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They Know What’s in Your Medicine Cabinet

They Know What’s in Your Medicine Cabinet

How insurance companies dig up applicants’ prescriptions–and use them to deny coverage

by Chad Terhune
Business Week
July 23, 2008

That prescription you just picked up at the drugstore could hurt your chances of getting health insurance.

An untold number of people have been rejected for medical coverage for a reason they never could have guessed: Insurance companies are using huge, commercially available prescription databases to screen out applicants based on their drug purchases.

Privacy and consumer advocates warn that the information can easily be misinterpreted or knowingly misused. At a minimum, the practice is adding another layer of anxiety to a marketplace that many consumers already find baffling. “It’s making it harder to find insurance for people,” says Jay Horowitz, an independent insurance agent in Overland Park, Kan.

The obstacle primarily confronts people seeking individual health insurance, not those covered under an employer’s plan. Walter and Paula Shelton of Gilbert, La., applied to Humana (HUM) in February. They were rejected by the large Louisville insurer after a company representative pulled their drug profiles and questioned them over the telephone about prescriptions from Wal-Mart Stores (WMT) and Randalls, part of the Safeway grocery chain, for blood-pressure and anti-depressant medications.

Mental Health Is a Red Flag

Walter Shelton, a 57-year-old safety consultant in the oil and gas industry, says he tried to explain that the medications weren’t for serious ailments. The blood-pressure prescription related to a minor problem his wife, Paula, had with swelling of her ankles. The antidepressant was prescribed to help her sleep–a common “off-label” treatment doctors advise for some menopausal women. But drugs for depression and other mental health conditions are often red flags to insurers.

Despite his efforts to reassure Humana, the phone interview with the company representative “just went south,” Walter recounts. He and his wife remain uninsured.

“I want to know what’s in there if there’s a black mark against us,” Walter says. Paula, 51, adds: “We can’t get health insurance because we’re taking medications that were prescribed by our doctors. I don’t think that’s right.”

A spokesman for Humana says the company uses “data regarding pharmacy history as part of our assessment process.” But he adds that the insurer has a policy of not commenting on particular cases, such as the Sheltons’ failed application.

FTC Investigation

Traditionally, applicants have been asked to provide insurers with a description of past illnesses. About 30% are deemed uninsurable because of their histories, according to industry veterans. Prescription profiles could add another hurdle, making it especially difficult for the 47 million Americans who lack insurance to acquire coverage. Some 18 million people are now covered by individual policies.

Most consumers and even many insurance agents are unaware that Humana, UnitedHealth Group , Aetna (AET), Blue Cross plans, and other insurance giants have ready access to applicants’ prescription histories. These online reports, available in seconds from a pair of little-known intermediary companies at a cost of only about $15 per search, typically include voluminous information going back five years on dosage, refills, and possible medical conditions. The reports also provide a numerical score predicting what a person may cost an insurer in the future.

An investigation last year by the Federal Trade Commission found that the two companies supplying these pharmacy profiles–MedPoint and IntelliScript–violated federal law for years by keeping the system hidden from consumers. But the FTC has merely required disclosure if prescription information causes denial of coverage or some other adverse action; the agency imposed no penalties. MedPoint and IntelliScript say they are now fully complying with the FTC’s order.

Two-thirds of all health insurers are using prescription data–not only to deny coverage to individuals and families but also to charge some customers higher premiums or exclude certain medical conditions from policies, according to agents and others in the industry. Some carriers are also using the data to charge small employers higher group rates. Separately, some 20% of life insurance companies are relying on prescription histories when reviewing applications, according to experts in that business.

Designed for Emergency Use

“The fundamental breakthrough is that this is the first time ever we have had near-instantaneous access to objective, third-party information,” says Tia Goss Sawhney, an actuary and consultant to the health insurance industry. She says she tested the prescription profiles last year while designing a new insurance policy for American Community Mutual Insurance in Livonia, Mich.

IntelliScript says it sells prescription data to more than 75 health, life, and long-term-care insurance companies. Milliman, a large Seattle consulting firm, acquired the company in 2005. A rival service, MedPoint, has been offered by UnitedHealth’s Ingenix data-mining unit since 2002. MedPoint says it has access to more than 5 billion pharmacy claims.

The data were originally sought to help inform doctors treating patients, especially in emergencies. But that use hasn’t widely caught on, and today the information is primarily employed by insurance companies.

MedPoint and IntelliScript buy the data they disseminate mostly from another group of middleman companies known as pharmacy-benefit managers (PBMs). Large PBMs, such as Medco Health Solutions, provide services to insurers and employers. In playing that role, the PBMs gain broad access to prescription information from drugstores. Some retail chains operate their own PBMs. No privacy laws or other regulations prevent the gathering of this data, according to the FTC.

Fodder for Denials

In its marketing to the insurance industry, MedPoint says prescription histories help “identify high-risk individuals, reduce costs, lower loss ratios, and increase revenue.” Despite that pitch, John Stenson, an Ingenix executive who helps oversee MedPoint, says he doubts that his company’s information causes insurers systematically to reject more people for coverage. “This is about insurance companies getting at the information quickly and clearly,” he says.

BlueCross BlueShield of Tennessee, the state’s biggest insurer, has used MedPoint since April 2007, ordering prescription profiles for about 75% of individual applicants. Since February, when the federal disclosure requirement went into effect, BlueCross says it has notified 1.5% of applicants that their prescription reports have resulted in denial or other negative action. But the company acknowledges that it doesn’t alert consumers if the profiles lead to requests for more medical information that result in subsequent denial. “This doesn’t make it any harder for consumers,” Kevin Ashpole, director of individual products at Tennessee BCBS, maintains. “It ensures the right decision is made.”

But skeptics worry that more people inevitably will be turned down for coverage as a result of growing reliance on prescription histories. Most consumers would be shocked to learn that information about their past prescriptions is being bought and sold–and could come back to haunt them, says Gary Claxton, director of the Health Care Marketplace Project, a research organization run by the Kaiser Family Foundation in Washington, D.C. Rejection by one insurer commonly becomes grounds for denial by others, and the industry has ready access to who has been turned down through a separate database.

Is Disclosure Enough?

When applying for insurance, individuals routinely sign paperwork allowing providers to review their medical history. To comply with the privacy provisions of the federal Health Insurance Portability & Accountability Act, most insurers have now added a reference to prescription history in the lengthy fine print consumers are instructed to read.

The FTC forced the industry to begin disclosing the use of prescription information under a different federal statute, the Fair Credit Reporting Act. Insurers now are required to tell applicants the address of the company that assembled the data. Copies of prescription reports are supposed to be available to consumers at no charge under federal law.

“As soon as we were alerted by the FTC, we cooperated fully, and we began sending out notices to [insurance industry] clients of their obligations” under federal law, says Mark Franzen, managing director of IntelliScript. “This wasn’t the result of a consumer complaint or privacy being violated.” The FTC confirms that its investigation didn’t stem from consumer concern but won’t say what did spark the inquiry.

Insurance companies say that they use prescription data responsibly and that it isn’t the sole basis of decisions to deny coverage. A spokesman for UnitedHealth (UNH) adds that when there are discrepancies between the data and information provided directly by applicants, “the applicant is contacted and given the opportunity to provide additional information.”

But privacy watchdogs and some insurance agents question how insurance carriers can guarantee that they are obtaining accurate prescription histories, especially for people with highly common names. The skeptics also worry about whether legitimate off-label use of prescription drugs by patients such as Paula Shelton could hurt some applicants unfairly.

IntelliScript’s Franzen says it’s the responsibility of the insurance company to deal with issues such as off-label use. He says IntelliScript has reported the wrong person’s drug file in several instances but that mistakes occur in fewer than 1 in 10,000 cases. MedPoint says it has had only “two cases of matching errors in more than 2 million queries.” Most searches include full name, date of birth, Social Security number, and address.

“Is it perfect? No,” Franzen says. “But it’s pretty darn good.”

Can’t Get No Health Care Satisfaction

by Pat LaMarche
Bangor Daily News
Wednesday, July 30, 2008

A Fox News anchor said Saturday that if Mick Jagger was from the United States he’d finally qualify for Medicare.

She’s kidding — right?

The anchor made a pretty lame attempt at highlighting the rock star’s advancing age. She did, however, do a good job of pointing out how backward the U.S. health care system is.

See, Mick Jagger’s from the United Kingdom and he’s had universal government medical benefits since he was five. That’s because 60 years ago the United Kingdom instituted their National Health Service.

George Bernard Shaw once said that “England and America are two countries separated by a common language.” And that distinctive terminology doesn’t just lend itself to cute little linguistic differences like how they say “lorry” when we say “truck.”

There is also the language used in the U.S. that doesn’t have corresponding lingo in the UK. One example of jargon unique to the U.S. is the term “redlining.” In the U.S., redlining is when an insurance company denies you health care coverage because of a pre-existing condition. In the UK, redlining doesn’t exist.

In fact, according to Health Affairs, “the number one cited health policy journal devoted to publishing original, peer-reviewed research and commentary,” medical redlining is quantified as the “denial rate among applicants for non-group coverage.” Health Affairs lists conditions frequently redlined and the rates at which people are denied access to further coverage. Two of the patient subsets most commonly redlined are breast cancer survivors, 43 percent of the time and HIV patients 100 percent of the time.

There’s a neat organization in the world. It’s called the Organization for Economic Co-operation and Development, OECD. The group consists of 30 member countries that embrace the notion of “democracy” and support a “free market” economy. It used to be called the Organization for European Economic Cooperation and it began as a result of the Marshall Plan – America’s effort to rebuild Europe after World War II. The OECD compiles statistics: Statistics that illuminate the economic conditions and comparatives among their representative democracies.

OECD statistics state that in 2003, the per capita out-of-pocket expenses for healthcare in the U.S. were $722; while in the UK they were only $208.

The Brits aren’t just saving money, they’re living longer. Again, according to OECD, folks in the UK live about 11 months longer than folks in the U.S. This means that in Mick Jagger’s lifetime, with numbers extrapolated for inflation, the average resident of the UK would have saved somewhere around $30,000 over their U.S. counterpart. Think of it as money they could use to live on during that extra year of life.

But that’s just the difference in out-of-pocket expenses. Out-of-pocket costs are nothing compared with a nation’s overall medical expenses. Here the numbers get really staggering.

Again, according to the same smart data-gathering agency that we created under the Marshall Plan, the 2005 per capita cost for health care in the U.S. was $5,290 while in the UK it was only $2,230. That’s $3,060 per person per year. Over the course of a lifetime that sort of money adds up. In simple terms it means that Mick Jagger’s lifetime health needs will cost his society about $180,000 less then our own John Mellencamp will cost us.

All together, between out-of-pocket and regular health expenditures, some London rocker’s health care is almost a quarter of a million dollars cheaper — again adjusted for inflation — than our rock star from Seymour, Ind.

But those expenses are national averages. Ordinary people aren’t as capable of making up the difference as rock stars are. Statistics show that middle income folks still chip in their share of health care costs but go without needed services.

According to a 2002 survey of U.S. taxpayers earning between $25,000 and $50,000 per year conducted by National Public Radio, the Kaiser Family Foundation and Harvard’s Kennedy School of Government, 22 percent of middle class Americans postponed receiving care. Twenty-three percent had problems paying for the care they did receive and 13 percent did not get necessary drug prescriptions filled.

Remember Mick Jagger singing, “Mother’s little helper?” In the U.S. it isn’t just a “drag” getting old — it’s also a little less likely and enormously more expensive.

Pat LaMarche of Yarmouth is the spokesperson for the Evergreen Mountain Resort & Casino referendum campaign. She’s the author of “Left Out in America” and may be reached at PatLaMarche@hotmail.com.

Will America enact national health insurance in 2009?

A video editorial by Dr. Quentin Young, Physicians for a National Health Program

Transcript of Dr. Youngā€™s remarks:

By Quentin Young

The 43rd anniversary of the passage of Medicare is an appropriate time to examine just why this single-payer government-run national health insurance has not been expanded to everybody. Despite its deficiencies, Medicare serves the elderly remarkably better than the confusion of for-profit private insurance schemes that have steadily disserved the American patient.

Of course, the failure to have fundamental health care reform has been the result of the awesome power of the industry, which profits from the present arrangements ā€” big pharma, for-profit hospitals, and health insurance giants. In addition to the increasingly frustrated ā€œbeneficiaries,ā€ Americaā€™s physicians have suffered under the health system organized to assure returns to investors.

Doctors have, at long last, realized that there is something worse than government: corporate-run health care.

Heretofore the prevailing political and health policy wisdom has been that expansion of Medicare to everybody was simply politically unfeasible. Billions of dollars are ready to be spent resisting health reform; recall ā€œHarry and Louiseā€ in 1993.

Recent months have seen a huge shift in public positions on single-payer health care. In a recent AP poll, 65 percent of the public agreed that the United States should ā€œadopt a universal health insurance program ā€¦ like Medicare that is run by the government and financed by taxpayers.ā€ In January, the American College of Physicians endorsed single payer for the first time as a pathway to universal coverage. In April, the Annals of Internal Medicine published a national survey of physicians indicating that 59 percent of doctors support the adoption of legislation to create national health insurance.

Significantly, on June 23, the U.S. Conference of Mayors, representing cities of over 30,000 people, unanimously endorsed legislation for Medicare for All, H.R. 676.

Could 2009 turn out to be the year this nation takes the leap to enact a national health system?

Thatā€™s my opinion. Iā€™m Dr. Quentin Young, national coordinator, Physicians for a National Health Program.

Happy Birthday Medicare

By Judy Deutsch
Guest Columnist
Sudbury Town Crier
July 23, 2008

July 30th will be Medicare’s 43rd birthday.

And many people across our nation will be celebrating the event by letting their Congressional representatives know that they want to be included, too.

They’ll do so be sending a birthday cake and/or card to their representatives saying, ” Happy Birthday Medicare: Now It’s time for Medicare for all” or “Support HR 676.”

HR 676 is the improved Medicare for all bill introduced in the House by Rep. John Conyers.

This bill provides the only way to achieve quality health care for all U.S. residents at an affordable price to the nation and to individuals.

You must know that overhead costs in the health insurance industry (and the resulting excessive paperwork for health care providers) represent 30 to 40 percent of each healthcare premium dollar, and that Medicare’s overhead costs are far less.

It is past time that our nation stopped ripping off the American people by paying so much for the marketing and advertising of health insurance policies, and for the huge salary packages of health insurance CEOs.

It is past time that our nation acknowledged that the fiduciary responsibility of the health insurance industry is to make profits for its shareholders, not provide quality care for its policy holders.

We individuals need to have a program that provides quality health care at an affordable price for all residents. Our industries need it so that they can be competitive with industries in nations where health care is not privately financed.

The enactment and implementation of H.R. 676 will provide such a program. It will improve the Medicare program that exists and expand its coverage to all U.S. residents.

We would each receive a United States Health Insurance Card and would be entitled to primary care and prevention, inpatient care, outpatient care, emergency care, prescription drugs (which will be bought in bulk at negotiated prices), durable medical equipment, long-term care, mental- health care, the full range of dental services other than cosmetic dentistry, substance-abuse treatment services, chiropractic services, basic vision care and vision correction., and hearing services including hearing aids.

We would be entitled to this care from a licensed clinician anywhere in the United States without paying deductibles, copayments, or coinsurance.

And we would pay for this care by:

* using the federal and state funds currently being used for current health programs,

* a payroll tax of 4.7 percent on all employers and employees,

* a 5 percent health tax on the top 5 percent of income earners and a 10 percent tax on the top 1 percent of income earners,

* a one tenth of 1 percent tax on stock and bond transactions

We would spend less for our health care than we do now. A family of three making $40,000 per year would spend approximately $1,600 per year for health coverage, average employers will spend less for health coverage than they do now, and Physicians for a National Health program has estimated that our nation would save over $286 billion a year in total health care costs.

The Secretary of Health and Human Services would administer this system through a director appointed by the secretary. Under the director, there would be an office of quality control which would conduct annual reviews on the adequacy of medically necessary services and would make recommendations for proposed changes to Congress, the president, and the secretary. And a National Board of Universal Quality and Access would be established to ensure quality, access and affordability.

The director would be charged with making a good-faith effort to create a uniform electronic billing system, including in those areas where electronic billing is not yet established.

Annually, there would be established: an operating budget; a capital expenditures budget, reimbursement levels for providers, and a health professional educational budget, including the continued funding of resident physician training programs. The director would provide regional offices with an annual funding allotment to cover regional global budgets, reimbursements to clinicians, and capital expenditures.

Global budgets of providers would be established through annual negotiations between providers and regional directors.

Private health care insurers would be prohibited from selling coverage that duplicates the benefits provided in this bill, but could sell coverage for additional benefits such as cosmetic surgery and private rooms. Workers displaced from their health insurance industry jobs would be eligible for retraining and first preference for jobs in the new system.

HR 676 has 90 co-sponsors in the U.S. House of Representatives. It has been endorsed by the Kentucky and New Hampshire Houses of Representatives, the New York State Assembly, and by dozens of cities and counties from Baltimore to San Francisco and from Warren County, Tennessee, to majority Republican Rensselaer County in New York.

Recently, the U.S. Conference of Mayors, representing more than 1,000 cities with populations over 30,000, unanimously adopted a resolution in support of H.R. 676. The recent General Assembly of the Presbyterian Church USA proclaimed single payer, universal national health program “the program that best responds to the moral imperative of the gospel,” and the June 2008 General Assembly of the Unitarian Universalist Association endorsed H.R. 676.

So have 34 state AFL-CIO federations, 110 central labor councils, more than 445 union organizations, and international unions.

Recent polls have shown that 59 percent of physicians nationwide now support single-payer and that 65 percent of people believe: “The United States should adopt a universal health insurance program in which everyone is covered under a program like Medicare that is run by the government and financed by taxpayers.”

To do otherwise, is to continue to undermine our nation’s health and its pocketbooks. Just how much longer do we want to spend more than twice as much as any other nation for health care and still be among the highest in infant mortality and among the lowest in longevity

Please send a birthday card to our Rep. Niki Tsongas, asking that she support improved Medicare for all, HR 676.

http://www.wickedlocal.com/sudbury/news/lifestyle/columnists/x1346890415/Deutsch-Happy-Birthday-Medicare

Uninsured left in the lurch

Thousands pour into SW Va. this weekend seeking free health care

By LOUIS LLOVIO
Richmond Times-Dispatch
Monday, Jul 28, 2008

WISE — They have come by the thousands.

They walk through the gates of the fairgrounds, give their most personal information to complete strangers and are ushered off for a battery of tests and procedures.

An expected 3,000-plus residents of Southwest Virginia and neighboring states are here through today for one reason — to get basic medical care they couldn’t otherwise afford.

A crowd began lining up in the wee hours of Friday morning for a coveted spot inside the fences at the Remote Area Medical clinic. Some would wait days for the free service. Some would never get in.

For the majority though, organizers and doctors said, this would be the only time all year they would get medical treatment of any sort.

Remote Area Medical, based in Knoxville, Tenn., has provided medical care for the poor and uninsured in the United States and around the world since 1985.

Since Friday, volunteer doctors, optometrists, pharmacists and dentists have been helping patients during 14-hour days.

Charles Sizemore, a 68-year old retired machinist from Wise County, got in line Friday about 2 a.m. for a basic physical and to get two fillings replaced.

Sizemore raised four children in the area but never had health insurance until he got Medicare when he retired three years ago.

“I wanted to,” he said, leaning against bleachers where patients were being registered as the sun rose over the mountains. “There just wasn’t enough money. I had to take care of my family, and I never made more than $10 an hour.”

All his children have left the area for better-paying jobs, but he’s too old to move, he said playfully.

Turning serious, Sizemore said, “I don’t mean to be ungrateful. I’m glad RAM comes out and does this. But it’s just damned sad that this is the only time most of the people around here are going to see a doctor. It’s a damned shame.”

Teresa Gardner said the RAM event is vitally important.

Gardner is executive director of The Health Wagon, a nonprofit organization that provides health care for the uninsured and underinsured in Southwest Virginia. It is the local organizer for the RAM event.

“The main problem is that these people don’t have access to even the most basic health care because they can’t afford it,” she said. “And those that can afford the insurance, or get it through their companies, can’t afford to pay the co-pays or the prescriptions.”

According to the figures released this year by the U.S. Department of Commerce’s Bureau of Economic Analysis, per-capita personal income in Wise County is $25,330. That’s about $14,000 less than the state average and several thousand less than in the Richmond area. The U.S. personal per capita income is $36,714.

A study by the Southwest Virginia Graduate Medical Education Consortium paints a bleak picture about health in this part of the state. In the study, Southwest Virginia is defined as the 16-locality area between and including Lee County to the west and Bland, Wythe and Carroll counties to the east.

The study found that people living in the region are 26 percent more likely to die from heart disease, 52 percent more likely to die from pneumonia or flu and 28 percent more likely to die from diabetes than other Virginians.

About 25 percent of the area’s residents have no health insurance.

Dr. Ross Isaacs of Charlottesville said numbers such as those are frustrating because most maladies are treatable if caught early enough. Isaacs, who specializes in kidney disease, said something as simple as monitoring blood pressure can help stop most of what ails people and increase life expectancy.

“These people urgently need treatment,” he said, getting visibly angry. “We need to put our resources into fighting” to get people adequate health care in the region.

“This is what we do — we take care of people,” Isaac said. “There isn’t a cash register between me and my stethoscope, nor should there be.”

Of the more than 3,000 people who will come into the fairgrounds this weekend, the majority will be there to see dentists.

About 53 percent of people here have no dental insurance, double the rate for the rest of the state, according to a study titled Health Care in Southwest Virginia. Those who do have coverage have limited choices in dentists.

The Virginia Dental Association in Richmond made the trip with a contingent of dentists and hygienists who set up camp in the middle of the fairgrounds with rows of chairs and trays of equipment. They will take x-rays, fill cavities, make dentures and pull teeth.

By Friday at 2 p.m., almost a thousand patients were waiting on metal seats under an awning to see the dentists. The crowd was muted. A few read books, some wrangled children and a great many smoked.

Dr. Terry D. Dickinson, executive director of the dental association, said the situation in the region is worsening as the price of gas and energy remains high.

“These people need to decide whether they are going to pay the rent or buy groceries for the kids. They’re not thinking about going to the dentist. They are just trying to survive,” he said. “But that they are here tells you how much they need this. Even with $4 gas, these people made the trip.”

RAM organizers expect a record crowd this year, almost double of what they saw in 2000, the first year the expedition came to Wise. The group does a total of 16 expeditions in the U.S.

“You see some of these people coming over and over,” said Dr. Lanny R. Levenson, a Midlothian dentist.

Contact Louis Llovio at (804) 649-6348 or LLLovio@timesdispatch.com.

Unions Back Plan that Could Kill Off Real Health Care Reform

By Kip Sullivan
Labor Notes

If Barack Obama wins the fall election, he will be under more pressure to establish universal health insurance than any president in U.S. history. This will be due not only to public disgust with the current health care system, but to the hard work of organizations dedicated to universal health insurance.

But the most powerful of these groups, including the AFL-CIO and Service Employees (the major Change to Win health care union) are promoting a solution that won’t fix the problem.

Their plan would fatten the insurance industry and make it an even more formidable opponent of true reform than it already is.

If SEIU and the AFL-CIO get their way, the day that all Americans have affordable insurance will be pushed into the unforeseeable future.

The labor-backed plan, which they call “guaranteed affordable choice,” would create a public program like Medicare that would allegedly compete with the nation’s 1,500 insurance companies. Americans would get tax-financed subsidies to purchase insurance from either a private insurance company or the public plan. Competition, which has never worked in the health insurance industry, would magically come to life.

DOUBLE ENDORSEMENT

Oddly, the AFL-CIO and SEIU have also endorsed an entirely different plan: the single-payer solution.

The AFL-CIO’s executive council endorsed the concept in March 2007 by calling for the expansion of Medicare to people of all ages. SEIU endorsed HR 676, a single-payer bill pending in the House of Representatives, at its June 2008 convention.

“Single payer”–the system used in Canada and other countries–gets its name from its most essential feature: One payer, a public agency, replaces the 1,500 insurance companies. It becomes the sole reimburser of clinics and hospitals. That one agency has the authority to set limits on what doctors, hospitals, and drug companies can charge. Patients go to doctors and hospitals of their choosing. The traditional Medicare program is an example of a single-payer system.

The U.S. spends twice as much per person on health care as other industrialized nations. Single payer is the only system that can achieve universal coverage for the same or less money than the nation spends now.

Replacing all those insurance companies and dozens of government programs with one payer slashes the huge costs incurred by doctors, clinics, and hospitals on billing and arguing with insurance companies about how to treat patients. It wipes out what insurers spend on marketing and excessive salaries, and what they take in profits.

The issue that unions are sidestepping is whether the mere presence of a public program in the jungle of private insurance companies would force private insurers to lower premiums without resorting to delaying or denying care to some.

What is more likely to happen is that the insurance industry would “compete” with the public program by rationing the care received by their sicker enrollees, pushing some to sign up with the public program instead.

This would in turn drive the public program’s premiums up and the private premiums down. Eventually the public program would be driven out of the market.

WINDOW DRESSING

The AFL-CIO’s and SEIU’s endorsements of single payer appear to be window dressing. They are putting all their energies into “guaranteed affordable choice.” They do it in their own names, and as members of the Herndon Alliance and the Health Care for America Now coalition, which became public July 8. These coalitions criticize single payer as “not politically feasible.”

SEIU’s track record is even worse than the AFL-CIO’s. Unlike the federation, SEIU President Andy Stern regularly trashes single payer. “I think we need to find a new system that is not built on the back of the government,” he told the Brookings Institute two years ago. “We are going to build an American system because we are Americans.”

Some liberals say they support single payer but won’t work for it because the insurance industry is too powerful to beat. But Stern bases his trash talk on a more baseless and insidious claim–that average Americans oppose single payer.

He says we embrace a hyper-patriotism that causes us to resist adopting good ideas from other countries–even Canada–and are so satisfied with our current insurance companies that we will fight any attempt to replace them.

Stern’s perception is contradicted by many polls and focus groups. A December 2007 AP poll, for example, found that 65 percent of Americans support “a universal health insurance program in which everyone is covered under a program like Medicare that is run by the government and financed by taxpayers.” A poll by ABC News in 2003 found 62 percent in favor.

WHY BACK A BAD PLAN?

Why would the AFL-CIO and SEIU endorse single payer but then, in reality, support a plan that will not cut costs?

Getting officials to answer that question is difficult. Even though they are clearly supporting “guaranteed affordable choice,” representatives of the AFL-CIO, SEIU, and the coalitions they belong to say there’s no need for the rank and file, or the public at large, to understand the differences between the two plans.

This assumption was articulated by Bruce Popper, a member of SEIU 1199-United Healthcare Workers East, from the floor of SEIU’s June convention.

“My local union, my local labor council, and community groups all over in my area are for single payer,” Popper said. “But I’m not going to get bogged down in an endless debate about which plan will work best. We must leave that debate until the day when we can actually enact a plan. That day is the day after our candidate, Barack Obama, wins the White House.”

Nick Unger, AFL-CIO’s health policy analyst, makes the same point. In a recent presentation, he put it this way:

Health care. All you need to know is:

* It costs too much.

* It covers too little.

* It excludes too many.

* And it’s getting worse.

But advocates of “guaranteed affordable choice” have already decided which plan is best and they are communicating their decision to Democrats. The labor-supported coalitions claim credit for having persuaded John Edwards, Hillary Clinton, and Barack Obama to endorse the basic elements of their plan.

Union members have several explanations for why the AFL-CIO and SEIU are promoting a proposal that can’t work and which feeds the health insurance industry, the very industry most dedicated to killing single payer.

A representative of the AFL-CIO, who asked not to be identified, said the federation is divided about how to solve the health care crisis. Apparently the federation’s endorsement of Medicare-for-all merely reflected the executive council’s desire to acknowledge that single-payer advocates existed in their ranks.

Mike Carano, a member of Teamsters Local 348 in Ohio and longtime activist with the state’s Single-Payer Action Network, offered another explanation. “The AFL-CIO and SEIU are pretty close to the Democratic Party,” he said. “The Democrats don’t want to take on the insurance industry. I imagine one way the AFL-CIO and SEIU support Democrats is not to upset Democrats.”

Woolhandler on the ethics of reform

Ethical Questions in the Reform of Health and Medical Care

The President’s Council on Bioethics
June 26, 2008
Chairman Edmund Pellegrino: This afternoon we’re going to look at the ethical questions from the point of view of people who are involved in designing and propagating and thinking about various programs to which we referred.
***
Chairman Pellegrino: I’m going to move ahead and ask each of these panelists to briefly state why they think ā€” I hope this isn’t too aggressive a question ā€” why they think the program that they’re most closely associated with is a morally acceptable one.
Stephanie Woolhandler, M.D: Well, I think that the single-payer proposal is the only ethical one on the table because it’s the only one with proven effectiveness. I think that many of these proposals up here are known to be ineffective. They’ve been tried, and they failed. Perhaps the best you could say about some of them is they’re an experimental treatment. So I just think if we’re concerned about 18,000 deaths each year from lack of health insurance, we’re actually obligated from a moral point of view to go with something that’s proven, which would be some form of nonprofit national health insurance.
Len Nichols, Ph.D.: ā€” my interpretation of Leviticus… In my view, health care has become like food, a unique gift. We absolutely know people will die without it. It was unacceptable to let people starve back then. It’s unacceptable to let people go without health care now. In my view, those are morally equivalent. But what I love about the gleaning metaphor in Leviticus is that it does not say, “Give the same amount of food to every person.” It does not say, “Give all the food to one person who happens to be hungry.” It does not say, “Bring the poor home and cook for them.” It says, “Leave the food in the field, and the poor have to go get it.” So there’s a mutual obligation. There’s a mutual responsibility, and that’s why I see that reflected perfectly in the combination of personal responsibility, including individual mandate to purchase, and shared responsibility, that is, to make it possible for each individual to achieve their own objective.
James Capretta: Well, I think the program I put forward is the ethically appropriate way to proceed for several reasons. First and foremost, the more that financial resources are put in the hands of patients and consumers to make decisions, the more the system is responsive to those patients and consumers. …it’s the most practically plausible and workable approach. …it doesn’t cede to the federal government all centralized control. And, finally, controlling costs is either a matter of efficiency or queuing, in a sense. And market incentives, financial incentives with oversight can get to more efficiency, trying to do things where people decide on their own that this is less valuable than the price we’ve been paying and not doing it anymore.
***
Dr. Schneider: And many of the people have spoken with extraordinary confidence and force and have been quite willing to say that the alternatives to their program are highly unsatisfactory. These arguments are all based on data and empirical evidence and arguments that we are entirely incompetent to evaluate.
Dr. Woolhandler: I don’t understand your point. Why would you be incompetent to evaluate these arguments?
***
Dr. Woolhandler: I’m again just a little amazed at the comment that this group is not prepared to decide on these questions. There are so many IQ points in this room, and people spend so much time thinking about ethics. I mean, the material I present is not rocket science. The Rand study is not rocket science, either. There’s a book about this [holding her fingers about an inch apart] thick that you could probably read in an evening if you want to read it yourself. So I think saying we’re not prepared to decide is actually saying we’re going to step away from a problem that we recognize is very serious and is resulting in 50 deaths today as we meet here and 18,000 deaths a year in the United States.
***
Prof. Lawler: Dr. Woolhandler seemed to have this ethical theory that when it comes to medical care there should be no exchange of money. So co-pays are immoral. Deductibles are immoral. Whereas your other two, to some extent or another, think actually to introduce a bit of cash here is helpful because understanding yourself as a consumer makes the person delivering the product more responsive and introduces choice.
Dr. Woolhandler: I’ve seen people die because of co-payments and deductibles. Co-payments and deductibles were studied in the Rand experiment. They’ve been studied a couple of times in Canada where they’ve introduced small co-payments and deductibles, and they always have the same effect. Rich people are not affected by them a bit. Low-income people get less care. They get less elective unnecessary care. They also get less life-saving and completely necessary care, and that’s the basis on which I think they’re immoral.
***
Prof. Dresser: For Dr. Woolhandler , I’m probably mangling this philosophically, but I think Kant said, “Ought implies can.” And so, you know, I love your idea, and if I were queen of the world or the US I would say, “Okay. Go for it.” But I just wonder, if it’s not realistic in this country, then it’s a placebo. So how do you think we’re going to get from here to where you are politically?
Dr. Woolhandler: Well, I think the argument you’re making is politics is the art of the possible. But I actually disagree with that. I actually think politics is the art of creating the possible, and what’s possible is what people believe is possible.
So who would have believed before Rosa Parks that we would have a civil rights movement and a Civil Rights Act? Who would have believed in the mid-1980s that the Soviet Union was about to collapse?
So you can’t just sit here and say based on what you’re seeing today that no change is possible. We’ve got to create the possible, which I think is a challenge to this group and, you know, partly why I reacted so strongly to the suggestion you couldn’t understand it or come to grips with it.
You have tremendous moral suasion. You have the power as a group to make a statement that universal health care is the only ethical policy alternative and that the only proven way to get universal health care is through nonprofit national health insurance.
If you went public with that, you would be creating the possible. You know, you would be creating the possible and helping people believe that this real change is possible. And when I look at those polls about the American people, the American people say they want national health insurance.
It’s not that the people don’t agree. It’s the insurance industry that’s blocked this from debate. They’ve used their full political power and economic power to block it and, frankly, the pharmaceutical industry, as well. And they’ve always opposed this.
And when I first got in this business I was shocked about the pharmaceutical industry opposing it. Well, it turns out they knew something that the American people just learned later, which is every nation with national health insurance negotiates for price discounts on drugs. They knew that, and they were completely and totally opposed to any sort of national health insurance covering drugs because they were going to get lower prices.
So we’ve got the American people endorsing it. We’ve got some very powerful folks opposing it. We need to get it on the agenda, and (it’s) the one real power you have and you can use it, or you can turn your back and say, “We don’t understand this.” You can use that power to put this on the political agenda.
http://www.bioethics.gov/transcripts/june08/session3.html
continued:
http://www.bioethics.gov/transcripts/june08/session4.html

After the November election, it is expected that the President’s Council on Bioethics will release a report on ethical considerations for reforming health care.
The Council was formed in 2001 in response to the controversy over President Bush’s decision to deny funds for embryonic stem cell research. With a touch of irony for which this administration is famous, many thought that political ethics were compromised in the selection of supposed ethicists who had already expressed biases incompatible with the ability to objectively assess important issues of bioethics. When one of the members of the Council states that they are incompetent to assess the ethical issues in the reform proposals, it does make you wonder.
It is difficult to know what the report will state, but some of the more enlightened members of the Council clearly do understand the moral imperative behind Steffie Woolhandler’s message. It would be nice if their views, based on actual ethical principles, would prevail in the final report. Regardless, it is really Steffie’s message that is important.

Woolhandler on the ethics of reform

Ethical Questions in the Reform of Health and Medical Care

The President’s Council on Bioethics
June 26, 2008

Chairman Edmund Pellegrino: This afternoon we’re going to look at the ethical questions from the point of view of people who are involved in designing and propagating and thinking about various programs to which we referred.

***

Chairman Pellegrino: I’m going to move ahead and ask each of these panelists to briefly state why they think — I hope this isn’t too aggressive a question — why they think the program that they’re most closely associated with is a morally acceptable one.

Stephanie Woolhandler, M.D: Well, I think that the single-payer proposal is the only ethical one on the table because it’s the only one with proven effectiveness. I think that many of these proposals up here are known to be ineffective. They’ve been tried, and they failed. Perhaps the best you could say about some of them is they’re an experimental treatment. So I just think if we’re concerned about 18,000 deaths each year from lack of health insurance, we’re actually obligated from a moral point of view to go with something that’s proven, which would be some form of nonprofit national health insurance.

Len Nichols, Ph.D.: — my interpretation of Leviticus… In my view, health care has become like food, a unique gift. We absolutely know people will die without it. It was unacceptable to let people starve back then. It’s unacceptable to let people go without health care now. In my view, those are morally equivalent. But what I love about the gleaning metaphor in Leviticus is that it does not say, “Give the same amount of food to every person.” It does not say, “Give all the food to one person who happens to be hungry.” It does not say, “Bring the poor home and cook for them.” It says, “Leave the food in the field, and the poor have to go get it.” So there’s a mutual obligation. There’s a mutual responsibility, and that’s why I see that reflected perfectly in the combination of personal responsibility, including individual mandate to purchase, and shared responsibility, that is, to make it possible for each individual to achieve their own objective.

James Capretta: Well, I think the program I put forward is the ethically appropriate way to proceed for several reasons. First and foremost, the more that financial resources are put in the hands of patients and consumers to make decisions, the more the system is responsive to those patients and consumers. …it’s the most practically plausible and workable approach. …it doesn’t cede to the federal government all centralized control. And, finally, controlling costs is either a matter of efficiency or queuing, in a sense. And market incentives, financial incentives with oversight can get to more efficiency, trying to do things where people decide on their own that this is less valuable than the price we’ve been paying and not doing it anymore.

***

Dr. Schneider: And many of the people have spoken with extraordinary confidence and force and have been quite willing to say that the alternatives to their program are highly unsatisfactory. These arguments are all based on data and empirical evidence and arguments that we are entirely incompetent to evaluate.

Dr. Woolhandler: I don’t understand your point. Why would you be incompetent to evaluate these arguments?

***

Dr. Woolhandler: I’m again just a little amazed at the comment that this group is not prepared to decide on these questions. There are so many IQ points in this room, and people spend so much time thinking about ethics. I mean, the material I present is not rocket science. The Rand study is not rocket science, either. There’s a book about this [holding her fingers about an inch apart] thick that you could probably read in an evening if you want to read it yourself. So I think saying we’re not prepared to decide is actually saying we’re going to step away from a problem that we recognize is very serious and is resulting in 50 deaths today as we meet here and 18,000 deaths a year in the United States.

***

Prof. Lawler: Dr. Woolhandler seemed to have this ethical theory that when it comes to medical care there should be no exchange of money. So co-pays are immoral. Deductibles are immoral. Whereas your other two, to some extent or another, think actually to introduce a bit of cash here is helpful because understanding yourself as a consumer makes the person delivering the product more responsive and introduces choice.

Dr. Woolhandler: I’ve seen people die because of co-payments and deductibles. Co-payments and deductibles were studied in the Rand experiment. They’ve been studied a couple of times in Canada where they’ve introduced small co-payments and deductibles, and they always have the same effect. Rich people are not affected by them a bit. Low-income people get less care. They get less elective unnecessary care. They also get less life-saving and completely necessary care, and that’s the basis on which I think they’re immoral.

***

Prof. Dresser: For Dr. Woolhandler , I’m probably mangling this philosophically, but I think Kant said, “Ought implies can.” And so, you know, I love your idea, and if I were queen of the world or the US I would say, “Okay. Go for it.” But I just wonder, if it’s not realistic in this country, then it’s a placebo. So how do you think we’re going to get from here to where you are politically?

Dr. Woolhandler: Well, I think the argument you’re making is politics is the art of the possible. But I actually disagree with that. I actually think politics is the art of creating the possible, and what’s possible is what people believe is possible.

So who would have believed before Rosa Parks that we would have a civil rights movement and a Civil Rights Act? Who would have believed in the mid-1980s that the Soviet Union was about to collapse?

So you can’t just sit here and say based on what you’re seeing today that no change is possible. We’ve got to create the possible, which I think is a challenge to this group and, you know, partly why I reacted so strongly to the suggestion you couldn’t understand it or come to grips with it.

You have tremendous moral suasion. You have the power as a group to make a statement that universal health care is the only ethical policy alternative and that the only proven way to get universal health care is through nonprofit national health insurance.

If you went public with that, you would be creating the possible. You know, you would be creating the possible and helping people believe that this real change is possible. And when I look at those polls about the American people, the American people say they want national health insurance.

It’s not that the people don’t agree. It’s the insurance industry that’s blocked this from debate. They’ve used their full political power and economic power to block it and, frankly, the pharmaceutical industry, as well. And they’ve always opposed this.

And when I first got in this business I was shocked about the pharmaceutical industry opposing it. Well, it turns out they knew something that the American people just learned later, which is every nation with national health insurance negotiates for price discounts on drugs. They knew that, and they were completely and totally opposed to any sort of national health insurance covering drugs because they were going to get lower prices.

So we’ve got the American people endorsing it. We’ve got some very powerful folks opposing it. We need to get it on the agenda, and (it’s) the one real power you have and you can use it, or you can turn your back and say, “We don’t understand this.” You can use that power to put this on the political agenda.

http://www.bioethics.gov/transcripts/june08/session3.html
continued:
http://www.bioethics.gov/transcripts/june08/session4.html

Comment:

By Don McCanne, MD

After the November election, it is expected that the President’s Council on Bioethics will release a report on ethical considerations for reforming health care.

The Council was formed in 2001 in response to the controversy over President Bush’s decision to deny funds for embryonic stem cell research. With a touch of irony for which this administration is famous, many thought that political ethics were compromised in the selection of supposed ethicists who had already expressed biases incompatible with the ability to objectively assess important issues of bioethics. When one of the members of the Council states that they are incompetent to assess the ethical issues in the reform proposals, it does make you wonder.

It is difficult to know what the report will state, but some of the more enlightened members of the Council clearly do understand the moral imperative behind Steffie Woolhandler’s message. It would be nice if their views, based on actual ethical principles, would prevail in the final report. Regardless, it is really Steffie’s message that is important.

Ethics panel may back universal coverage, ponders access as a "moral imperative"

A presidential committee explored the ethics of health system reform and plans to release a report later this year

By Kevin B. O’Reilly
AMNews staff
PROFESSIONAL ISSUES
Aug. 4, 2008.

Chicago — A panel appointed by President Bush that met here in June appears set to endorse some form of societal obligation to provide health care access to all.

The meeting was part of the President’s Council on Bioethics initiative examining the ethical underpinnings of approaches to reforming the nation’s health system and covering the estimated 47 million uninsured Americans. A report is likely to be issued after the November election.

Bush established the council in November 2001 to advise him after his decision to deny federal funds for research using newly created human embryonic stem cells met with fierce opposition. The council’s first chair, Leon Kass, MD, PhD, primarily focused the group’s attention on the ethical implications of scientific advancements such as cloning and assisted reproductive technology.

But in remarks before the panel in June, current chair Edmund D. Pellegrino, MD, made clear that he believes health system reform also has ethical dimensions. “What kind of society do we want to be?” he asked. “Are our values reflected in the way we’ve authorized and delivered this element of the flourishing of human beings?”

In an interview, Dr. Pellegrino said the goal of the council is not to recommend any political party’s plan but to lay out in “an orderly, systematic and critical way” the ethical implications of various approaches on access to care, medical innovation, and individual freedom and responsibility.

“We will not be lecturing people on what’s right and wrong,” said Dr. Pellegrino, a spry 88-year-old widely recognized as a father of bioethics and the founding editor of the Journal of Medicine and Philosophy.

Despite Dr. Pellegrino’s view, there was plenty of pushback from members of the conservative-leaning council.

Health system reform is “a black hole — once you get in it, you never get out,” said Gilbert Meilaender, PhD, professor of Christian ethics at Valparaiso University in Indiana. “The more we try to fully elaborate all the principles that might be involved in reforming the health care system, the more hopeless and black hole-ish things get.”

Carl E. Schneider, JD, a bioethicist at the University of Michigan, agreed, saying the council — composed primarily of physicians, ethicists and legal scholars with little expertise in economics or health policy — was out of its depth. The reform plans are “all based on data and empirical evidence that we are entirely incompetent to evaluate,” he said.

Meilaender said the council might be able to argue that providing care to those who cannot afford it is a “moral imperative.” A majority of the council seemed to agree that society has a duty to provide everyone with access to health care.

A draft of the council’s report notes “growing support for the claim that the problem of the uninsured is a moral problem for a prosperous society that strives to provide some measure of equality of opportunity.”

The major split, the report said, comes when discussion moves to “how best to solve this problem.” That division was reflected in panelists who spoke before the council on behalf of options such as a Massachusetts-style, individual health insurance mandate and a more market-oriented approach.

Steffie Woolhandler, MD, MPH, argued that the single-payer model prevails around the world in countries that provide better access to care at lower cost than the U.S. system. “I think single payer is the only morally acceptable reform choice, because it’s the only effective one on the table,” said Dr. Woolhandler, a primary care doctor who co-founded Physicians for a National Health Program in 1986. “If we’re concerned about the 18,000 deaths a year due to uninsurance, then we are morally obligated to go with a plan that has been shown to work.”

Other panelists were reluctant to declare their proposals morally superior, and there was no apparent consensus among council members about which proposal would best improve access to care.

Laurie Zoloth, PhD, director of the Center for Bioethics, Science and Society at Northwestern University’s Feinberg School of Medicine, Chicago, attended the council meeting as an observer. She believes, based on panelists’ discussions, that the panel will issue a report endorsing the principle of universal access to care. She said the statement would mean a lot coming from a panel appointed by Bush.

“The more people who say universal health care is a moral imperative, the better our society is,” she said.

Last fall, the AMA’s Ethical Force Program published an essay in the Hastings Center Report outlining a consensus framework for reform proposals. According to the report, reforms should ensure that everyone has adequate health care benefits established through an ethical process in a system that is financially sustainable over time and makes clear the responsibilities of doctors, patients, payers and society.

At its June Annual Meeting, the AMA House of Delegates adopted policy seeking to replace the tax deduction for employer-provided health insurance with tax credits and an exemption for health insurance spending from state and federal payroll taxes. Expanding coverage for the uninsured also tops the AMA’s legislative agenda.

Ethics panel may back universal coverage, ponders access as a “moral imperative”

A presidential committee explored the ethics of health system reform and plans to release a report later this year

By Kevin B. O’Reilly
AMNews staff
PROFESSIONAL ISSUES
Aug. 4, 2008.

Chicago — A panel appointed by President Bush that met here in June appears set to endorse some form of societal obligation to provide health care access to all.

The meeting was part of the President’s Council on Bioethics initiative examining the ethical underpinnings of approaches to reforming the nation’s health system and covering the estimated 47 million uninsured Americans. A report is likely to be issued after the November election.

Bush established the council in November 2001 to advise him after his decision to deny federal funds for research using newly created human embryonic stem cells met with fierce opposition. The council’s first chair, Leon Kass, MD, PhD, primarily focused the group’s attention on the ethical implications of scientific advancements such as cloning and assisted reproductive technology.

But in remarks before the panel in June, current chair Edmund D. Pellegrino, MD, made clear that he believes health system reform also has ethical dimensions. “What kind of society do we want to be?” he asked. “Are our values reflected in the way we’ve authorized and delivered this element of the flourishing of human beings?”

In an interview, Dr. Pellegrino said the goal of the council is not to recommend any political party’s plan but to lay out in “an orderly, systematic and critical way” the ethical implications of various approaches on access to care, medical innovation, and individual freedom and responsibility.

“We will not be lecturing people on what’s right and wrong,” said Dr. Pellegrino, a spry 88-year-old widely recognized as a father of bioethics and the founding editor of the Journal of Medicine and Philosophy.

Despite Dr. Pellegrino’s view, there was plenty of pushback from members of the conservative-leaning council.

Health system reform is “a black hole — once you get in it, you never get out,” said Gilbert Meilaender, PhD, professor of Christian ethics at Valparaiso University in Indiana. “The more we try to fully elaborate all the principles that might be involved in reforming the health care system, the more hopeless and black hole-ish things get.”

Carl E. Schneider, JD, a bioethicist at the University of Michigan, agreed, saying the council — composed primarily of physicians, ethicists and legal scholars with little expertise in economics or health policy — was out of its depth. The reform plans are “all based on data and empirical evidence that we are entirely incompetent to evaluate,” he said.

Meilaender said the council might be able to argue that providing care to those who cannot afford it is a “moral imperative.” A majority of the council seemed to agree that society has a duty to provide everyone with access to health care.

A draft of the council’s report notes “growing support for the claim that the problem of the uninsured is a moral problem for a prosperous society that strives to provide some measure of equality of opportunity.”

The major split, the report said, comes when discussion moves to “how best to solve this problem.” That division was reflected in panelists who spoke before the council on behalf of options such as a Massachusetts-style, individual health insurance mandate and a more market-oriented approach.

Steffie Woolhandler, MD, MPH, argued that the single-payer model prevails around the world in countries that provide better access to care at lower cost than the U.S. system. “I think single payer is the only morally acceptable reform choice, because it’s the only effective one on the table,” said Dr. Woolhandler, a primary care doctor who co-founded Physicians for a National Health Program in 1986. “If we’re concerned about the 18,000 deaths a year due to uninsurance, then we are morally obligated to go with a plan that has been shown to work.”

Other panelists were reluctant to declare their proposals morally superior, and there was no apparent consensus among council members about which proposal would best improve access to care.

Laurie Zoloth, PhD, director of the Center for Bioethics, Science and Society at Northwestern University’s Feinberg School of Medicine, Chicago, attended the council meeting as an observer. She believes, based on panelists’ discussions, that the panel will issue a report endorsing the principle of universal access to care. She said the statement would mean a lot coming from a panel appointed by Bush.

“The more people who say universal health care is a moral imperative, the better our society is,” she said.

Last fall, the AMA’s Ethical Force Program published an essay in the Hastings Center Report outlining a consensus framework for reform proposals. According to the report, reforms should ensure that everyone has adequate health care benefits established through an ethical process in a system that is financially sustainable over time and makes clear the responsibilities of doctors, patients, payers and society.

At its June Annual Meeting, the AMA House of Delegates adopted policy seeking to replace the tax deduction for employer-provided health insurance with tax credits and an exemption for health insurance spending from state and federal payroll taxes. Expanding coverage for the uninsured also tops the AMA’s legislative agenda.

The "dual-eligibles" scam

Medicare Part D: Drug Pricing and Manufacturer Windfalls

By the Majority Staff
United States House of Representatives
Committee on Oversight and Government Reform
July 2008
Conclusion
This analysis of confidential data on Medicare Part D and Medicaid drug prices shows that the private Medicare Part D insurers pay significantly higher prices for prescription drugs than does the Medicaid program. In the case of the six million dual eligible beneficiaries, the Medicare Part D insurers paid $3.7 billion more in 2006 and 2007 to purchase the top 100 drugs for dual eligible beneficiaries than they would have paid if they had access to the lower Medicaid drug prices. This increase in costs represents a windfall to drug manufacturers.
Eliminating the drug manufacturer windfall would realize substantial savings to federal taxpayers. Over the next ten years, taxpayers would save $86 billion if the Medicare Part D insurers paid Medicaid prices for drugs used by the dual eligible beneficiaries. If Medicare negotiated directly with drug manufacturers and obtained prices equivalent to the Medicaid prices for all Medicare beneficiaries, the potential savings to taxpayers increases to $156 billion.
http://oversight.house.gov/documents/20080724101850.pdf

And…

Apples, Oranges and “Windfalls”

Republican Staff Analysis
Conclusion
The Part D benefit was designed to offer choice in prescription drug insurance, value for seniors through low negotiated prices, and overall low program costs for taxpayers. It is achieving those goals and exceeding expectations. The Majority report fails to recognize these benefits and instead makes inappropriate and unrealistic price comparisons. Politically appealing but substantively flawed changes like those advocated by the Majority would have serious implications for the prices paid by employers, unions, health care providers, and the uninsured. Likewise, changing the financial incentives in Part D could have a negative impact in the type of drug research and development that is conducted.
Finally, it is worth noting that the Majority has written eight reports on Part D and the program is only in its third year. This represents a significant level of oversight. Without a doubt Medicare requires substantial oversight given its importance to seniors and its uncertain long-term financial prospects. However, the Majority’s criticisms of Part D seem misplaced. Part D costs substantially less than Part A (which primarily pays for hospital based care) and Part B (which primarily pays for physician services). The Hospital Insurance trust fund, Part A’s revenue source, is not adequately financed in the short-term and will be exhausted in 2019. This looming financial crisis has received scant oversight from the Majority.
http://republicans.oversight.house.gov/Media/PDFs/20080723PartDReport.pdf

To understand the basis for the problems with the Medicare Part D drug benefit, you need only to recall that the program was designed by the Medicare privatizers in Congress, with the support of two of the largest lobby interests in the nation: the private insurers and the pharmaceutical firms.
There are a great many problems that have been created by the privatization measures in the Medicare Modernization Act, but here we will limit the discussion not to just the Part D program, but to only one aspect of Part D: the application of Part D to dual-eligibles.
Dual-eligible Medicare beneficiaries are those individuals who not only qualify for Medicare based on age or long-term disabilities, but they also qualify for Medicaid based on their very low incomes. Before Medicare Part D was enacted, they received their drugs through the state-administered Medicaid programs. This worked well for the taxpayers because of the ability of the government to negotiate much lower drug prices, and it worked well for the patients because they received their necessary medications usually without any out-of-pocket expense.
The privatizers were successful in shifting the state-run Medicaid drug benefit into the Part D program. Because the drug benefit for the dual-eligibles is still subsidized, the cost impact was not that great for the beneficiaries, though the administrative hassles, including the need to comply with various formularies offered by the different plans, proved to be more than just an inconvenience.
The taxpayers did not fare at all well with this shift into the Part D program. This study by the Majority Staff demonstrates that taxpayers paid $3,739,000,000 more to the drug manufacturers for the top 100 drugs than they would have under the Medicaid drug program which this replaced. The Republican Staff response glosses over this very real additional cost foisted onto taxpayers.
The Republican response obfuscates and segues into Part A hospital funding – an important problem but not the subject at hand. Buried in their response, the Republicans do state that if the drug benefit for the dual-eligible population were returned to the Medicaid program, “this population would have access to Medicaid price controls and pharmaceutical manufacturers no longer would be benefiting from the purported windfall profits.” Of course they wouldn’t; the taxpayers would benefit.
This example shows once again that health policy science is not complicated. It’s the politics that are so difficult. One side is represented by individuals who want everyone to have affordable access to the health care that they need, and the other side is more interested in enhancing the private sector through measures such as ensuring windfall profits for the pharmaceutical firms.
One thing great about America is that it is our choice… but we do have to make a greater effort to be certain that everyone is making an informed choice.

The "dual-eligibles" scam

Medicare Part D: Drug Pricing and Manufacturer Windfalls

By the Majority Staff
United States House of Representatives
Committee on Oversight and Government Reform
July 2008

Conclusion

This analysis of confidential data on Medicare Part D and Medicaid drug prices shows that the private Medicare Part D insurers pay significantly higher prices for prescription drugs than does the Medicaid program. In the case of the six million dual eligible beneficiaries, the Medicare Part D insurers paid $3.7 billion more in 2006 and 2007 to purchase the top 100 drugs for dual eligible beneficiaries than they would have paid if they had access to the lower Medicaid drug prices. This increase in costs represents a windfall to drug manufacturers.

Eliminating the drug manufacturer windfall would realize substantial savings to federal taxpayers. Over the next ten years, taxpayers would save $86 billion if the Medicare Part D insurers paid Medicaid prices for drugs used by the dual eligible beneficiaries. If Medicare negotiated directly with drug manufacturers and obtained prices equivalent to the Medicaid prices for all Medicare beneficiaries, the potential savings to taxpayers increases to $156 billion.

http://oversight.house.gov/documents/20080724101850.pdf

And…

Apples, Oranges and “Windfalls”

Republican Staff Analysis

Conclusion

The Part D benefit was designed to offer choice in prescription drug insurance, value for seniors through low negotiated prices, and overall low program costs for taxpayers. It is achieving those goals and exceeding expectations. The Majority report fails to recognize these benefits and instead makes inappropriate and unrealistic price comparisons. Politically appealing but substantively flawed changes like those advocated by the Majority would have serious implications for the prices paid by employers, unions, health care providers, and the uninsured. Likewise, changing the financial incentives in Part D could have a negative impact in the type of drug research and development that is conducted.

Finally, it is worth noting that the Majority has written eight reports on Part D and the program is only in its third year. This represents a significant level of oversight. Without a doubt Medicare requires substantial oversight given its importance to seniors and its uncertain long-term financial prospects. However, the Majority’s criticisms of Part D seem misplaced. Part D costs substantially less than Part A (which primarily pays for hospital based care) and Part B (which primarily pays for physician services). The Hospital Insurance trust fund, Part A’s revenue source, is not adequately financed in the short-term and will be exhausted in 2019. This looming financial crisis has received scant oversight from the Majority.

http://republicans.oversight.house.gov/Media/PDFs/20080723PartDReport.pdf

Comment:

By Don McCanne, MD

To understand the basis for the problems with the Medicare Part D drug benefit, you need only to recall that the program was designed by the Medicare privatizers in Congress, with the support of two of the largest lobby interests in the nation: the private insurers and the pharmaceutical firms.

There are a great many problems that have been created by the privatization measures in the Medicare Modernization Act, but here we will limit the discussion not to just the Part D program, but to only one aspect of Part D: the application of Part D to dual-eligibles.

Dual-eligible Medicare beneficiaries are those individuals who not only qualify for Medicare based on age or long-term disabilities, but they also qualify for Medicaid based on their very low incomes. Before Medicare Part D was enacted, they received their drugs through the state-administered Medicaid programs. This worked well for the taxpayers because of the ability of the government to negotiate much lower drug prices, and it worked well for the patients because they received their necessary medications usually without any out-of-pocket expense.

The privatizers were successful in shifting the state-run Medicaid drug benefit into the Part D program. Because the drug benefit for the dual-eligibles is still subsidized, the cost impact was not that great for the beneficiaries, though the administrative hassles, including the need to comply with various formularies offered by the different plans, proved to be more than just an inconvenience.

The taxpayers did not fare at all well with this shift into the Part D program. This study by the Majority Staff demonstrates that taxpayers paid $3,739,000,000 more to the drug manufacturers for the top 100 drugs than they would have under the Medicaid drug program which this replaced. The Republican Staff response glosses over this very real additional cost foisted onto taxpayers.

The Republican response obfuscates and segues into Part A hospital funding – an important problem but not the subject at hand. Buried in their response, the Republicans do state that if the drug benefit for the dual-eligible population were returned to the Medicaid program, “this population would have access to Medicaid price controls and pharmaceutical manufacturers no longer would be benefiting from the purported windfall profits.” Of course they wouldn’t; the taxpayers would benefit.

This example shows once again that health policy science is not complicated. It’s the politics that are so difficult. One side is represented by individuals who want everyone to have affordable access to the health care that they need, and the other side is more interested in enhancing the private sector through measures such as ensuring windfall profits for the pharmaceutical firms.

One thing great about America is that it is our choice… but we do have to make a greater effort to be certain that everyone is making an informed choice.