PNHP

Senate Finance summit missed the message

Senate Finance summit missed the message

Letters to the Editor
A Cure for Our System
The Washington Post
June 19, 2008

While I welcome the heightened attention of policymakers, including Federal Reserve Chairman Ben S. Bernanke, to our failing health-care system [Business, June 17], I was struck by how few real “prescriptions for change” emerged from the Senate Finance Committee’s health reform “summit” Monday.

All of the reforms mentioned, including what is being offered by Sen. Ron Wyden (D-Ore.), keep the for-profit private insurance industry at the center of our system — and yet that industry is the main problem.

Private insurers profit by enrolling the healthy, screening out the sick and denying claims. They burden us with wasteful administrative costs, including outlandish executive salaries. We simply can’t afford this fragmented, inefficient system anymore.

What’s needed is an orderly transition to national health insurance, the kind of social insurance that most other industrialized nations take for granted. This “single-payer” approach has a track record of delivering better-quality care at lower cost. People end up living longer and are healthier. They go to the doctors of their choice, and everyone, without exception, has access to comprehensive care.

We need to get at the root of the problem and not be afraid to challenge the status quo.

Harvey Fernbach
College Park
The writer is a member of Physicians for a National Health Program.

Comment:

By Don McCanne, MD

The politicians in Washington are not in sync with the health care needs of the nation, but are tuned in to the concerns that the private insurance industry has about its own role in the future of health care financing. They seem to believe that all we need is more of the same: unaffordable private health plans that often fail to prevent financial hardship for those with significant health care needs. They are paralyzed by the meme that replacing our current system of financing health care with a system that would actually work is “not politically feasible.”

The politicians need to listen to the message of the protesters at the meeting of America’s Health Insurance Plans (AHIP) in San Francisco today (and in other cities throughout the nation).

People don’t want crummy, unaffordable private health plans. They want health care. Washington needs to listen to our meme: HEALTH CARE FOR ALL! SINGLE PAYER NATIONAL HEALTH INSURANCE!

State Assembly points the way forward on health care

Andrew D. Coates, MD
Poughkeepsie Journal
June 13, 2008

Supporters of national health insurance – a single-payer system of nonprofit, public financing that would guarantee quality health care to every one of us – were just getting used to being compared to Don Quixote.

Our critics smile at us and say that national health insurance a great idea, but they add a wink, for they believe the insurance companies are simply too rich and too powerful. The not-so-subtle message: give up and prepare for compromise with the private insurance industry.

Enter the New York State Assembly, not known as a den of starry-eyed idealists, with an overwhelming vote of support for single-payer health reform.

On May 27, the State Legislature’s lower house decisively adopted a resolution backing a federal proposal, H.R. 676, the “U.S. National Health Insurance Act,” sponsored by Rep. John Conyers of Michigan. The Congressional bill’s 90 co-sponsors include New York Representatives Yvette Clark, Eliot Engel, Maurice Hinchey, Carolyn Maloney, Michael McNulty, Gregory Meeks, Jerrold Nadler, Charles Rangel, Jose Serrano, Edolphus Towns and Anthony Weiner.

The chief sponsor of the May 27 resolution was Assemblyman Felix Ortiz (D-51, Brooklyn). The measure was also pushed by a coalition of labor groups, doctors and nurses, religious groups, anti-poverty and human rights organizations. A similar measure in support of H.R. 676 was adopted in 2007 by the Republican-led Rensselaer County Legislature.

Noting that approximately 2.6 million New Yorkers currently lack health insurance, that people who have insurance are often burdened with “unacceptable medical debt” that frequently leads to bankruptcy, and that all New Yorkers face “sometimes life-threatening delays in obtaining health care,” the N.Y. Assembly unambiguously declared itself in support of the single-payer approach. By calling for passage of a bill in the U.S. Congress, they acknowledge our need for a nationwide solution.

The single-payer model has accumulated new support because of the failure of compromise after compromise with private health insurers in state after state.

Massachusetts’ mandate model has reduced the percentage of uninsured through state-subsidies for private health insurance for low-income families but generated a spectacular deficit. The plan also failed to provide for an influx of new primary care patients and failed to eliminate excessive out-of-pocket costs including co-pays and deductibles. Further, the middle class uninsured who have been “mandated” to buy private health without a state subsidy (or else pay a fine) simply cannot afford the premiums.

Meanwhile the single payer model has already proved its effectiveness in country after country.

Taiwan recently adopted single payer. Like other nations that have national health insurance, health costs been brought under control. More striking, the new system has improved health outcomes. Significantly, disparities in the quality of care for the affluent vs. the poor have been lessened in Taiwan, with life expectancy among low-income people in rising most dramatically. (In contrast, life expectancy for American women in 1,000 U.S. counties, poor and rural areas, actually declined for the first time in our history during the 1990s.)

Single payer health financing delivers better care, better medical outcomes at a lower cost through a basic democratic method: by sharing health risks and needs across the whole public. In this era of evidence-based medicine, the evidence is in: single payer is the way to go.

The New York State Assembly’s action demonstrates that those who smile knowingly and call for compromise with the private insurance industry are seriously out of touch with popular opinion.

An exaggeration? Consider this: over 430 labor organizations, including 33 state chapters of the AFL-CIO, have endorsed H.R. 676. The Capital District Area Labor Federation and the Troy Area Labor Council have also endorsed H.R. 676. These organizations have also helped organize local participation in an upcoming nationwide day of protest: “Healthcare YES! Insurance companies NO!” They will rally, with other groups, outside of the 90 State St. office of the New York Health Plan Association on Thursday, June 19th at 5 p.m.

Some 59 percent of doctors now support national health insurance, up from 49 percent only five years ago. In Minnesota, New Hampshire, Massachusetts and New York, when polled, nearly two-thirds of physicians and surgeons support single payer.

Last December an Associated Press poll showed strong public support – 65 percent – in favor of “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.”

These figures, and the Assembly’s resolution on H.R. 676, give further expression to a gathering, unstoppable movement for fundamental health care reform, confirming Victor Hugo’s estimate that “there is nothing more powerful than an idea whose time has come.”

Minor tweaks in our deeply flawed system simply aren’t enough. The private health insurance industry, which skims off such a big share of each health care dollar in administrative costs, marketing, outsized profit-taking, and outlandish CEO salaries, has outlived its usefulness. It’s time to move on.

We should be proud that our Assembly has helped point the way forward. Let’s make this a banner year for moving toward a more effective and compassionate health care system: single payer.

Andrew D. Coates, M.D., practices and teaches medicine in Albany and is secretary of the Capital District (N.Y.) chapter of Physicians for a National Health Program (www.pnhp.org).

Paying More, Getting Less

How much is the sick U.S. health care system costing you?

By Joel A. Harrison
Dollars and Sense magazine
May/June 2008 issue

http://dollarsandsense.org/archives/2008/0508harrison.html

By any measure, the United States spends an enormous amount of money on health care. Here are a few of those measures. In 2006, U.S. health care spending exceeded 16% of the nation’s GDP. To put U.S. spending into perspective: the United States spent 15.3% of GDP on health care in 2004, while Canada spent 9.9%, France 10.7%, Germany 10.9%, Sweden 9.1%, and the United Kingdom 8.7%. Or consider per capita spending: the United States spent $6,037 per person in 2004, compared to Canada at $3,161, France at $3,191, Germany at $3,169, and the U.K. at $2,560.

By now the high overall cost of health care in the United States is broadly recognized. And many Americans are acutely aware of how much they pay for their own care. Those without health insurance face sky-high doctor and hospital bills and ever more aggressive collection tactics–when they receive care at all. Those who are fortunate enough to have insurance experience steep annual premium hikes along with rising deductibles and co-pays, and, all too often, a well-founded fear of losing their coverage should they lose a job or have a serious illness in the family.

Still, Americans may well underestimate the degree to which they subsidize the current U.S. health care system out of their own pockets. And almost no one recognizes that even people without health insurance pay substantial sums into the system today. If more people understood the full size of the health care bill that they as individuals are already paying–and for a system that provides seriously inadequate care to millions of Americans–then the corporate opponents of a universal single-payer system might find it far more difficult to frighten the public about the costs of that system. In other words, to recognize the advantages of a single-payer system, we have to understand how the United States funds health care and health research and how much it actually costs us today.

Paying through the Taxman

The U.S. health care system is typically characterized as a largely private-sector system, so it may come as a surprise that more than 60% of the $2 trillion annual U.S. health care bill is paid through taxes, according to a 2002 analysis published in Health Affairs by Harvard Medical School associate professors Steffie Woolhandler and David Himmelstein. Tax dollars pay for Medicare and Medicaid, for the Veterans Administration and the Indian Health Service. Tax dollars pay for health coverage for federal, state, and municipal government employees and their families, as well as for many employees of private companies working on government contracts. Less visible but no less important, the tax deduction for employer-paid health insurance, along with other health care-related tax deductions, also represents a form of government spending on health care. It makes little difference whether the government gives taxpayers (or their employers) a deduction for their health care spending, on the one hand, or collects their taxes then pays for their health care, either directly or via a voucher, on the other. Moreover, tax dollars also pay for critical elements of the health care system apart from direct care–Medicare funds much of the expensive equipment hospitals use, for instance, along with all medical residencies.

All told, then, tax dollars already pay for at least $1.2 trillion in annual U.S. health care expenses. Since federal, state, and local governments collected approximately $3.5 trillion in taxes of all kinds–income, sales, property, corporate–in 2006, that means that more than one third of the aggregate tax revenues collected in the United States that year went to pay for health care. (See Addendum below for information about how this estimate was calculated.)

Beyond their direct payments to health care providers and health insurance companies, then, Americans already make a sizeable annual payment into the health care system via taxes. How much does a typical household contribute to the country’s health care system altogether? Of course, households pay varying amounts in taxes depending on income and many other factors. Moreover, some households have no health insurance coverage; others do have coverage for which they may pay some or all of the premium cost. What I aim to do here is to estimate the average size of the health care cost burden for households at different income levels, both those with job-based health coverage and those with no coverage.

Note that the estimates in the table below do not include out-of-pocket expenses. For those with health insurance, these include co-pays, deductibles, and uncovered expenses (consider, for example, that even my high-end policy does not cover commonly used home medical equipment such as oxygen). For those without insurance, of course, out-of-pocket expenses include their full hospital, doctor, and pharmacy bills.

Chart of what Americans pay into the health care system today

The first row (“Share and Amount of Income Going to Health Care via Taxes Alone”) shows how much of the total tax burden on households at three income levels goes into the nation’s health care system. In other words, a family with an annual income of $50,000 that has no health insurance nonetheless contributes nearly 10% of its income to health care merely by paying typical income, payroll, sales, excise, and other taxes. A person who earns about $25,000 a year and has no health coverage already contributes over $2,400 a year to the system–enough for a healthy young adult to purchase a year’s worth of health insurance.

The next two rows add in, for individuals and for families, the cost of employer-based health insurance. So, a household at the $50,000 income level with family health insurance coverage is paying over a quarter of its income into the health care system.

How were these figures derived? The tax component of the figures represents 34.4% of the total tax burden (federal, state, and local) on households at the three income levels. Of course, estimating average combined federal, state, and local taxes paid by households at different income levels is not a simple matter. The most comprehensive such estimates come from the Tax Foundation, a conservative think tank. Other analysts, however, including the liberal Center on Budget and Policy Priorities, view the Tax Foundation’s figures as overestimating the total tax burden. The center has published its own estimates, based on figures from the Congressional Budget Office and Congress’s Joint Committee on Taxation. The figures in the table are based on the CBO’s numbers, which fall in between the Tax Foundation’s estimates and the JCT-based estimates. (Estimates based on the Tax Foundation and JCT figures, along with details of the analysis, can be found at www.dollarsandsense.org.) It is worth noting that using the Tax Foundation’s numbers, which show a larger share of income going to taxes at every income level, would have made the story even worse. For a family with health insurance earning $50,000 a year, for instance, the share of income going into health care would have been 28.7% rather than 26.4%.

For insurance premiums: in 2007, the average annual premiums for health insurance policies offered through employers were $4,479 for individuals and $12,106 for families, according to the Kaiser Family Foundation’s annual survey of health benefits. Of course, some employers pay all or a large share of that premium while others pay half or less, leaving much of the premium cost to the worker. Either way, however, the full premium cost represents a bite taken out of the worker’s total “wage packet”–the cost of wages plus benefits. This becomes evident when premiums go up: workers either see their own premium payments rise directly, or else face cuts or stagnation in their wages and non-health benefits. For that reason, economists typically view the entire premium as a cost imposed on the worker regardless of variations in employer contribution.

These figures are not meant to be exact, but do offer reasonable estimates of how much U.S. families are actually paying into the country’s health care system today. Again, they do not include out-of-pocket expenses, which averaged 13.2% of all health care expenditures in 2005. Moreover, they do not include the risk of bankruptcy that health care costs impose: 50% of consumer bankruptcies in the United States stem from medical bills, including a surprising number among households that do have some kind of health coverage. Nor do they include the approximately 20% of auto insurance premiums or the 40% of workers’ compensation premiums that pay for medical expenses.

Where Does All the Money Go?

After you’ve finished gasping in surprise at the share of your income that is already going into health care, you may wonder where all that money goes. One answer is that the United States has the most bureaucratic health care system in the world, including over 1,500 different companies, each offering multiple plans, each with its own marketing program and enrollment procedures, its own paperwork and policies, its CEO salaries, sales commissions, and other non-clinical costs–and, of course, if it is a for-profit company, its profits. Compared to the overhead costs of the single-payer approach, this fragmented system takes almost 25 cents more out of every health care dollar for expenses other than actually providing care.

Of the additional overhead in the current U.S. system, approximately half is borne by doctors’ offices and hospitals, which are forced to maintain large billing and negotiating staffs to deal with all the plans. By contrast, under Canada’s single-payer system (which is run by the provinces, not by the federal government), each medical specialty organization negotiates once a year with the nonprofit payer for each province to set fees, and doctors and hospitals need only bill that one payer.

Of course, the United States already has a universal, single-payer health care program: Medicare. Medicare, which serves the elderly and people with disabilities, operates with overhead costs equal to just 3% of total expenditures, compared to 15% to 25% overhead in private health programs. Since Medicare collects its revenue through the IRS, there is no need to collect from individuals, groups, or businesses. Some complexity remains–after all, Medicare must exist in the fragmented world that is American health care–but no matter how creative the opponents of single-payer get, there is no way they can show convincingly how the administrative costs of a single-payer system could come close to the current level.

Some opponents use current U.S. government expenditures for Medicare and Medicaid to arrive at frightening cost estimates for a universal single-payer health care system. They may use Medicare’s $8,568 per person, or $34,272 for a family of four (2006). But they fail to mention that Medicare covers a very atypical, high-cost slice of the U.S. population: senior citizens, regardless of pre-existing conditions, and people with disabilities, including diagnoses such as AIDS and end-stage renal disease. Or they use Medicaid costs–forgetting to mention that half of Medicaid dollars pay for nursing homes, while the other half of Medicaid provides basic health care coverage, primarily to children in low-income households, at a cost of only about $1,500 a year per child.

Getting What We’ve Already Paid For

Americans spend more than anyone else in the world on health care. Each health insurer adds its bureaucracy, profits, high corporate salaries, advertising, and sales commissions to the actual cost of providing care. Not only is this money lost to health care, but it pays for a system that often makes it more difficult and complicated to receive the care we’ve already paid for. Shareholders are the primary clients of for-profit insurance companies, not patients. Moreover, households’ actual costs as a percentage of their incomes are far higher today than most imagine. Even families with no health insurance contribute substantially to our health care system through taxes. Recognizing these hidden costs that U.S. households pay for health care today makes it far easier to see how a universal single-payer system–with all of its obvious advantages–can cost most Americans less than the one we have today.

Joel A. Harrison, PhD, MPH, lives in San Diego, where he does consulting in epidemiology and research design. He has worked in the areas of preventive medicine, infectious diseases, medical outcomes research, and evidence-based clinical practice guidelines. He has lived and studied in both Canada and Sweden.

ADDENDUM

A Tax Foundation report states, “In 2004 Americans paid a total of $3 trillion in total taxes.” The U.S. Bureau of Economic Analysis under its National Economic Accounts section gives the following numbers for U.S. Gross Domestic Product in billions of dollars: 2004 – $11,685.9 and 2006 – $13,194.7. Using the Tax Foundation tax estimates, the estimated tax percentage of GDP for 2004 was 25.67% ($3 trillion/$11.6859 trillion). The “$3.5 trillion” is a ballpark rounding estimate for total taxes for 2006 from multiplying 0.26 by the 2006 GDP.

Sources: Center on Budget and Policy Priorities, The Debate Over Tax Levels: How Much Does a Typical Family Pay?, March 11, 1998; Center on Budget and Policy Priorities, Tax Foundation Figures Do Not Represent Middle-Income Tax Burdens: Figures May Mislead Policymakers, Journalists, and the Public, April 13, 2006; Center on Budget and Policy Priorities, Clearing Up Confusion on the Cost of Covering Uninsured Children Eligible for Medicaid or SCHIP, March 13, 2007; Gary Claxton et al., “Health Benefits in 2007: Premium Increases Fall to an Eight-Year Low, While Offer Rates and Enrollment Remain Stable,” Health Affairs 26(5), 2007 [based on Employer Health Benefits 2007 Annual Survey by the Kaiser Family Foundation]; Congressional Research Service, U.S. Health Care Spending: Comparison with Other OECD Countries, September 17, 2007; Andres de Francisco and Stephen Matlin, eds., Monitoring Financial Flows for Health Research 2006 (Global Forum for Health Research, 2006); Tax Foundation, Who Pays America’s Tax Burden, and Who Gets the Most Government Spending?, March 2007; Public Citizen Congress Watch, Rx R&D Myths: The Case Against the Drug Industry’s R&D ‘Scare Card’, July 2001; Steffie Woolhandler et al., “Health Care Administration in the United States and Canada: Micromanagement, Macro Costs,” Int’l Journal of Health Services 34(1), 2004; Steffie Woolhandler and David Himmelstein, Paying for National Health Insurance–And Not Getting It, Health Affairs 21(4), July/August 2002.

Health Care: Go Canadian

The U.S. should adopt its northern neighbor's system of state-paid medical care for all its citizens. Pro or con?

Pro: Follow the Maple Leaf

by James Clancy, National Union of Public & General Employees (Ottawa)
Business Week

I find Top 10 lists are a useful way to quickly distill large and complicated issues down to the bare essentials. So here are my Top 10 reasons the U.S. should adopt Canada’s single-payer health-care system.

1. All Americans would have health insurance. This is the right thing to do because it reflects and promotes core values and notions of citizenship: equality, compassion, and social solidarity. Sickness doesn’t discriminate. Neither should health care.

2. Health would improve. On almost every critical measure (life expectancy, infant mortality, etc.), Canada rates higher than the U.S., and we’re among the best in the world.

3. It would cost less. Canada spends 9.8% of GDP on health care, while the U.S. spends more than 15%. A single-payer system is the less expensive way to go.

4. Patients would have more choice. In Canada, patients can choose whatever doctor, specialist, and hospital they want. Treatment decisions are left to patients and their doctors. No insurance companies meddle in our choices.

5. Quality of service would improve. In Canada, health providers never have to choose between their wealth and a patient’s health. Our system forbids that choice. The vast majority of Canadians are highly satisfied with the quality of care they receive. In Canada, patients rarely sue physicians.

6. It would reduce the bureaucracy. Patients in Canada show their health card and get care. Health providers bill the government directly and get paid. It’s that simple.

7. Fewer Americans would go bankrupt because of health-care costs. This is a major problem for many U.S. families. It rarely happens in Canada.

8. It would benefit business. Companies in Canada have a competitive advantage because they don’t have to provide basic health-care coverage for their workers.

9. It would diminish labor strife. Health care is incidental in labor negotiations in Canada. It’s a large and growing pitfall in contract negotiations in the U.S.

10. It would serve democracy. Most Americans want major, not incremental, health-care reform. Many Americans support a single-payer system. It is about responding to the wishes of the people.

A Cure for Our System

Harvey Fernbach, MD
Letters to the Editor
The Washington Post
June 19, 2008

While I welcome the heightened attention of policymakers, including Federal Reserve Chairman Ben S. Bernanke, to our failing health-care system [Business, June 17], I was struck by how few real “prescriptions for change” emerged from the Senate Finance Committee’s health reform “summit” Monday.

All of the reforms mentioned, including what is being offered by Sen. Ron Wyden (D-Ore.), keep the for-profit private insurance industry at the center of our system — and yet that industry is the main problem.

Private insurers profit by enrolling the healthy, screening out the sick and denying claims. They burden us with wasteful administrative costs, including outlandish executive salaries. We simply can’t afford this fragmented, inefficient system anymore.

What’s needed is an orderly transition to national health insurance, the kind of social insurance that most other industrialized nations take for granted. This “single-payer” approach has a track record of delivering better-quality care at lower cost. People end up living longer and are healthier. They go to the doctors of their choice, and everyone, without exception, has access to comprehensive care.

We need to get at the root of the problem and not be afraid to challenge the status quo.

Harvey Fernbach, MD
College Park
The writer is a member of Physicians for a National Health Program.

Health Care, the Massachusetts Way

The New York Times
Letters
Published: June 19, 2008

To the Editor:

Re “The Massachusetts Model” (editorial, June 16):

As a Massachusetts primary care physician, I dearly wish that your optimism for our state’s health care plan were well placed. My fear, however, is that any plan that does not eliminate the colossal waste of multiple competing private health insurers is doomed to failure.

Costs can never be contained while supporting bloated private bureaucracies and for-profit medicine. Most physicians now support single-payer, national health insurance (“Medicare for all”).

Alan Meyers
Boston, June 16, 2008
The writer is associate professor of pediatrics at Boston University School of Medicine and a founding member, Physicians for a National Health Program.

To the Editor:

You hail Massachusetts health reform as a promising model for the nation. But within the last year both the State Senate president and the executive director of the agency implementing the new law have publicly recognized that it will collapse if health care costs continue to rise by double digits, which they have.

No effective cost-control legislation is in sight. In Massachusetts we see history repeating itself: a large expansion of Medicaid in the mid-1990s added more than 300,000 residents to the rolls, cutting the uninsured population almost by half. A few short years of rising costs, however, were enough to erase those gains and place the state back to where it started.

Similar fates have befallen many “universal” state reforms hailed as models for the nation. Without eliminating the waste inherent in commercial health care systems and making comprehensive coverage a right, no country has ever been able to achieve universal health care.

We need a single-payer health care system that will be there for our children, not another unsustainable experiment with obvious math problems that won’t be there just a few years from now.

Benjamin Day
Executive Director
Mass-Care: The Massachusetts Campaign for Single Payer Health Care
Boston, June 17, 2008

Sen. Sheila Kuehl on the LAO report

LAO Confirms Single Payer Reduces Health Care Spending, Contains Annual Growth

by State Senator Sheila Kuehl
California Senator Sheila Kuehl
June 16, 2008

The new LAO report did not actually analyze SB 840

Although the LAO’s report clearly showed the kinds of savings a single payer plan would provide for the State, workers, employers and private individuals, it was not an assessment of SB 840. SB 840, now awaiting a hearing in the Assembly Appropriations Committee, does not contain details concerning taxes, premiums, expenses or other financial matters, but rather constructs a Blue Ribbon Panel, made up of statewide officers, to research and propose the actual funding mechanism and put it out for a vote of the people, along with the entire health insurance plan.

What the LAO found

The LAO study confirmed that a single payer health care system saves money and lowers the rate at which health care costs grow each year.

Generally, the LAO report agreed with the findings of the Lewin Group study of 2006 with regard to the impact of single payer on the growth in health care spending and found that Lewin’s projections for the legislation’s impact on health care spending were reasonable. Like Lewin, the LAO analysis identified substantial savings on administrative costs, bulk purchasing of drugs and durable medical equipment, and confirmed that it would lower the rate at which costs grow every year.

Need for Single Payer greater than ever

The main lesson of the Analyst’s report is that the people and employers of California are continuing to pay escalating healthcare costs while wages and payrolls are flatlining. Those costs are a drain on our already shaky economic outlook. SB 840 will bring stabilization to the healthcare crisis and, since the Blue Ribbon Panel will have flexibility to adjust the details of premium proposals, single payer is still our best answer.

http://dist23.casen.govoffice.com/index.asp?Type=B_PR&SEC={88ED6A03-02D2-492F-8C37-9434DFB58E29}&DE={42BC1F9D-AA2B-4C10-879B-CAC5C5647E0B}

Comment:

By Don McCanne, MD

When you hear criticisms of single payer based on this report, keep in mind the facts. The Legislative Analyst did not find any significant problems with the single payer model. It would provide all essential services for everyone while slowing increases in health care costs. What it did show is that delaying reform is increasing costs by tens of billions of dollars, and the failure to address our flat wage scales is creating the need to use even more progressive methods of financing health care.

Current proposals to use an expansion of private plans will fall short on universality and comprehensiveness, and will be even more expensive because of the failure to adopt the cost efficiencies of the single payer model.

The LAO study shows that the failure is not in the single payer model – it works – but the failure in containing costs is due to not yet having enacted the single payer model.

You think health care reform would cost a lot now. Just wait until it’s expensive.

Doctors to Join National Protests Against Private Health Insurers

For immediate release:
June 18, 2008

Contacts:
John Geyman, M.D., (360) 378-6264
Don McCanne, M.D., (949) 493-3714
Garrett Adams, M.D., (502) 895-8847

Doctors and medical students will join with nurses, patients, union members and health care reform activists at a rally tomorrow in San Francisco and 16 other cities, charging that the private health insurance industry is responsible for 47 million Americans being uninsured, half of all personal bankruptcies and at least 18,000 deaths each year.

The biggest rally is set to take place outside San Francisco’s Moscone Center, where delegates to the convention of America’s Health Insurance Plans (AHIP), the national trade association of the health insurance industry, will be listening to pro-industry figures like former Senators John Breaux and Bill Frist. About 35,000 insurance company executives are attending the meeting.

The physicians and others are calling for “guaranteed single-payer health care now,” a nonprofit, Medicare-like national health insurance program that is supported by 59 percent of doctors and about two-thirds of the general public. A bill in Congress, H.R. 676, embodies the single-payer approach and has 90 co-sponsors, more than any other health reform proposal.

“Private health insurance is obsolete,” said Dr. John Geyman, M.D., professor emeritus of family medicine at the University of Washington in Seattle and past president of Physicians for a National Health Program.

Geyman is the author of six books, including the forthcoming “Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It.”

Private health insurance has outlived its usefulness, he said, for the following reasons:

* it is much less efficient than public financing
* it fragments the risk pool by cherry-picking healthy patients
* it is the source of the epidemic of underinsurance
* administrative and overhead costs are excessive and insupportable
* profiteering is trumping patients’ needs
* insurance premiums are too costly for middle-class families
* the industry has excessive political clout and resists regulation

“While there is widespread consensus that the nation’s health care system is broken and in urgent need for reform, too little attention has been paid to the role of the private insurance industry in perpetuating our problems,” Geyman said.

“Over the past 40 years, private insurance has evolved from a not-for-profit activity into a $300-billion-a-year, for-profit, investor-owned industry. The six biggest insurers made over $10 billion in profits in 2006. They did so by enrolling healthy people, denying claims, and screening out the sick, who are increasingly being shunted into our beleaguered public safety net programs.”

“These for-profit companies have burdened our system with enormously wasteful administrative costs and skyrocketing CEO salaries, while leaving tens of millions uninsured and underinsured,” Geyman continued. “The risk pool has been badly fragmented among more than 1,300 private insurers, defeating the goal of insurance, which is to provide coverage by sharing risk across a broad population. Premium prices continue to climb at a double-digit rate alongside other health costs.”

“Thus, the average family premium for employer-based coverage was $11,500 in 2006, an increase of 87 percent from 2000,” he said. “At the rate we are going, health insurance premiums will consume almost one-third of average household income by 2010 and all of household income by 2025.”

“This clearly is not sustainable,” Geyman said. “What is urgently needed is a transition to single-payer national health insurance, coupled with our private delivery system. By moving to such a system, patients would regain their choice of physician and hospital. The administrative savings alone would be $350 billion a year, enough to cover all of the uninsured and underinsured. That is the only realistic path to guaranteeing truly universal and equitable care to everyone at an affordable cost.”

Physicians for a National Health Program (www.pnhp.org), a membership organization of over 15,000 physicians, supports a single-payer national health insurance program. PNHP is headquartered in Chicago and has chapters across the United States. To contact a physician-spokesperson in your area, contact info@pnhp.org or call (312) 782-6006. For additional resource materials these and related topics, visit www.pnhp.org/research.

The June 19 protests are scheduled to take place in San Francisco; Albany, N.Y.; Atlanta; Baltimore; Boston; Chicago; Harrisburg, Pa.; Indianapolis; Jacksonville, Fla.; Louisville, Ky.; Minnetonka, Minn.; Pittsburgh; Philadelphia; New York City; Newark, N.J.; Oklahoma City; San Antonio and St. Louis.

For more information on the San Francisco protest, see www.singlepayernow.net or call 415-695-7891.

"I Think I See a Few Dollars on That X-Ray: We'll have to Operate"

by David Himmelstein, MD
Posted by CommonHealth, Friday, June 13th, 2008
WBUR Blog

As a primary care doctor, I live with one foot in the horse and buggy era and one in the silicon age. I spend most of my time talking to patients and wielding a stethoscope, and I also use the latest high tech gadgets. But the gadgetry is getting out of hand; its overuse threatens patients and is blowing the lid off health care costs. Here’s one example. Last week, when a patient came in complaining of a cough that had lingered longer than usual, I sent him down for a chest x-ray. The x-ray was absolutely normal to my eye, a reading confirmed by the radiologist. But he added one key phrase after the word “normal.” “Consider obtaining a CT scan.”

Now the radiation from a single chest CT is equivalent to about 500 chest x-rays, which carries a real risk of causing cancer down the road. And there’s virtually no evidence that a CT would help a patient like mine. But it would certainly benefit the radiologist. He and his colleagues are paid as piece workers — they get an additional fee for each scan they interpret. Radiologists have gotten rich (they average over $400,000 annually) by buying CT scanners, MRI machines and other high tech gadgets, and prodding other doctors to order these expensive tests. And each test breeds more tests. A tiny abnormality on one CT (and most of us have something that looks a little funny if you look hard enough), means a radiologist’s report recommending “follow-up CT in 6 months to assess progression.”

It’s not just the radiologists who work this scam. Perhaps half of the stents that cardiologists put in do patients no good at all; oncologists inflict lucrative chemotherapy on many patients who gain nothing but suffering from these potions; and orthopedists often needlessly scope knees and operate on backs. And hospitals are willing partners to these rip-offs. The useless and harmful procedures keep ORs humming and beds full of high-paying patients. It’s gadgets and procedures that bring in the big bucks.

HMOs and insurers have tried to crack down on unnecessary care. But doctors and hospitals can easily outsmart them. We manufacture the data they use to monitor us. I can always make a plausible case for an expensive test, and just try interrupting a cardiologist in the middle of a diagnostic catheterization to debate whether a stent is really needed. So insurers are turning to high deductible insurance policies in an effort to get patients to do the dirty work of limiting care. Unfortunately, the high deductibles mostly keep people away from inexpensive primary and preventive care, and do little to discourage high cost, useless procedures. Even one day in the hospital pushes most patients over their deductible, leaving them no further reason to economize.

As Milton Roemer (a distinguished health policy professor) once observed: “an empty hospital bed will soon be filled.” He probably would have added “an idle CT scanner will soon be in use,” but CTs hadn’t been invented yet. Once you build it, they will come — encouraged by their doctors — and costs will rise.

So what are the implications of all this for health reform? Not good. Almost everywhere you look, hospitals are building, and the new buildings won’t house psychiatrists or family doctors who devote their days to the routine, inexpensive care that has the biggest impact on health and wellness. They’re for big ticket items like surgery and imaging suites. Those buildings will soon be filled, driving health costs further skyward. And legislation encouraging prevention, or electronic medical records, or even banning drug company gifts won’t make a whit of difference (even though I favor all of these things).

What can help? Real health planning, which limits the supply of expensive gadgets and ORs. Paying doctors on salaries rather than as piece workers. And a ban on for-profit medicine. Unfortunately, all of these require far more radical reform than Chapter 58. They’re only feasible under a real national health insurance program.

David Himmelstein is an Associate Professor of Medicine at Harvard Medical School and Co-Founder of Physicians for a National Health Program

“I Think I See a Few Dollars on That X-Ray: We’ll have to Operate”

by David Himmelstein, MD
Posted by CommonHealth, Friday, June 13th, 2008
WBUR Blog

As a primary care doctor, I live with one foot in the horse and buggy era and one in the silicon age. I spend most of my time talking to patients and wielding a stethoscope, and I also use the latest high tech gadgets. But the gadgetry is getting out of hand; its overuse threatens patients and is blowing the lid off health care costs. Here’s one example. Last week, when a patient came in complaining of a cough that had lingered longer than usual, I sent him down for a chest x-ray. The x-ray was absolutely normal to my eye, a reading confirmed by the radiologist. But he added one key phrase after the word “normal.” “Consider obtaining a CT scan.”

Now the radiation from a single chest CT is equivalent to about 500 chest x-rays, which carries a real risk of causing cancer down the road. And there’s virtually no evidence that a CT would help a patient like mine. But it would certainly benefit the radiologist. He and his colleagues are paid as piece workers — they get an additional fee for each scan they interpret. Radiologists have gotten rich (they average over $400,000 annually) by buying CT scanners, MRI machines and other high tech gadgets, and prodding other doctors to order these expensive tests. And each test breeds more tests. A tiny abnormality on one CT (and most of us have something that looks a little funny if you look hard enough), means a radiologist’s report recommending “follow-up CT in 6 months to assess progression.”

It’s not just the radiologists who work this scam. Perhaps half of the stents that cardiologists put in do patients no good at all; oncologists inflict lucrative chemotherapy on many patients who gain nothing but suffering from these potions; and orthopedists often needlessly scope knees and operate on backs. And hospitals are willing partners to these rip-offs. The useless and harmful procedures keep ORs humming and beds full of high-paying patients. It’s gadgets and procedures that bring in the big bucks.

HMOs and insurers have tried to crack down on unnecessary care. But doctors and hospitals can easily outsmart them. We manufacture the data they use to monitor us. I can always make a plausible case for an expensive test, and just try interrupting a cardiologist in the middle of a diagnostic catheterization to debate whether a stent is really needed. So insurers are turning to high deductible insurance policies in an effort to get patients to do the dirty work of limiting care. Unfortunately, the high deductibles mostly keep people away from inexpensive primary and preventive care, and do little to discourage high cost, useless procedures. Even one day in the hospital pushes most patients over their deductible, leaving them no further reason to economize.

As Milton Roemer (a distinguished health policy professor) once observed: “an empty hospital bed will soon be filled.” He probably would have added “an idle CT scanner will soon be in use,” but CTs hadn’t been invented yet. Once you build it, they will come — encouraged by their doctors — and costs will rise.

So what are the implications of all this for health reform? Not good. Almost everywhere you look, hospitals are building, and the new buildings won’t house psychiatrists or family doctors who devote their days to the routine, inexpensive care that has the biggest impact on health and wellness. They’re for big ticket items like surgery and imaging suites. Those buildings will soon be filled, driving health costs further skyward. And legislation encouraging prevention, or electronic medical records, or even banning drug company gifts won’t make a whit of difference (even though I favor all of these things).

What can help? Real health planning, which limits the supply of expensive gadgets and ORs. Paying doctors on salaries rather than as piece workers. And a ban on for-profit medicine. Unfortunately, all of these require far more radical reform than Chapter 58. They’re only feasible under a real national health insurance program.

David Himmelstein is an Associate Professor of Medicine at Harvard Medical School and Co-Founder of Physicians for a National Health Program

LAO report on SB 840 (California)

A fiscal analysis of SB 840 (Kuehl), which would establish in California a single-payer health care system and its companion financing mechanism.

By Elizabeth G.Hill, Legislative Analyst
California Legislative Analyst’s Office (LAO)
May 22,2008

Fiscal Projection Overview. We estimated the revenues and costs of the SPP for 5.5 years, assuming an implementation date of January 1, 2011. Our estimate indicates that that the SPP would result in a net shortfall of $42 billion in 2011-12 (the first full year of operations) and $46 billion in 2015-16.

Significant Factors Contributing to Shortfall

A substantial portion of our analysis relies on modeling and estimates described in the Lewin report, which concluded that SB 921 (2004) would generate sufficient resources to pay the costs for universal coverage. Nonetheless, our estimates indicate the SPP would incur annual shortfalls over our projection period. The estimates for our first full year of implementation in 2011-12 differ from those estimated by Lewin for the first full year of implementation (2006) primarily for the three reasons discussed in more detail below.

Interim Growth Rates.

The Lewin report estimated costs and revenues assuming full implementation in 2006. Between that year and 2011-12, we estimate that health benefits costs would grow at a higher rate than the SPP proposed tax base and redirected health funds. This difference in growth rates accounts for over one-half of the shortfall we project in 2011-12.

Data Sources.

The Lewin report used data from a variety of sources, much of which originated between 1998 and 2003, including some data from national surveys. Our analysis uses more recent data that, where possible, is more specific to California and based on actual reported data rather than surveys. For example, we used wage data provided by EDD instead of survey data, resulting in a lower estimate of payroll taxes than projected in the Lewin report. In total, these various data differences contributed roughly 40 percent to the shortfall we project for 2011-12.

Some Different Assumptions.

While we generally agree with many of the assumptions regarding savings and costs used in the Lewin report, our assumptions differed somewhat in a few areas. Our estimates assume somewhat lower costs from health care utilization as well as somewhat higher costs for administration and drug purchasing. Our estimates also include the costs of establishing an operating reserve, which the Lewin report did not include. Additionally, we estimated that greater amounts of state and local funding could be redirected to the SPP than did the Lewin report. We describe these differences in greater detail below. The net effect of these assumptions contributed to most of the remaining shortfall.

http://www.lao.ca.gov/2008/hlth/sb840/SB840_analysis.pdf

Comment:

By Don McCanne, MD

California’s single payer bill, SB 840, authored by Sen. Sheila Kuehl, has already been approved once by the California State Legislature, only to be vetoed by Gov. Arnold Schwarzenegger. It is back before the legislature, has passed in the Senate and is now in the Assembly Appropriations Committee.

A previous analysis of the bill by The Lewin Group has confirmed that it would provide comprehensive benefits for all residents of California with no increase in total health care spending.

A new analysis by the Legislative Analyst was just released showing that the bill would result in a $42 billion shortfall in its first full year of operation. Opponents of single payer reform will jump on this to loudly proclaim that single payer is a fraud and cannot result in savings that would be used to pay for care needed by the uninsured and underinsured. One columnist has already labeled this as “a financial train wreck” (Daniel Weintraub, The Sacramento Bee, June 15).

What will not be reported by those who wish to demonize single payer is that the Legislative Analyst confirmed that the features of single payer would perform as previously modeled. Truly comprehensive benefits would be provided for absolutely everyone, while the rate of cost escalation would slow. Although she made relatively minor adjustments in the assumptions, she did not report any previously unrecognized significant flaws in the single payer model.

So what is this $42 billion shortfall that did not show up in the previous Lewin analysis?

Over half is due to the fact that California has faced another five years of outrageous health care inflation, and that alone has raised the baseline by over $20 billion.

Almost half (40 percent) is due to use of more recent wage data indicating that payroll tax revenue would be less because wages are comparatively lower than previously modeled.

Different assumptions used by the Legislative Analyst account for most of the remaining shortfall – a very modest amount.

This $42 billion shortfall is not a reason to turn away from single payer, but rather it confirms that single payer reform is even more urgent. Health care inflation is killing us, and it must be harnessed immediately. The financial burdens of wage earners are killing them (sometimes literally), and they must have immediate relief from the financial hardships caused by their health care needs.

The LAO report confirms that single payer provides the financing structure that we need, and enacting it has become an emergency.

Congressional Quarterly article on Taiwan's single payer system

Taiwan: Surprising Lessons From a Small Island

By John Reichard, CQ HealthBeat Editor
CQ HealthBeat News
June 5, 2007

In the middle of May, two Taiwanese officials, Hou Sheng-Mou and Michael S. Chen, came to Washington facing a tough assignment: promote single payer health care in a city where it’s widely regarded as a non-starter in the debate over revamping the U.S. system.

http://www.cqpolitics.com/wmspage.cfm?docID=hbnews-000002889735&parm1=5&cpage=1

Comment:

By Don McCanne, MD

There will be a two week break in the Quote of the Day messages, which will give you plenty of time to read this article on Taiwan’s single payer system.