Wednesday, October 31, 2012

Fwd: qotd: Privately-run NHS hospital racks up £4.1m loss

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Privately-run NHS hospital racks up £4.1m loss
Date: Wed, 31 Oct 2012 11:24:45 -0700
From: Don McCanne <>
To: Quote-of-the-Day <> <>
October 28, 2012
Fury as first privately run NHS hospital racks up £4.1m loss
By Nick Dorman

Bosses at Britain's first privately-run NHS hospital have asked for a
bailout just six months after taking over.

In a major blow to Tory plans to privatise the health service further,
contractor Circle racked up losses of £4.1million at Hinchingbrooke.

Now the firm, which is run by a former Goldman Sachs banker and has
expressed an interest in running other hospitals, has been forced to ask
the local NHS trust for a cash advance.

The hospital has fallen 19 places from the top of a Government league
table of patient ­satisfaction since it was taken over by Circle.

Last night Unison health union said this raises big questions over Tory
­privatisation plans for the NHS.

Spokesman Anne Mitchell added: "This should force a rethink. Right from
the start our view was a private company would not have the experience
to run a large hospital like Hinch­-ingbrooke.

"They made many claims which they are now ­failing miserably to deliver."

Shadow health minister Jamie Reed said: "Patients are paying the price
for David Cameron's eagerness to hand the NHS to private companies."


BBC News
October 25, 2012
Hinchingbrooke losses double Circle Health estimate

The first NHS hospital to be run by a private company has revealed
losses in the firm's first six months in charge were almost double those

Circle Health took over management of Hinchingbrooke Hospital in
Cambridgeshire in February.

The board reported that 46 nursing posts had been cut so far at the
Huntingdon hospital under Circle's management.

Karen Webb, regional director for the Royal College of Nursing (RCN)
union, said: "The RCN doesn't see how [quality care] can be achieved by
removing nurses from the system.


The Telegraph
August 4, 2012
Ali Parsa: Government should not be running hospitals
By Andrew Cave

"It's all about bringing entrepreneurialism, ownership and a sense of
engagement into health care," says Parsa, pointing out that the company
subsidiary delivering the health care is 49.9pc owned by hospital staff.

So, how big can Circle become? Parsa, who came to the UK by himself from
Iran at the age of 16 a few years after the 1979 Islamic revolution and
built up and sold a media promotions company before moving into
investment banking with Credit Suisse, Merrill Lynch and Goldman Sachs,
apparently sees no limit.

"I'm an entrepreneur with ambition," he says. "And I didn't come to run
a small company in Circle. We came to create a very large organisation.

"On a 10 to 20-year view, I think the scale of private companies running
NHS health care in Britain could be huge. I honestly cannot see why we
should not be running many, many hospitals in the UK.

"And if we are doing a great job in the UK 10 or 20 years from now,
there's no reason why we should not be doing the same thing all over the

Comment: Britain's Conservative Prime Minister David Cameron has been
eager to privatize their National Health Service. What a great start.
Hinchingbrooke, now privately managed by former Goldman Sachs banker Ali
Parsa, has racked up losses of £4.1 million and has plummeted on the
Government's new patient satisfaction league table. Apparently Cameron
and his Conservatives are blind as to what has happened across the Atlantic.

Of significance is that the tendering process for this arrangement began
under the Labour government. Just as the Democrats here have supported
an expansion of privatization through private insurers and private
managed care organizations, Labour seems to be complicit in Britain's
move toward privatization. Taking care of the one percenters seems to be
an international phenomenon. Sad.

Tuesday, October 30, 2012

Fwd: qotd: Important: We have the wrong Medicare program

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-------- Original Message --------
Subject: qotd: Important: We have the wrong Medicare program
Date: Tue, 30 Oct 2012 10:45:54 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

Archives of Internal Medicine
October 29, 2012 (Online First)
Cost Control in a Parallel Universe: Medicare Spending in the United
States and Canada
By David U. Himmelstein, MD; Steffie Woolhandler, MD, MPH

As the United States was implementing Medicare in 1966, Canada was
phasing in its own Medicare program, which covered all Canadians under
provincially administered plans. While these provincial plans varied,
all incorporated significant payment reforms—global budgeting of
hospitals and stringent capital expenditure controls—and banned
copayments and deductibles.

Before the mid-1960s, the 2 nations' health care financing systems were
similar, and health care costs were comparable. Since then, overall US
costs have grown more rapidly, but no study has compared spending for
the elderly—the populations covered by Medicare in both nations.


US Medicare spending per elderly enrollee rose from $1215 in 1980 to
$9446 in 2009 (an inflation-adjusted 198.7% increase). The comparable
increase for Canada was 73.0% (from $2141 to $9292). Canada's higher
base-year spending reflects its more comprehensive benefits, covering
about 80% of seniors' total health costs, vs about 50% in US Medicare.

The Table lists actual US Medicare spending from 1980 through 2009 and
projected spending and savings had US costs risen at the lower Canadian
rate. Projected savings totaled $154.2 billion in 2009 and $2.156
trillion for 1980 through 2009.

For the 1971-2009 period, US costs rose 374.1% vs 126.3% for Canada, and
estimated foregone savings were $2.9024 trillion.


Medicare spending has grown nearly 3 times faster in the United States
than in Canada since 1980. Had US Medicare costs risen at Canadian
rates, rather than a deficit of $17.1 billion in 2009, the Medicare
Hospital Trust Fund would have realized a $32.3 billion surplus. Savings
on Medicare Part B would have been even larger. By 2009, the $2.156
trillion in excess spending attributable to US Medicare's faster growth
was equivalent to more than one-sixth of the national debt.

Several features of Canada's program help constrain costs. First, the
single-payer system has simplified administration, holding
administrative costs to 16.7% of overall spending vs 31.0% in the United
States. Although US Medicare's internal overhead costs are low, it
remains one among many payers. Hence providers' administrative costs are
inflated by having to deal with a multitude of payers and track
eligibility, attribute costs, and bill for individual patients and services.

Second, Canadian hospitals receive prospectively determined global
operating budgets, removing incentives to provide unnecessary care while
simplifying billing and administration. However, unlike accountable care
organization payment schemes in the United States, capital costs are not
folded into the global budgets but distributed separately through an
explicit health-planning process. Canadian hospitals cannot use
operating surpluses to fund new buildings or equipment but must request
separate capital appropriations. Hence, they cannot expand by
overproviding lucrative services, gaming the payment system through
upcoding, avoiding unprofitable patients, or cost shifting.

Third, 51% of Canada's physicians are primary care practitioners vs 32%
in the United States. Primary care–centered health systems are generally
thriftier. Canada's outpatient fee schedules are also less technology
skewed than in the United States.

Fourth, Canada's provincial plans have used their concentrated
purchasing power to limit drug and device prices.

Finally, litigation and malpractice costs have remained relatively low
in Canada.

Life expectancy at age 65 years is longer and has grown faster in Canada
than in the United States since 1980 (and 1971), offering reassurance
that cost control has not compromised quality. A meta-analysis suggests
that clinical outcomes are, if anything, better for Canadians than for
insured Americans.

To some, US Medicare's grim financial health suggests an even grimmer
conclusion: it can no longer keep its promise of all needed care for the
elderly population. Some would replace it with vouchers that seniors
could use to purchase private coverage. Others suggest upending the
current payment system by inverting volume-based incentives, offering
instead profits to organizations that limit utilization. Yet the
efficacy of these drastic solutions remains unproven. Canada's
road-tested cost-containment methods offer an alternative.

PNHP Press Release:'s-health-costs-for-seniors-rising-slowly-points-way-to-medicare-solvency-ar

Comment: This study is particularly important because it compares
spending in our Medicare program for beneficiaries 65 and older with
Canadian Medicare spending for the same age population during the same
decades studied. This apples to apples comparison reveals that there is
no contest. Since 1971, we've spent almost $3 trillion more than we
would have had we used Canada's payment reforms. The Medicare Hospital
Trust Fund would have had a huge surplus by now, and nobody would be
claiming that Medicare is "going broke."

The difference is due to economic policies that really do work. Single
payer advocates already know what these are, but for those who need a
reminder, they are listed in the Comment in the original article above.

Not only did Canadians more effectively control their health care cost
increases, their life expectancy grew more rapidly during the same time
period. They benefited more under their cost efficient Medicare model.

We have enough understanding of health policy science to predict that
the current proposals to control spending in the United States will
either have very little impact, or, much worse, will reduce spending by
making health care access even more unaffordable.

Comparing the two Medicare programs, the Canadian system pays about 80
percent of health care costs, whereas our Medicare program pays only
about half. Also, Canada has banned copayments and deductibles for
physician and hospital services - a mainstay of the perverse, misguided
efforts to control health spending in the United States. We can control
spending without imposing financial penalties on people accessing health
care that we want them to have.

It is time for all of us to express our OUTRAGE! We can no longer accept
inaction by our politicians because they fear the political
consequences. We have to make them understand that they face dire
political consequences if they don't act. As FDR said, "Make me do it."
It's time to get in their faces!

Monday, October 29, 2012

Fwd: qotd: A national plan for the exchanges

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: A national plan for the exchanges
Date: Mon, 29 Oct 2012 07:41:20 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

The New York Times
October 27, 2012
U.S. Set to Sponsor Health Insurance
By Robert Pear

The Obama administration will soon take on a new role as the sponsor of
at least two nationwide health insurance plans to be operated under
contract with the federal government and offered to consumers in every

These multistate plans were included in President Obama's health care
law as a substitute for a pure government-run health insurance program —
the public option sought by many liberal Democrats and reviled by
Republicans. Supporters of the national plans say they will increase
competition in state health insurance markets, many of which are
dominated by a handful of companies.

The national plans will compete directly with other private insurers and
may have some significant advantages, including a federal seal of
approval. Premiums and benefits for the multistate insurance plans will
be negotiated by the United States Office of Personnel Management, the
agency that arranges health benefits for federal employees.

John J. O'Brien, the director of health care and insurance at the
agency, said the new plans would be offered to individuals and small
employers through the insurance exchanges being set up in every state
under the 2010 health care law.

Under the Affordable Care Act, at least one of the nationwide plans must
be offered by a nonprofit entity. Insurance experts see an obvious
candidate for that role: the Government Employees Health Association, a
nonprofit group that covers more than 900,000 federal employees,
retirees and dependents, making it the second-largest plan for federal
workers, after the Blue Cross and Blue Shield program.

Richard G. Miles, the association's president, expressed interest in
offering a multistate plan to the general public through insurance
exchanges, but said no decision had been made.

"Our expertise in the Federal Employees Health Benefits Program would be
useful in the private marketplace," Mr. Miles said in an interview. "But
we are concerned about the underwriting risk in providing insurance to
an unknown group of customers."

To be eligible to participate in the multistate program, insurers must
be licensed in every state. The Government Employees Health Association
recently bought a company that has the licenses it would need.

National insurance plans will be subject to regulation by the federal
government, state insurance commissioners and state insurance exchanges.
That mix could cause confusion for some consumers who have questions or
complaints about their coverage.

The federal standards will pre-empt state rules in at least one respect:
the national health plans will automatically be eligible to compete
against other private insurers in the new exchanges, regardless of
whether they have been certified as meeting the standards of those

The administration has promised to "work cooperatively with states." But
it is unclear whether the government-sponsored plans will have to comply
with all state laws and consumer protection standards; whether they will
have to comply with state benefit mandates; and whether they will have
to pay state fees and taxes levied on other insurers to finance exchange

Robert E. Moffit, a senior fellow at the conservative Heritage
Foundation, said he worried that "the nationwide health plans, operating
under terms and conditions set by the federal government, will become
the robust public option that liberals always wanted."

Rules for the new program have been under review by the White House for
three months, and officials said they would be issued soon.


H.R.3590, Patient Protection and Affordable Care Act (P.L.111-148)

(1) ESTABLISHMENT.—The Secretary shall establish a community health
insurance option to offer, through the Exchanges established under this
title (other than Exchanges in States that elect to opt out as provided
for in subsection (a)(3)), health care coverage that provides value,
choice, competition, and stability of affordable, high quality coverage
throughout the United States.

Comment: Although the White House has not yet released the rules for
federally-sponsored national health plans, we really don't need those
rules to know that this program is not an incremental step towards a
single payer national health program.

At this point, consideration is being given to using the Government
Employees Health Association as a national plan to be offered to
individuals and small businesses through the state insurance exchanges.
This plan is one already offered to government employees through the
Federal Employees Health Benefits Program (FEHBP) administered by the
United States Office of Personnel Management (OPM).

This is still a private plan, even if it is non-profit serving
government employees. It is not and never will be a publicly-owned plan
such as the traditional Medicare program. Currently it is being proposed
for a rather limited market - the state insurance exchanges which will
be offering coverage for only the relatively small proportion of our
population that qualifies for the exchanges. It will be competing on a
private market basis with other private plans within the exchanges.
There is concern that it would be exposed to adverse selection -
insuring more expensive patients such as those with preexisting
disorders, many of whom are currently amongst the ranks of the
uninsured. So it may not even be able to compete on an equal basis with
the other private plans that have proven themselves quite capable of
dodging adverse selection. So it still will be just another cog in our
fragmented, dysfunctional system of financing health care.

It will be offered nationally, in some ways meeting the expressed desire
of Republicans to offer insurance across state lines. It is unclear if
this would satisfy their intent to allow the plans to escape state
regulation since it is not yet known how the state and federal
governments will share regulatory oversight. This aspect of the national
plan could be a step backward.

Thus this national private plan currently offered to government
employees will still be nothing more than a private plan in a market of
other plans within the state exchanges. The single payer community
should not waste its time trying to make this plan something that it is
not and never can be. We cannot let up in our advocacy for a bona fide
national single payer program - an improved Medicare for all.

Friday, October 26, 2012

Fwd: qotd: Bipartisan report on costs is leading us astray

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-------- Original Message --------
Subject: qotd: Bipartisan report on costs is leading us astray
Date: Fri, 26 Oct 2012 04:48:40 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

PBS NewsHour/Kaiser Health News
October 24, 2012
Seven Factors Driving Up Your Health Care Costs
By Julie Appleby

There is no one villain in the battle against rising health care costs.
Currently, the United States spends more on health care services than
any other country, exceeding $2.6 trillion, or about 18 percent of gross
domestic product. Most years, medical spending rises faster than
inflation and the economy as a whole. Many factors -- and nearly
everyone -- contributes to those increases.

Here are seven ways you or your medical providers play a role, based on
a recent report from the Bipartisan Policy Center, a think tank in
Washington, D.C.

1. We pay our doctors, hospitals and other medical providers in ways
that reward doing more, rather than being efficient.

2. We're growing older, sicker and fatter.

3. We want new drugs, technologies, services and procedures.

4. We get tax breaks on buying health insurance -- and the cost to
patients of seeking care is often low.

5. We don't have enough information to make decisions on which medical
care is best for us.

6. Our hospitals and other providers are increasingly gaining market
share and are better able to demand higher prices.

7. We have supply and demand problems, and legal issues that complicate
efforts to slow spending.

The Bipartisan Policy Center report on which this article was based:
What Is Driving U.S. Health Care Spending?
America's Unsustainable Health Care Cost Growth

Comment: Julie Appleby is a highly credible health care reporter who
has done an excellent job of reporting the views expressed in this
report released by the Bipartisan Policy Center, an organization founded
by Bob Dole, George Mitchell, Howard Baker and Tom Daschle. As we shall
see, when we look at these seven health care cost factors, "bipartisan"
has now come to mean a right-wing position between the extreme
conservative views held by most of today's elected Republicans, and a
moderate-right view held by the majority of Democrats. This corruption
of bipartisanship has had a devastating impact on our efforts to achieve
health care justice for all.

Let's look at each of the seven factors supposedly driving up our health
care costs, keeping in mind the fact that other industrialized nations
have much more effective health care financing systems which are able to
deliver care to everyone at an average of half what we spend. The
numbers here refer to each item in the article.

1. It seems that almost everyone in the policy community believes the
meme that our health care costs are too high because we pay for care
based on fee-for-service - a system that rewards doctors and hospitals
for providing a greater volume of more complex health care services and
products. The primary flaw in this explanation is that many other
nations also use fee-for-service yet are still able to control their
total health care costs. The primary defect is not in the way we
determine what health care is worth, but in the fundamental dysfunction
of our health care financing system.

2. We are getting older, obesity is increasing, and more chronic
conditions are diagnosed. However, with minor variations, the same
supposed changes are happening in other nations as well, yet without the
need to drive health care costs up as rapidly as we do. We still fall
short on life expectancy when compared to other nations, so living more
years has not been the problem. Obesity is a problem, as it is in other
nations, but the answers lie more in public health measures encouraging
better nutrition and more exercise, and less on care provided within our
health care delivery system, except for preventive programs. Much of the
reported increase in chronic disease is related to the emphasis on
recording in more detail diagnoses which then permits higher billing for
more complex conditions and also provides a basis for greater rewards
under pay-for-performance and other so-called quality schemes. Refined
diagnoses are possible for example when using much more inclusive
laboratory criteria for the defining diabetes or hypercholesterolemia
(just a touch of disease), or also by including osteoarthritis as a
diagnosis in the elderly - a condition that has always been there but
frequently not reported unless it was the primary presenting complaint.
Our disease epidemic is more in augmented documentation than it is in
exploding pathophysiology.

3. Almost everyone says that our newer expensive technologies and our
plethora of expensive new drugs are major reasons for our high health
care costs. Guess what. Other nations use the same technology and the
same drugs, yet do not spend nearly as much as we do on health care.
Some of the new technologies replace older technologies, and the actual
costs (not prices) are often not higher. Also the breakthrough drugs of
prior decades become the low-cost generics of today. Yes, advances do
add to medical spending in all nations, but not nearly to the extent
suggested by the policy community and politicians.

4. Many blame the tax benefits provided for employer-sponsored health
plans as an incentive to purchase "Cadillac plans" that provide far more
coverage than most people need. Yet actually our private plans have been
shifting more costs to patients through higher deductibles and other
cost sharing, while paring back on benefits and restricting access
through measures such as limited provider networks and tiering of
products and services. Again, other nations have not adopted these
perverse barriers to care to the same extent that we have, yet they
still provide care at a much lower level of spending. Contrary to
popular lore, patient insensitivity to costs is not the primary reason
why our health care spending is so high.

5. The lack of transparency is often blamed for our high costs. If
patients only understood better all of their options and were better
informed on the potential adverse consequences of their decisions, then
they wouldn't be demanding all of this unnecessary care. Those who make
this claim are ignoring the fact that it now has been decades since we
recognized that patients must provide their informed consent for health
care. Doctors do explain the options and the potential problems of
various diagnostic and therapeutic interventions. Paternalistic medicine
has been largely replaced by the patients' need to know. Better
information is already resulting in greater value in our health care

6. Consolidation amongst hospitals and physician groups has provided
them with greater market leverage that results in higher prices. But
where is this occurring? It is the private insurers that have been far
less effective in negotiating savings with the providers. If you look up
the S&P health care indices, commercial carriers (private insurers) have
continued to increase health care spending at intolerable escalating
rates, while the Medicare index has demonstrated that public agencies
are much more effective than the private sector in keeping the rate
increases down to more tolerable levels (bending the cost curve).
Administrators of public health care financing programs are able to
override the unfair advantage that market consolidation permits.

7. It is often said that our supply-side excesses result in excessive
spending. Actually, as far as hospital beds and health care
professionals, we do not have excesses when compared to other nations,
except perhaps in certain resources such as imaging. We do have a
maldistribution of resources, the worst being a disproportion between
primary care professionals and specialist physicians. We need to
reinforce our primary care infrastructure and reduce the overemphasis on
some, but not all, of the specialized fields. The malpractice problem
does need to be addressed through measures such as alternative dispute
resolution, but the savings expected by reducing CYA medical management
has often been overstated since we will always have low-yield testing,
even if the malpractice threat goes away, since those tests potentially
can result in important beneficial outcomes, even if less frequent. It's
just that the emphasis will be on protecting the patient rather than on
protecting the doctor.

Following is the "Conclusion and Next Steps" from the report of the
Bipartisan Policy Center (link above):

"The drivers of health care cost growth are complex and multi-faceted.
Just as no single driver is responsible for our high and rising health
care costs, no single policy solution will be adequate to meet this
challenge. For this reason, the BPC Health Care Cost Containment
Initiative plans to produce a comprehensive, bipartisan package of
health care cost containment options that, if implemented together,
could reduce system-wide health care costs, slow cost growth and improve
the efficiency and quality of care in the United States."

The Bipartisan Policy Center is politically influential and may well be
a major player as Congress begins to embark on these right-wing
"bipartisan" solutions to health care costs. The primary reason that
this framing of the problems is considered right-wing is that it diverts
our attention away from the real solutions as it attacks these problems
in a way that will perpetuate our perverse, dysfunctional health care
financing system - further reinforcing the private insurance industry
that has been a major source of our problems, while using the
underfunded and therefore inadequate Medicaid program as a safety net.

What we really need is no secret. We need an administratively efficient
financing system that will reduce one of the largest sources of excess
health care costs in the United States - the administrative waste of the
fragmented multi-payer system which is heavily dependent on the
inefficient private insurers, and the waste of the administrative burden
that this system places on our hospitals and health care professionals.
We need a public administration which would improve the allocation of
our health care resources through regional planning, including improving
and expanding our primary care infrastructure. Our public administrators
can also use their power as a beneficent monopsony to get pricing right
- improving cost effectiveness while promoting high quality,
evidence-based medicine.

Julie Appleby has done a great job in distilling the contents of this
Bipartisan Policy Center report. Now it's our job to provide the proper
perspective. She reports. We decide.

Thursday, October 25, 2012

Fwd: qotd: Health care insurance lessons from Greece

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Health care insurance lessons from Greece
Date: Thu, 25 Oct 2012 04:25:15 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

The New York Times
October 24, 2012
Amid Cutbacks, Greek Doctors Offer Message to Poor: You Are Not Alone
By Liz Alderman

Life in Greece has been turned on its head since the debt crisis took
hold. But in few areas has the change been more striking than in health
care. Until recently, Greece had a typical European health system, with
employers and individuals contributing to a fund that with government
assistance financed universal care. People who lost their jobs still
received unlimited benefits.

That changed in July 2011, when Greece signed a loan agreement with
international lenders to ward off financial collapse. Now, as stipulated
in the deal, Greeks who lose their jobs receive benefits for a maximum
of a year. After that, if they are unable to foot the bill, they are on
their own, paying all costs out of pocket.

About half of Greece's 1.2 million long-term unemployed lack health
insurance, a number that is expected to rise sharply in a country with
an unemployment rate of 25 percent and a moribund economy, said Savas
Robolis, director of the Labor Institute of the General Confederation of
Greek Workers. A new $17.5 billion austerity package of budget cuts and
tax increases, agreed upon Wednesday with Greece's international
lenders, will make matters only worse, most economists say.

"In Greece right now, to be unemployed means death," said Dr. Kostas
Syrigos, (the chief of oncology at Sotiria General Hospital in central

"We are moving to the same situation that the United States has been in,
where when you lose your job and you are uninsured, you aren't covered,"
Dr. Syrigos said.

Comment: Greece's austerity program has been devastating. Greece's
lenders have imposed on them the requirement that individuals lose their
health insurance after one year of unemployment. As Dr. Kostas Syrigos
states, "We are moving to the same situation that the United States has
been in, where when you lose your job and you are uninsured, you aren't

So the European nation that is suffering most from the current financial
crisis has had to drop its health care coverage standards to that of the
United States. Isn't there a lesson here for us?

But you say that the Affordable Care Act has fixed that. If you lose
your employer-sponsored coverage you can always buy insurance in the
exchanges (but not if you can't pay your share of the subsidized
premium). If you lose most or all of your income, you can always sign up
for Medicaid (but not if your state declined to participate in the
expanded program).

Greece is right to hold us up as the example of the worst health care
coverage standards of all industrialized nations. The irony is that we
are wealthy enough and are already spending enough money to do something
about it, but we don't. We still can, by enacting an improved Medicare
that covers everyone. Can't we learn from Greece's experience?

Wednesday, October 24, 2012

Fwd: qotd: Mark Pauly: Cost effectiveness depends on cost sharing

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Mark Pauly: Cost effectiveness depends on cost sharing
Date: Wed, 24 Oct 2012 14:44:46 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

National Bureau of Economic Research
October 2012
Cost Effectiveness Analysis and the Design of Cost-Sharing in Insurance:
Solving a Puzzle
By Mark Pauly

The conventional model for the use of cost effectiveness analysis for
health programs involves determining whether the cost per unit of
effectiveness of the program is better than some socially determined
maximum acceptable cost per unit of effectiveness. If a program is
better, the policy implication is that it should be implemented by full
coverage of its cost by insurance; if not, no coverage should be
provided and the program should not be implemented. This paper examines
the unanswered question of how cost effectiveness analysis should be
performed and interpreted when insurance coverage can involve
non-negligible cost sharing. It explores both the question of how cost
effectiveness is affected by the presence of cost sharing, and the more
fundamental question of cost effectiveness when cost sharing is itself
set at the cost effective level. Both a benchmark model where only
"societal" preferences (embodied in a threshold value of dollars per
unit of health) matter and a model where individual willingness to pay
can be combined with societal values are considered. A common view that
cost sharing should vary inversely with program cost effectiveness is
shown to be incorrect. A key issue in correct analysis is whether there
is heterogeneity either in marginal effectiveness of care or marginal
values of care that cannot be perceived by the social planner but is
known by the demander. The cost effectiveness of a program is shown to
depend upon the level of cost sharing; it is possible that some programs
that would fail the social test at both zero coverage and full coverage
will be acceptable with positive cost sharing. Combining individual and
social preferences affects both the choice of programs and the extent of
cost sharing.

From the Introduction

Of course, the answer to the question of the relationship between cost
effectiveness values and cost sharing depends both on the perspective
taken and the empirical facts. So I first outline the simple and
correct application of a decision rule to treatment choices based on
cost effectiveness in the "binary coverage" setting, when insurance
either covers 100 percent of the cost of a given type of care or leaves
it entirely uncovered, and the extra welfarist approach is taken. I
show that this approach usually is based on two assumptions: a single
value for expected improvement in health outcomes is to be applied to
all patients, and a single monetary value for those expected marginal
benefits prevails. This is the approach, avowedly "extra-welfarist,"
much favored at present in the United Kingdom by the NICE advisory body.

However, I then show that opening the door to consideration of cost
sharing means that many things, including this perspective, might
appropriately be modified. Modifications are needed if there is
heterogeneity in either effectiveness of the treatment across patients
or in the values citizens place on health outcomes, and that
heterogeneity is determined to be relevant to policy. I show that the
ideal level of "interior" cost sharing depends on whether consumer
values are assumed to be relevant, on how much consumer values really
vary, and most especially on whether the extent of variation in expected
effectiveness across patients is perceived by patients but cannot be
known by the insurer. I briefly consider as well the possibility that
social values are variable or uncertain.

These are somewhat discouraging conclusions. They definitely imply that
there is no simple but correct way to move from findings of a typical
cost effectiveness study to saying what the coinsurance rate should be
for a non-poor population. The most one could hope for would be a
binary decision of whether or not a particular treatment should or
should not be covered by insurance with a particular predetermined cost
sharing rate (usually but not necessarily zero). They also imply that
the cost effectiveness of a treatment cannot be properly determined
unless coinsurance is set at the optimal level. So, unless there is
perfect information to identify heterogeneity of benefits,
considerations of consumer demand (in the classic economic sense of the
shape of the demand curve) need to be added, regardless of the normative

The fundamental problem is the assumption of a uniform benefit of
uniform value which is central to the societal cost effectiveness model.
This assumption is presumably made for administrative and expository
reasons, not because anyone believes that marginal health benefits are
uniform, or that the marginal value of a health benefit (to a consumer
or society) is independent of the current level of health or allocation
of resources. It was hard enough to get policymakers to accept the need
for considering costs and the need to establish a money value for health
outcomes, however arbitrary, and in the United States neither of these
concepts is as yet effective. But paradoxically it might be more
feasible to get political acceptance if more attention to reasonable
variation in effectiveness and value were explicit rather than
suppressed in the analysis. As always, there is a case to prefer
approximating the perfect rather than precisely hitting the imperfect as
a method of policy analysis.

Comment: Mark Pauly has contributed extensively to the policy
literature on the moral hazard of health insurance (the hazard that
individuals will obtain care that they do not need if they do not have
to pay for it), a concept which has been used to support cost sharing
(deductibles, co-payments and coinsurance) as a means to create consumer
price sensitivity. Pauly now expands on the concept by applying it to
cost effectiveness analysis.

With our very high health care costs, it is inevitable that more
attention will be paid to cost effectiveness. Although most cost
effectiveness analyses are aimed at whether or not a particular health
care service or product provides adequate societal value (measured
benefit per unit cost, especially costs that society pays through public
programs or private insurance), Pauly now suggests that the value to the
individual, as expressed by the level of cost sharing tolerated, should
also be introduced in determining cost effectiveness.

First, a few words about cost effectiveness. Most health care
professionals do attempt to provide cost effective care. If a very
expensive procedure likely would provide no health care value, the
practitioner would advise against its use. Likewise, low cost but high
volume interventions that are eventually shown to be ineffective also
would be abandoned by the practitioner.

Sometimes we simply don't know whether the benefit is worth the cost.
This is where cost effectiveness analysis can be helpful. If a cancer
drug regimen that costs $300,000 results in maybe three months of poorer
quality life due to side effects, but prolongs life by only three days,
most reasonable individuals would decide that this is not cost effective
and should not be paid for through our collective funds, whether
government taxes or private insurance funds. Three months of hospice is
better than three months and three days of therapeutic misery.

An example of a low cost, high volume intervention might be the use of
an anti-hypertensive drug that in long term studies showed absolutely no
benefit in reducing morbidity or mortality. Obviously that would not be
cost effective, and its use would be abandoned.

Okay. So we determine that most medical interventions fall somewhere
between 100 percent cost effective and not cost effective at all. Then
we are supposed to determine a level of cost sharing for each
intervention that would motivate the patient to make a correct decision
on whether or not to accept the care based on consumer-directed cost
effectiveness decisions that still provide adequate societal value? Come on!

Forget moral hazard. Through cost effectiveness analyses we can
determine whether or not medical interventions should be available to
patients, and we don't need to have patients making spending decisions
to determine health care value. Even if the benefit may not be uniform
between patients, the decisions should be made at the clinical level
based strictly on medical benefit and not on cost. Cost decisions should
be made at the societal level.

The purpose of cost sharing is to reduce health care spending. Our
message earlier this week demonstrated that controlling moral hazard
through cost sharing introduces behavioral hazard; that is, decisions
that patents make when exposed to out-of-pocket costs as a consequence
of accessing health care can be detrimental. Policies that promote
detrimental medical decisions are bad policies.

Keep in mind that we spend almost twice as much per capita on health
care as the United Kingdom, yet we have ever-increasing cost sharing
whereas their system pays 100 percent of the cost of covered services.
There are many features of their national health services that result in
lower costs, but one that applies to today's discussion is their
application of cost effectiveness and evidence-based analyses through
their National Institute for Health and Clinical Effectiveness (NICE).
Eliminating ineffective and detrimental care reduces costs, with a net
gain in quality.

Just think of what we could have if we established a single payer
financing system. We could reduce administrative and clinical waste
while eliminating financial barriers to care so that everyone would have
access to cost effective and evidence-based, high quality care - care
that is really NICE.

Tuesday, October 23, 2012

Fwd: qotd: U.S. executives most concerned about health care costs

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-------- Original Message --------
Subject: qotd: U.S. executives most concerned about health care costs
Date: Tue, 23 Oct 2012 11:43:05 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

October 22, 2012
Healthcare costs top U.S. executives' concerns: Adecco survey
By Nick Zieminski

U.S. corporate executives are more worried about providing healthcare
benefits to their employees than about issues like wages, taxes or
attracting qualified workers, according to a survey by the world's No. 1
staffing company, Adecco SA.

In Adecco's poll of senior executives, 55 percent named healthcare
benefits as their biggest current business challenge, and about a third
say they are holding back hiring because of healthcare reforms
introduced by U.S. President Barack Obama.

Healthcare's prominence as an issue has risen since the 2008-2009
recession, Adecco found: in 2007, only 35 percent called healthcare
their top worry.

Obama's 2010 healthcare law, upheld this year by the U.S. Supreme Court,
is expected to raise insurance costs for employers because it calls for
wider coverage of more people, including those with pre-existing medical

Comment: The Affordable Care Act (ACA) was designed to not disturb the
largest sector of health insurance coverage already in existence:
employer-sponsored health plans. Although costs were said to be almost
intolerable for many employers, ACA included provisions to improve
private health plans which will further increase costs for employers.
Thus it is no surprise that health care has moved up on the executives'
list of concerns as their biggest business challenge.

Before the Democrats settled on the ACA model of reform, employers were
looking for better ways of controlling costs. One of the models under
consideration was single payer, an attractive option because of its
greater efficiencies and assured coverage of everyone.

Business executives might have been more interested in the single payer
model except for two perceived drawbacks: 1) They were not assured that
they wouldn't have to foot much of the bill for a national health
program through higher payroll taxes, higher taxes on executive
compensation, and higher corporate taxes, and 2) Many of them are
ideologically conservative and did not want to see a government-run
health care financing system.

With the passage of ACA health care moved from a top concern of 35
percent of the executives to a top concern of 55 percent of them. That
suggests that they may believe they made a bad decision in passively
allowing ACA to move forward, though there was token opposition from the
U.S. Chamber of Commerce and the National Federation of Independent

Another change taking place is that businesses are relying more on
Medicare for their retirees as they pare back their health benefit
programs for former employees. Obviously they recognize that Medicare
provides a greater value for them than did their private programs,
especially because of the federal funding of Medicare. It would not be
much of a reach for them to decide that Medicare would also provide a
greater value for them if it became the health benefit program for their
active employees.

If we were to move forward with an improved Medicare that covered
everyone, then the employers would need to be convinced that the taxes
to fund the universal risk pool would be equitably distributed, and that
they would not have to bear an unfair excessive financial burden for the
program. Without getting into details on tax policy, suffice it to say
that such a goal is readily achievable.

That would leave only ideology as a hurdle. Successful businessmen
certainly place great importance on value. When it is demonstrated to
them that an improved Medicare for all would control their health care
costs well into the indefinite future, they would be very foolish to
reject such a good deal. They really wouldn't have to give up their
ideology. They could take it to the smoking lounge and vent with their
business colleagues, over a cigar and a snifter of brandy, how terrible
it is that they had to accept the terms of a single payer system, but,
after all, business is business.

Monday, October 22, 2012

Fwd: qotd: Behavioral hazard in health insurance

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Behavioral hazard in health insurance
Date: Mon, 22 Oct 2012 13:55:26 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

National Bureau of Economic Research
October 2012
Working Paper 18468
Behavioral Hazard in Health Insurance
By Katherine Baicker, Sendhil Mullainathan and Joshua Schwartzstein


This paper develops a model of health insurance that incorporates
behavioral biases. In the traditional model, people who are insured
overuse low value medical care because of moral hazard. There is ample
evidence, though, of a different inefficiency: people underuse high
value medical care because they make mistakes. Such "behavioral hazard"
changes the fundamental tradeoff between insurance and incentives. With
only moral hazard, raising copays increases the efficiency of demand by
ameliorating overuse. With the addition of behavioral hazard, raising
copays may reduce efficiency by exaggerating underuse. This means that
estimating the demand response is no longer enough for setting optimal
copays; the health response needs to be considered as well. This
provides a theoretical foundation for value-based insurance design: for
some high value treatments, for example, copays should be zero (or even
negative). Empirically, this reinterpretation of demand proves
important, since high value care is often as elastic as low value care.
For example, calibration using data from a field experiment suggests
that omitting behavioral hazard leads to welfare estimates that can be
both wrong in sign and off by an order of magnitude. Optimally designed
insurance can thus increase health care efficiency as well as provide
financial protection, suggesting the potential for market failure when
private insurers are not fully incentivized to counteract behavioral biases.


6.3 Evidence on Private Plans

These results suggest that competitive forces do not lead to efficient
equilibrium insurance contracts when insurees are naive about their
biases, but that the insurer will have an incentive to counteract biases
when this saves the insurer money. These results may shed light on why
more health insurance plans do not incorporate behavioral hazard into
their copayment structures. Recall the evidence from Table 2 (from full
paper at link below), which summarizes the features of several major
insurance plans. Co-payments are rarely a function of the health benefit
associated with the care for a particular patient.

Nevertheless, insurers could increase profits by promoting adherence to
medications and treatments that save money over a reasonably short
horizon (relative to the typical tenure of their enrollees), and the
model suggests that insurers will invest in encouraging care in such

Comment: Moral hazard in health insurance is said to occur when
patients obtain unnecessary care merely because they don't have to pay
for it. Requiring patients to pay for at least a portion of their care,
through deductibles, co-payments and coinsurance, supposedly
disincentivizes patients from obtaining such unnecessary care, but does
so at the cost of patients declining care that is quite appropriate and
should be obtained. This paper attempts to compensate for that by adding
behavioral hazard to that of moral hazard when determining when and how
much financial exposure patients should have when accessing care. If the
behavior of patients might cause them to underuse care, then cost
sharing should be adjusted downward accordingly.

That's the theory. In practice it would greatly add to the
administrative burden of private health care financing to try to
identify not only each instance when a patient might be inclined to
overuse care unnecessarily (moral hazard), but also each instance in
which a patient might avoid beneficial care because of cost barriers
(behavioral hazard), and then to modify the patient's share of each cost
entailed based on these economic hazards.

Current estimates on how much could be saved by avoiding moral hazard
are flawed anyway, primarily because they ignore the deleterious effect
of behavioral hazard. Yet private insurance products incorporate cost
sharing that does ignore behavioral hazard, except in very limited
instances such as preventive services or cost sharing for important
maintenance drugs. Once you make the adjustments in cost sharing that
would prevent most or all behavioral hazard, the savings would
dramatically diminish and might even be totally offset by the costs of
the administrative excesses.

The most effective way to prevent behavioral hazard is to remove all
financial barriers to care. The moral hazard remaining does not even
apply to the eighty percent of health care that is consumed by patients
with greater needs who have long exceeded their deductibles and stop
loss. It's simply not worth applying cost sharing measures to the
remaining twenty percent of care for those of us who are relatively
healthy, when the resulting decrease in our total national health
expenditures would be almost negligible.

Besides, who are all of these people who are demanding care that they
simply do not need? Thinking back through my decades of family practice,
no one individual comes to mind.

Sunday, October 21, 2012

Fwd: qotd: George McGovern

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: George McGovern
Date: Sun, 21 Oct 2012 07:30:38 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

Blue Rider Press, Penguin Group
What It Means to Be a Democrat
By George McGovern

Universal Health Care

In 2010, Barack Obama and the Democrats in Congress did an outstanding
job in passing the Patient Protection and Affordable Care Act to make
health insurance available for every American. The bill passed without a
single Republican vote.

The law is being phased in over five years, but it already has
eliminated some of the major shortcomings of the private insurance
system. It has made health care coverage available to more children and
young adults, ended lifetime limits on coverage, made more preventive
services available at no cost, improved pharmaceutical coverage for
seniors on Medicare, and provided tax credits to small businesses that
insure their employees. The law also prohibits insurers from the heinous
practice of denying coverage to children who have preexisting
conditions, a provision that later will be extended to adults. It offers
much-needed discipline to the insurance companies, which have called the
shots for far too long.

But I think we should go further.

We should replace the 906-page bill, which I'm sure many lawmakers and
most citizens haven't read, with a seven word sentence that reads:
"Congress hereby extends Medicare to all Americans."

My firsthand experience with Medicare has convinced me that a
Medicare-like plan, or single-payer system such as Canada enjoys, should
apply to everyone, not just to old duffers like me.


Electoral votes, 1972 Presidential election:

17 - George McGovern
520 - Richard Nixon

McGovern tried, and he never quit. We are all the better for it.

Friday, October 19, 2012

Fwd: qotd: Should Medicare patients pay more?

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Should Medicare patients pay more?
Date: Fri, 19 Oct 2012 14:14:27 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

Allsup Medicare Advisor Seniors Survey
October 2012
Medicare Planning and Trends Among Seniors

An independently conducted telephone survey of 1,000 randomly selected
individuals 65 years and older who currently have Medicare coverage

Thinking about retirement, are any of the following concerns for you?

61% - Future of Medicare
52% - Having enough money to enjoy retirement
43% - Paying for long-term care
41% - Paying for health care
38% - Outliving money
24% - Paying for housing

In general, how satisfied are you with your current Medicare coverage?

45% - Extremely satisfied
44% - Somewhat satisfied
6% - Not satisfied
5% - Not sure

As you may know, costs for the Medicare program are rapidly increasing.
New funding or benefit restructuring will likely be needed. To keep the
Medicare coverage you have right now, would you be willing to pay: 20%
more/10% more/5% more/1% more?

32% - Pay 20% more
19% - Pay 10% more
10% - Pay 5% more
10% - Pay 1% more
23% - Pay nothing more
4% - Don't know
2% - Medicare won't need new funding

Comment: This survey confirms what we already knew. Most seniors are
satisfied with Medicare, but a majority of them also are concerned about
the future of Medicare, doubtlessly provoked by the current political
threats to convert Medicare into a defined contribution (voucher) under
the rubric of the imperative for entitlement reform. An intriguing
inquiry in this survey is whether or not Medicare beneficiaries would be
willing to pay more in order to keep their current Medicare coverage.

Sixty-one percent of responders indicated that they would be willing to
pay five to twenty percent more to keep their current Medicare coverage.
This probably does not communicate their belief that they should be
paying more, but rather expresses the view that they are protective of
Medicare and would be willing to reach deeper into their pockets to
preserve the program.

It would not surprise anyone if the politicians used this result to
decide to increase the out-of-pocket expenses for Medicare
beneficiaries, again in the name of entitlement reform. But this would
be a mistake. In a recent Quote of the Day message, we discussed
Medicare's failure to protect personal finances
Instead of increasing out-of-pocket costs, financial barriers should be
removed by providing first-dollar coverage. You could do that by
adopting a single payer system. Health care costs can be controlled by
using the other economic tools of a well-designed single payer system.

Rather than using premiums, deductibles and coinsurance assigned to the
individual Medicare beneficiary, an improved Medicare program that
covered everyone should be separately funded through progressive taxes.
The current proposal to adjust Medicare premiums based on income would
seem like a step in the right direction, but it would add more
unnecessary administrative complexity to Medicare financing. It would be
far better to establish a single, separate universal risk pool, funded
based on ability to pay, and then to provide health services based on
need regardless of the individual's financial status. We should totally
separate health care funding from the delivery of health care services,
just like we do with police protection, fire protection, highway
systems, public education and the many other government functions that
we rightfully take for granted.

Thursday, October 18, 2012

Fwd: qotd: Medicaid, red and blue

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Medicaid, red and blue
Date: Thu, 18 Oct 2012 11:10:25 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

The New Republic
October 25, 2012
E Pluribus Duo
By Jonathan Cohn

In all kinds of real and practical ways, the United States today is not
one nation, but two.

We've come to think of "blue" and "red" states as political and cultural
categories. The rift, though, goes much deeper than partisan differences
of opinion. The borders of the United States contain two different forms
of government, based on two different visions of the social contract.

In blue America, state government costs more — and it spends more to
ensure that everybody can pay for basic necessities such as food,
housing, and health care. It invests more heavily in the long-term
welfare of its population, with better-funded public schools, subsidized
day care, and support for people with disabilities.

In the red states, government is cheaper, which means the people who
live there pay lower taxes. But they also get a lot less in return. The
unemployment checks run out more quickly and the schools generally
aren't as good. Assistance with health care, child care, and housing is
skimpier, if it exists at all.

The result of this divergence is that one half of the country looks more
and more like Scandinavia, while the other increasingly resembles a
social Darwinist's paradise.

The easiest way to grasp what this means for the actual residents of red
and blue America is to look at Medicaid. Although the federal government
sets minimum standards for coverage and benefits, states have discretion
over how many additional people to include. Based on data compiled by
the Kaiser Family Foundation, the five states with the strictest
criteria for working parents are Arkansas, Alabama, Indiana, Louisiana,
and Texas. The five states with the least restrictive requirements are
Minnesota, Connecticut, Maine, Vermont, and Wisconsin. A Minnesota mom
with two kids and a job that doesn't offer health insurance can get
Medicaid as long her annual income doesn't exceed about $40,000. But if
she moves to Arkansas, she'll be ineligible for Medicaid as soon as her
household income reaches $3,150 a year—not nearly enough to pay for
basic living costs, let alone health insurance.

By nearly every measure, people who live in the blue states are
healthier, wealthier, and generally better off than people in the red
states. It's impossible to prove that this is the direct result of
government spending. But the correlation is hard to dismiss. The four
states with the highest poverty rates are all red: Mississippi,
Louisiana, Alabama, and Texas. (The fifth is New Mexico, which has
turned blue.) And the five states with the lowest poverty rates are all
blue: New Hampshire, New Jersey, Vermont, Minnesota, and Hawaii. The
numbers on infant mortality, life expectancy, teen pregnancy, and
obesity break down in similar ways.

Advocates for the red-state approach to government invoke lofty
principles: By resisting federal programs and defying federal laws, they
say, they are standing up for liberty. These were the same arguments
that the original red-staters made in the 1800s, before the Civil War,
and in the 1900s, before the Civil Rights movement. Now, as then, the
liberty the red states seek is the liberty to let a whole class of
citizens suffer. That's not something the rest of us should tolerate.
This country has room for different approaches to policy. It doesn't
have room for different standards of human decency.


Picayune Item
October 17, 2012
Miss. says no thanks to Medicaid expansion dollars

Mississippi has long been one of the sickest and poorest states in
America, with some of the highest rates of obesity, diabetes and heart
disease and more than 1 in 7 residents without insurance. And so you
might think Mississippi would jump at the prospect of billions of
federal dollars to expand Medicaid.

You'd be wrong.

Leaders of the deeply conservative state say that even if Mississippi
receives boatloads of cash under President Barack Obama's health care
law, it can't afford the corresponding share of state money it will have
to put up to add hundreds of thousands of people to the government
health insurance program for the poor.

Under the law, Washington would pay 100 percent of the costs of
expanding Medicaid from 2014 to 2016. Between 2017 and 2020, the federal
share would decrease to 90 percent and the states' contribution would
rise in stages to 10 percent, and that's where it would stay.

"While some people say Obamacare will come as an economic boost with
'free' money, the reality is simple: No money is free," said Republican
Gov. Phil Bryant. "Since when did the federal government ever give free
money without asking for something in return?"

The governor and GOP leaders in the Republican-controlled Legislature
have argued that the expansion will foster a culture of dependency on

GOP Govs. Rick Scott of Florida, Bobby Jindal of Louisiana, Nathan Deal
of Georgia, Nikki Haley of South Carolina and Rick Perry of Texas have
said they, too, will reject a Medicaid expansion, calling it too expensive.

Comment: One strategy in the Affordable Care Act that was introduced to
help cover everyone was to expand the Medicaid program for low-income
individuals. To encourage state participation, the federal government
would pay the full costs of care for three years and then taper down to
90 percent, leaving the states responsible for only 10 percent of the
costs. Yet Governors Bryant, Scott, Jindal, Deal, Haley, and Perry have
rejected the program, decisions which will surely leave many otherwise
qualified individuals with no coverage.

Those of us who supported single payer reform - an improved Medicare for
all - warned repeatedly that the model enacted in the Affordable Care
Act could never cover everyone. Current predictions are that 30 million
people will remain uninsured (CBO).

This is shocking and fills with grief those of us who have been fighting
so long and hard for health care justice in America. It is worth
repeating the last paragraph in Jonathan Cohn's article because he
states it so well:

"Advocates for the red-state approach to government invoke lofty
principles: By resisting federal programs and defying federal laws, they
say, they are standing up for liberty. These were the same arguments
that the original red-staters made in the 1800s, before the Civil War,
and in the 1900s, before the Civil Rights movement. Now, as then, the
liberty the red states seek is the liberty to let a whole class of
citizens suffer. That's not something the rest of us should tolerate.
This country has room for different approaches to policy. It doesn't
have room for different standards of human decency."

Wednesday, October 17, 2012

Fwd: qotd: The Cochrane study of general health checkups

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: The Cochrane study of general health checkups
Date: Wed, 17 Oct 2012 12:52:06 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

The Cochrane Library
October 17, 2012
General health checks in adults for reducing morbidity and mortality
from disease
By Lasse T Krogsbøll, Karsten Juhl Jørgensen, Christian Grønhøj Larsen,
Peter C Gøtzsche

Plain language summary

General health checks involve multiple tests in a person who does not
feel ill with the purpose of finding disease early, preventing disease
from developing, or providing reassurance. Health checks are a common
element of health care in some countries. To many people health checks
intuitively make sense, but experience from screening programmes for
individual diseases have shown that the benefits may be smaller than
expected and the harms greater. One possible harm from health checks is
the diagnosis and treatment of conditions that were not destined to
cause symptoms or death. Their diagnosis will, therefore, be superfluous
and carry the risk of unnecessary treatment.

We identified 16 randomised trials which had compared a group of adults
offered general health checks to a group not offered health checks.
Results were available from 14 trials, including 182,880 participants.
Nine trials studied the risk of death and included 155,899 participants
and 11,940 deaths. There was no effect on the risk of death, or on the
risk of death due to cardiovascular diseases or cancer. We did not find
an effect on the risk of illness but one trial found an increased number
of people identified with high blood pressure and high cholesterol, and
one trial found an increased number with chronic diseases. One trial
reported the total number of new diagnoses per participant and found a
20% increase over six years compared to the control group. No trials
compared the total number of new prescriptions but two out of four
trials found an increased number of people using drugs for high blood
pressure. Two out of four trials found that health checks made people
feel somewhat healthier, but this result is not reliable. We did not
find that health checks had an effect on the number of admissions to
hospital, disability, worry, the number of referrals to specialists,
additional visits to the physician, or absence from work, but most of
these outcomes were poorly studied. None of the trials reported on the
number of follow-up tests after positive screening results, or the
amount of surgery used.

One reason for the apparent lack of effect may be that primary care
physicians already identify and intervene when they suspect a patient to
be at high risk of developing disease when they see them for other
reasons. Also, those at high risk of developing disease may not attend
general health checks when invited. Most of the trials were old, which
makes the results less applicable to today's settings because the
treatments used for conditions and risk factors have changed.

With the large number of participants and deaths included, the long
follow-up periods used in the trials, and considering that death from
cardiovascular diseases and cancer were not reduced, general health
checks are unlikely to be beneficial.



Comment on this study by H. Gilbert Welch, MD, The Dartmouth Institute,
Community and Family Medicine

I think that there has been a growing realization that we've oversold
the value of screening for early cancers or early disease, that we sort
of suggested that there is considerable benefit when, in fact, the
evidence about benefit is at least open to question. It's not a huge
benefit. And we've downplayed or ignored entirely the downsides of the
problem. I'm not saying there's one right answer, but I am saying that
there are two sides to the story. And I think that there is a growing
realization that there are benefits - that everyone knew - but there are
also harms, and people have to balance those.

Video of Dr. Welch's response to the Cochrane study:

Comment: General health checkups or routine physicals have been a
mainstay of keeping people healthy, or so we thought. Finding disease
early and providing appropriate interventions seems like a recipe for
success in maintaining health. However, because some doubts have arisen
over this concept, The Cochrane Collaboration studied randomized trials
of health checks and found that "general health checks are unlikely to
be beneficial."

Though this study does indicate that the formal health check is unlikely
to be beneficial, does that apply to isolated procedures such as blood
pressure checks, serum lipid screening, cervical cancer screening, or
skin screening for melanomas? Numerous studies have suggested that early
intervention is effective in these disorders. If not, then it wouldn't
be logical to treat hypertension, hypercholesterolemia, or most early
cancers, yet we do it all the time.

H. Gilbert Welch, MD, co-author of the enlightening book, "Overdiagnosed
- Making People Sick in the Pursuit of Health," provides perspective in
his comments on the Cochrane study. He says that we need to balance the
benefits "that everyone knew" with the harms that interventions can cause.

It seems that rather than promoting general health checkups as an
isolated process, we should use this information to promote primary
care. Establishing a long-term relationship with a primary care
professional or team can provide continuity in health screening
procedures, both in their timeliness and appropriateness.

What does this have to do with single payer reform? Simply that the
single payer model includes reinforcement of our primary care
infrastructure as an important and effective means of providing higher
quality and less costly care for everyone.

Tuesday, October 16, 2012

Fwd: qotd: Premium support would affect much more than the premiums

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Premium support would affect much more than the premiums
Date: Tue, 16 Oct 2012 13:48:47 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

Kaiser Family Foundation
October 2012
Transforming Medicare into a Premium Support System: Implications for
Beneficiary Premiums
By Gretchen Jacobson, Tricia Neuman and Anthony Damico

Over the past several decades, the idea of transforming Medicare from
its current structure to one known as "premium support" has been raised
intermittently as an approach for reforming the Medicare program, often
in the context of efforts to reduce the federal debt and deficit. The
primary goals of a premium support system are to reduce the growth in
Medicare spending, and rely more on a competitive marketplace. While
the parameters of various premium support proposals differ, the general
idea is for the federal government to make a predetermined contribution
on behalf of each person on Medicare that would be applied toward the
premium for a health insurance plan.

This paper aims to help inform policy discussions by examining the
potential implications of a leading premium support approach on Medicare
premiums, the extent to which Medicare premiums would vary by state and
by county, and the key factors that could drive variations in premiums
under this approach. The analysis looks at an approach to premium
support that ties federal payments to the second lowest cost plan
offered in an area or traditional Medicare, whichever is lower. This
approach is similar to the premium support proposal included in Chairman
Paul Ryan's (R-WI) budget proposal for FY2013 that was embraced by
Presidential nominee Mitt Romney, and previously included in the
Wyden-Ryan and Domenici-Rivlin proposals. The study focuses on
beneficiaries' Medicare premiums, but does not take into consideration
out-of-pocket spending due to the effects of changes in benefits,
cost-sharing requirements and premiums for supplemental insurance.

From the Discussion

These findings underscore the potential for highly disparate effects of
a premium support system for beneficiaries across the country. The
results show how individual decision making (plan choices), coupled with
geographical variations in the cost of traditional Medicare and the
private health plans, would play a major role in determining how well
beneficiaries fare with respect to premiums under this approach.

The study estimates that the majority (59%) of Medicare beneficiaries
would be expected to face additional premiums, based on current plan
preferences, under the modeled premium support system. Clearly, a
smaller share of beneficiaries would pay higher premiums if they instead
enrolled in a low-cost plan offered in their area. In high-cost areas,
such as Miami and Los Angeles, most beneficiaries in the traditional
Medicare program would see a significant increase in Medicare premiums,
unless they opted to enroll in a lower-cost private plan. Conversely,
in low-cost areas, such as Honolulu County in Hawaii and Multnomah
County in Oregon (which includes Portland), the majority of
beneficiaries would not pay additional premiums if they remained in
their plan (based on current enrollment in that county), but a sizeable
minority (17% and 43%, respectively) would pay at least $100 more in
monthly premiums for their Medicare coverage in a private plan.

Further, this analysis shows that premiums for traditional Medicare
would likely vary across states, and within states, by county. If this
system had been fully implemented in 2010, some would have paid the same
Medicare premium, while others would have paid an additional $200 more
per month in Medicare premiums, not considering other additional costs
beneficiaries could potentially face, such as cost-sharing requirements
for benefits covered by the plan, the cost of benefits not covered by
the plan, and premiums for supplemental insurance.

Beyond premiums, other factors could be considered in choosing a plan,
which may or may not be consistent with the choice of a low-cost plan.
First, enrolling in a low-cost plan, if it requires changing from
another plan, may require beneficiaries to change their doctors and
other health care providers, posing potential problems for beneficiaries
with long-standing relationships with their doctors, especially those
with chronic conditions. Second, some beneficiaries may value the
option to enroll in a highly-rated plan, but quality is not a factor in
determining which plan is the benchmark plan. Third, low-cost plans in
a given area may or may not have the capacity to accommodate all
beneficiaries who wish to enroll in the plan. Fourth, the low-cost plans
offered in an area could change each year or so, as has occurred in the
Medicare Part D program, potentially creating instability for
beneficiaries with modest incomes who would have a strong financial
incentive to remain in a low-cost plan each year.

Given a lack of specificity about some of the key policy elements and
questions about the likely response of the insurance industry and
beneficiaries, there remains great uncertainty about the expected
effects of this approach for elderly and disabled Americans in the future.


* This study focuses narrowly on the expected effects of a premium
support system on beneficiaries' Medicare premiums – an approach that
excludes the effects of changes in benefits, cost-sharing requirements
and premiums for supplemental insurance.

* This study models the effects of a premium support system in a given
year, but not the expected costs for beneficiaries over the longer term,
including the effects of adverse selection for beneficiaries in
traditional Medicare or the potential for Medicare spending caps to
increase premiums for beneficiaries over time.

* This study does not examine the effects of a premium support system
for beneficiaries with low-incomes, including dual-eligible
beneficiaries who could also be affected by changes made to Medicaid,
such as a Medicaid block grant.

* This study considers potential changes in plan behavior (changes in
bids), but does not analyze the potential for insurers' responses to
vary, based on local market conditions.

* This study does not capture the nuances of beneficiaries' plan
switching behavior and only allows for beneficiaries to switch into a
benchmark plan, rather than a plan that is less expensive than their
current plan, but is not a benchmark plan.

* This study does not consider whether benchmark plans (if not
traditional Medicare) would have sufficient capacity to serve all
potential enrollees.

* Finally, this analysis does not consider the effect of a premium
support system for other payers, including the federal government, state
governments (Medicaid), or employers.

Comment: When reforms for health care are proposed, the first response
by many is, what will it cost me? In the case of the premium support
model (voucher, or defined contribution), most people want to know what
the premium will be. This meticulous 48-page study by Kaiser Family
Foundation shows that for the majority of individuals, premiums would
increase. But there is much more to premium support than merely the
premium to be paid.

Reading the full report might be of interest to individuals who would
want to see the complexities involved in simply determining the impact
on premiums. In the excerpts above, some of the factors that were not
considered are emphasized, especially in the list of limitations of the
study. Because the proposal depends heavily on private insurance plans,
there are a slew of potential negative impacts which can increase costs
and impair access for the Medicare beneficiary - impacts that are far
beyond those suggested by the list of limitations.

If you aren't convinced by now that premium support is a terrible idea,
go to our website at <> and type in
"premium support" in the search window and spend a an hour or so reading
what we have to say. Then go back and read what Romney and Ryan have to
say, and you'll see what they deliberately left out. It is a scheme to
slowly unwind the social contract of health care justice, when what we
need to do is to improve that contract and expand it to cover everyone.

Monday, October 15, 2012

Fwd: qotd: Physician advocacy, activism and politics

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Physician advocacy, activism and politics
Date: Mon, 15 Oct 2012 13:39:50 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

Medicine and Social Justice
October 13, 2012
Physician advocacy: for patients and for social change
By Josh Freeman

A recurring question for physicians and others in the health profession
is what degree of health advocacy is expected or appropriate. For those
of us in medical education, the question becomes how much of the
training (and evaluation) of medical students and residents should be
based on advocacy for their patients or populations.

In the United States, the clearest expression of the role of advocate is
in the American Medical Association's (AMA) Declaration of Professional
Responsibility: Medicine's Contract with Humanity, which contains, as
item #8, "Advocate for social, economic, educational, and political
changes that ameliorate suffering and contribute to human well-being."

Dobson and colleagues propose a parsing of the concept of advocacy into
two components. They call these "agency", working on behalf of the
interests of a specific patient, and "activism", which is more directed
toward changing social conditions that impact health, and whose effect
is seen on populations more than individuals.

They note that "...several studies have concluded that although
physicians generally endorse the idea of advocacy, they rarely engage in
it." They summarize the difference between agency and activism by saying
"...whereas agency is about working the system, engaging in activism is
about changing the system."

There are, however, many physicians who do act as social activists, and
we need more of them. The source will be medical students who then
become residents. Luckily, there seem to be no shortage of entering
medical students with this commitment. They demonstrate it by community
volunteer work, creating and working in free clinics, volunteering their
time to work in schools, and pursuing training in public health, public
policy, and community involvement. Sadly, however, along with empathy,
which has been shown to dramatically drop as medical students enter
their clinical training (Hojat, et al.[2], and this blog, "Are we
training physicians to be empathic? Apparently not.", September 12,
2009), so does volunteerism and commitment to social change.

When we look at the American political landscape, we see a fair number
of physicians involved in politics. It could be argued that, in these
roles, they are advocating for social, economic, educational, and
political changes. What is disconcerting is that the majority of these
physician politicians seem to ignore the second half of that sentence,
"...that ameliorate suffering and contribute to human well-being". They
are often found among, and sometimes as leaders, in advocating policies
that slash the social safety net, decrease funding for public education,
and oppose universal health insurance. Too frequently, they act as
agents of their own social class than as advocates for those most in need.

That doctors will most often adopt the "agency" role when it comes to
issues that most directly affect the health of their patients, that can
be arguably seen as "medical", is very reassuring.

The advocacy role is more complex. Not only are many physicians socially
conservative and not, perhaps, in support of policies "…that ameliorate
suffering and contribute to human well-being," physicians are busy
people who mostly see themselves in the role of providing direct patient
care, not advocating for systemic societal change.

I would like to think that all physicians manifest advocacy in the
"agency" sense for their patients. It may be wishful thinking to hope
that all physicians will manifest advocacy in the "activist" sense, that
they will fulfill the AMA's Declaration by actually advocating "...for
social, economic, educational, and political changes that ameliorate
suffering and contribute to human well-being." But if we do not make
this a core value for physicians that is ubiquitously taught in medical
school and residency, if we do not select students because of their
commitment to advocacy, we will have much less of it.

And we need it badly.

(Joshua Freeman, MD is Chair of the Department of Family Medicine,
University of Kansas Medical Center. These excerpts are from his blog
and do not represent the views of the University of Kansas.)


GOP Doctors Caucus, U.S. Congress

True health care reform can only begin with a complete repeal of Obamacare.

The Doctors Caucus is committed to ensuring that all Americans have
access to quality health care. Doctors believe that chronic illness and
cost are two main barriers between patients and quality coverage.
Consumer-driven health reforms that seek to put the patient and their
physicians in control of how care is accessed can greatly increase a
patient's access to quality health care.

21 members of the GOP Doctors Caucus:

Comment: What is the disconnect between the activism of physicians who
serve in Congress advocating for social, economic and political changes,
and physicians in the community who advocate for ameliorating suffering
while contributing to human well-being? Didn't they all enter medical
school with the same altruism? Apparently not.

We now have a politically polarized nation. The medical profession has
not escaped this dichotomy. In Congress, it is not as balanced as it is
throughout the nation. The GOP Doctors Caucus has twenty-one members,
whereas there are only two Democratic physicians in Congress and one of
those, as a delegate, is not even allowed a vote on the House floor.

When you read the Priorities of the GOP Doctors Caucus, it is loaded
with warm, fuzzy, feel-good language. But if you are a student of health
policy, you recognize that they support policies that would greatly
increase the numbers of uninsured, and would expand a market of
"affordable" health plans that really just shift costs to users, making
health care access unaffordable for far too many. That might meet the
social, economic and political goals of the GOP Doctors Caucus, but at
the cost of exacerbating suffering and further impairing human well-being.

We wish that the partisan divide wasn't a chasm, but it won't go away.
Voters do bear some responsibility for having selected these physicians
to be their senators and representatives in Congress, but it is
difficult to blame them when the GOP Doctors Caucus stated mission is
"Utilizing medical expertise to develop patient-centered health care
reforms focused on quality, access, affordability, portability, and
choice." That sounds pretty good. How could the voters be expected to
understand the nefarious policy positions behind that statement?

For health care, many would agree that the filter should be at the
medical school admissions committee. Medical schools should select
students for whom ameliorating suffering and contributing to human
well-being is a part of their soul. The problem is that it may be
difficult to find enough admissions committee members who can pierce the
obfuscating feel-good language used by too many of the applicants - the
type of language that is so effectively used by the GOP Doctors Caucus.

(I apologize to Republican single payer supporters who might object to
what seems to be a partisan message. In my defense, the message is about
physician politicians and health care justice. It is the Republican
physicians in Congress who have made it partisan.)