By Casey Selix
MinnPost.com
Monday, June 22, 2009

Dr. Oliver Fein, president of the 16,000-member Physicians for a National Health Program, thinks the civil rights movement of the 21st century will be health care.

As health policy reform moves up the domestic agenda of the president and Congress, a single-payer, government-run program appears to be off the table. But Fein, who was in the Twin Cities last week to launch the Hazardous to Your Health! series at St. Catherine University, thinks the single-payer concept is gaining momentum in the United States.

He urges skeptics to think of a single-payer system as Medicare 2.0 or a new and improved Medicare for All. Fein, an internist and professor at Weill Medical College of Cornell University, explained his reasoning in a Q&A with MinnPost.com.

MinnPost: One report says that those at either end of the health policy spectrum — a single-payer, government-run plan on one end, a free-market approach on the other — are being marginalized in Congress and the administration. Is there any way to revive a single-payer proposal at this point and how would your group go about doing that?

Dr. Oliver Fein: We have been very active in attempting to do that over this period, and what we would say, frankly, is that actually we’ve gotten more visibility during this time, more discussion of single payer over the last six months than we’ve had before. So whether people say that we’re marginalized or not, the fact of the matter is there seems to be more actual discussion of single payer. What I think is really interesting is that although Sen. [Max] Baucus says that single payer is off the table, at the minimum, we’re the elephant under the table. Everybody is referring to us.

So, you have someone like [Health and Human Services Secretary Kathleen] Sebelius now saying we’ll create a public option that will not go to single payer. You have Republicans saying that the thing they fear is single payer; you have a whole variety of discussion that’s going on that keeps referring to this thing called single payer. Probably one of the real problems is there’s not enough of a definition for the public to make an assessment about what that really is.

MP: Would you like to explain that?

OF: I think there are certain principles that really define what single payer is. The first is automatic enrollment in a national plan, which would lead to universal coverage. What we have now are discussions of universal coverage favored by the health insurance industry — provided that there’s a mandate to buy their product. There’s every evidence that that is not going to lead to universal coverage.

Principle two is that benefits ought to be really comprehensive. There’s a lot of discussion that single payer should be a basic package. We think it ought to be a comprehensive benefit package going from prevention, doctor, hospital, pharmaceuticals, to dental, mental health — all medically necessary services.

Principle three is that these things should be publicly financed; that means one would not use insurance premiums for financing. Premiums are really regressive because the president of a company pays the same as the secretary of a company. That seems to us grossly unfair because the incomes of those two parties are so different. So, we would propose either a payroll tax the way the Medicare program, Part A, is funded, or a mix of payroll and income taxes so that you have a progressive way of paying for health insurance. The only way you can do that is through public financing.

The fourth principle is single payer, and what that means is we’re really able to eliminate the administrative waste that occurs when you have multiple payers. The Medicare program has an overhead of about 3 percent in contrast to private health insurance which, on average, has an overhead of 20 to 30 percent. It’s not just the insurance overhead, but every hospital has to have a large billing department to deal with the multiple payers. In my personal office, I have to hire extra people to deal with prior approval, denials of claims, each insurance company having different regulations and different things that I have to fill out.

Single payer would eliminate all of that. A study published in the New England Journal shows that $300 billion could be redirected if we went from a multi-payer system to a single-payer system. That would cover everyone who’s uninsured and many of the people who are underinsured because they have high deductibles — without costing the overall system more. And that’s the real dilemma that the Obama administration is facing right now with their notion of mandates.

The fifth principle is maximizing choice. Under our present private insurance system, health plans limit you to their network of doctors and network of hospitals and you have to pay more if you go out of network or not get covered at all. Many employers offer only one plan — 42 percent of employees in America are offered only one plan. That doesn’t increase choice. The program in the country now with the most choice is Medicare. You have a choice of physician, a choice of hospital; so, again, single payer would lead to increased choice.

The final principle is essentially that this system would be delivered through a nonprofit, privately controlled system. Doctors would not be employed by the government; hospitals would not be owned by the government. What you have is public financing and collection of money by the single payer, but the private delivery system would continue.

So, then people usually ask me is there a model for this, any place in the world that does this? And I respond, “Yes, right here in the United States. It’s the Medicare program.” The traditional Medicare program is very much what we’re talking about. It needs improvement and better coverage. Dental care isn’t covered, for instance; nursing home care isn’t covered; the prescription drug benefit is a real problem because you have to use a private insurance company. The Medicare program can’t negotiate directly with pharmaceutical companies. Medicare is structured on an 80-20 rule where the beneficiary has to come up with 20 percent of the cost. I would eliminate that.

So, what we talk about is Medicare 2.0 — an expanded program of Medicare for all and an improved program that deals with many of these other programs. That would be the way a single-payer program would operate in the United States.

MP: What is your best hope — and worst fear — about the health reform proposals floated by Congress and the Obama administration?

OF: I guess our worst fear would be that Congress would pass essentially an individual mandate that everybody had to purchase health insurance AND that there would be nothing like a public option. That would be our worst fear because what that would do is essentially act as a bailout for the private health insurance industry — just like the bailout for Wall Street, frankly. It probably would not benefit patients but benefit the industry. Private health insurers have been losing people who pay premiums because essentially employer coverage has dropped over 10 million people over the last decade. We think they’re out now for this individual mandate so that they can reverse that and have more people buy private health insurance.

When it comes to the public option, we think there are many problems with it potentially. It could become a multi-payer system where private health insurance persists — a system in which the sickest patient would be dumped into the public option. The public option would, in fact on a per-beneficiary basis, become very expensive. People would say, “Oh, the government can’t run a program.” There would be strong attempts to underfund the program; it could become a total fiasco.

The other thing that worries us a little bit is how are we going to pay for this public option and some of the proposals like taxing health benefits — why are we doing such a ridiculous thing? So we really think that’s the major dilemma for the Obama administration at this point.

MP: Your best hope?

OF: It’s really difficult to say what that would be other than that there would be an increasing awareness of the single-payer option and essentially out of all of this, an increasingly large mass movement that really begins to say, “Well, we need this kind of Medicare 2.0 type program in the United States.” I’m not impressed with the idea that that’s impossible.

One has to think of the kinds of things we thought were really impossible. If you were in the 1960s and looking at the segregation that was in our society — separate waiting rooms in bus stations, train stations … in the South, you would come to think it was impossible that segregation would be erased in our lifetimes. But in four short years because there was a civil rights movement, we got the Civil Rights Act.

My best hope is that there would be a growing awareness and mass movement for health care as a right. What I think that means is health care as a single payer. I think that is growing in the country. It’s just not yet being recognized by politicians. Politicians are, to some degree, beholden to various interest groups, and that can change if there is this growing mass movement.

The civil rights movement of the 21st century, I think, is going to be for health care as a right.

MP: Why do you think this nation has resisted universal coverage and/or a single-payer program for so long?

OF: I think it’s an accident of history. During World War II, wages were frozen and unions couldn’t bargain for raises. But they could bargain for fringe benefits. So, what happened is that health insurance got linked to employment and that then began to expand. Government involvement in guaranteeing health care is very young in the world. In Europe, it started in post-World War II. There, the accident of history was that they were in very devastated economies and devastated societies; they were rebuilding. The decision there was we’ve got to offer medical care, in essence, as a right.

Well, we had a different model linking it to employment. Gradually, we got to 1965, the Medicare program was passed; why was that? What happened to most people when they turned 65? They retired. They lost their health insurance because they were no longer working for an employer. So, we instituted single-payer national health insurance for the elderly.

Now, we have many more formidable interest groups that have built up since 1965 — the private health insurance industry, the pharmaceutical industry who really worry that they’re at jeopardy if we go to single payer — and they’re probably right. So I think it’s no mystery why things have moved a little slower here. The problem is it’s not sustainable in a global world, and in a global world, which is really the way things are moving, we’re going to see single payer in the United States. It’s inevitable.

Casey Selix, a news editor and staff writer for MinnPost.com, can be reached at cselix[at]minnpost[dot]com.

By ELIZABETH COONEY
Boston Globe
June 22, 2009

The debate in Washington about how to overhaul the nation’s healthcare system has included little from advocates for a single-payer plan. Dr. Steffie Woolhandler, a Cambridge Health Alliance internist and Harvard Medical School professor who cofounded Physicians for a National Health Care Program, has been raising her voice for a national plan for more than two decades, contending that the current system based on private insurance – including the Massachusetts model mandating near-universal coverage – does not serve people well, whether they are rich or poor, insured or uninsured. Here is an edited version of an interview last week.

ELIZABETH COONEY

Q. What do you think of current efforts in Washington to improve healthcare?

A. What’s currently on the table, what [President] Obama and [Senator Edward M.] Kennedy are talking about, will not fix healthcare. They don’t have any way to pay for it. We can’t just keep pumping money into the system. We actually have to fix the system.

Q. Why aren’t single-payer advocates at the table?

A. I think that was due to the tremendous influence of the private health insurance industry. We’ve pushed some and the process has moved some. At first Senator [Max] Baucus had 13 people, mostly doctors and nurses, arrested outside the hearing he was leading. We did get a hearing on single payer for the first time in history in the House Education and Labor Committee.

Q. How would a single-payer system pay for itself?

A. A single-payer system contains its own funding. It would fix the system by dramatically reducing administrative costs. Just the complexity of having competing insurance firms and the system overhead make costs go way up. In the United States, administration costs us 31 cents of every healthcare dollar. In Canada, it’s about 16.5 cents for every healthcare dollar. If we could have the administrative efficiency they have in Canada, we could move $400 billion in annual costs.

Q. What about waiting lists for care?

A. Canada spends half of what we do per capita on healthcare and they do have some waiting lists, but they’re really not as bad as the right wing portrays them. The waiting lists are a result of their level of spending. Our problem in the US is we spend a lot of money but we have a bad system. In Canada they have a good system but they just don’t spend enough money on it. We have great hospitals and great nurses and well-trained doctors and lots of fancy technology. We have what we need, and yet we still can’t take care of patients because the financing system doesn’t work.

Robert Kuttner
The Huffington Post
June 22, 2009

I’m sure I’m not the only reader who noticed the juxtaposition of two front page stories in Sunday’s New York Times dealing with health care. The first article cited a new Times-CBS poll showing that 72 percent of Americans favored a government run health plan comparable to Medicare, which would be available to everyone.

The second reported on a rogue radiologist at a Philadelphia VA hospital who botched 92 prostate procedures.

The right will doubtless go to town on that one, as what we can expect of government-sponsored medicine. I’ll have more to say about the VA in a moment, but first let’s consider the poll findings.

The poll is relevant because Congress will soon decide whether to include the so-called “public option” in the Obama health reform bill. As drafted by three House leaders and unveiled last Wednesday, the 852-page bill would include a government-sponsored, Medicare-like public plan.

Republicans and the health industry have been kicking and screaming that this is socialistic. But the poll suggests that defenders of the public plan have nothing to fear politically, and that Republicans are in danger of getting on the wrong side of a popular issue.

However, that’s only the beginning of the story. The reform package, as drafted by the Obama administration and the House leadership, is dubious legislation even with the inclusion of a public option. Basically, it leaves the two worst aspects of the system intact. First, private insurers will continue to dominate. Second, most people will continue to get their insurance through their employers. Given these two bedrock realities, there is no way that the bill can make serious inroads on cost without cutting back on care. The high cost of the approach is already causing key legislators to back off. The current system wastes huge sums, but because it is so fragmented the money flows to profit opportunities and not to the most cost-effective forms of health care.

Also, as my American Prospect colleague Paul Starr warns, a mixed system with a public option effectively invites the most expensive and hard-to-treat people to opt for the public plan, while private insurers will seek to insure the young and the healthy. This is a familiar problem known as adverse selection. The private insurers will then smugly point out that the public plan is less “efficient,” when in fact it simply will have a more costly population. The only way to avoid this problem is to have everyone in the same universal plan–what’s otherwise known as a single-payer plan.

The public option is a not-very-good second best–because our leading liberal politicians lack the nerve to embrace the one reform that simultaneously solves the problem of cost, quality, and universal inclusion. The policy that dare not speak its name is of course comprehensive national health insurance, or Medicare-for-All. I try to avoid using the term “single payer,” because a technical, policy-wonk phrase not understood by most civilians has become insider shorthand for national health insurance. Let’s call the thing by its rightful name. Medicare-for-All is something regular people understand.

The Times-CBS poll is evidence that this is what more than two Americans in three really want. Most voters have not followed the nuances of how the public option in the Obama plan would compete with private insurance. The poll simply indicates that voters want access to a straight-up, Medicare-style plan to be available to one and all. In past polls, when Times-CBS pollsters ask whether people favor national health insurance, responses generally favor Medicare-for-All by margins of about two-to-one.

In the current debate, liberals find themselves fighting to keep the public option alive, so that some form of efficient, publicly-run health insurance will stay in the mix–but knowing that it is embedded in a reform package that is far more costly and inefficient than it should have been. Instead of validating the common sense and reformist demands of ordinary Americans and identifying the insurance, drug, and corporate elites as the obstacles to real reform, too many of our liberal leaders from President Obama on down hope to co-opt business elites with a convoluted scheme that undermines the efficiencies of a comprehensive and universal system. And just wait until it gets watered down further in order to retain the support of these same elites. A plan that all of these groups would endorse would not be worth having.

So what’s the matter with our politicians? Why are the people so far ahead of their elected leaders on this one? One reason, as usual, is money. The combination of the insurance industry, the drug industry, the American Medical Association, the hospital lobby–all of whom oppose Medicare-for-All–represents a huge amount of political spending. It takes a brave politician to face down all of these industries, even though the people are on the side of real reform. The AMA’s position is especially shameful, since the professional societies that represent most actual physicians favor national health insurance.

The second reason that liberal politicians wimp out on single payer is that the self-styled realists in this debate have decided that Medicare-for-All, even if it’s the first-best system, is too hard politically. But think about it. Has the administration picked up one Republican vote by supporting the present system plus a public option? Hardly. The current House leadership bill, offering a mixed system, with a robust public option, a requirement that employers provide good insurance or pay a tax, and that insurers not discriminate against pre-existing conditions, is just as heavy a political lift as national health insurance–and far inferior policy. So why not just go for the first-best?

The advocates of Medicare-for-All have become something of an embarrassment to the liberals. The White House forum on health reform on March 5th, which boasted a diverse range of viewpoints, including representatives of the Business Roundtable, the health insurance industry, the drug lobby, as well as a broad spectrum of business, labor and Congressional leaders, left advocates of Medicare-for-All banging on the door. None were included, despite requests for invitations.

When Sen. Bernie Sanders recently arranged for five prominent advocates of national health insurance to have a courtesy meeting with Senate Finance Committee Chair Max Baucus, the story was newsworthy because the political elite usually pretends that this viewpoint doesn’t exist, much less that it represents the desires of two Americans in three. The mainstream media have also colluded in the general effort to keep the single-payer option out of the limelight. The organization FAIR recently published an important study in its heroic magazine, “Extra”, titled “Media Blackout on Single-Payer Healthcare.”

Indeed, the Sunday New York Times-CBS poll didn’t even offer Medicare-for-All as a free-standing option. It took the Obama position as the left edge of the debate.

As for that rogue doctor at the Philadelphia veterans’ hospital, quality control is not what it should be throughout our fragmented system. And the oases of public medicine are particularly starved for resources. Yet studies consistently find that on average, the VA does more with less than its private sector competitors. Phil Longman has written the definitive book on the subject, “Best Care Anywhere.” Here is a summary.

In this case, the offending radiologist, Dr. Gary D. Kao, was actually a contract employee and not a VA physician.

Only by having a comprehensive system can we marry quality, cost-effective care, and universal access. One of these days, a national leader will have the nerve to embrace national health insurance and fight for it. Until then, we will keep paying more money for less care, and liberals will defend reforms they themselves scarcely believe in.

Robert Kuttner is co-editor of The American Prospect, and senior fellow at Demos. His recent book is “Obama’s Challenge”.

Robert Kuttner is Co-Founder and Co-Editor of The American Prospect

Amnesty International USA today issued the following email alert.

To take action, go to the AI-USA online Action Center: http://takeaction.amnestyusa.org/siteapps/advocacy/index.aspx?c=jhKPIXPCIoE&b=2590179&template=x.ascx&action=12462

Health Care is a Human Right — Urge the Senate to Have a Real Debate on Single Payer

We at Amnesty International believe that policymakers have a historic opportunity to reform a broken health care system. During the presidential debates, Barack Obama took a step in the right direction by affirming that health care should be a right. The legislation now emerging from Washington is, however, a long way from fulfilling that vision.

One reason the current draft legislation falls short of the mark is that single-payer advocates, a crucial human rights constituency, have been largely excluded from the reform process. While the human right to health care does not mandate any particular type of health care system, of the reform proposals being discussed in the U.S. today, the single-payer plans are more universal, equitable and accountable — the three key principles of the human right to health care. Single-payer plans approach health care as an essential service and a public good. A single-payer health care system would pair private delivery with public financing — that is, with private doctors, clinics and hospitals getting all their reimbursement from the government. Medicare, a well-established and popular part of our current health care system, works this way; a single-payer system would institute an improved Medicare for all.

Two of Amnesty International’s ally organizations, the National Economic and Social Rights Initiative and the National Health Law Program, have analyzed current single-payer proposals, and found them to come much closer to fulfilling the human right to health care than the market-based reform plans.

But the powerful Senate Finance Committee, the single most important legislative grouping in the reform process, has yet to hold a public hearing on single-payer. In fact, the committee chair, Sen. Max Baucus, has said that single-payer is “off the table” — a stance he has since acknowledged was mistaken.

Advocates for a human rights-based approach to health care must be included in the reform process. Tell Max Baucus to hold a Finance Committee hearing on single-payer!

Publicly financed and administered health care should be expanded as the strongest vehicle for making health care universally accessible and accountable. Single-payer is a crucial proposal for fulfilling the human right to health care. Without a single-payer seat at the table, we risk that no one will speak up for true universality and a fair, equitable health care system..

Too much of the current debate about health care assumes that we can talk about health care in the same way that we talk about consumer products. But health care is not about markets; it is about the right of every person to live a life of dignity. In health care reform, human rights must come first.

Though things are moving very fast in Congress, it’s not too late to make your voice heard. Tell Max Baucus that single-payer advocates must be heard!

Sincerely,

Sameer Dossani
Demand Dignity Campaign Director
Amnesty International, USA

P.S. You can always get more information on Amnesty International’s Healthcare Is A Human Right project and sign our petition at http://www.amnestyusa.org/healthcare

By Arnold Relman
The New York Review of Books
Volume 56, Number 11 · July 2, 2009

Healthcare, Guaranteed: A Simple, Secure Solution for America
by Ezekiel J. Emanuel, with a foreword by Victor R. Fuchs
PublicAffairs, 219 pp., $14.95 (paper)

President Obama has placed health care reform high on his domestic agenda. He believes that a better health care system is essential for the nation’s economic recovery, so health reform “will not wait another year.” However, he has made only general proposals for reform, leaving Congress to work out the details of the legislation. The Democratic-led Congress has already passed some limited health legislation and its leaders say that they will put a comprehensive reform bill on the President’s desk before the end of this year.

Despite wide popular support for major reform, there will be powerful opposition. Most Republicans in Congress, allied with a small band of fiscally conservative “Blue Dog” Democrats, and most people in the for-profit health care industry will resist significant change. Many others with ideological objections to “big government” pay lip service to reform, but will balk at proposals that threaten private insurance. Compromises will be necessary, so it remains to be seen what legislation emerges and how effectively it addresses the basic problems of the US health system.[1]

The central problem is its expense. Health care in the US is about twice as expensive per capita as in other developed countries–nearly 17 percent of US GDP in 2008–and its costs are rising faster. High costs partly account for another huge health care problem–nearly 50 million people are uninsured, and the number is rapidly increasing. Economists say that the main reason for high costs is the ever-expanding use of expensive kinds of diagnosis and treatment, such as new drugs, diagnostic tests, imaging methods, and surgical procedures. Physicians in most other advanced countries have access to virtually the same resources, but use them less.

This difference is partly explained by a higher proportion of specialists in the US, who rely more than primary care physicians on expensive technical procedures for their livelihood, and in general are much more highly paid than primary care physicians–one reason why primary care doctors are now in short supply. The American College of Physicians attributes much of the high cost of the US health system to its relative excess of well-paid specialists and lack of primary care doctors.

There are also much greater financial incentives in the US to use technology, since health insurers pay doctors and clinical facilities most of what they charge for such services. In most advanced countries with universal coverage, the government determines how medical expenses are reimbursed, and the income of health care providers from technical services is therefore more modest. Also, relatively more practicing physicians in those countries are paid salaries, and relatively more hospitals (where most advanced technology is concentrated) are controlled by government budgets. This limits the availability and use of expensive technology.

Another very important but often overlooked reason for greater health expenditures in the US is that, more than in any other advanced country, large parts of the system are owned by investors. As a result, the entire system behaves like a profit-driven industry, as I described two years ago in my book A Second Opinion.[2] The commercialization of our health system dates back only a few decades, but its consequences are profound. Investors now own about 20 percent of nonpublic general hospitals, almost all specialty hospitals, and most freestanding facilities for ambulatory patients, such as walk-in clinics, imaging centers, and ambulatory surgical centers. These medical care businesses, like other businesses, need profits to satisfy their investors, and for this purpose they use marketing and advertising, directed at physicians and the general public.

To remain competitive, many not-for-profit hospitals promote their bottom line just like their for-profit counterparts, vigorously advertising their facilities and services to the public. No other health care system is as focused on generating income as ours, and in no other country is medical care marketed and advertised so aggressively, as if it were just another commodity in trade. This increases health costs, while hospitals concentrate on the delivery of profitable, rather than effective, services. It also favors those who can pay over those who need medical care but can’t afford it.

The behavior of US physicians has been changed by the commercialization of medical care, and this too has increased costs. US medical practice has traditionally relied on fee-for-service, which has always given it some of the attributes and incentives of a business. However, the American Medical Association (AMA) maintained for many years that medical practice was a profession, not a business. The AMA’s ethical guidelines therefore advised physicians to limit their income to reasonable earnings from the care of patients, and to refrain from advertising and from entering financial arrangements with drug and device manufacturers. Those restrictions were lifted after the US Supreme Court decided in 1975 that lawyers, and by extension members of other professions, including physicians, are engaged in interstate commerce and therefore must be subject to antitrust law (from which they had largely been exempt).[3]

This decision had an enormous effect on the medical profession, but its consequences have received relatively little public attention. Although the courts did not initiate the commercialization of medicine, they certainly accelerated it and gave it legal justification. In 1980, after medical organizations lost some costly antitrust trials, in which they were accused of such offenses as limiting doctor fees or denying staff privileges, the AMA changed its ethical guidelines, declaring medicine to be both a business and a profession. This lowered the AMA’s barriers to the commercialization of medical practice, allowing physicians to participate in any legal profit-making business arrangement that did not harm patients.

Nearly a half-century ago, Stanford economics professor Kenneth Arrow, later a Nobel laureate, convincingly argued that medical care cannot conform to market laws because patients are not ordinary consumers and doctors are not ordinary vendors.[4] He said that sick or injured patients must rely on physicians in ways fundamentally different from the price-driven relation between buyers and sellers in an ordinary market. This argument implied that, contrary to the assumptions of antitrust law, market competition among physicians cannot be expected to lower medical prices. And since physicians influence decisions to use medical services far more than patients do, the volume and types of services provided to patients–and hence total health costs–need to be controlled by forces other than the market, such as professional standards and government regulation. But Arrow’s argument was largely ignored in the rush to exploit health care for commercial purposes that ensued after the passage of Medicare and Medicaid in 1965.

The effects of investor ownership on health costs are perhaps most evident in the US private insurance system, which covers about 170 million people under age sixty-five–most of them through employment-based private plans. The great majority of private health insurers today, such as Aetna and Cigna, are investor-owned businesses. Most of these were established just a few decades ago, when–as a result of the rapid expansion of employment-based insurance–huge amounts of money began to flow into health care, creating profitable opportunities for investors.

Profits and management expenses take at least 10 to 20 percent of the premiums charged by investor-owned plans, including the costs of selecting those they will insure, whereas the overhead costs of Medicare–a government-run insurance plan covering everyone sixty-five and older–are about 3 percent. When private insurance companies provide coverage for Medicare patients (as in the Medicare Advantage plans), they cost the US government about 13 percent more than standard Medicare coverage.

In comparison with public insurance, a much smaller fraction of private insurance premiums goes to the actual provision of care, and the cost of providing acceptable care for those under sixty-five is probably much higher than if the same population were covered by Medicare. The private US health insurance industry has revenues from premiums of at least $500 billion, so its business overhead and profits add many billions to the cost of health care. Furthermore, the overhead costs of physicians and hospitals, whose offices must deal with the red tape of multiple private insurance companies when billing and collecting for services, add substantially to the expense these insurers inflict on the US system.

When considered in the light of what has been said about health costs, the proposals now being debated in Washington seem to be missing the main target. They will expand insurance coverage in the short term, which is certainly needed, but they will create a system even less affordable than at present.

Consider, first, the health proposals made in late February by President Obama in his budget message (most of which were also part of his campaign platform). He stressed the need to cover the uninsured and reduce the costs of health insurance. He suggested that people should not be locked into their jobs just to secure health coverage, that they should have a choice of health plans and physicians, and should be able to keep their employment-based plans if they wished, but should have other options. To reduce costs he urged elimination of high administrative expenses, unnecessary tests and services, and other inefficiencies. He also advocated more use of electronic records and the development of data on the effectiveness of specific medical interventions. He expected that these measures would not only improve the reformed system but also help it to pay for itself and maintain “fiscal sustainability.”

The coverage problem had already been partially addressed through the Recovery Act of 2009, signed by the President on February 17, which provides tax credits for the recently unemployed to help them keep their health insurance. Coverage had been increased further by separate legislation reauthorizing the Children’s Health Insurance Program (CHIP), which includes funds to insure an additional four million children under Medicaid–mainly children from poor families.

The Recovery Act also provides funds to improve the health care system and control costs. It authorizes $19 billion to support computerizing health records and about $1 billion for preventive public health programs (such as control of smoking and obesity), as well as community clinics and case management. As he said in his budget message, Obama believes that these initiatives will in the long run result in more efficient and less expensive care, although many people would remain uninsured. So beyond the already enacted measures, the President requested a reserve fund of more than $630 billion over ten years for health reform, most of which would expand and improve health insurance coverage.

The President proposed to finance half of his health expenditures over the next ten years through increased taxes on the wealthy, and half through savings from improved medical care. He also proposed to save money by reducing excessive payments to private insurers who cover Medicare beneficiaries (Medicare Advantage plans); by reducing drug prices and encouraging the use of generics; and by curtailing fraudulent billing practices.

These objectives are laudable, but as many knowledgeable authorities–including the Congressional Budget Office–have pointed out, there is very little evidence that the President’s initiatives would actually produce substantial savings. Whatever improvements these measures may make in the quality and efficiency of care–and they could well be significant–they are unlikely, over the next ten years, to generate the $300 billion in savings assumed by the President’s budget. And even if such savings were to be realized, most health economists believe that universal coverage would cost over twice what Obama allocated in his budget, and that does not count the cost of medical inflation.

The President apparently wants to achieve nearly universal coverage now, hoping to deal with the cost problem later. That probably explains why he invited representatives of the health industry to the White House on May 11. According to the White House, the meeting was a “watershed” event that resulted in a pledge from industry officials to reduce costs by $2 trillion over the next decade. But leaders of the American Hospital Association and the private insurance industry told The New York Times a few days earlier that a specific amount of savings had not been promised, and that the savings would be more gradual. This episode is best described as part of the industry’s strategy to appear supportive, more by words than action, hoping thereby to fend off legislation that would seriously threaten its interests. To facilitate passage of health reform, the President solicits the health industry’s support, but he must know this will require making compromises with vested interests. He also must know that health care businesses cannot be much interested in reducing expenditures that are their income.

The President no longer insists that people under sixty-five whose income is too high for Medicaid should have the option of buying public insurance, although that was part of his campaign platform and Secretary of Health and Human Services Kathleen Sebelius says he still favors it. Representative Pete Stark, the California Democrat who chairs the House Ways and Means Health Subcommittee, strongly supports this idea. Such a public insurance option is strongly opposed by the private insurance industry and by some influential legislators like Iowa Republican Senator Charles Grassley, who see it as unfair competition and the opening wedge of a move toward the ultimate replacement of private plans with a government-operated insurance system. The industry and its allies have so far been emphatic that they will not agree to a reform plan that offers the choice of public insurance.

A compromise has been suggested by Senator Charles Schumer in which the public insurance option is supported entirely by premiums and co-payments and administered by an independent agency enforcing the same rules that regulate the private plans. Whether this, or any other, version of the public option would satisfy industry’s concerns is not clear. The private insurance industry has made clear its willingness to compromise on a proposal that subsidizes expanded coverage and improvements in medical care, provided that the legislation mandates private coverage for all those under sixty-five not already covered by a government program. The private insurance industry might even accept a requirement that private insurers offer insurance to all applicants without increasing premiums to those with preexisting illnesses, provided that insurers are allowed to set rates based on age and other demographic factors. The insurance industry’s conciliatory public position may be concealing what will ultimately be its usual resistance to any policy threatening its current stranglehold on the under-sixty-five health insurance system. It will be interesting to see how these issues are resolved. As the May 11 meeting at the White House suggests, the administration does not want a direct confrontation with vested interests and probably will settle for arrangements the insurance industry suggests.

In seeking a consensus, Obama’s health reform policies do not address the central causes of rising costs, and propose nothing likely to have much effect on them. He does not mention the ways that investor ownership and the fee-for-service payment system provide incentives for increasing costs. Nor do his policies recognize as a major problem the fragmented, entrepreneurial organization of a medical care system that is dominated by specialists and is deficient in primary care doctors. And yet reforms that do not address these problems cannot produce an affordable or sustainable system.

In many respects, Obama’s proposals resemble the widely acclaimed reforms enacted three years ago under Governor Mitt Romney in Massachusetts. That initiative has achieved wider insurance coverage in the state but has not challenged the private insurers or made any changes in the delivery of medical care, which is among the most expensive in the country. Consequently, while federal funds from the Recovery Act may keep the Massachusetts plan alive for the time being, the state is now confronting cost problems that could bankrupt the entire program. Like Obama, Massachusetts lawmakers decided to begin by expanding coverage, apparently hoping to control costs later on.

Five congressional committees, two in the Senate and three in the House, are working on health care proposals, but to judge from the advice they are getting and from comments in the media by members of these committees, the resulting legislation is unlikely to go beyond the expanded coverage and the marginal improvements in the existing medical care delivery system proposed by Obama. Max Baucus, Democrat from Montana, chairman of the influential Senate Finance Committee, released a white paper last November outlining a reform plan largely resembling the President’s. There is little evidence in this document of a strong determination to challenge the private insurance plans with a competing public plan, or to make basic changes in the organization and funding of medical practice. Timid legislative tinkering with the current medical care system and a focus on increasing coverage, rather than major reform, are not going to control costs or make much difference in the quality of care.

This is one of the main conclusions of Ezekiel Emanuel’s recent book, Healthcare, Guaranteed. Although its views stand apart from the current consensus, it will get attention from Washington’s policymakers, not least because the author, a physician with clinical training, is the older brother of Rahm Emanuel, Obama’s chief of staff. He is also chair of the Department of Bioethics at the National Institutes of Health and the medical adviser to Peter Orszag at the Office of Management and Budget.

Emanuel shares many of the criticisms of the current system that I have put forward here, including the problems of private insurance and fragmented, fee-for-service medical care. However, he says nothing about the role of investors and commercial behavior in creating these problems, and none of his suggested reforms addresses the lack of primary care doctors. Still, to his credit, he proposes comprehensive reforms in all parts of the system, arguing that incremental changes like those advocated by Obama and Baucus will be ineffective.

Emanuel proposes, first, that everyone be issued a government certificate guaranteeing access to a broad range of health care services, which would be provided through certified, competing private health insurance plans. These plans would be paid by a government agency, with premiums adjusted for the degree of risk estimated for each patient. The plans would be required to accept everyone regardless of preexisting medical conditions. They would then organize integrated teams of physicians and other health professionals to provide the guaranteed care. Hospitals, selected by the doctors and their patients, would be reimbursed by the plans. Employment-based insurance would disappear, to be replaced by increased wages for employees. Medicaid would also end and Medicare would be gradually phased out, to be replaced by membership in the new national system. Individuals would be free to buy alternative or supplemental services at their own expense, but these costs would not be tax-deductible.

Emanuel’s proposed system would be funded by a dedicated, VAT-type of consumption tax, the rate to be set by Congress. The amount collected would in effect limit total federal expenditures on health. Costs would also be moderated by a more rational use of expensive technology, based on the recommendations and research findings of a federally supported Institute for Technology Outcomes and Assessment. A National Health Board would oversee the operation of the entire system, monitor and report on the performance of the plans, and determine the risk-adjusted per capita payments to them.

Apart from the question of its political chances, how should this proposal be judged? In my view it has much to commend it, but is seriously flawed by its dependence on competing, for-profit private insurance plans to reorganize and manage the medical care delivery system, and to determine the reimbursement of physicians and hospitals. It recalls the “managed care” era of the 1990s, when, in an effort to control costs and maximize profits, the HMOs restricted access to specialists and hospitals and regulated physicians’ use of technical procedures, causing many patients and physicians to rebel against them. As that experience has shown, insurers should not make decisions about the use of medical resources, whether the insurers are private or public. Such decisions should be left to physicians and their patients–provided, of course, that there is appropriate accountability, and public mechanisms are in place for controlling total expenditures and the prices paid for services.

Emanuel is right in wanting to reform the present insurance system, but he is mistaken in thinking that it should be replaced by regulated competition among private, for-profit insurers. The experience of the last few decades with such insurers–Medicare Advantage plans are a case in point–shows that they add costs without commensurate benefit. Private, investor-owned insurance plans are a failed experiment and should be phased out or marginalized.

The logical alternative would be a universal insurance plan administered by the government and funded by taxes–some sort of “single-payer” arrangement, which would eliminate paying for the profits and administrative expenses of private insurance middlemen. Emanuel admits that a single- payer system would save a lot of money, probably at least $120 billion per year, but he fears single-payer plans, and argues against them. He says that they do little or nothing to improve the quality or efficiency of care, while exposing the system to the risks of government meddling, rationing, and unpredictable financial support.

The obvious response to those criticisms is that single-payer plans concern the method of insurance and not the delivery of medical care. Medicare, for example, is a single-payer system in which medical care is privately delivered, with a minimum of government interference. The medical care delivery system could be reformed and reorganized to control costs and improve quality while still being funded through a single payer plan.

That solution, in fact, is one that I proposed two years ago in A Second Opinion. It would include a single public payer that guaranteed comprehensive health care for all, funded by a progressive tax whose proceeds would be dedicated to medical care. This insurance and funding plan would be combined with a delivery system, overseen by a public agency but managed entirely on a not-for-profit basis by privately organized doctors and hospitals. The delivery of care and the use of health resources would be the responsibility of organized multispecialty groups of salaried physicians and other health professionals, which would include adequate numbers of primary care doctors.

Multispecialty group practice with salaried physicians has many advantages for the delivery of low-cost, high-quality care, in which the different medical services needed by a patient are effectively integrated. Evidence for these advantages, as well as the problems faced by group practice in the current system, are thoroughly discussed in a book edited by Alain C. Enthoven and Laura A. Tollen.[5] Despite the problems, a few large multispecialty groups have managed to thrive–for example, the Mayo Clinic, Kaiser-Permanente, Marshfield, Geisinger, Scott-White, and Lahey. Patients at these groups are covered by a variety of insurance plans, public and private. They receive high-quality care by integrated teams of physicians, primary care doctors, and specialists, who are paid mainly by salaries.

The Mayo Clinic, for example, has been very successful as a large, private, not-for-profit, self-governing organization, in which the participating physicians elect medical leaders who set professional standards, hire and fire staff, and determine salaries. I envision a system that would encourage the development of many smaller community-based group practices of this kind, and would help them survive, with subsidies if needed. These groups would be certified by a new central health agency, which would set guidelines for salaries and administrative policies.

As in Emanuel’s plan, total costs would be limited by the amount of money collected through a health tax, but I favor a progressive, income-related tax rather than a VAT. Deci-sions on the use of available resources would be the responsibility of physicians, who would be helped, but not controlled, by clinical guidelines and assessments of technology. Hospitals and other facilities would be not-for-profit and would be paid through the central health agency, but the choice of these facilities would be a private decision made by doctors and their patients.

Congressman John Conyers of Michigan has introduced a single-payer proposal (HR 676) that would pro- vide universal health care through a Medicare-like public insurance system with private, nonprofit providers. Although his bill now has many cosponsors in the House, it remains held up in committee and is unlikely to be part of any legislation emerging from the 111th Congress. A single-payer system, despite its many advantages over the present insurance system, and despite its growing public acceptance, is clearly “off the table” in current legislative discussions. At the start of the public hearing of the Senate Finance Committee on May 5 and 12, Senator Baucus insisted that he was “open” to all views; but among the twenty-eight invited witnesses, no single-payer advocate was allowed to testify. In fact, Baucus has repeatedly said that the legislative debate would not consider a single-payer option.

Neither my proposal, nor Emanuel’s, nor Conyers’s, nor any other plan that starts with the elimination of private employment-based insurance and depends largely on public funding stands much of a chance of being enacted now. It would be too great a change, and it would threaten insurance companies and other powerful vested interests that influence Congress. The same is true of any major reorganization of medical care that phases out fee-for-service practice in favor of nonprofit multispecialty groups of salaried physicians and dampens the commercial fire that has converted US medical care into an ever-expanding profit-seeking industry.

As bad as they already are, things will have to get still worse before major reform becomes politically possible. The legislation likely to emerge from this Congress will not control–and will probably even exacerbate–the inflation of costs. But sometime in the not-too- distant future, health expenditures will become intolerable and fundamental change will at last be accepted as the only way to avoid disaster. When that time arrives, the opportunity to enact real health reform will finally be at hand.

Notes

[1]I briefly summarized my view of the health system’s problems in an earlier commentary on the McCain and Obama campaigns, but an assessment of the legislative remedies now being discussed requires a deeper analysis of what’s wrong with US health care. See “McCain, Obama, and the National Health,” The New York Review, November 6, 2008.

[2]A Second Opinion: Rescuing America’s Health Care: A Plan for Universal Coverage Serving Patients over Profit (PublicAffairs, 2007).

[3]Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975).

[4]Kenneth J. Arrow, “Uncertainty and the Welfare Economics of Medical Care,” The American Economic Review, Vol. 53, No. 5 (December 1963).

[5]Toward a 21st Century Health System: The Contributions and Promise of Prepaid Group Practice (Jossey-Bass, 2004).

Obama has been supportive of a public option, but how do you solve the healthcare problem when you fail to deal with its root?

By Bernie Sanders
Opinion
Christian Science Monitor
from the June 16, 2009 edition

Washington – President Obama has indicated he wants a healthcare bill on his desk sometime around October, before we worry about timetables, however, we as a nation have to answer two very fundamental questions.

First, should all Americans be entitled to healthcare in the same way we respond to other basic needs such as education, police, and fire protection? Second, if we are to provide quality healthcare to all, how do we accomplish that in the most cost-effective way?

The answer to the first question is pretty clear, and one of the reasons that Barack Obama was elected president. Most Americans believe that all of us should have healthcare coverage, and that nobody should be left out of the system. The real debate is how we accomplish that goal in an affordable and sustainable way.

To me, the evidence is overwhelming that we must end the private insurance company domination of healthcare in our country and move toward a publicly funded, single-payer, Medicare-for-all approach.

Our current private health insurance system is the most costly, wasteful, complicated, and bureaucratic in the world. But in America, the people who have to navigate that maze are the lucky ones. Today, 46 million people have no health insurance and even more are underinsured with high deductibles and co-payments. At a time when 60 million people, including many with insurance, do not have access to a medical home base, more than 18,000 Americans die every year from preventable illnesses. That is six times the number who died in the 9/11 terrorist attacks.

Despite the fact that we spend almost twice as much per person on healthcare as any other country, our healthcare outcomes lag behind many other nations. According to the World Health Organization, the United States ranks 37th in terms of health system performance and we are far behind many other countries in terms of such important indices as infant mortality, life expectancy, and preventable deaths.

The main reason we get such bad results is that the function of private health insurance companies is not to provide quality healthcare for all, but to make huge profits for those who own the companies. With thousands of different health benefit programs designed to maximize profits, private health insurance companies spend an incredible 30 percent of each healthcare dollar on administration and billing, exorbitant CEO compensation packages, advertising, lobbying, and campaign contributions. Public programs like Medicare, Medicaid, and the department of Veterans Affairs are administered for far less.

In recent years, while we have experienced an acute shortage of primary healthcare doctors as well as nurses and dentists, we are paying for a huge increase in healthcare bureaucrats and bill collectors. Over the past three decades, the number of administrative personnel has grown by 25 times the number of physicians.

While healthcare costs are soaring, it should surprise no one that profits of private health insurance companies are more than keeping pace.

From 2003 to 2007, the combined profits of the nation’s major health insurance companies increased by 170 percent. And, while more and more Americans are losing their jobs and health insurance, the top executives in the industry are receiving lavish compensation packages.

It’s not just William McGuire, the former head of United Health, who several years ago accumulated stock options worth an estimated $1.6 billion, or Cigna CEO Edward Hanway who made more than $120 million in the past five years. The reality is that CEO compensation for the top health insurance companies now averages $14.2 million.

The president has been supportive of a public option – a plan that people could opt into if they are uninsured or don’t like their private coverage. But the situation is extremely fluid. How do you get to the root of a problem when you fail to take on the private health industry?

The time is now for our nation to address the most profound moral and economic issue we face. The time is now for our country to join the rest of the industrialized world and provide cost-effective, comprehensive, quality healthcare to every man, woman, and child in our country. The time is now to take on the powerful special interests in the insurance and pharmaceutical industries and pass a single-payer national healthcare program.

Bernie Sanders is an independent senator for Vermont and a member of the Senate Health, Education, Labor and Pensions Committee.