Wednesday, June 30, 2010

qotd: Proof that individuals game the individual mandate

The Boston Globe
June 30, 2010
Short-term insurance buyers drive up cost in Mass.
By Kay Lazar

The number of people who appear to be gaming the state's health insurance system by purchasing coverage only when they are sick quadrupled from 2006 to 2008, according to a long-awaited report released yesterday from the Massachusetts Division of Insurance.

The result is that insured residents of Massachusetts wind up paying more for health care, according to the report.

"The active members subsidize some of the costs tied to those individuals who terminate within one year," the report says.


Comment:  During the reform process the concern was expressed repeatedly that an individual mandate - requiring individuals to purchase their own health insurance - would result in gaming the system. People would enroll when they needed expensive care, and then drop out after the care was completed. The experience in Massachusetts has demonstrated that it did not take long for the public to learn this game, for this is precisely what has happened. Nevertheless, the individual mandate is now the law of the land.

Options being considered to reduce this form of adverse selection include, as examples, allowing open enrollment for only one month per year, or increasing the penalty for remaining uninsured. Although such measures might reduce this tendency to game the system, they will not eliminate it.

It is the structure of the financing system that is fundamentally flawed. It cannot be fixed merely by tweaking the mandate, nor by tweaking the thousands of other provisions in this dysfunctional system. It needs to be replaced with a structurally sound system.

With a single payer national health program the issue of an individual mandate would be moot since everyone would be enrolled, automatically, throughout life.

Tuesday, June 29, 2010

qotd: Vermont Joint Fiscal Committee approves single payer study

Burlington Free Press
June 29, 2010
Vermont health reform panel recommends analyst
By Nancy Remsen

The Health Care Reform Commission recommended Monday that the Legislature hire the Harvard economist who helped Taiwan revamp its health-care system for a six-month, $300,000 health research project for Vermont.

The consultant's task: Give lawmakers three roadmaps the state could follow to achieve a more efficient and accessible but less-expensive health-care system. One must be a government-financed system, and another must include a public option for health coverage along with private insurance. 

The commission received proposals from three consultants, interviewed representatives of two Monday morning and made a unanimous choice after lunch. 

Today the Legislature's Joint Fiscal Committee is to decide whether it agrees with the commission's choice of William S. Hsiao, professor of economics at the Harvard School of Public Health and his associates, Jonathan Gruber, an economics professor at Massachusetts Institute of Technology, and Steven Kappel, a health policy analyst who previously worked for the state and for the Legislature. 

Details of the Hsiao, Gruber, Kappel proposal — and the rival bids from Lewin Group of Falls Church, Va., and Mathmatica Policy Research Inc. of Washington, D.C. — remain confidential until an agreement is signed.

"All three proposals were good on the analytical front," said Commission Co-Chairman Rep. Steve Maier, D-Middlebury. Still, he and others agreed Hsiao's proposal stood out, and his presentation clinched his selection. 

"Dr. Hsiao's proposal offers us the greatest value," said Rep. Mark Larson, D-Burlington. 

"His group has a track record all over the work designing health-care systems," said Rep. Francis "Topper" McFaun, R-Barre. "He knows what works." 

The designs the winning consultant must deliver by next winter are intended to guide the Legislature's next steps. 

Hsiao had spoken to the Legislature's health-care committees last winter about the potential savings and shortcomings of a single-payer system. Many lawmakers came away impressed. 

Sen. Kevin Mullin, R-Rutland, noted some people might suggest the "fix" was in to select Hsiao to do the study. Mullin said he tried hard to find reasons to pick one of the other consultants. In the end, he agreed with the rest of the commission: "This one is the best for Vermont."


TO: All interested parties
FROM: Jim Hester, Director, Health Care Reform Commission
DATE: 6/29/10
SUBJECT: Selection of Health Care Reform Study Contractor

On June 28, the Health Care Reform Commission voted unanimously to hire the team of William Hsiao, Ph.D, Steven Kappel, and Johnathan Gruber, Ph.D to conduct the health care reform design study as laid out in Act 128 of 2010. On June 29th, the Joint Fiscal Committee voted to approve the recommendation of the Health Care Reform Commission. It is expected that a contract will be signed on or about July 15th.

Comment:  Today the Vermont Joint Fiscal Committee gave the final approval for a study of health care reform for the state of Vermont. The study, to be done by William Hsiao, Ph.D, Johnathan Gruber, Ph.D, and Steven Kappel, will look at three models, including a government-financed system. Especially noteworthy is the fact that this study has received the support of Republican legislators. Single payer is on the table!

Monday, June 28, 2010

qotd: Winner-Take-All Politics

Invisible Hands
By Kim Phillips-Fein

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


Politics and Society
June 2010
Winner-Take-All Politics:
Public Policy, Political Organization, and the Precipitous Rise of Top Incomes in the United States
By Jacob S. Hacker and Paul Pierson

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

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


One response to Hacker and Pierson:
The Public's Role in Winner-Take-All Politics
By Andrea Louise Campbell

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


Pew Research Center
Project for Excellence in Journalism
June 21, 2010
Six Things to Know About Health Care Coverage
A Study of the Media and the Health Care Debate


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

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

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

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

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

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

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

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

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

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

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

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

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

Friday, June 25, 2010

qotd: The private insurance oligopoly

Bloomberg Businessweek
June 24, 2010
WellPoint's Kleinman Sees Health Insurer 'Oligopoly'
By Alex Nussbaum

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

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

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

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

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

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

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

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

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

Thursday, June 24, 2010

qotd: Venture capitalists say cheap is the name of the game

The Wall Street Journal
June 13, 2010
Name Of Game In Health Care: Cheaper, Better, Faster
By Jennifer Rossa

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

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

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

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

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

Wednesday, June 23, 2010

qotd: Will grandfathering save our current private plans?

U.S. Department of Health & Human Services
Accessed June 23, 2010
Fact Sheet: Keeping the Health Plan You Have: The Affordable Care Act and "Grandfathered" Health Plans

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

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

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


Quote of the Day
July 11, 2008
"Keeping the insurance you have" - Don't believe it!
Comment by Don McCanne, MD

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

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

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

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

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

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

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

Tuesday, June 22, 2010

qotd: Clarification of HCAN report on insurance rates

The following is to clarify a legitimate concern of one of the qotd subscribers.

From the 6/22/10 message:

21% - general inflation
39% - medical inflation
72% - increase in private insurers' payments to health care providers
90% & 97% - premium increases for individual and family health plans

General inflation and medical inflation refer to increased prices. Payments to providers and insurance premium increases refer to increased prices modified by increased volume and intensity of services.

Though the numbers should not be compared on a single scale, the principles are still the same as stated earlier. The rate of medical inflation (prices) has continued to increase in excess of the rate of general inflation. Insurance premiums have continued to increase in excess of the payments (prices x services) to providers.

qotd: Are high premiums due to medical costs or insurer profits?

Health Care for America Now! (HCAN)
June 2010
Insurance Industry Inflates Rates While Falsely Blaming New Health Care Law

The health insurance industry argues that rising medical costs are to blame for runaway premiums, but it's clear that they are constantly looking for excuses to raise rates and expand their cash flows.

Premium hikes have surpassed the growth of medical costs, wages and overall inflation. From 2000 to 2008, premiums for families enrolled in employer-sponsored health plans increased 97 percent, while rates for individuals in workplace health plans climbed 90 percent. During that same period, private insurers' payments to health care providers rose only 72 percent, medical inflation increased 39 percent, wages grew 29 percent and overall inflation climbed 21 percent. Health insurers are basing increases on something other than medical inflation, wages or general inflation.

Comment:  If you look beyond the inflammatory anti-private insurance rhetoric of this report (mostly appropriate, some perhaps not), you can find a few real numbers to help understand rising insurance costs. From 2000 to 2008, overall inflation increased 21 percent, but medical inflation increased 39 percent, while employer-sponsored insurance premiums increased 90 percent for individuals and 97 percent for families.

The fact that medical inflation grew faster than overall inflation supports the position of the private insurers that rising health care costs have necessitated higher premiums, but that isn't the whole story.

Private insurers' payments to health care providers increased at 72 percent, considerably higher than the rate of medical inflation. This supports the insurers' position that failure of government reimbursement rates to keep up with medical inflation, especially in the Medicare and Medicaid programs, has resulted in a cost shift to the private insurers who are paying more to make up the differences. However, some economists have suggested that this merely represents a failure of the private insurance industry to hold down excessive price increases.

Even with medical inflation and public-to-private cost shifting, premiums have increased at a significantly higher rate. This likely represents both higher administrative costs and greater profits. If the insurance industry were efficient, the percent dedicated to administrative costs should actually decline since higher prices would reduce the percentage of premiums absorbed by each unit of administrative service.

Although the insurance industry has been evasive about the portion of premiums that are consumed by administrative services, the for-profit insurers have been required to report their profits and their medical loss ratios. From the 2009 data (included in this report) we know that their administrative costs are outrageously wasteful, and that their profits are at an all time high.

Today President Obama told representatives of the insurance industry to not raise their prices so high. Do you think that they will listen? It seems that he would be much more effective if he were to tell the public stewards of an improved Medicare for all to get the prices right. 

Monday, June 21, 2010

qotd: Twenty percent average premium increase

Kaiser Family Foundation
June 21, 2010
Recent Premium Increases Imposed by Insurers Averaged 20% for People Who Buy Their Own Health Insurance, Kaiser Survey Finds

People who buy their own insurance report that their insurers most recently requested premium increases averaging 20 percent, according to a new Kaiser survey examining the experiences and views of people who buy health coverage in the non-group or individual market.

Most say they paid the increase, but 16 percent of all policyholders say they switched plans, either buying a less expensive policy from their current insurer or switching companies altogether. After these so-called "buy downs" are taken into account, people who faced a premium increase ended up paying 13 percent more than before.

Many people report being in plans with high deductibles, including one in four (26 percent) with an annual deductible of $5,000 or more and 6 percent with a deductible of $10,000 or more.  

Overall, the average deductible reported for single coverage is $2,498, almost four times the $634 deductible reported on average for employer-sponsored PPO coverage.  Those with family coverage whose deductibles must be met on a per-person basis report an average deductible of $2,959, while those with a family deductible (the total spending required across the entire family before coverage kicks in) report an average of $5,149.

More than one in five (22 percent) say over the past year they or a family member covered by their plan did not get needed medical care because of the cost, and a similar share (20 percent) say they skipped filling a prescription due to cost.

Nearly four in ten policyholders (38 percent) report at least one problem getting their insurer to pay a bill.

"With people in the individual market being hit with average increases of 20%, the survey shows that the steep increases we have been reading about over the last several months are not just extreme cases," Kaiser Family Foundation President and CEO Drew Altman said.

Comment:  This survey is very important because it shows that outrageous insurance premium increases are not limited to the anecdotes that we have been hearing, but rather are a pervasive problem, inflicting the nation with an average 20 percent premium increase in the individual insurance market. Those who say that the Patient Protection and Affordable Care Act (PPACA) will fix this had better take a closer look.

With these increases, it is not surprising that many looked for less expensive plans, usually opting for higher deductibles. But look at the numbers. The average deductible for a family is now over $5000, and for some, $10,000 or more. In spite of all of the buy-downs to higher deductible plans, people still ended up this year paying an average of 13 percent higher premiums - paying more and getting less.

Will PPACA provide relief from these high deductibles that are impairing access to needed medical care? No. The plans will be required to have an actuarial value of only 60 percent, or 70 percent for the exchange plans eligible for premium credits. When the patients' share averages 30 to 40 percent of the costs (plus the premium), it is inevitable that the plans will have high deductibles. 

Will the cost sharing subsidies of the exchange plans adequately ameliorate the impact of the deductibles? No. Lower income individuals do not have adequate disposable income to meet their portion of the cost sharing, even with the subsidies. For those with incomes over 250 percent of the federal poverty level ($55,125 for a family of four), there are no cost sharing subsidies beyond the equivalent of a 70 percent actuarial value. The portion of the subsidized insurance premium that this family would still have to pay is $4438 (8.05 percent of income), so with a $5000 deductible, they would have to pay over 17 percent of their income before coverage begins (except for limited preventive services), and even then they would still have coinsurance payments plus costs for non-covered or most out-of-network services. By any definition, that is underinsurance, which will become the norm for the United States.

The problem is not the total cost of health care for our nation. We can afford it, though we are nearing our collective tolerance. The problem is the fragmented, dysfunctional financing system that results in tremendous inequities and runaway cost increases. A single payer national health program would fix this.

Friday, June 18, 2010

qotd: Sherif Emil - an American physician in Canada

The University of California, Irvine
School of Medicine
June 5, 2010
Commencement Address
Sherif Emil, MD, CM

It is a profound honor for me to be here today at UCI to partake in the commencement ceremonies of a group of individuals who are destined to become 104 of the best doctors in America. My presence at this podium today is the most significant event in my medical and surgical career spanning two decades. It is so significant because the invitation to join you today came from a very special group of medical students, students whom I admire immensely, students who are my pride and joy, students who give me true hope in the future of medicine in this great country of ours, hope that American medicine's best days are still ahead, that its most lasting accomplishments are still to be realized, that one day the best health care in the world will be available to all our citizens without regard to financial means, personal circumstances, or status in society.

Although I left UCI in 2008 and moved to a distinctly less pleasant climate (Canada), UCI has never left me.  My career in pediatric surgery began and matured at this university. I had wonderful mentors, and superb colleagues. 


Finally, please, please stay involved in issues of health care policy. If you think we have passed health care reform, and can now rest easy, think again. We have not passed health care reform. We have only passed some health care expansion. It is too early to judge the effects of what just occurred, but it is not too early to be certain that much work still lies ahead. Make your voice heard in the national debate that started in your senior year, and will almost certainly rage on. It was interesting for me, as an American physician practicing in Canada, to see the recent negative depictions of the Canadian system in TV ads and lay media, depictions that bore absolutely no resemblance to the actual environment in which I practice daily. My reality is very different. I can see any patient and any patient can see me – total freedom of practice. My patients' parents have peace of mind regarding their children's health. If they change jobs or lose their job altogether in a bad economy, their children will still get the same care and see the same physicians. Micromanagement of daily practice has become a thing of the past for me. There are no contracts, authorizations, denials, appeals, reviews, forms to complete, IPA's, HMO's, or PPO's. Our Division's billing overhead is 1 %. My relationship with the hospital administration is defined by professional, not financial, standards. I have no allegiance to any corporate or government entity, nor does one ever get in between me and the patient. This environment, which some denigrate as the ever so scary system of "socialized medicine" allows for more patient autonomy and choice than was available to most of my patients in California. That is not at all to say that I practice in a medical utopia. There is no perfect health care system. The Canadian system has its own set of difficulties, challenges, and shortcomings, and Canadians are also looking to significantly reform their system. But as physicians, we have to enter the debate and we have to enter it objectively, salvaging it from the bias, misrepresentation, and demagoguery that has characterized it. Health care should not be a liberal or conservative issue, for disease, disability, and death do not recognize political affiliations. As a socially conservative Christian myself, my belief that health care is a fundamental human right, and my efforts on behalf of single payer universal health coverage stem from my faith, and not despite it. My faith calls for personal morality, but also for societal morality – how do we treat the sick amongst us, the weak amongst us, the least amongst us?  

Sherif Emil, MD, CM

Comment:  The students know. They brought Sherif Emil back from Canada to give them their commencement address. The future of health care in America is in good hands.

Thursday, June 17, 2010

qotd: NHIS uninsured report portends underinsurance for most

(This message was sent out a several hours ago, but seems to have been lost in cyberspace. If the original message eventually shows up, please excuse the duplication.)

Centers for Disease Control and Prevention (CDC)
National Center for Health Statistics
June 16, 2010
Health Insurance Coverage: Early Release of Estimates From the National Health Interview Survey, 2009
by Robin A. Cohen, Ph.D., Michael E. Martinez, M.P.H., M.H.S.A., and Brian W. Ward, Ph.D.

In 2009:

46.3 million (15.4%) were uninsured at the time of the interview

58.5 million (19.4%) had been uninsured for at least part of the year

32.8 million (10.9%) had been uninsured for more than a year

Estimates of enrollment in HDHPs, CDHPs, and FSAs:

Based on data from the 2009 NHIS, 22.4% of persons under age 65 years with private health insurance were enrolled in a HDHP (high deductible health plan), including 6.3% who were enrolled in a CDHP (consumer-directed health plan) and 16.1% who were enrolled in a HDHP without a health savings account (HSA). Enrollment in HDHPs increased from 17.5% in 2007 to 22.4% in 2009. There was a significant increase in enrollment in HDHPs without HSAs and in CDHPs.

Based on data for 2009, among persons under age 65 with private health insurance, 20.2% with employment-based coverage were enrolled in a HDHP, compared with 46.9% of those with a private plan that was directly purchased or obtained through means other than employment. The percentage of persons covered by employment-based private plans that are HDHPs increased from 15.6% in 2007 to 20.2% in 2009. The percentage of persons covered by directly purchased private health plans that are HDHPs increased from 39.2% in 2007 to 46.9% in 2009. For persons under age 65, approximately 8% of private health plans are directly purchased. HDHPs constitute a growing share of both employment-based and directly purchased health plans.

In 2009, among persons under age 65 with private health insurance, 20.4% were in a family that had a FSA for medical expenses. This is an increase from 2007, when 16.7% of persons under age 65 with private insurance were in a family with a FSA.

Comment:  Although the net loss in insurance coverage for 2009 left another 3 million individuals without coverage, the media response is tempered by the anticipated expansions in health care coverage under the Patient Protection and Affordable Care Act (PPACA). What is being missed in the media reports is a new trend revealed in this survey that will result in an exponential increase in the rates of underinsurance.

A few facts:

* 20.2% of individuals with employer-sponsored plans have high deductible health plans (HDHP)

* 46.9% of individuals with private plans purchased outside of employment have HDHPs

* 72% of those with HDHPs do not have health savings accounts

* PPACA will require plans to have an actuarial value of only 60 percent

Much has been written about how high deductible health plans (HDHPs) result in underinsurance for the majority of Americans, so little will be said here other than to point out that those with medical needs do not receive all of the care that they should have when faced with the financial barrier of a high deductible before they can access the benefits of their health plan. Insurance should improve access to necessary care rather than impair it.

Although the right-wingers in the policy community tout health savings accounts (HSAs) as the solution for making deductibles affordable, there are several flaws. First, close to three-fourths of HDHPs don't even have an HSA component. For those that do, excess expensive and burdensome administration is being wasted on managing the HSAs which are really no different from the patient paying the expenses out of personal savings, except for the very modest tax advantage of the HSA. Whether in an HSA or in a personal savings account, it is still the patient's own money that is being spent. If the HSA or the personal savings account were empty, as might be expected for individuals with medical problems, then the high deductible remains as a barrier to care.

Another approach is to set up a flexible spending account (FSA) instead of an HSA. One-fifth of individuals are in families that already have FSAs through their employment. These are even less rational than HSAs since it is the employee's own pre-tax money that is deposited into the FSA, yet any funds remaining at the end of the year are forfeited. How smart is that?

There is a coalescence of trends that makes it likely that HDHPs will become the standard for most of us with private coverage. To slow the increase in insurance premiums, employers are starting to convert to HDHPs, and one-fifth of them have already done so. Plans in the individual market are much less affordable except for HDHPs. Almost half of those purchasing plans in the individual market have now switched to HDHPs. Because of concerns about high insurance premiums, the drafters of PPACA decided on an actuarial value of only 60 percent for private insurance plans (the patient pays 40 percent of the costs of care). Large deductibles and high coinsurance are used to keep the actuarial value down. Adverse selection of plans will low deductibles will cause a premium spiral that will make those plans unaffordable, forcing even more individuals to choose HDHPs. With these trends it seems that the future will hold little option for most of us not eligible for government programs, other than to enroll in HDHPs.

Since PPACA provides subsidies for both the premiums and out-of-pocket spending, does it even matter if the plans have high deductibles? Since the alleged purpose of high deductibles is to decrease the use of health care by making patients sensitive to health care prices, then it makes no sense to add the administrative excesses and expenses of removing a benefit in the form of the deductible and adding it back in in the form of administered subsidies if the patient ends up bearing only a negligible portion of the costs, thereby jettisoning price sensitivity. As the means- tested subsidies diminish, the deductibles may have more significance, but not for those who are responsible for most of our health care costs - the 20 percent who use 80 percent of our health care.

Will the insurance exchanges obviate the need for HDHPs? When they crafted the PPACA model, it was clear that premiums for comprehensive plans were already too high. That is why they decided on reducing the actuarial values of the plans - 60 percent for the least coverage, though premium subsidies will apply to silver plans with a 70 percent actuarial value. Silver plans will still require high deductibles since they fall short of the typical employer-sponsored plan with an actuarial value of 80 percent or more. 

Since the cost sharing would still be excessive for most individuals and families, PPACA provides for cost sharing credits that would have the effect of increasing the actuarial value on a sliding scale based on income - 70 percent for those at 250-400% of the federal poverty level (FPL) and up to 94 percent for those with incomes at 100-150% FPL. 

There is concern that the combined premium plus the cost sharing for the exchange plans is still too high for most families, but these are the levels that Congress decided would be necessary because of their arbitrary decision to limit how much of the costs would pass through the federal budget.

But what is really ridiculous is that merely to avoid an efficient system with a single, publicly financed universal risk pool, they designed an administratively complex system of variable actuarial values, with variable premium subsidies, with variable cost sharing credits, which will drive the plans to introduce high deductibles as the national standard, when high deductibles have already been demonstrated to be a perverse policy for controlling costs.

Remember, by continuing on our current PPACA course, we are going to see an explosion in high deductible health plans, to the detriment of people who need health care. Of course, we could change course and enact an improved Medicare for all without any deductibles. We wouldn't need price sensitivity if we had our own public health care monopsony.

Wednesday, June 16, 2010

qotd: League of Women Voters calls for 'Medicare for all'

Physicians for a National Health Program
June 16, 2010
League of Women Voters calls for 'Medicare for all'

Noting the Obama administration's new health law falls short of providing affordable care to all U.S. residents, the national convention of the League of Women Voters passed a resolution Monday calling on the group's board to "advocate strongly" for "an improved Medicare for all."

Although many other groups, including labor unions, religious denominations and medical associations, have gone on record in recent years in support of a single-payer health program, or an improved Medicare for all, the League's action is believed to be the first national endorsement of its type since Congress passed the Patient Protection and Affordable Care Act in March.

The resolution was introduced at the Atlanta meeting by Karen Green Stone of Bloomington, Ind., who argued that the new law lacks effective cost controls and does nothing to eliminate wasteful paperwork and bureaucracy in the U.S. health system.

Green Stone commented after the vote, "The delegates at the meeting understood that it has never been more important to push for a single-payer plan, an improved Medicare for all. They loved our new slogan in Indiana: 'Health care reform: We're still for it ... and we're not done yet!'"


League of Women Voters
2010 Convention
Atlanta, Georgia
June 11-15, 2010

Motion #549-473, submitted by LWV of Bloomington-Monroe, IN.

Whereas the League of Women Voters of the United States believes quality health care at an affordable cost should be available to all U.S. residents; and

Whereas the current and proposed systems do not achieve the League goals of affordability and access to everyone; and

Whereas an improved Medicare for all, a publicly funded and privately delivered national health care plan, is consistent with this goal;

Therefore, be it resolved that we, the representatives of local and state Leagues assembled at the 2010 LWLVUS Convention, call upon the LWVUS Board to advocate strongly for bills that legislate for improved Medicare for all.



LWV Address by Health and Human Services Secretary Kathleen Sebelius

Closing remarks:

So I want to thank you for all your hard work on behalf of the Affordable Care Act.  It's a tremendous accomplishment.

But I'm also here to tell you that our work isn't over.  You understand this.  The League of Women Voters was created right before the passage of the 19th amendment.  Some people might have said it was a strange time to start a group focusing on women and democracy.  After all, women were already poised to get the right to vote.

But you knew that passing the amendment was just the first step.  There was still hard work to be done to fulfill its promise.  That's also true for the Affordable Act.

We're on the right track.  But we've still got a long way to go.  And we'll need your help to get there.

Comment:  Once again, the League of Women Voters leads the way. Although they supported the Patient Protection and Affordable Care Act (PPACA), they realize that it falls far short of the League goals of affordability and access for everyone. Even HHS Secretary Kathleen Sebelius concedes that we still have a long way to go. 

There are several beneficial measures in PPACA that we should continue to support. But the greatest deficiency in the act is that the PPACA financing model can never get us to an affordable system that includes everyone. The delegates at the LWV convention recognized this when they passed the resolution calling for the national LWV Board (LWVUS) to "advocate strongly for bills that legislate for improved Medicare for all," since it would provide the financing infrastructure that we desperately need.

The individuals and organizations, who in the name of compromise abandoned support for a national health program, have achieved their lesser goal of passing something - anything - as long as the act provided some benefit. Now that it is clear that tweaks to PPACA will still leave us with only compromised "something - anything" policies, it's time to remount the unified effort to enact an improved Medicare program that includes everyone. We need to give Kathleen Sebelius the tools that she needs to get us there, and that didn't happen with PPACA.

The League of Women Voters has picked up the torch. Let's join them. After all, as they say in Indiana, "Health care reform: We're still for it ... and we're not done yet!"

Tuesday, June 15, 2010

qotd: AMA health insurer report card

June 14, 2010
New AMA Health Insurer Report Card Finds Need For More Accuracy

The American Medical Association (AMA) today announced that one in five medical claims are processed inaccurately by health insurers, according to the AMA's third annual check-up of the nation's commercial health insurers and the systems they use to manage and pay claims. This was the key finding of the AMA's 2010 National Health Insurer Report Card.

The AMA estimates that $777.6 million in unnecessary administrative cost could be saved if the health insurance industry improves claims processing accuracy by one percent. Increasing the health insurance industry's accuracy rating to 100 percent would save up to $15.5 billion annually that could be better used to enhance patient care and help reduce overall health care costs.

National Health Insurer Report Card

Comment:  The private insurance industry is selling us administrative services at an outrageously high price. This report card confirms that we certainly are not receiving value. Not only are we paying them too much, but they also continue to do a lousy job at their most important function - claims processing. Their error rate results in an additional $15 billion annually in administrative waste that could be used for patient care, according to this AMA report.

This year the AMA did not report Medicare's error rate, but, in the 2008 report card, Medicare's compliance rate was vastly superior to all of the private insurers - over 98 Percent.

But the greatest argument for changing to an improved Medicare program that covers everyone is not the reduction in waste caused by private insurer claims processing errors which would save about $15 billion, rather it is the replacement of our dysfunctional, fragmented, private/public financing system with a single payer system which would save us about $400 billion annually.

Even if the private insurers could match the claims performance of Medicare, that wouldn't fix our problems. It's the financing model that needs to be changed. The $4 trillion that we could recover over the next decade would pay for the needed care for the uninsured and the growing numbers of underinsured. We would have solved our health care financing problems, and that would allow us to direct more of our attention and effort to much needed health system reform.

Monday, June 14, 2010

qotd: Insurers wipe out small business credits

San Francisco Chronicle
June 12, 2010
Insurance premium hikes hit small business hard
By John Gonzales

California small-business owners expected to be early beneficiaries of health care reform, with billions of dollars in federal tax relief becoming available this month to help them purchase medical coverage for their employees.

The credit is worth up to 35 percent of a small business' premium costs.

But many said the tax credits granted under the legislation have run up against a new hurdle: a spate of rate increases by insurance companies, including 58 to 75 percent hikes levied recently by Blue Shield of California.

The company offered other coverage without the high rate increase, but included similar deductibles and added co-pays of about 20 percent. The Blue Shield hikes are in line with increases from all major insurers on small business health savings plans, said (Tom Epstein, vice president of Public Affairs for Blue Shield of California).

"Anthem Blue Cross offered this first," he said. "Health Net followed us. Aetna and United offered products like this. Every one of these insurers had very substantial rate increases."

"That money is going right back to the insurance companies," said Brad Wing, co-owner of the San Francisco Advertiser, who received notice of his 58.3 percent increase in April.

"Normally, rates go up 10 to 15 percent and you can swallow it," he said. "But at 58 percent, there's just no way."

Comment:  The Patient Protection and Affordable Care Act (PPACA) is supposed to make health care affordable, primarily by subsidizing private insurance plans. It begins immediately by offering small businesses a credit worth up to 35 percent of premium costs. With Blue Shield of California increasing rates by as much as 58 to 75 percent, how is the small business owner going to find relief when the insurer takes the full subsidy and charges what amounts to another 23 to 40 percent surcharge?

Several individuals who no longer want to hear our single payer message tell us that PPACA is now the law of the land, that private plans are here to stay, and that we need to quit attacking the private insurers and get on with making PPACA work.

When non-profit Blue Shield of California is the best the industry has to offer, how can we possibly ever make that work? We can't. We need to quit supporting PPACA and get on with making an improved Medicare for all work!

Friday, June 11, 2010

qotd: Castlight casts light on sick U.S. health system

The New York Times
June 10, 2010
Bringing Comparison Shopping to the Doctor's Office
By Claire Cain Miller

The lack of price information in health care has been a big driver of ballooning health care costs, analysts say, because costs are opaque to patients and heavily subsidized by employers. The patient has no incentive or responsibility to keep costs down. But many employers are switching to health plans that require patients to pay more out of their own pockets.

A start-up financed by prominent venture capitalists and the Cleveland Clinic, Castlight Health, aims to change that by building a search engine for health care prices. Patients using Castlight could search for doctors that offer a service nearby and find out how much they will charge, depending on their insurance coverage.

Castlight has received money from investment firms including Venrock, Maverick Capital, Oak Investment Partners and from an unlikely source, the Cleveland Clinic.

Ideally, transparency in health care pricing could lead to higher-quality, lower-cost health care, and more patient involvement in buying health care, said Delos Cosgrove, chief executive of the Cleveland Clinic. "Because they begin to realize that a trip to the doctor is not free, they might stay home and take the aspirin instead of getting the neurologic work-up."

Castlight sells its service to employers and charges by employee per month.

Safeway, the grocery chain, with 200,000 employees, has signed on as its first customer.

Safeway has been experimenting with ways to cut health costs, including by using Castlight. "I'm a big believer in trying to create market forces wherever you can and then let personal accountability really drive the result," said Steven A. Burd, the chief executive of Safeway.

Castlight is working on a mobile version of the service to introduce next year so people can access the information from the exam table.

Price transparency could significantly change the way health care is bought in the United States. The notion "seems ridiculously simple and obvious, and in any other industry, you would say, 'Duh, we already have that.' But in health care, it's revolutionary," said Alan M. Garber, a professor of medicine and the director of the center for health policy at Stanford, as well as an investor in Castlight.

Comment:  Our highly dysfunctional, fragmented health care financing system has opened innumerable opportunities for entrepreneurs to glom onto funds that should be going for health care, especially by diverting them to profoundly wasteful administrative services. One of the latest iterations is Castlight, an entity that is capitalizing on the perverse notion, promoted by the right-wing element in the policy community, that we can control health care costs by making patients more sensitive to prices.

The fact that there is much more money to be made in wasteful administrative services is supported by the faith that the venture capitalists have expressed in Castlight. They have put up the financing because they believe that creating a price shoppers portal can suck up more funds out of our health care system. Our entrepreneurs are there to be sure that the United States remains the world's leader in blowing up health care budgets through administrative waste.

Castlight's model begins with the flawed theory that price sensitivity will control health care costs. About four-fifths of health care is provided to the one-fifth of individuals who have the greatest health care needs. Price awareness by these individuals does not influence spending much since most of their care is provided after their deductibles and maximums are met. For the other one-fifth of individuals, only a small portion of their care would be amenable to price shopping, and the discounts that they would receive would have a negligible impact on our total national health expenditures.

Of more concern, requiring out-of-pocket spending as a consequence of accessing health care has been proven to cause individuals to forgo beneficial health care services. A policy that disincentivizes beneficial care should be rejected, especially when it is a policy that wouldn't help much in our efforts to control spending anyway.

Prices are important. The two most significant reasons that we spend much more on health care in the United States than do other nations are our profound administrative waste, and our prices that are much higher than in all other countries. Did other nations price their health care more appropriately by exposing patients to prices? Of course not. They did it by using the monopsonistic power of their governments in setting prices that were fair for patients and yet adequate to ensure that the health care delivery system receives the funds it needs to function. For controlling administrative costs, they simply adopted sane methods of financing health care.

Perhaps the greatest concern over the Castlight start-up involves ethical issues. Let's look at Delos Cosgrove, Steven Burd, and Alan Garber.

Although Cleveland Clinic is often touted as an efficient health delivery model, it seems appropriate to criticize it for investing in an entity that is going to profit by providing more excessive administrative services that would expand application of the flawed policy of shifting more costs to patients in need. Of particular concern is the position of their chief executive, Delos Cosgrove, who glibly suggests that price sensitivity could cause a patient to decline a neurological work-up and to go home and take an aspirin instead. Such an important decision should hardly be made on the basis of price shopping. 

Steven Burd, chief executive of Safeway, has a track record of touting savings through "personal accountability." He glosses over the fact that his savings resulted from switching his employees to high-deductible health plans. Now he is becoming a customer of Castlight thereby solidifying the policy that his employees may not receive care that they should have because they have a price barrier between them and health care.

But what about the ethics of Alan Garber, a professor of medicine and the director of the center for health policy at Stanford? Although very knowledgeable about the impacts of health policy, he is personally investing in a company that wastes more resources on excess administration and that he says is "revolutionary" in bringing transparency in support of the inappropriate price barriers that are being erected on the path to health care. Is that an ethical compromise for a health policy expert? As he says, "Duh."

Thursday, June 10, 2010

qotd: The Medicare-for-all concept won't go away

The Cap Times
June 9, 2010
Plain Talk: Medicare for all still the best idea
By Dave Zweifel, Cap Times editor emeritus

But what's still so befuddling is that health care reform could have been so much better — and easier for everyone to understand.

In fact, following the 2008 presidential election, the opportunity to finally get the United States to adopt a universal single-payer health care system seemed at hand.

Many of the Democrats who had been swept into office that fall had campaigned for single-payer and there were strong indications that the congressional leadership was ready to introduce legislation that, in effect, would reduce the eligibility for Medicare from age 65 to 0.

People were beginning to understand that there's enough administrative waste in the existing system that extending health coverage to every American from birth to death could be accomplished without substantial added cost. Yes, the Medicare payroll tax would need to be increased, but that increase would be more than offset by the elimination of insurance premiums for both employers and employees.

Further, single-payer isn't some kind of experimental, untested idea. It's working all around us, has been for years. For decades the Canadians, the British, the French, the Germans and countless other so-called advanced countries have had a universal health care system that covers all of their citizens.

Yet by the time Congress fiddle-faddled its way through a bunch of meetings and pro-insurance company legislators were placed in key positions to come up with a bill that would somehow appeal to Republicans as well as so-called Blue Dog Democrats, single-payer didn't even make it to first base. The entrenched interests -- those with money to throw into campaign coffers and into lobbying -- succeeded in shoving it aside.

Comment:  Just because Congress passed and the President signed a bill labeled "health care reform" doesn't mean that the policy debate has been retired. Single payer Medicare for all is "still the best idea."

The public will soon understand that "passing reform" did not guarantee insurance for everyone, it did not guarantee that insurance benefits will be adequate to prevent financial hardship, and it did not prevent insurers from denying patients choice by restricting care to their limited networks of providers.

But what will really convince everyone that we didn't get real reform is that individuals, employers and the government will continue to see intolerable increases in the costs of health care. Skyrocketing insurance premiums for low actuarial value products that fail to protect personal household finances will drive the demand for the reform we need.

We don't have to wait until 2020 or later to fix it. Before the November elections, let the candidates know that we want an improved Medicare for all now.

Wednesday, June 9, 2010

qotd: RAND: Few health reform options would have covered more people at lower cost

June 8, 2010
Few Health Reform Options Would Have Covered More People at Lower Cost Than New Law

The recently enacted federal health care reform law provides health insurance coverage to the largest number of Americans while keeping federal costs as low as reasonably possible, according to a new analysis from the RAND Corporation.

The only alternatives that would have covered more Americans at a lower cost to the federal government were all politically untenable—substantially higher penalties for those who don't comply with mandates, lower government subsidies and less-generous Medicaid expansion, according to research published in the June edition of the journal Health Affairs.

Researchers simulated more than 2,000 different policy scenarios using the RAND COMPARE microsimulation model, which was designed by RAND to provide independent analysis about how different reform proposals would impact the American health care system.

"Of all the proposals on the table that would expand health insurance to more Americans, the final health reform law included those that covered the largest number of people at the lowest cost to the federal government," said Elizabeth A. McGlynn, the study's lead author and a senior researcher at RAND, a nonprofit research organization.

RAND article in Health Affairs:


Prior qotd on RAND COMPARE:

Comment:  RAND created a microsimulation model called RAND COMPARE that was designed to "provide independent analysis about how different reform proposals would impact the American health care system." Using this model, Dr. Elizabeth McGlynn concludes, "Of all the proposals on the table that would expand health insurance to more Americans, the final health reform law included those that covered the largest number of people at the lowest cost to the federal government."

On a RAND Webinar event held in January of last year announcing the release of RAND COMPARE, I noted that a single, public insurance model (single payer or Medicare for all) was not an option available on the RAND COMPARE website. Dr. McGlynn then assured me that it was a model that should be added. In followup, others also contacted RAND to request that this model be added, and they received assurances that the matter was being addressed.

If you check the RAND COMPARE website, you will find that they did add well over 100 legislative proposals before Congress. They marked each proposal as to whether or not they addressed specific policies evaluated by the RAND COMPARE model. Some of the policies considered included individual mandate, employer mandate, tax credits, Medicaid eligibility, high deductible health plans, bundled payment, comparative effectiveness, and others. In the chart, H.R. 676, John Conyers' Medicare for all bill received no marks whatsoever, as if it did absolutely nothing under the RAND COMPARE model.

Everyone who understands the single payer model knows that the final health reform law will not cover "the largest number of people" since single payer would have covered tens of millions more - that is, everyone. Also the single payer model would be far more effective in slowing health care cost increases than would the legislation enacted. RAND dodges this by repeatedly stating that the bill represents the "lowest cost to the federal government," but it is our total national health expenditures and not the federal budget that matters.

The slogan for RAND COMPARE on their website is "Facts you can use, analysis you can trust." Well, that sounds "Fair and Balanced." It's only people who need health care that are being victimized.

Tuesday, June 8, 2010

qotd: Howard Dean and others debate Canadian versus U.S. health care

The Globe and Mail
June 7, 2010
A conversation with Howard Dean
By André Picard

On Monday (June 7), a group of prominent American and Canadian physicians (debated), in Toronto, the question: "Be it resolved that I would rather get sick in the U.S. than in Canada." One of the panelists is Howard Dean.

Q. Health-care reform dominated the headlines for a long time. Was it successful?

We didn't pass reform. All we did pass was putting more money into what we already have. It's successful in a sense that 1) we got a major bill passed, which is something for a new administration; 2) we created a system that's going to force reform because of the financial realities; 3) a great many more people are going to have coverage. But this system is still not nearly as effective and efficient as the Canadian system.

Q. What's the single most important lesson that Americans can take from the Canadian system?

It covers everybody with a relative lack of bureaucracy. I know Canadians think there is bureaucracy, but you haven't seen anything until you work in a system with several hundred insurance companies that all do something different. American hospitals have a whole floor occupied by a billing office. You don't have that in Canada.

Q. Conversely, what's the most important lesson Canadians can take from the U.S. health-care system?

I'm afraid I'm not sure there is one. There is more cutting-edge innovative technology, but the cost of that is to pay 70 per cent more than Canadians do for health insurance. Canadians will have to decide if that's a lesson they want to learn.

Q. Bottom line, which system is better for the patient?

I've spent a lot of time in both countries and there is no doubt that you're better off getting sick in Canada.

Q. But don't you have the best health care in the world? We hear that mantra constantly.

We have the best health care in the world for people who can afford it. But Canada has very, very good health care for everybody.

Toronto Debate (almost 2 hours):
"Be it resolved that I would rather get sick in the United States than Canada."
Pro team: William Frist and David Gratzer
Con team: Howard Dean and Robert Bell (Click on "Watch the Debate" for video)

Debate results:
Pro: 27%
Con: 73%

Comment:  As Howard Dean states, "We didn't pass reform. All we did pass was putting more money into what we already have." This is precisely why a debate on the Canadian versus the U.S. health care systems is more timely than ever. 

If you don't have two hours to watch the full debate, you may want to watch the opening statements, and then slide the time bar forward to catch the closing statements (though I watched the full debate live-streamed, and it was well worth my time).

The importance of this message is that this is a crucial debate that has not gone away in spite of the enactment of PPACA. We should all do our part to see that everyone in the United States becomes fully informed on the true facts.

Monday, June 7, 2010

qotd: Johnathon Ross explains why health care financing foundation must be rebuilt

The Plain Dealer (Cleveland)
May 30, 2010
Build foundation for health care on Medicare: Johnathon Ross, M.D.
By Johnathon Ross, M.D.

Mrs. Brown (not her real name) was recently in to check on her blood pressure. She knows I've worked decades for a national health plan that would benefit individuals and businesses alike.

"So what do you think of the reform bill, Doc?" she asked, hoping I'd be pleased.

I replied with a question of my own: "Would you add a third floor to a house that has a crumbling foundation?" Because that is what Congress just did.

The crumbling foundation is our private, for-profit, insurance-based system of financing health care. As nonprofit, community-service organizations, health insurers were once a boon to millions of workers and thousands of companies. Now, they are a very bad bargain, indeed.

Private insurers make money by denying claims. They cause us to waste enormous amounts of money on excess paperwork and bureaucracy -- their own paperwork and the paperwork they inflict on hospitals, patients and doctors like me. An estimated 31 cents of every health care dollar goes toward administration in U.S. health care, at least half of it unnecessary.

The problem is getting worse. The number of administrative personnel in health care jumped more than 3,000 percent over the past three decades, while the number of doctors, nurses and other caregivers has grown by less than 200 percent.

In effect, health care has been overtaken by an army of bureaucrats whose "generals" -- the CEOs -- get astronomical salaries. Money-changers and paper-pushers thrive chasing the money to pay for care -- not deliver it. In our complex, multipayer system, chasing money is expensive work.

Does the new law remedy this? No. "Insurance exchanges" will add yet another layer of private bureaucrats and IRS agents to determine eligibility for subsidies and enforce fines for those who fail to purchase insurance.

Private insurers in the new exchanges will continue to advertise and market their products, bill for premiums, determine eligibility for coverage, coordinate benefits, manage a multitude of yearly contracts with brokers, businesses, individuals, doctors, hospitals and other providers and, lastly, pay stockholders a high rate of return.

Each hospital and doctor will continue to track myriad contracts, discount arrangements, benefit packages, drug formularies, limited referral networks and insurance rules designed to reduce utilization of our medical resources and to increase insurance company profits.

The new law perpetuates this wasteful overhead and guarantees insurers more profits as we spend $447 billion over 10 years to subsidize the mandatory purchase of shoddy private insurance by 16 million uninsured Americans.

The exchanges are supposed to bring down prices by promoting "market competition" among various insurers. But Massachusetts and several other states have had plenty of experience with such exchanges, and the verdict is clear: They don't control costs. In fact, Massachusetts now has the highest health care costs in the world.

As a rule, "market competition" doesn't work well in health care. Health care is not an ordinary product that people want. Rather, it is a necessity that they must have. The most expensive care is most often not optional, predictable or negotiable.

Businesses are groaning under the burden of the rising costs of employee and retiree health care benefits. They, too, need to get out from under the heel of the private health insurance industry and the skyrocketing, volatile prices that come with it.

So what's the alternative? It's building on the solid foundation of our tax-financed, low-overhead Medicare system, and extending it to cover everyone without exception. The administrative savings from such a streamlined system would amount to $400 billion per year, enough to provide comprehensive coverage to all with no significant out-of-pocket expenses and with complete choice of doctor and hospital.

A single-payer system would also have the clout to negotiate drug prices and provider fees, and to allocate resources efficiently and wisely. It would possess powerful tools for improving quality and controlling costs.

Conventional wisdom suggests we have to "wait and see" how the administration's new law plays out. But we can't afford that: With about 50 million uninsured this year, some 50,000 people will die because they lack coverage, a recent study estimates. By 2019, those figures will only be halved, experts say.

It's not too late to do the right thing. The sooner we adopt an expanded and improved Medicare-for-all, the better off our patients and our economy will be.

Johnathon Ross is past president of Physicians for a National Health Program ( and a leader of the Single Payer Action Network in Ohio (

Also posted on the PNHP website:

Comment:  Because of the complexity of the Patient Protection and Affordable Care Act (PPACA) and the intense attention that has been diverted to the details of the act, almost no consideration is being given to correcting the fundamental flaws in the health care financing structure of PPACA. The prevailing attitude is that the legislative task is finished, except for a few tweaks, and so this is the law that we are going to have to live with indefinitely.

Today's qotd included Johnathon Ross's piece in its entirety because it explains so well, in a single, easily read article, why we need to dismiss this idea that the legislative task has been completed, and why we must revise the financing system by getting rid of the private insurers and Medicaid, and replace the entire financing system with an expanded and improved Medicare for all. 

The article can be downloaded to be used in your advocacy work by distributing it electronically or by printing it out to be distributed as handouts.

We must reopen the national dialogue on comprehensive reform, and this article can be used to initiate the requisite conversation. Failure to do so will result in more suffering, hardship, and even death. As a civilized society, we simply can no longer allow that.

Friday, June 4, 2010

qotd: Will financial incentives work?

Mathematica Policy Research, Inc.
May 2010
Financial Incentives for Health Care Providers and Consumers
by Jill Bernstein, Deborah Chollet, and Stephanie Peterson

Health reform will emphasize financial incentives for providers and consumers to promote the use of effective health services and discourage the use of marginally effective or inappropriate services. This brief looks at evidence on the impacts of financial incentives and draws lessons for policymakers.

Consumer Incentives Affect Their Choices

Most private and public insurance plans use financial incentives to constrain consumer demand for care. This strategy is premised on the idea that consumers will make better decisions about seeking care and using cost-effective services when they bear responsibility for a portion of the cost. So-called "consumer-directed" health plans attempt to extend this model, coupling high cost sharing with consumer information about treatment alternatives.

Indeed, research shows that cost sharing — including deductibles, coinsurance, and copayments — does affect health care use and expenditures. However, cost sharing can have important negative effects on health, and high cost sharing may ultimately have little impact on total costs.

When people respond to greater cost sharing by reducing their use of health services, they may forgo services that are necessary and effective as well as those that are more discretionary or ineffective. Forgoing care in response to higher cost sharing may not have significant health consequences for people with good overall health status and average income. But people with health problems and those with lower income and education enrolled in high-deductible health plans may suffer worse outcomes when they forgo or delay care. Vulnerable populations are especially likely to experience negative health outcomes related to cost sharing.

In addition, financial incentives may not significantly change the overall costs of care. Consumers with serious health problems account for most health care costs. Even if strong incentives induce these consumers to use care judiciously, most of their care is nondiscretionary, and costs that exceed their cap on out-of-pocket spending may account for most of the total cost of their care.

Value-Based Purchasing

A growing number of private and public payers (including Medicare) use financial incentives targeted to providers, consumers, or both, and linked to measures of health care quality and efficiency. These strategies have come to be known generally as value-based purchasing.

Value-based purchasing efforts that focus on providers typically use evidence-based measures of quality, effectiveness, and efficiency to classify or select providers, and to determine how much they are paid. These payment strategies, generally known as "pay for performance" (P4P), may also take into account measures of consumer experience or satisfaction. Most commercial P4P systems use hybrid approaches that combine fee-for-service payment with payment bonuses or withholds that reflect provider performance on specific measures of quality or patient satisfaction.

Value-based systems have encountered various problems related to consumer education and continuity of care that have affected their ability to meet program goals. For example:

* Consumers sometimes associate higher prices with higher quality, leading them to select inefficient, lower-quality health plans with higher premiums.

* Adverse outcomes — and ultimately greater cost — may result when conversions to new evidence-based treatment protocols disrupt care. Disruptions may be especially problematic for patients with serious, chronic illnesses and close ties to their care providers. Although careful targeting of incentives can protect vulnerable patients by identifying those who would most benefit from specialized care, it may also entail additional costs for technical and clinical expertise and for educating and communicating with patients.


Evidence on the impacts of financial incentives in private and public insurance plans is limited, but we do know that:

* In general, financial incentives work best when carefully targeted to a specific population, set of services, or health condition. However, providing high quality, effective care can be expensive, even when it is targeted.

* Incentives that improve care and reduce cost present challenges. For plan administrators, designing and using effective incentives can be technically demanding and administratively expensive. For providers, performance reporting can be time consuming. For consumers, choosing among plan options, providers, and treatments can be difficult.

* If not carefully designed, financial incentives can have unintended adverse consequences, including poorer health outcomes and higher long-term costs.

Comment:  Considerable attention has been paid to controlling health care costs through financial incentives to constrain consumer demand for care (e.g., consumer-directed health care, or CDHC) or to encourage value-based purchasing (e.g., pay for performance, or P4P). This is more than just a theoretical construct since the Patient Protection and Affordable Care Act (PPACA) "focuses on developing financial incentives to improve quality of care and constrain costs."

A great many readers have told me that they often skip the excepts from the resource, and go straight to my comment. Today's surprise is that I do request that you read the excerpts above so that you understand more clearly why CDHC and P4P are yet other diversions that will not save money and yet would risk adverse outcomes.

(I'll omit the comment that a single payer financing system would bring all of us true consumer choice of health care, absent financial barriers, while providing us value-based purchasing though the power of our own public monopsony. Er... I guess I didn't omit that after all.)

Thursday, June 3, 2010

qotd: The Dartmouth Atlas and ACOs

The New York Times
June 2, 2010
Critics Question Study Cited in Health Debate
By Reed Abelson and Gardiner Harris

In selling the health care overhaul to Congress, the Obama administration cited a once obscure research group at Dartmouth College to claim that it could not only cut billions in wasteful health care spending but make people healthier by doing so.

But while the research compiled in the Dartmouth Atlas of Health Care has been widely interpreted as showing the country's best and worst care, the Dartmouth researchers themselves acknowledged in interviews that in fact it mainly shows the varying costs of care in the government's Medicare program. Measures of the quality of care are not part of the formula.

The mistaken belief that the Dartmouth research proves that cheaper care is better care is widespread — and has been fed in part by Dartmouth researchers themselves.

The debate about the Dartmouth work is important because a growing number of health policy researchers are finding that overhauling the nation's health care system will be far harder and more painful than the Dartmouth work has long suggested. Cuts, if not made carefully, could cost lives.

A graphic comparing "The Dartmouth Atlas of Health Care" with Medicare's "Hospital Compare":


May 25, 2010
Monarch HealthCare, HealthCare Partners, and Anthem Blue Cross Chosen for Innovative National Healthcare Program

Two of Southern California's leading physician-governed medical groups, along with Anthem Blue Cross, have been selected for participation in a new and innovative, nationally-recognized healthcare model that rewards providers for improving patient outcomes, while slowing cost growth.
Monarch HealthCare, an Irvine, California-based Medical Group and Independent Physician Association (IPA), and HealthCare Partners, a Torrance, California-based Medical Group and IPA, will collaborate with Anthem Blue Cross in an Accountable Care Organization (ACO) pilot project led by the Engelberg Center for Health Care Reform at Brookings and The Dartmouth Institute for Health Policy and Clinical Practice. The selection of the two California organizations furthers the nationwide demonstration project already underway in three other communities. The demonstration project expects to produce a successful model that will be replicable throughout the country. 

Jay Cohen, M.D., president and chairman of the board at Monarch, believes "this is a very exciting development for anyone who supports innovative ideas designed to improve healthcare delivery in the communities we serve. Monarch has always been a leader in this regard and is delighted to have been selected as a pilot site for this project."

Comment:  The Dartmouth Atlas of Health Care has been an important contribution to the health policy literature because it demonstrates that regional variations in health care spending are very real. The reasons for these differences are complex and certainly not fully understood at this time.

In spite of the lack of adequate comprehension of the multiple factors involved, the Dartmouth researchers and the Washington politicians are pushing us into accountable care organizations (ACOs) that would arbitrarily reduce spending in high cost areas even though that spending might be medically appropriate and such reductions could impair health care outcomes.

Examples of other important factors that should be considered include the rates of poverty in the region, the population health status in the region, adequacy of health insurance and other financing programs, prices being charged for health care services, excess or deficient capacities in health care facilities especially for high-tech services, and whether or not the variations in frequency and intensity of services are medically appropriate. All potential factors should be well defined through further study, and then policy decisions should be made on the facts.

Unfortunately, moving forward with ACOs is not based on solid policy science. The prototype already initiated by the Dartmouth Institute and others, as mentioned in the Marketwire article above, is really not much different from the HMO concept.

Each year Jay Cohen, MD, MBA, the president and chairman of Monarch HealthCare, and I coach competing debate teams at the University of California at Irvine School of Medicine. The debate is on single payer versus managed care. I can assure you that the ACO under Monarch HealthCare will be structured based on markets and money, with "accountable" prioritized over "care." Who in their right mind would ever believe that a new label for an old entity will somehow magically reduce our health care spending?

We do need to proceed with studies that could lead to promising efficiencies, but we should not allow the dubious ACO experiment to divert us from introducing proven efficiencies now. The most obvious would be to introduce a single payer national health program. That would provide us with much greater value in our health care purchasing while slowing the rate of cost growth throughout the future. And, oh yes, it would ensure that all of us would receive the care that we need - a mission not on the agendas of ACOs.