality, access or costs you can look at all the numbers, they’ve dropped precipitously, and we’ve been able to demonstrate, if anything, out of these last 15 years that incremental reform doesn’t work. We’ve tried incremental reform with SCHIP and with the passage of Part D and maybe portability, a couple things here and there. We’ve seen everything go south, and it’s going to continue to do that until we put in place the corrective policy building blocks to address this more comprehensively.
Daschle: Are you satisfied that the Senate bill does enough to control costs?
A. I don’t think that either version of the bill does enough. I look at this whole effort as having three components: insurance reform, payment reform and delivery reform. And all three components have cost containment elements in them. Not nearly as much as I’d like, but I think a lot of the building blocks are going to be in place. But you can’t expect one bill to comprehensively deal with each one of these components to everyone’s satisfaction. I tell audiences all over the country, that if this passes I think we’re on the 30-yard line, that we’ve got 70 yards to go to accommodate really significant change in the system, adequate enough to be able to say we’ve addressed cost, access and quality in a meaningful way.
http://www.kaiserhealthnews.org/Checking-In-With/Daschle-Incremental-Health-Reforms-Wont-Work.aspx

And…

Why Incremental Reforms Will Not Solve the Health Care Crisis

By Don McCanne, MD
Journal of the American Board of Family Practice
16:257-261 (2003)
The record of incrementalism to date is unimpressive. Medicaid, the State Children’s Health Insurance Program, and the Health Insurance Portability and Accountability Act have been important programs that have provided access and coverage for many who need it. These programs alone, however, have been grossly deficient in filling the greater voids in our system. The numbers of uninsured Americans continue to increase. Health care costs continue to escalate well beyond the rate of inflation, while no efforts are being made to reduce the egregious waste of our administrative excesses. We are spending more on health care administration alone than is allocated for our entire national military defense budget. Health care outcomes continue to be much worse in the United States than in other industrialized nations that provide coverage for everyone at a much lower cost than that of our fragmented and inefficient system. Furthermore, inadequate coverage is now threatening the financial security of many of those that actually do have insurance.
Despite the failure of incrementalism, these approaches continue to have support primarily because of the perception that the nation does not want a “taxpayer-funded, government solution.” Ironically, health care is already 60% publicly funded, and nearly all incremental proposals involve public policy, especially tax policy, and actually further increase taxpayer funding of health care.
Conclusion
Incremental models of reform perpetuate our flawed, fragmented system of funding health care. They perpetuate inequities both in the funding of health care and in the allocation of our health care resources. They limit choice of health care providers. None assures continuity of coverage and care. Many incremental proposals barely have an effect on the numbers of uninsured, and none of them ensure truly universal coverage. All incremental approaches substantially increase health care costs, and most current proposals assure neither financial security nor health security.
In contrast, a single payer program would provide affordable, equitable, comprehensive care for everyone.
Whether through tax policy, public programs, regulatory oversight, mandated coverage, or a combination of these and other interventions, the government will be intimately involved in our health care funding. We can no longer afford to dismiss any valid option because it is a government solution, especially in that all proposals are government solutions. We must decide how we can best use our government resources to be sure that we are receiving the greatest value for our health care investment. Limiting our consideration to various incremental solutions closes the door on the health care reform goals of equity, affordability, and efficiency, and it threatens the goals of universality, provider choice, access, and comprehensiveness. When all are readily achievable, why accept less?
http://www.jabfm.org/cgi/content/full/16/3/257

To understand that incremental reforms have not worked, all you have to do is look at the increasing numbers of uninsured, the greater numbers with inadequate insurance, the steep increases in health care prices, the perversities of the private insurers, and the administrative waste and other dysfunctions of our multi-payer and non-payer system. Everyone agrees that incrementalism has failed us, even Tom Daschle and Don McCanne.
Daschle and McCanne also agree that the policies contained in the House and Senate bills also fall far short. As Tom Daschle states, “… that if this passes I think we’re on the 30-yard line, that we’ve got 70 yards to go to accommodate really significant change in the system, adequate enough to be able to say we’ve addressed cost, access and quality in a meaningful way.”
Think of what he has said. The policies contained in these bills are highly flawed incremental steps that won’t even get us one-third of the way there, at the same time that he tells us that incremental reform won’t work.
In my article (link above) I discuss some of the incremental policies and why they have not worked and will not work. Although some of the terminology and policy proposals have evolved since the article was written, it does discuss several of the concepts in the legislation supported by Congress and President Obama. The basics are the same; incremental health reforms won’t work.
For those who say, “yes, but the insurance market reforms are an improvement over what we now have,” we need to acknowledge that not only are these incremental steps, but they take us down the WRONG path. They lock us into a profoundly wasteful and inefficient financing system that, by design, draws off much needed and evermore scarce health care dollars by prioritizing the interests of a parasitic industry over the interests of patients.
Tom Daschle explains that, once this legislation passes, most of the work will still be left to do. The flaw with this strategy is that everyone will walk away pretending that health care has been reformed. It will take another decade or two of financial hardship, suffering and even death before our elected leaders will admit that this didn’t work. That is far too great of a price to pay for us to let them off the hook now.
Addendum:  If the legislation does pass, PNHP is not walking away. Get used to listening to our clamoring.

Daschle and McCanne: Incremental Health Reforms Won’t Work

Daschle: Incremental Health Reforms Won’t Work

Kaiser Health News
March 2, 2010

Q: What are the parallels or contrasts between the Clinton administration’s efforts to get a health care overhaul in 1993-94 and now?

Former Senate Majority Leader Tom Daschle:  … You’ve got a lot more recognition that we don’t have a luxury this time to fail. Per capita costs were $3,400 in 94, they’re $8,000 now. The level of uninsured was 37 million, and now I think it’s over 50 million.

Whether it’s quality, access or costs you can look at all the numbers, they’ve dropped precipitously, and we’ve been able to demonstrate, if anything, out of these last 15 years that incremental reform doesn’t work. We’ve tried incremental reform with SCHIP and with the passage of Part D and maybe portability, a couple things here and there. We’ve seen everything go south, and it’s going to continue to do that until we put in place the corrective policy building blocks to address this more comprehensively.

Daschle: Are you satisfied that the Senate bill does enough to control costs?

A. I don’t think that either version of the bill does enough. I look at this whole effort as having three components: insurance reform, payment reform and delivery reform. And all three components have cost containment elements in them. Not nearly as much as I’d like, but I think a lot of the building blocks are going to be in place. But you can’t expect one bill to comprehensively deal with each one of these components to everyone’s satisfaction. I tell audiences all over the country, that if this passes I think we’re on the 30-yard line, that we’ve got 70 yards to go to accommodate really significant change in the system, adequate enough to be able to say we’ve addressed cost, access and quality in a meaningful way.

http://www.kaiserhealthnews.org/Checking-In-With/Daschle-Incremental-Health-Reforms-Wont-Work.aspx

And…

Why Incremental Reforms Will Not Solve the Health Care Crisis

By Don McCanne, MD
Journal of the American Board of Family Practice
16:257-261 (2003)

The record of incrementalism to date is unimpressive. Medicaid, the State Children’s Health Insurance Program, and the Health Insurance Portability and Accountability Act have been important programs that have provided access and coverage for many who need it. These programs alone, however, have been grossly deficient in filling the greater voids in our system. The numbers of uninsured Americans continue to increase. Health care costs continue to escalate well beyond the rate of inflation, while no efforts are being made to reduce the egregious waste of our administrative excesses. We are spending more on health care administration alone than is allocated for our entire national military defense budget. Health care outcomes continue to be much worse in the United States than in other industrialized nations that provide coverage for everyone at a much lower cost than that of our fragmented and inefficient system. Furthermore, inadequate coverage is now threatening the financial security of many of those that actually do have insurance.

Despite the failure of incrementalism, these approaches continue to have support primarily because of the perception that the nation does not want a “taxpayer-funded, government solution.” Ironically, health care is already 60% publicly funded, and nearly all incremental proposals involve public policy, especially tax policy, and actually further increase taxpayer funding of health care.

Conclusion

Incremental models of reform perpetuate our flawed, fragmented system of funding health care. They perpetuate inequities both in the funding of health care and in the allocation of our health care resources. They limit choice of health care providers. None assures continuity of coverage and care. Many incremental proposals barely have an effect on the numbers of uninsured, and none of them ensure truly universal coverage. All incremental approaches substantially increase health care costs, and most current proposals assure neither financial security nor health security.

In contrast, a single payer program would provide affordable, equitable, comprehensive care for everyone.

Whether through tax policy, public programs, regulatory oversight, mandated coverage, or a combination of these and other interventions, the government will be intimately involved in our health care funding. We can no longer afford to dismiss any valid option because it is a government solution, especially in that all proposals are government solutions. We must decide how we can best use our government resources to be sure that we are receiving the greatest value for our health care investment. Limiting our consideration to various incremental solutions closes the door on the health care reform goals of equity, affordability, and efficiency, and it threatens the goals of universality, provider choice, access, and comprehensiveness. When all are readily achievable, why accept less?

http://www.jabfm.org/cgi/content/full/16/3/257

To understand that incremental reforms have not worked, all you have to do is look at the increasing numbers of uninsured, the greater numbers with inadequate insurance, the steep increases in health care prices, the perversities of the private insurers, and the administrative waste and other dysfunctions of our multi-payer and non-payer system. Everyone agrees that incrementalism has failed us, even Tom Daschle and Don McCanne.

Daschle and McCanne also agree that the policies contained in the House and Senate bills also fall far short. As Tom Daschle states, “… that if this passes I think we’re on the 30-yard line, that we’ve got 70 yards to go to accommodate really significant change in the system, adequate enough to be able to say we’ve addressed cost, access and quality in a meaningful way.”

Think of what he has said. The policies contained in these bills are highly flawed incremental steps that won’t even get us one-third of the way there, at the same time that he tells us that incremental reform won’t work.

In my article (link above) I discuss some of the incremental policies and why they have not worked and will not work. Although some of the terminology and policy proposals have evolved since the article was written, it does discuss several of the concepts in the legislation supported by Congress and President Obama. The basics are the same; incremental health reforms won’t work.

For those who say, “yes, but the insurance market reforms are an improvement over what we now have,” we need to acknowledge that not only are these incremental steps, but they take us down the WRONG path. They lock us into a profoundly wasteful and inefficient financing system that, by design, draws off much needed and evermore scarce health care dollars by prioritizing the interests of a parasitic industry over the interests of patients.

Tom Daschle explains that, once this legislation passes, most of the work will still be left to do. The flaw with this strategy is that everyone will walk away pretending that health care has been reformed. It will take another decade or two of financial hardship, suffering and even death before our elected leaders will admit that this didn’t work. That is far too great of a price to pay for us to let them off the hook now.

Addendum:  If the legislation does pass, PNHP is not walking away. Get used to listening to our clamoring.

Welcome to the Independent Medicare Advisory Board – an empowered MedPAC

Report to the Congress: Medicare Payment Policy

Medicare Payment Advisory Commission (MedPAC)
March 1, 2010

The goal of Medicare payment policy is to get good value for the program’s expenditures, which means maintaining beneficiaries’ access to high-quality services while encouraging efficient use of resources.

Managing base rates will not solve the fundamental problem with current Medicare payment systems, discussed in our June 2008 report, that providers are paid more when they deliver more services (fee-for-service), without regard to the quality or value of those additional services. To address that problem directly, the Commission was an early proponent of payment reforms now widely discussed, including “medical homes,” “bundling,” and “accountable care organizations.”

For two reasons, however, comprehensive reform of Medicare’s payment systems is not a ready panacea. First, the new payment models need to be tested and refined; it is one thing to conceptualize a new model but quite another to implement it on a broad scale. Second, reorganization of how care is delivered may be necessary for payment reform to work. For example, “bundling” would pay a lump sum to the hospital, physicians, and post-acute providers caring for a patient during an inpatient admission plus some interval post-discharge (e.g., 30 days). Currently, those providers often act independently of one another and have no formalized means for collaborating, much less for sharing financial risk. Payment reform will often require reorganizing the delivery of care, a complex and time-consuming activity in its own right.

As much as reformers – including the Commission – may wish to hasten a sweeping overhaul of Medicare payment systems, Medicare is likely to continue using its current payment systems for some years into the future. This fact alone makes unit prices – both their overall level and the relative prices of different services – an important topic. In addition, unit prices under the current payment systems could affect the prospects for payment reform for the following reasons:

• The level of unit prices has an immediate and direct effect on Medicare expenditures. By limiting unnecessary updates, the Congress can achieve budget savings and lower beneficiary premiums and cost sharing. Although some critics of Medicare claim that it pays too little for each unit of service, in their 2003 Health Affairs article, Uwe Reinhardt, Gerard Anderson, and others found that high unit prices are one of the most important reasons that total U.S. health expenditures per capita are the highest in the world.

• By limiting and altering Medicare’s unit prices, Medicare provides an impetus for providers to volunteer for experiments with new payment methods. Medicare payment reform will often require changes in how providers are organized. Therefore, payment reform will likely need to proceed, at least initially, on a voluntary basis. Voluntary reform poses two challenges: First is the challenge of getting enough volunteers; after all, reorganizing can be difficult work since it may well entail a redistribution of income among participants. A physician subspecialist, for example, is unlikely to volunteer to participate in an accountable care organization that intends to redistribute income from subspecialists to primary-care providers – unless the subspecialist believes that redistribution is likely to happen under the current payment system. The second challenge is that if there is no financial pressure on providers that choose to stay in the current fee-for-service payment systems, their incentive to take a risk on a new system will be limited – and only providers who expect that they will fare better financially under the new payment method will volunteer. As a result, all other things being equal, voluntary payment reform could increase, not decrease, Medicare expenditures. Steady pressure on unit prices under Medicare’s current payment systems, coupled with appropriate redistribution of payments, will help address both of these challenges.

• The relative values used in Medicare’s payment systems signal what the program values and can, by themselves, shape the delivery system. On the one hand, inappropriately high unit prices may encourage heavy investment in equipment (e.g., MRI or computed tomography scanners) or programs and facilities (e.g., cardiac specialty hospitals and programs) that institutional providers are then reluctant to abandon. In extreme cases, badly mispriced services may leave the program vulnerable to fraud and abuse. On the other hand, comparatively low unit prices may discourage providers from delivering certain services. Take, for example, the relatively low amount paid for primary care services as opposed to subspecialty services. The comparatively low compensation for primary care has contributed to the dramatic decline in the number of U.S. medical school graduates choosing careers in primary care.

In conclusion, changing Medicare’s payment methods is essential to improving efficiency and value in health-care delivery. But such payment reform is unlikely to happen – or at least will not happen as quickly – without steady pressure on the level of prices paid by Medicare as well as attention to the relative values assigned to different services. We hope this report contributes to that effort.

MedPAC Report to the Congress (381 pages):
http://www.medpac.gov/documents/Mar10_EntireReport.pdf

And…

Patient Protection and Affordable Care Act

U.S. Senate
December 24, 2009

SEC. 3403. INDEPENDENT MEDICARE ADVISORY BOARD.

There is established an independent board to be known as the ‘Independent Medicare Advisory Board’.

PURPOSE.—It is the purpose of this section to, in accordance with the following provisions of this section, reduce the per capita rate of growth in Medicare spending.

http://thomas.loc.gov/  Click Bill Number; Insert H.R. 3590; Click Search; Click Text of Legislation; At end of version 5 click PDF (2409 pages); Go to pages 982-1033 for SEC. 3403 on the Independent Medicare Advisory Board.

Comment: 

By Don McCanne, MD

Wake up! Big changes are coming in health care financing!

For those who are upset about the 21 percent cut in Medicare payments instituted yesterday, this provides you with hardly an inkling of what may be ahead.

The sustainable growth rate (SGR) was a well intentioned effort to slow the increase in Medicare payments to more closely match the rate of inflation. MedPAC (Medicare Payment Advisory Commission) played an advisory role in establishing SGR, but it required the action of Congress to institute it.

Because physicians then increased the frequency and intensity of services, the SGR formula required a very modest rate reduction – each year. Congress was reluctant to approve the rate reductions and so they postponed them – each year. But the reductions were cumulative and have remained on the books. This year Congress has failed to act so the cumulative 21 percent reduction was applied as of yesterday. HHS is withholding payments for the next ten days to give Congress one more chance to halt the reductions for this year, but no definitive resolution is in sight.

If this is what has happened when MedPAC has had only an advisory role, just think of the possibilities of an empowered MedPAC. The Independent Medicare Advisory Board (IMAC) that would be established by the enactment of the Senate health care reform legislation has tremendous powers to move forward with their recommendations, with Congress being relegated to having only limited veto powers on their actions.

When you read MedPAC’s Medicare Payment Poli
cy report presented to Congress yesterday, you can begin to imagine the potential of IMAC as an empowered MedPAC. It is likely that we would be moving ahead with the initial phases of accountable care organizations (ACOs) and bundled payments. A recent qotd discussed how these concepts might actually increase spending instead of achieving their goal of reducing spending, that is for private insurers negotiating with a more highly consolidated delivery system. But the IMAC rules would apply to Medicare exclusively, and Medicare doesn’t have to negotiate.

Health care cost increases must be contained. I’m not as concerned about those who can afford the high prices of health insurance and health care as I am about those who will not be receiving the health care that they need because they can’t pay for it and government support will be inadequate to remove the financial barriers to care.

The private insurers have proven to be incapable of controlling spending. The government has been effective, but in what way? For Medicaid, they have simply underfunded the program. The government is depending on both captive providers and provider charity to absorb the losses on Medicaid.

What about Medicare? Actually Medicare has been very effective in using innovations to slow cost increases, including some innovations recommended by MedPAC. The problem is that there is now a perception on the part of many providers that Medicare has been too aggressive in slowing spending, and there are early signs that access may become impaired for Medicare beneficiaries because of a lack of willing providers. It is crucial that Medicare maintains a balance between fair compensation for the providers while at the same time not supporting today’s excesses in health care pricing.

Are you still awake? Here’s where I’m going to lose some of you.

We do need an Independent Medicare Advisory Board, but not for Medicare as we know it. Letting the private insurance industry have free rein while allowing Medicare to ratchet down rates risks converting Medicare into another underfunded Medicaid program.

What we need instead is an Independent Medicare Advisory Board (or a public administrative equivalent) that strives for optimal payment policies for our entire health care system, i.e., for a single payer Medicare for all program. Patient and provider push back would ensure that we would have the balanced compensation rules that we need.

It’s too bad that we can’t use reconciliation to enact an improved Medicare for all. Or can we?

Welcome to the Independent Medicare Advisory Board – an empowered MedPAC

Report to the Congress: Medicare Payment Policy

Medicare Payment Advisory Commission (MedPAC)
March 1, 2010
The goal of Medicare payment policy is to get good value for the program’s expenditures, which means maintaining beneficiaries’ access to high-quality services while encouraging efficient use of resources.
Managing base rates will not solve the fundamental problem with current Medicare payment systems, discussed in our June 2008 report, that providers are paid more when they deliver more services (fee-for-service), without regard to the quality or value of those additional services. To address that problem directly, the Commission was an early proponent of payment reforms now widely discussed, including “medical homes,” “bundling,” and “accountable care organizations.”
For two reasons, however, comprehensive reform of Medicare’s payment systems is not a ready panacea. First, the new payment models need to be tested and refined; it is one thing to conceptualize a new model but quite another to implement it on a broad scale. Second, reorganization of how care is delivered may be necessary for payment reform to work. For example, “bundling” would pay a lump sum to the hospital, physicians, and post-acute providers caring for a patient during an inpatient admission plus some interval post-discharge (e.g., 30 days). Currently, those providers often act independently of one another and have no formalized means for collaborating, much less for sharing financial risk. Payment reform will often require reorganizing the delivery of care, a complex and time-consuming activity in its own right.
As much as reformers – including the Commission – may wish to hasten a sweeping overhaul of Medicare payment systems, Medicare is likely to continue using its current payment systems for some years into the future. This fact alone makes unit prices – both their overall level and the relative prices of different services – an important topic. In addition, unit prices under the current payment systems could affect the prospects for payment reform for the following reasons:
• The level of unit prices has an immediate and direct effect on Medicare expenditures. By limiting unnecessary updates, the Congress can achieve budget savings and lower beneficiary premiums and cost sharing. Although some critics of Medicare claim that it pays too little for each unit of service, in their 2003 Health Affairs article, Uwe Reinhardt, Gerard Anderson, and others found that high unit prices are one of the most important reasons that total U.S. health expenditures per capita are the highest in the world.
• By limiting and altering Medicare’s unit prices, Medicare provides an impetus for providers to volunteer for experiments with new payment methods. Medicare payment reform will often require changes in how providers are organized. Therefore, payment reform will likely need to proceed, at least initially, on a voluntary basis. Voluntary reform poses two challenges: First is the challenge of getting enough volunteers; after all, reorganizing can be difficult work since it may well entail a redistribution of income among participants. A physician subspecialist, for example, is unlikely to volunteer to participate in an accountable care organization that intends to redistribute income from subspecialists to primary-care providers – unless the subspecialist believes that redistribution is likely to happen under the current payment system. The second challenge is that if there is no financial pressure on providers that choose to stay in the current fee-for-service payment systems, their incentive to take a risk on a new system will be limited – and only providers who expect that they will fare better financially under the new payment method will volunteer. As a result, all other things being equal, voluntary payment reform could increase, not decrease, Medicare expenditures. Steady pressure on unit prices under Medicare’s current payment systems, coupled with appropriate redistribution of payments, will help address both of these challenges.
• The relative values used in Medicare’s payment systems signal what the program values and can, by themselves, shape the delivery system. On the one hand, inappropriately high unit prices may encourage heavy investment in equipment (e.g., MRI or computed tomography scanners) or programs and facilities (e.g., cardiac specialty hospitals and programs) that institutional providers are then reluctant to abandon. In extreme cases, badly mispriced services may leave the program vulnerable to fraud and abuse. On the other hand, comparatively low unit prices may discourage providers from delivering certain services. Take, for example, the relatively low amount paid for primary care services as opposed to subspecialty services. The comparatively low compensation for primary care has contributed to the dramatic decline in the number of U.S. medical school graduates choosing careers in primary care.
In conclusion, changing Medicare’s payment methods is essential to improving efficiency and value in health-care delivery. But such payment reform is unlikely to happen – or at least will not happen as quickly – without steady pressure on the level of prices paid by Medicare as well as attention to the relative values assigned to different services. We hope this report contributes to that effort.
MedPAC Report to the Congress (381 pages):
http://www.medpac.gov/documents/Mar10_EntireReport.pdf

And…

Patient Protection and Affordable Care Act

U.S. Senate
December 24, 2009
SEC. 3403. INDEPENDENT MEDICARE ADVISORY BOARD.
There is established an independent board to be known as the ‘Independent Medicare Advisory Board’.
PURPOSE.—It is the purpose of this section to, in accordance with the following provisions of this section, reduce the per capita rate of growth in Medicare spending.
http://thomas.loc.gov/ Click Bill Number; Insert H.R. 3590; Click Search; Click Text of Legislation; At end of version 5 click PDF (2409 pages); Go to pages 982-1033 for SEC. 3403 on the Independent Medicare Advisory Board.

Wake up! Big changes are coming in health care financing!
For those who are upset about the 21 percent cut in Medicare payments instituted yesterday, this provides you with hardly an inkling of what may be ahead.
The sustainable growth rate (SGR) was a well intentioned effort to slow the increase in Medicare payments to more closely match the rate of inflation. MedPAC (Medicare Payment Advisory Commission) played an advisory role in establishing SGR, but it required the action of Congress to institute it.
Because physicians then increased the frequency and intensity of services, the SGR formula required a very modest rate reduction – each year. Congress was reluctant to approve the rate reductions and so they postponed them – each year. But the reductions were cumulative and have remained on the books. This year Congress has failed to act so the cumulative 21 percent reduction was applied as of yesterday. HHS is withholding payments for the next ten days to give Congress one more chance to halt the reductions for this year, but no definitive resolution is in sight.
If this is what has happened when MedPAC has had only an advisory role, just think of the possibilities of an empowered MedPAC. The Independent Medicare Advisory Board (IMAC) that would be established by the enactment of the Senate health care reform legislation has tremendous powers to move forward with their recommendations, with Congress being relegated to having only limited veto powers on their actions.
When you read MedPAC’s Medicare Payment Policy report presented to Congress yesterday, you can begin to imagine the potential of IMAC as an empowered MedPAC. It is likely that we would be moving ahead with the initial phases of accountable care organizations (ACOs) and bundled payments. A recent qotd discussed how these concepts might actually increase spending instead of achieving their goal of reducing spending, that is for private insurers negotiating with a more highly consolidated delivery system. But the IMAC rules would apply to Medicare exclusively, and Medicare doesn’t have to negotiate.
Health care cost increases must be contained. I’m not as concerned about those who can afford the high prices of health insurance and health care as I am about those who will not be receiving the health care that they need because they can’t pay for it and government support will be inadequate to remove the financial barriers to care.
The private insurers have proven to be incapable of controlling spending. The government has been effective, but in what way? For Medicaid, they have simply underfunded the program. The government is depending on both captive providers and provider charity to absorb the losses on Medicaid.
What about Medicare? Actually Medicare has been very effective in using innovations to slow cost increases, including some innovations recommended by MedPAC. The problem is that there is now a perception on the part of many providers that Medicare has been too aggressive in slowing spending, and there are early signs that access may become impaired for Medicare beneficiaries because of a lack of willing providers. It is crucial that Medicare maintains a balance between fair compensation for the providers while at the same time not supporting today’s excesses in health care pricing.
Are you still awake? Here’s where I’m going to lose some of you.
We do need an Independent Medicare Advisory Board, but not for Medicare as we know it. Letting the private insurance industry have free rein while allowing Medicare to ratchet down rates risks converting Medicare into another underfunded Medicaid program.
What we need instead is an Independent Medicare Advisory Board (or a public administrative equivalent) that strives for optimal payment policies for our entire health care system, i.e., for a single payer Medicare for all program. Patient and provider push back would ensure that we would have the balanced compensation rules that we need.
It’s too bad that we can’t use reconciliation to enact an improved Medicare for all. Or can we?

Healthcare Summit Ends in Deadlock; Single-Payer Advocates Excluded

From Democracy Now!
February 26, 2010

After nearly seven hours of televised debate, President Obama’s so-called bipartisan healthcare summit ended Thursday without any substantive agreement between Republicans and Democrats. Republican lawmakers remained staunchly opposed to using the federal government to regulate health insurance. We speak to Columbia Journalism Review contributing editor Trudy Lieberman and pediatrician Dr. Margaret Flowers of Physicians for a National Health Program. [includes rush transcript]

Guests:
Dr. Margaret Flowers, congressional fellow for Physicians for a National Health Program.
Trudy Lieberman, contributing editor to the Columbia Journalism Review and she blogs on healthcare at CJR.org.

Rush Transcript

AMY GOODMAN: After nearly seven hours of televised debate, President Obama’s so-called bipartisan healthcare summit ended Thursday without any substantive agreement between Republicans and Democrats. Republican lawmakers remained staunchly opposed to using the federal government to regulate health insurance.

Following the summit, Illinois Democratic Senator Dick Durbin told reporters, quote, “If nothing comes of this, we’re going to press forward. We just can’t quit. This is a once in a political lifetime opportunity to deal with a healthcare system that is really unsustainable.”

Well, earlier in the day, Republican lawmakers had urged the President to drop his healthcare proposal in Congress and start afresh. This is Senator Lamar Alexander of Tennessee.

SEN. LAMAR ALEXANDER: Our country is too big, too complicated, too decentralized, for Washington, a few of us here, just to write a few rules about remaking 17 percent of the economy all at once. That sort of thinking works in the classroom, but it doesn’t work very well in our big complicated country.

AMY GOODMAN: At the end of the session, President Obama acknowledged that the divide between the two parties on this issue might just be too large to bridge, but sent a clear message that Democrats will move forward to pass major legislation with or without Republican support.

PRESIDENT BARACK OBAMA: What I’d like to propose is that I’ve put on the table now some things that I didn’t come in here saying I supported, but that I was willing to work with potential Republican sponsors on. I’d like the Republicans to do a little soul searching and find out are there some things that you’d be willing to embrace that get to this core problem of 30 million people without health insurance and dealing seriously with the pre-existing condition issue.

I don’t know, frankly, whether we can close that gap. And if we can’t close that gap, then I suspect Mitch McConnell and Harry Reid, Nancy Pelosi and John Boehner are going to have a lot of arguments about procedures in Congress about moving forward.

I will tell you this, that when I talk to the parents of children who don’t have healthcare, because they’ve got diabetes or they’ve got some chronic heart disease, when I talk to small businesspeople who are laying people off because they just got their insurance premium, they don’t want us to wait. They can’t afford another five decades.

AMY GOODMAN: Outside the Blair House summit, across from conservative protesters calling “Kill the bill!” single-payer advocates held a grassroots “Sidewalk Summit for Medicare for All.” Physicians for a National Health Program was one of the organizers of the sidewalk summit. Despite repeated requests, the group was not invited to the official summit.

We’re joined in Baltimore now by the congressional fellow for Physicians for a National Health Program, pediatrician Dr. Margaret Flowers. And for more on what happened during the seven-hour summit and what comes next, we’re joined via Democracy Now! video stream by Trudy Lieberman. She’s a contributing editor to the Columbia Journalism Review, and she blogs on healthcare at cjr.org.

We welcome you both to Democracy Now! Trudy Lieberman, let’s begin with you. Even though you are very close to Democracy Now!’s studios, just to let people know the weather report around the country, we have had more than a foot of snow in New York. It is truly astonishing to walk through the streets. The streets are just blanketed in snow. So thank you, though, for joining us from your home by Democracy Now! video stream. Trudy, tell us what was new in yesterday’s seven-day—seven-hour session, if there was anything.

TRUDY LIEBERMAN: Well, I heard one thing that was new. They had a lot at back and forth about the minimum benefit package for insurance policies that would be sold through the insurance exchange. And the insurance exchange is the brokerage service, shopping service, if you will, that the government is planning to set up to help people buy insurance. These are people who don’t have insurance from employers and small businesses. I believe one of the Republicans said that he thought maybe one thing could happen is that the insurance companies that did not have policies that met these minimum benefit standards could sell their policies alongside those that did, and those that did meet benefit standards would have a check or some kind of designation to show that they met some sort of standard that the government had set. That was the first time I had ever heard that being discussed. And whether or not that will survive in the final bell is an unknown question. But for me, that was new.

I think the takeaway, for me, from all of this—and I listened to almost all of it, except for the early morning part—was that, as a country, we are still extremely divided. And this has been a problem that we have had from the very beginning, when this country was founded. We have a deep cleavage in this country about how much government should do and how much government should not do. And for me, that came through in many, many ways. Certainly, it came through in the whole discussion of how much we ought to be regulating insurance companies. Regulation is something that has always been with us. Sometimes we regulate more; sometimes we regulate less. But it’s always a very contentious, tension-filled issue for regulators, for the public and for those who are regulated.

I also came away from the summit thinking that we really have no agreement yet on equity. And the equity issue kind of loomed up here and there during the discussion. It came out in McCain’s comments about the 800,000 Medicare beneficiaries in Florida who are going to not see their Medicare Advantage plans cut if the federal government does succeed in cutting the overpayments to MA plans. He was complaining that his own constituents in Arizona were not getting this kind of a perk, if you will, and that—he was raising the equity issue, in a way, but he was framing it, not in terms of an equity issue, but in terms of the backroom deals that made this carve out for people in Florida.

But I think we really still have no agreement on whether everyone in this country, every citizen, should have healthcare and the ticket to buy it. And I think the President was getting to that point at the very end, when he admitted, quite candidly, he does not know whether we can bridge the gap. And the gap that he identified was how are we going to cover the 30 million people that the government wants to cover and deal with getting everyone into a risk pool, dealing with the pre-existing conditions issue, which keeps people out of this, because in a private insurance market you really—insurance companies can’t really choose people who are sick, or they will go out of business eventually. So that is really the question that has not been resolved.

AMY GOODMAN: In her closing remarks Thursday, House Speaker Nancy Pelosi reminded President Obama he once supported the public option.
 

HOUSE SPEAKER NANCY PELOSI: Mr. President, I hearken back to that meeting a year ago. At that time, Senator Grassley said to—questioned you about the public option, and you said, “The public option is one way to keep the insurance companies honest and to increase competition. If you have a better way, put it on the table.”

Well, I bring that up because we have come such a long way. We’re talking about how close we are on this, how far apart we are here. But as a representative of the House of Representatives, I want you to know that we were there that day in support of the public option, which would save $120 billion, keep the insurance
companies honest, and increase competition. We’ve come a long way to agreeing to a Republican idea: the exchanges. Senator Enzi has been a leader in that. Senator Snowe, along with Senator Durbin, had legislation to that effect, a bipartisan, because the insurance companies opposed the public option. They couldn’t take the competition.

AMY GOODMAN: What about that, Trudy Lieberman? Why did President Obama drop the public option? And what that means?

TRUDY LIEBERMAN: Well, it was never clear to me that he supported it in the first place, although if you go back to the campaign, his campaign boilerplate did say that he supported some kind of a public option. And I had reason to look at that fairly recently, and it was very clear that he did. But perhaps as the campaign went on and campaign contributions came in from stakeholders—not just insurance companies, but the doctors weren’t keen on it. Neither were the hospitals, certainly not the business community, led by the Chamber of Commerce. So it was really a constellation of stakeholders who had contributed to his campaign that did not want the public option. And perhaps he soured on it along the way.

On the advocacy side, it was never really clear, although many of the advocacy groups ran ads for it, gave lip service to it, discussed it in various ways. It was really never clear that they really were 100 percent behind it. And I heard from many people as the debate went on in 2009 that it was basically a bargaining chip. It was something that they could give away in return for something else. And I had always assumed that something else was, let’s get the pre-existing conditions clause removed, let’s have some insurance market reform, let’s find a way to get those 30 million people covered under some kind of insurance. And so, I think that is what happened.

There are some people who believe that the public option was kind of puny, to begin with. Certainly there have been some writers on this who have advanced that theory. That is quite possible, that it never really was robust, to begin with, because if it were robust, it certainly would have been close to a single-payer system, and certainly the stakeholders were not in favor of that.

AMY GOODMAN: Well, let’s go to Margaret Flowers, Baltimore pediatrician and congressional fellow for Physicians for a National Health Program, who is definitely in favor of that. Single payer was not a part of yesterday’s discussion. No advocate was there—Dennis Kucinich, not Physicians for a National Health Program. Your group asked to be represented, Dr. Flowers?

DR. MARGARET FLOWERS: We did, because the President had stated that health experts should be involved in this process. And so, we wanted to offer our services as people that do research in this area. And indeed, they quoted several of our studies during the summit.

AMY GOODMAN: What happened? Why wasn’t anyone represented?

DR. MARGARET FLOWERS: Well, you know, this has been a series of—throughout the entire health process, that we’ve been excluded from this discussion. I think it’s pretty basic. It hearkens back to the special interests that have been involved in this process, you know, and we—it’s really interesting to watch this debate, because so many of the areas that the President and Congress are talking about—cost controls, increasing coverage, excluding pre-existing conditions—all of these would be met through a national Medicare-for-All system. But—so we win, you know, on the policy. But there is such a heavy influence from the insurance and pharmaceutical companies that they, I guess, felt threatened by the presence of the single-payer advocates.

AMY GOODMAN: Just looking at a report from the National Journal by Ashlie Rodriguez, who writes, “Health care interests have given $46.6 million in campaign donations since 2005 to [the] 21 lawmakers” at the bipartisan healthcare summit, including Senator Max Baucus, Senate Minority Leader Mitch McConnell, House Minority Whip Eric Cantor, and to the summit’s host, President Obama, according to this new report. And “Citizens for Responsibility and Ethics in Washington found that health professionals, political action committees, hospitals and nursing homes, pharmaceutical and health product companies, health services firms, HMOs and accident insurers have given heavily to all summit attendees.” How does that affect this discussion, Dr. Flowers?

DR. MARGARET FLOWERS: You know, we could only imagine that it affects it pretty strongly. And we saw that through the year, is that the members of Congress need to get reelected, and if they speak out against the interests who are funding their campaigns, they’re not going to get that funding. So we continue to see these machinations around the dysfunctional situation that we have and tiny efforts to try to patch it together, and we’re missing the bigger picture entirely, which actually the majority of Americans understand and the majority of physicians understand, that we are very different from other industrialized nations because we do not have a health system, we do not take care of everybody in our country.

And we actually could do that. We have a program that’s been working very well for forty-four years now in this country. It’s a model, a model where people can choose which doctor they want to go to. Doctors can choose the treatment for their patients without insurance companies interfering. And it’s also the model that will control healthcare costs and be much more efficient in our healthcare financing. Because we have this system of multiple private, for-profit—or profit-driven, really—insurance companies—their bottom line is not health; it’s profit—we’re wasting a third of our healthcare dollars, over $400 billion a year at this time.

AMY GOODMAN: And you’re talking—of course, you’re talking about Medicare and just dropping the age of eligibility to include everyone. But what about now? Even the public option is off the table. How do you feel about that?

DR. MARGARET FLOWERS: Well, the public option was a very vague concept, to begin with, and so many people didn’t really understand what it was or didn’t have faith that a public option could keep a giant insurance company honest. We have seen evidence over and over at the state level that you can’t keep these insurance companies honest by having a public program. What happens with a public program is that that’s where all of the people who actually need healthcare end up, and the insurance companies continue to avoid the sick, and deny and restrict care, and make huge profits, so that it wasn’t a concept that people could really understand.

But a national improved Medicare-for-All system is very simple to understand, because we’ve seen it working here in this country. It’s familiar. And so, by excluding, I think—by excluding that viewpoint, we really missed an opportunity to push for real reform, because the people do understand national Medicare for All.

AMY GOODMAN: We just have thirty seconds, Dr. Margaret Flowers, but what is the plan of single-payer advocates, of Medicare-for-All advocates, at this point?

DR. MARGARET FLOWERS: We’re going to continue to move forward. You know, I think it’s pretty clear that Congress is not going to be able to do this if left to their own devices. And so we, as a people, are going to have to educate ourselves and get active and get much more involved. And Senator Harkin alluded to the fact that there’s segregation by health status in this country. We can’t allow that to continue. It’s not acceptable. So I hope that more people will get involved with this movement. We’re certainly going to continue to move forward and push
for this.

AMY GOODMAN: Dr. Margaret Flowers, Baltimore pediatrician, congressional fellow for Physicians for a National Health Program, she was arrested when she spoke out in Congress trying to get a single-payer advocate included in Max Baucus’s, the Senate healthcare leader, Senate leader of the Finance Committee—getting a healthcare advocate who supported single payer in the discussions in his hearings. Also, Trudy Lieberman, thanks for joining us from here in New York, contributing editor to the Columbia Journalism Review, blogs at cjr.org.

http://www.democracynow.org/2010/2/26/healthcare_summit_ends_in_deadlock_single

Michael Hiltzik asks, why do we need insurers?

What do we need health insurers for anyway?

By Michael Hiltzik
Los Angeles Times
February 28, 2010

(Before a congressional subcommittee, WellPoint’s chief executive Angela) Braly was forced to make an implicit admission that her industry almost never makes explicitly: The nation’s health coverage system is so hopelessly broken that even the health insurance industry can’t handle it anymore.

Her testimony, and other statements she and other WellPoint executives have made, suggests that insurers can’t profitably manage through periods of high unemployment. They can’t price policies in a way that keeps healthy young people in the same pool as older people, producing a mockery of the very point of indemnity insurance. Despite a decade of unobstructed consolidation, which was sold to regulators as a way to control healthcare costs by creating mega-insurers like hers, her industry can’t control healthcare costs.

Braly’s words are a reminder of the most important unasked question in the entire healthcare debate: What do we need insurance companies for, anyway?

The only way insurers can remain profitable at all is by selling healthy people on policies that don’t offer much coverage at all, while squeezing older, less healthy people remorselessly so they either pay for most of their care out of pocket or get priced out of the insurance market completely (thus becoming a burden for taxpayers).

Braly in her testimony assured the subcommittee that even with the latest California rate increases, “a 40-year-old woman in Los Angeles can obtain coverage with a $1,500 deductible for as low as $156 per month.”

She didn’t specify what kind of coverage. So let’s check out what her company offers. Leaving aside whether that 40-year-old woman might have a preexisting condition that would drive up her premium or make her uninsurable — anything from diabetes to a history of hay fever — the insurer’s California package with a $1,500 deductible requires the customer to pay up to 70% of the cost of “covered services,” including routine mammograms and Pap tests, plus as much as $500 a day for hospital stays.

Maternity isn’t covered at all, so our 40-year-old Angelena better have gotten her lifetime childbearing out of the way before picking up the phone to sign up.

“Our plans fit the way you live,” the CoreGuard brochure says. What it really means is: You better fit the plan, or you’re out of luck.

Shouldn’t that have been on the agenda at the Washington summit?

http://www.latimes.com/business/la-fi-hiltzik28-2010feb28,0,1011707.column

And…

Our plans fit your plans

Anthem Blue Cross

Anthem Blue Cross CoreGuard Benefits for California

Deductible: choices of $750 to $20,000 (with a second deductible for Out-of-Network services)

Coinsurance (In-Network): 50%
Coinsurance (Out-of-Network): 70%

Inpatient Services (In-Network): 50% Coinsurance plus $500 Copay per day (3 days)
Inpatient Services (Out-of-Network): 70% Coinsurance plus $500 Copay per day (3 days)

http://www.ehealthinsurance.com/ehealthinsurance/benefits/ifp/CA/CAAthem_CoreGuard.pdf

Comment: 

By Don McCanne, MD

When WellPoint’s CEO Angela Braly boasts that a 40 year old woman can purchase $1,500 deductible coverage from them for only $156 per month, it’s important to see how they define that coverage.

Although Angela Braly didn’t state which $1,500 deductible plan has a premium “as low as $156,” let’s look at the Anthem Blue Cross $1,500 deductible CoreGuard plan as an example. Under that coverage, a 40 year old woman would have to pay twelve monthly premiums, the first $1,500 of In-Network care, the first $1,500 of Out-of-Network care, one-half of allowed In-Network charges after the deductible (coinsurance), 70% of allowed Out-of-Network charges after the second deductible (coinsurance) (Anthem Blue Cross paying only 30% of allowed charges!), an additional $500 per day for up to three days for hospitalization (a copayment on top of the coinsurance!), all maternity care (Anthem Blue Cross paying nothing!), and… well… you get it.

When Anthem Blue Cross promotes this product as a $1,500 deductible plan, they are being so deceptive that it is dishonest. They call these “look alike plans” – it looks like a $1,500 deductible plan, but it isn’t. The patient is paying most of the health care costs while Anthem Blue Cross pretends that this is insurance.

The more sophisticated insurance purchaser might look at this plan and recognize that it is almost worthless except that it has an out-of-pocket maximum of $3,500 for the year. So maybe it is worth the premium as a catastrophic plan, limiting losses to $3,500. But look closer. The fine print excludes the deductible from counting towards the out-of-pocket costs, so it is really $5,000, but only for In-Network services. Another $9,000 ($7,500 plus $1,500 deductible) has to be paid for Out-of-Network services as well. So the exposure is the total of monthly premiums, the In-Network $5,000, the Out-of-Network $9,000, all Out-of-Network costs in excess of the allowable charges, and any services, such as maternity care, that are not a benefit of the plan. This is another one of those you’re-covered-if-you-don’t-get-sick plans.

To show how ridiculous this can be, using the same benefit guide (link above) for a family with a $10,000 deductible plan, the out-of-pocket maximum looks like it is $7,000, but it is actually $17,000 for In-Network services ($7,000 plus $10,000 deductible), plus $25,000 for Out-of-Network ($15,000 plus $10,000 deductible). In addition to this $42,000, the family must pay monthly premiums, all Out-of-Network costs in excess of the allowable charges, and any services that are not a benefit of the plan (no maternity benefits for a young family!).

Angela Braly admits that WellPoint, the largest mega-insurer in the nation in terms of enrollees, cannot control health care costs, and neither can the rest of their industry. Their solution to keeping premiums affordable is to shift more of the health care costs to the individuals and families who need care, defeating the purpose of risk pooling.

Michael Hiltzik has asked the right question: What do we need insurance companies for, anyway?

What do we need health insurers for anyway?

By Michael Hiltzik
Los Angeles Times
February 28, 2010

Angela Braly can’t kid me.

When the chief executive of gargantuan health insurer WellPoint (parent of Blue Cross of California) went before a congressional subcommittee the other day, she displayed all the smile-through-the-tears pluck of Annie looking to a sunny tomorrow or Scarlett swearing to God she’ll never be hungry again.

WellPoint didn’t really want to jack up health premiums on its customers by as much as 39%, she said — it had no choice. “We care deeply about our California customers,” she said.

But what she was really telling the committee members was this: “Please put us out of our misery.”

Braly explained that her company’s premium increases on individual policies were based on several circumstances: One, people are getting older. Two, people are becoming unemployed, and if they’re healthy they’re dropping out of the insurance pool. Three, the cost of diagnostic testing is soaring.

Implicitly, she begged for the government to help — put people back to work so they’re eligible for cheaper group plans, and clamp down on costs. (Not even the government can stop people for growing older.) Without that help, she intimated, premiums are going to keep rising sharply and WellPoint’s already meager profits are going to be hammered worse.

In delivering this appeal, Braly was forced to make an implicit admission that her industry almost never makes explicitly: The nation’s health coverage system is so hopelessly broken that even the health insurance industry can’t handle it anymore.

Her testimony, and other statements she and other WellPoint executives have made, suggests that insurers can’t profitably manage through periods of high unemployment. They can’t price policies in a way that keeps healthy young people in the same pool as older people, producing a mockery of the very point of indemnity insurance. Despite a decade of unobstructed consolidation, which was sold to regulators as a way to control healthcare costs by creating mega-insurers like hers, her industry can’t control healthcare costs.

Braly’s words are a reminder of the most important unasked question in the entire healthcare debate: What do we need insurance companies for, anyway?

The only way insurers can remain profitable at all is by selling healthy people on policies that don’t offer much coverage at all, while squeezing older, less healthy people remorselessly so they either pay for most of their care out of pocket or get priced out of the insurance market completely (thus becoming a burden for taxpayers).

In short, this is an industry that acts as if it will have trouble making money unless regulators allow it to cover only injuries suffered by a young single male hit by an asteroid.

Meanwhile, however, it fritters premium income away on expenses generated largely by corporate initiatives having nothing to do with healthcare. WellPoint spent $2.6 billion repurchasing its own shares last year. This was such a good deal for shareholders that its board recently authorized spending an additional $3.5 billion for the same purpose. None of those dollars, it should go without saying, will be available for delivering healthcare to customers.

It would have been marvelous and uplifting if all the participants in Thursday’s health reform summit in Washington understood that as well as the insurers themselves.

Instead, the health reform obstructionists, who mostly belong to the Republican Party, mouthed the same tired and irrelevant bromides. They yammered about blocking malpractice lawsuits, even though the evidence shows that malpractice litigation, including the “defensive medicine” it foments, accounts for 2% to 3% of the country’s annual healthcare bill of $1.7 trillion. (Arguably a small price to pay, at that, for the value of giving patients injured by malpractice redress for their injuries.)

They returned again and again to the old chestnut about allowing insurers to sell policies across state lines. President Obama, to his credit, understood that absent minimum coverage standards this would lead insurers to race into whatever benighted states were willing to remove all coverage standards just to compete for, say, WellPoint’s headquarters. No one in any state would be able to buy a policy worth a tinker’s damn. The reform opponents greeted his explanation like the deaf adder in Psalm 58: They just stopped their ears.

So it’s worth scrutinizing Braly’s words for a reminder of what really needs to be fixed.

In that Wall Street conference call, Braly and her WellPoint management team observed that the company had lost 1.4 million subscribers, or 4%, during 2009. Much of that was because of layoffs by employers who offered WellPoint policies to their workers. That became a big problem for the insurer because of federal COBRA rules allowing laid-off workers to continue their group policies if they pay the full price themselves. Who does that? Only people with sickness in the family, which skewed WellPoint’s medical spending higher.

As for the 39% California premium boost, the House subcommittee released e-mails in which WellPoint executives discussed how to moderate rate increases by creating “look-alike plans . . . with a benefit or two removed” so they would seem cheaper, like a cereal company dropping its prices by a few nickels but putting less cereal in the same size box. Is there any surprise that, in this era of intolerable premium increases, the average deductible on WellPoint’s policies has risen by 20% over the last two years? (One WellPoint policy in California carries a family deductible totaling up to $40,000 — that’s not a misprint.)

Braly in her testimony assured the subcommittee that even with the latest California rate increases, “a 40-year-old woman in Los Angeles can obtain coverage with a $1,500 deductible for as low as $156 per month.”

She didn’t specify what kind of coverage. So let’s check out what her company offers. Leaving aside whether that 40-year-old woman might have a preexisting condition that would drive up her premium or make her uninsurable — anything from diabetes to a history of hay fever — the insurer’s California package with a $1,500 deductible requires the customer to pay up to 70% of the cost of “covered services,” including routine mammograms and Pap tests, plus as much as $500 a day for hospital stays.

Maternity isn’t covered at all, so our 40-year-old Angelena better have gotten her lifetime childbearing out of the way before picking up the phone to sign up.

“Our plans fit the way you live,” the CoreGuard brochure says. What it really means is: You better fit the plan, or you’re out of luck.

Shouldn’t that have been on the agenda at the Washington summit?

Michael Hiltzik’s column appears Sundays and Wednesdays. Reach him at michael.hiltzik@latimes.com, read previous columns at www.latimes.com/hiltzik, and follow @latimeshiltzik on Twitter.

Copyright © 2010, The Los Angeles Times

http://www.latimes.com/business/la-fi-hiltzik28-2010feb28,0,1011707.column

The Single-Payer Health Debate We Should Have Had

By Bruce Bartlett
The Wall Street Pit
Feb 27, 2010

There’s been a bit of a debate going on in the blogosphere lately about whether the Democrats should have proposed a more limited health reform plan in the first place. Such a plan might have gotten some Republican support or at least led to less intense Republican opposition and both improved the health system and given the Democrats a badly needed victory. The plan they proposed instead was too big to pass, so the thinking goes.

As a purely political matter, I think this analysis is wrong. The real problem, in my view, is not that the Democrats’ ambitions were too large, but rather that they were too small. In particular, I think they erred by not making the case for a single-payer system in the first place. Had they done so, the plan they eventually developed would have appeared to have been a modest alternative.

I say this not because I favor a single-payer health system—although I don’t fear such a system particularly, either. Rather, it’s because I understand political dynamics—you often have to ask for twice what you want in politics in order to end up with half of what you need at the end of the day. The great mistake that administrations of both parties often make is to put forward plans that have no bargaining chips or fallback positions built into them. The various trade-offs inherent in any major policy initiative were made within the administration rather than between Congress and the administration. This meant that the administration’s initial proposal was really its bottom line position; it had nothing to negotiate with and once the inevitable compromises started, the logic and integrity of the proposal quickly collapsed.

Also, I think administrations are sometimes unclear in their own minds about what precisely they are trying to accomplish. In terms of health reform, Barack Obama’s main campaign promise was to “bend the curve;” i.e., cut the growth rate of total health spending to a sustainable level. But this cannot be done without abolishing or at least severely scaling-back the tax exclusion for health insurance—a sacred cow only slightly less sacred than the mortgage interest deduction. Unfortunately, John McCain made this the centerpiece of his health reform plan during the campaign. In order to score some cheap political points, Obama opposed it. So when the time came for him to propose a health reform plan of his own, the central element that needed to be there for the plan to reduce costs was off the table.

Without some way of scaling back private health spending through the tax code, the only real alternative is essentially a single-payer system such as they have in virtually every other major country. I think a strong case could have been made for such a system on cost control grounds alone. Yes, this would have meant rationing, but it wouldn’t necessarily have meant that health outcomes would be worse. The people of France, Switzerland and Germany are not less healthy than Americans. (I don’t have space to do a detailed international comparison of health outcomes, but I would note that infant mortality is a pretty basic measure of a national health system’s quality and according to this CDC study practically every major country has significantly lower infant mortality rates than we do.)

Yet every major country spends very significantly less of its national output on health than we do. As Table 1 shows, we spend five percent of GDP more than the country with the second-highest level of health spending as a share of GDP. Five percent of GDP is about $700 billion that Americans could be spending on new homes, cars and clothing, nice restaurants, paying off bills or anything else they can imagine. Instead, that money went to doctors, hospitals, pharmacists and insurance companies. If we only spent as much as Japan—a country known for having an excellent health system and a healthy population—we would have eight percent of GDP, about $1 trillion, to spend on anything we like.

Table 1. Total Health Expenditures as a Share of GDP, 2007 (latest available)

The Single Payer Health Debate We Should Have Had

Of course, many will assume that we can’t afford a single payer system without vastly increasing government spending. What they probably don’t realize is that we are already spending a vast amount on health through government as it is for programs like Medicare and Medicaid. As Table 2 shows, only eight other countries have government spending on health greater than we have, and most of those spend only a trivial amount more.

Table 2. Public Health Expenditures as a Share of GDP, 2007 (latest available)

The Single Payer Health Debate We Should Have Had

Moreover, I believe these data substantially understate the total amount of health spending that flows through government because I don’t think they account for the revenue loss associated with tax expenditures for health insurance and care. These are very substantial, as shown in Table 3.

Table 3. Federal Corporate and Individual Tax Expenditures for Health, 2010

The Single Payer Health Debate We Should Have Had

If the tax expenditures for health were included in overall health spending, then public expenditures in the U.S. would be at least 1.3 percent of GDP higher and private spending would be concomitantly lower (to avoid double counting). (Keep in mind that to the extent that state and local governments also exempt health expenditures from taxation, the total tax expenditure would be a couple of tenths of GDP higher.) If that were the case, we would be spending as much as France does.**

To wrap up a post that has already gone on much too long, what I am trying to show is that for no more than we are already spending on health through the government we could have a single-payer system no worse that those that exist in almost every other major country. My point is that this is an option that the administration should have at least floated and on which we should have had a national debate. I don’t think Americans would have embraced such an option, but as I said at the beginning it would have clarified the debate by focusing on the overall cost of our health care system—which I believe is far too great for what we get in return—and made reforms such as those that the Democrats have put forward seem modest by comparison. That would have improved their political chances of success.

** I don’t know to what extent other countries also have tax expenditures for health that are not included in the figures for total health spending. However, a new OECD study suggests that they are small or nonexistent. Of seven countries studied (Canada, Germany, Korea, the Netherlands, Spain, the U.K. and U.S.), four had no tax expenditures for health at all and the two others that have them have revenue losses as a share of GDP less than a third of ours. See Tax Expenditures in OECD Countries (Paris: Organization for Economic Cooperation and Development, 2010), p. 224.

http://wallstreetpit.com/17869-the-single-payer-health-debate-we-should-have-had

Michael Hiltzik asks, why do we need insurers?

What do we need health insurers for anyway?

By Michael Hiltzik
Los Angeles Times
February 28, 2010
(Before a congressional subcommittee, WellPoint’s chief executive Angela) Braly was forced to make an implicit admission that her industry almost never makes explicitly: The nation’s health coverage system is so hopelessly broken that even the health insurance industry can’t handle it anymore.
Her testimony, and other statements she and other WellPoint executives have made, suggests that insurers can’t profitably manage through periods of high unemployment. They can’t price policies in a way that keeps healthy young people in the same pool as older people, producing a mockery of the very point of indemnity insurance. Despite a decade of unobstructed consolidation, which was sold to regulators as a way to control healthcare costs by creating mega-insurers like hers, her industry can’t control healthcare costs.
Braly’s words are a reminder of the most important unasked question in the entire healthcare debate: What do we need insurance companies for, anyway?
The only way insurers can remain profitable at all is by selling healthy people on policies that don’t offer much coverage at all, while squeezing older, less healthy people remorselessly so they either pay for most of their care out of pocket or get priced out of the insurance market completely (thus becoming a burden for taxpayers).
Braly in her testimony assured the subcommittee that even with the latest California rate increases, “a 40-year-old woman in Los Angeles can obtain coverage with a $1,500 deductible for as low as $156 per month.”
She didn’t specify what kind of coverage. So let’s check out what her company offers. Leaving aside whether that 40-year-old woman might have a preexisting condition that would drive up her premium or make her uninsurable — anything from diabetes to a history of hay fever — the insurer’s California package with a $1,500 deductible requires the customer to pay up to 70% of the cost of “covered services,” including routine mammograms and Pap tests, plus as much as $500 a day for hospital stays.
Maternity isn’t covered at all, so our 40-year-old Angelena better have gotten her lifetime childbearing out of the way before picking up the phone to sign up.
“Our plans fit the way you live,” the CoreGuard brochure says. What it really means is: You better fit the plan, or you’re out of luck.
Shouldn’t that have been on the agenda at the Washington summit?
http://www.latimes.com/business/la-fi-hiltzik28-2010feb28,0,1011707.column

And…

Our plans fit your plans

Anthem Blue Cross
Anthem Blue Cross CoreGuard Benefits for California
Deductible: choices of $750 to $20,000 (with a second deductible for Out-of-Network services)
Coinsurance (In-Network): 50%
Coinsurance (Out-of-Network): 70%
Inpatient Services (In-Network): 50% Coinsurance plus $500 Copay per day (3 days)
Inpatient Services (Out-of-Network): 70% Coinsurance plus $500 Copay per day (3 days)
http://www.ehealthinsurance.com/ehealthinsurance/benefits/ifp/CA/CAAthem_CoreGuard.pdf

When WellPoint’s CEO Angela Braly boasts that a 40 year old woman can purchase $1,500 deductible coverage from them for only $156 per month, it’s important to see how they define that coverage.
Although Angela Braly didn’t state which $1,500 deductible plan has a premium “as low as $156,” let’s look at the Anthem Blue Cross $1,500 deductible CoreGuard plan as an example. Under that coverage, a 40 year old woman would have to pay twelve monthly premiums, the first $1,500 of In-Network care, the first $1,500 of Out-of-Network care, one-half of allowed In-Network charges after the deductible (coinsurance), 70% of allowed Out-of-Network charges after the second deductible (coinsurance) (Anthem Blue Cross paying only 30% of allowed charges!), an additional $500 per day for up to three days for hospitalization (a copayment on top of the coinsurance!), all maternity care (Anthem Blue Cross paying nothing!), and… well… you get it.
When Anthem Blue Cross promotes this product as a $1,500 deductible plan, they are being so deceptive that it is dishonest. They call these “look alike plans” – it looks like a $1,500 deductible plan, but it isn’t. The patient is paying most of the health care costs while Anthem Blue Cross pretends that this is insurance.
The more sophisticated insurance purchaser might look at this plan and recognize that it is almost worthless except that it has an out-of-pocket maximum of $3,500 for the year. So maybe it is worth the premium as a catastrophic plan, limiting losses to $3,500. But look closer. The fine print excludes the deductible from counting towards the out-of-pocket costs, so it is really $5,000, but only for In-Network services. Another $9,000 ($7,500 plus $1,500 deductible) has to be paid for Out-of-Network services as well. So the exposure is the total of monthly premiums, the In-Network $5,000, the Out-of-Network $9,000, all Out-of-Network costs in excess of the allowable charges, and any services, such as maternity care, that are not a benefit of the plan. This is another one of those you’re-covered-if-you-don’t-get-sick plans.
To show how ridiculous this can be, using the same benefit guide (link above) for a family with a $10,000 deductible plan, the out-of-pocket maximum looks like it is $7,000, but it is actually $17,000 for In-Network services ($7,000 plus $10,000 deductible), plus $25,000 for Out-of-Network ($15,000 plus $10,000 deductible). In addition to this $42,000, the family must pay monthly premiums, all Out-of-Network costs in excess of the allowable charges, and any services that are not a benefit of the plan (no maternity benefits for a young family!).
Angela Braly admits that WellPoint, the largest mega-insurer in the nation in terms of enrollees, cannot control health care costs, and neither can the rest of their industry. Their solution to keeping premiums affordable is to shift more of the health care costs to the individuals and families who need care, defeating the purpose of risk pooling.
Michael Hiltzik has asked the right question: What do we need insurance companies for, anyway?

The Health Summit and Single-Payer Medicare for All

By Dr. Quentin Young
The Huffington Post
February 27, 2010

Having watched the entirety of President Obama’s televised health summit Thursday, I was struck by several things.

The president’s Republican opponents once again revealed their deep-seated, single-minded commitment to enhancing the profit margins of the insurance and drug monopolies. There were no surprises – and next to no useful additions to the debate – from the GOP’s stalwarts, only a repetition of their shopworn proposals for tort reform, the ability to sell health insurance across state lines (read as: eliminating state consumer protections) and the like.

The president’s proposal, an 11-page document released last Monday, along with the summit itself, was clearly aimed at creating a reform posture that would grease the wheels for getting the 51 Senate votes he needs to pass his party’s deeply flawed bill through the reconciliation process.

President Obama sought to create an impression of willingness to deal with his Republican opponents from a straight-up gamesmanship point of view. In this regard he prevailed, in my opinion. His skills of debate are quite formidable, as even his most bitter opponents have to admit.

But the really important question is this: What are the American people being offered in the way of real health reform by the Democrats?

A good starting point is to look at what they are not being offered. They are not being offered a universal plan. They are not being offered comprehensive coverage. They are not being offered affordable care.

In some ways, what they are not being offered is the saddest part of all, because the president, who was elected by a large majority with high expectations – along with solid Democratic majorities in both houses of Congress – has not fulfilled his mandate. Having struck a series of deals with the for-profit health industry, he has been unable to move any genuine health reform legislation forward.

The American people obviously are hurting. The health care crisis has done nothing but worsen in the months succeeding his election. The adverse economic events make certain that there will only be huge increases in the number of uninsured. The last official figure was over 46 million, and it’s hard to believe there will be less than 50 million who lack insurance when this year’s tally takes place.

The meeting took place with dark economic clouds hanging over it. And the horror stories related at the summit – of people being dropped by the insurers when they got sick, of people being unable to bear the burden of monstrous costs when illness struck – were a recurring and sobering theme.

During the summit I was struck by Sen. Harry Reid’s citation of two recent studies from Harvard University – one showing that 45,000 deaths annually can be linked to lack of health insurance (15 times the number of people who perished in the 9/11 tragedy), another showing that 62 percent of personal bankruptcies are linked to medical debt – to make the case for acting quickly to implement a reform of our broken system.

The irony is that those two studies, which played an outsized role in the health reform debate, just happen to have been conducted by research teams led mainly by Dr. Steffie Woolhandler and Dr. David Himmelstein, two of our nation’s most prominent advocates for single-payer Medicare for All and co-founders of Physicians for a National Health Program.

The stubborn fact remains that the only way that you can achieve truly universal coverage – that is, give access to health care for every person in our nation – is through a single-payer system. That’s also the only way to attain real cost control.

Our present arrangements, dominated as they are by the for-profit insurers, result in about $400 billion annually being wasted on useless paperwork and bureaucracy. Those excess administrative costs are weighing down on the medical profession, the public and the economy. By replacing the private insurers with a streamlined, nonprofit single-payer financing mechanism, we would reap sufficient savings to cover all the uninsured. The same savings would allow us to end co-pays, deductibles and caps, thereby upgrading everyone’s coverage. And patients could go to the doctor and hospital of their choice.

We could also reap savings from bulk purchasing, negotiated fees and rational capital improvement planning. From the standpoint of health economics, it’s a no brainer.

The tragedy is that President Obama, as recently as when he was an Illinois state senator, acknowledged that single-payer financing of health care was the logical and the best way to go. But now that he’s made fatal concessions to the insurers and Big Pharma, crystallized as they are in the odious Senate bill, his stated goal of fundamental reform has unfortunately been foiled.

What does this mean for the single-payer movement? It’s worth noting that although that we are obviously not in a decisive, victorious mode, the single-payer position has never been stronger. Whatever the outcome of this round of congressional maneuvering, the need for real reform will remain.

That was the message of the “Sidewalk Summit for Medicare for All” that took place outside the official proceedings at Blair House (and in several cities around the nation) on Thursday. Dr. Margaret Flowers, PNHP’s congressional fellow, was joined by other physicians, health professionals, unionists and other health care advocates, in bearing witness to our eminently rational and humane solution. And they are just the tip of the iceberg.

The single-payer issue should loom large in the 2010 elections and single-payer supporters, whose ranks are steadily increasing, are in this battle for the long haul.

http://www.huffingtonpost.com/dr-quentin-young/the-health-summit-and-sin_b_479484.html

A doctor's view: getting to real health care reform

By Peter Mahr
The Oregonian
February 26, 2010

The Oregonian’s recent editorial on the president’s health care proposal is off base. The editorial board states that Barack Obama’s plan “includes essential elements of reform.” But there is no discussion of what elements are indeed essential when analyzing health care reform.

T.R. Reid, a one-time correspondent for The Washington Post and chief of its London and Tokyo bureaus, explored health care systems around the world in his book “The Healing of America.” He found that health care systems vary greatly but all wealthy industrialized countries build their systems on three essential elements. First, there is one system for everyone, regardless of age, wealth, employment, race or health status. This results in administrative efficiency, cost control and fundamental fairness. Second, all other developed nations have health care financing that is not-for-profit. Their health insurance systems are not allowed to profit in the provision of necessary health services. This eliminates the fundamental conflict of interest that insurance companies face in our system: In order to profit, they deny access to care, bar sick members or refuse payment of services. Finally, the third basic principle is that all other developed nations with health care systems provide true universal access to health care services. Nobody is uninsured. Nobody is denied access if unable to pay.

Obama’s health care proposal does not include any of the basic principles for true reform. Our inefficient, expensive patchwork system of health insurance would be maintained. For-profit financing would continue in the private insurance market while individuals and employers would be forced to buy it. Finally, there is no guarantee of universal coverage. Millions would be left without insurance and millions more would face financial hardship in payment of their premiums, deductibles and out-of-pocket payments.

The Oregonian has a responsibility to its readers to provide factual and analytical information. Since all other industrialized countries provide true universal access to necessary health services at roughly half the cost than we do, it is common sense to tease out common principles that make their systems work. T.R. Reid has done this for us and clearly exposes great problems with Obama’s proposal. It is The Oregonian’s responsibility to inform it’s readers of these weaknesses and suggest alternatives.

One alternative that includes all three elements of reform is single-payer national health insurance — Medicare for all. By scrapping our patchwork system and improving and expanding Medicare to all, administrative costs would plummet due to increased efficiency of the payment system, the conflict of interest between paying for medical services and making a profit would be eliminated and everyone, all Americans, would have access to all necessary medical services regardless of ability to pay. The Oregonian has a responsibility to make this known to its readers. In blindly supporting a reform that lacks any of the basic components required for a functioning health care system while ignoring a reform that includes all of these elements, The Oregonian has failed to truly inform the public.

Peter Mahr is a Portland physician and a member of Physicians for a National Health Program.

http://www.oregonlive.com/opinion/index.ssf/2010/02/a_doctors_view_getting_to_real.html