By Jonathan Cohn, The American Prospect
Posted on May 29, 2008, Printed on June 22, 2008
http://www.alternet.org/story/85832/

When Lyndon Johnson signed the law creating Medicare in 1965, he promised that it would transform the lives of America’s senior citizens. “No longer will older Americans be denied the healing miracle of modern medicine,” Johnson proclaimed. “No longer will illness crush and destroy the savings that they have so carefully put away over a lifetime so that they might enjoy dignity in their later years.” As ambitious as those goals were, some of Medicare’s architects had even loftier hopes. Many were veterans of Harry Truman’s crusade to provide insurance to every single American; it was only after that effort failed that they decided to concentrate on covering the elderly, whom they knew to be a politically sympathetic group. But in focusing on senior citizens, they didn’t give up on bringing insurance to the rest of the country. Medicare, they fervently hoped, would be a stepping stone to universal coverage — and perhaps a model for how to achieve it.

More than 40 years later, universal health care is back on the political agenda. But hardly anyone with actual political power is talking about quickly achieving universal coverage with a Medicare-like program to cover everybody. And while some progressives hope to establish a new public program that could eventually cover everybody — an idea endorsed by all the leading Democratic candidates for president — they haven’t made this element a prime selling point. Instead, Medicare is just as likely to be invoked by the opponents of universal coverage. As far as they are concerned, Medicare is proof that universal coverage can’t work.

Medicare, according to this line of thinking, is a bloated, inefficient program — one destined to bankrupt the country within a few decades. And it’s true: The program’s financial situation really does appear dire. According to the most recent official projections, in 2011 the trust fund that pays for hospital benefits will spend more money than it takes in; eight years later, it will run out of money altogether. In the meantime, the Congressional Budget Office predicts, Medicare as a whole will gobble up an ever-increasing share of both the federal budget and our national wealth — until, by 2080, it’s taking up more than 15 percent of gross domestic product. As a stopgap, Congress has tried various Medicare cuts. But those cuts frequently translate into reduced payments to doctors, hospitals, and medical schools, and trickle down to individual beneficiaries in the form of higher premiums for physician services and cost-sharing. That means seniors who use the most medical services — those who need the most help — keep spending a larger share of their incomes on medical care. Medicare’s financing crisis is real enough. But it does not logically follow that universal health insurance should wait. On the contrary, Medicare costs a lot because medical care in this country costs a lot. The program is trapped in a deeply dysfunctional system — one in which too much money goes to the wrong uses and not enough goes to the right ones. Unless we want to simply hack away at the program’s benefits — in effect, undoing one of the greatest social-policy advances in American history — the best way to stabilize Medicare is to think even bigger and fix the rest of the health-care system. The founders had it right: Medicare should be the foundation for reform, not an impediment to it.

Notwithstanding the fiscal projections that make the evening newscasts, Medicare has been wildly successful. It delivered on LBJ’s promise to bring the elderly into the mainstream of American medicine, virtually eliminating severe economic hardship as a consequence of the costs of illness among elderly. The program is also hugely popular with the people who use it. Polls have shown that, relative to working families with private insurance, the elderly on Medicare are more satisfied with their coverage. And why wouldn’t they be? The program covers virtually any service they might need. It’s available to everybody 65 years or older, regardless of pre-existing conditions. And nobody can take the coverage away. This universality also explains the program’s efficiency — no money wasted on marketing or on middlemen profits.

Still, Medicare was a product of political compromises, some of which raised costs. In order to blunt opposition from organized medicine, health-care reform’s most traditional foe, Medicare’s promoters promised doctors that they could continue to charge their “usual and customary” fees. To win support from hospitals, which were struggling to cope with impoverished elderly patients but remained wary of too much government interference, Medicare promoters allowed Blue Cross to administer the actual payments, further inflating costs. (Nobody expected Blue Cross to scrutinize hospital billing too heavily.) All too predictably, Medicare’s expenses skyrocketed. Eventually, the government increased the program’s bargaining leverage with doctors and hospitals. In 1983, Congress changed the way Medicare paid hospitals, providing reimbursements based on diagnoses, in the hope that hospitals would be rewarded for providing the most cost-effective treatments. In 1989, the system implemented an explicit fee schedule that effectively set the prices doctors could charge their Medicare patients.

Thanks to the cost-containment efforts, Medicare has actually managed to hold down its costs as well as, if not slightly better than, private insurance. But the program’s victory over skyrocketing costs was far from complete. When Medicare reduced its payments to the providers of medical services, the providers turned around and charged more to other payers of premiums, whether insurance companies, employers, or individuals. This is known as “cost shifting.” The net shift is impossible to know, because doctors and hospitals try to shift some costs back onto Medicare as other sources of revenue diminish.

As a long-term strategy, however, simply cutting fees across the board tends to have diminishing returns. Service for service, procedure for procedure, Medicare already pays less than most private insurers. Every time a new cut looms, many doctors threaten to stop seeing some or all Medicare patients. That hasn’t actually happened yet, according to the Center for Studying Health System Change, perhaps because few doctors can afford to shun such a large group of paying patients. Another reason could be that Medicare, although not the most generous financier of medical care, is one of the quickest. But at some point, cutting fees must restrict access. The proof can be found in Medicare’s impoverished sister, Medicaid, which was created by the same 1965 law establishing Medicare. Because Medicaid pays so little — less even than Medicare — Medicaid patients frequently have trouble finding doctors who will see them, at least on a timely basis.

So Medicare has now reached the limits of cutting payments as a cost-containment strategy, unless Congress is willing to gut the program. Something that goes beyond past payment reforms is required to avoid the fiscal disaster that the Congressional Budget Office, the Medicare Trustees, and a chorus of fiscal critics project in the near future. But what kind of changes would that entail? That’s where the great ideological divide opens up.

For decades, conservatives have been saying that the solution to Medicare’s problems lies in making Medicare operate more like the commercial health-insurance market: Have more seniors get their insurance from private carriers rather than from the government and, no less important, encourage them to choose plans with less generous benefits. These steps, they promise, will help control the growth of Medicare spending.

At a time when the public’s faith in government is less than what it was when Medicare first came into existence, this sort of thinking has political appeal. But recent history offers a real-life test of this proposition — and it turns out to be pretty shaky.

In the 1990s, prodded by the insurance industry, Medicare introduced more private insurance options through an initiative called “Medicare plus choice.” By that point, private managed care plans had shown themselves capable of holding down medical costs for the working-age population by bargaining harder on prices, limiting payments to physicians, scrutinizing medical treatments, and shifting some out-of-pocket costs to consumers. Medicare-plus-choice sought to make the same sorts of managed care plans available to seniors, as an alternative to the traditional government program, in the hopes it would have a similarly salutary effect.

For a little while, the experiment seemed to work. The plans, some of which offered hard-to-get prescription drug benefits, proved affordable and popular. But soon it turned out the plans were offering more benefits largely because the government was paying them too much money. And their key to profitability was skimming off relatively healthy seniors with selective marketing. When the government cut back on the unnecessary subsidies, plans started dropping out — creating chaos and leaving recipients scrambling for replacement coverage. It turned out that, given a population of beneficiaries overwhelmingly likely to get sick, private carriers couldn’t perform as well as they could with the relatively healthier working-age population.

It was a sobering lesson, but one that President Bush and the Republican Congress chose to ignore a few years later. Under intense political pressure to create that much-needed prescription-drug benefit, Bush and his allies (including some Democrats) complied — but the twist was that the coverage would come only through private plans, which the government would be subsidizing. The result? Even more overpayments, making the program far more costly than the obvious alternative — the addition of a drug benefit to conventional, public Medicare. For example, every time a senior citizen opts out of traditional Medicare and enrolls in one of the new “Medicare Advantage” plans (which offer not just drug coverage but a full-blown private alternative to regular Medicare), the federal government has to spend 12 percent more than it would have if the patient had stayed on Medicare.

Although the idea that private insurance might actually cost more than public insurance confounds conservative wisdom, this reality is hardly surprising, given the economics of heath insurance. Government statistics show that around 98 percent of the money flowing into the traditional Medicare program goes back out as payment for medical services and goods. The comparable figure for private insurance companies — a figure the companies call the “medical-loss ratio,” since they consider money spent on patients a “loss” — rarely goes above 90 percent and, for the bigger commercial carriers, frequently dips down into the 70 percent range and even the high 60 percent range. It’s not hard to see why this would be. Commercial carriers answer to Wall Street, which demands profits. As such, they spend lavish sums on marketing — and figuring out new ways to target the healthiest (i.e., the cheapest to insure) beneficiaries. Medicare does none of these things.

Forcing seniors to bear more costs directly — the other idea conservatives love to talk up — might seem like a more promising strategy for containing Medicare spending. Studies have repeatedly shown that people consume fewer medical services when they have to pay more for them. And that’s why any sensible insurance program, private or public, asks its beneficiaries to pay for at least some portion of their medical bills out of pocket.

But the higher that cost-sharing goes, the more perilous it becomes. Even putting aside the moral issue — shouldn’t an insurance system protect sicker people? — it’s not clear that hiking out-of-pocket spending actually saves money in the long run, since even relatively intelligent and informed people have a hard time figuring out how to buy medical care wisely. Several recent studies, including one published in The New England Journal of Medicine, looked specifically at the impact of raising drug co-payments for seniors taking medication for chronic conditions. The short-term effect was that seniors spent less money on drugs (good). The long-term effect was that seniors got a lot sicker, requiring more hospitalizations — which quite possibly cost even more money than the foregone drugs would have (not good).

But if privatizing and pruning Medicare won’t save the program from financial turmoil, what will? The answer lies in understanding the real reason why Medicare costs keep going up. Surprisingly, the prime cause is not the aging of the population. If aging were the only factor driving up Medicare costs, the Congressional Budget Office predicts that the program would grow from a little less than 3 percent of gross domestic product today to a little less than 5 percent in 2080. That’s serious money but a relatively small portion of the projected overall cost increase.

The real reason Medicare is expected to grow so fast is that all medical spending, for both the elderly and non-elderly, is going up. The reason for that is a combination of newly available technology and an unchecked demand to use it. And this is where Medicare’s real problem — and that of the whole system — comes into view.

Historically, Medicare, like private insurers, has rewarded doctors and hospitals for performing more procedures. (While the payment reforms of the 1980s, so called “diagnosis related groups,” helped mitigate that problem, they didn’t eliminate it.) But patients don’t actually seem to be better off for the extra attention. The proof of this lies in the now-famous work of John Wenn-berg and his colleagues at Dartmouth Medical School. As they and their disciples have repeatedly demonstrated, Medicare currently underwrites vastly different levels of care in different parts of the country. Seniors in South Florida, for example, get a lot more medical care than seniors in Minneapolis — apparently because South Florida has a great many more doctors (who often overtreat their patients). But statistically, South Florida seniors don’t seem better off for the extra care. That means Medicare must be paying for a lot of unnecessary or counterproductive treatments.

That’s why reducing unnecessary care (as opposed to simply reducing care, which is what crude increases in cost-sharing would do) is the first key to Medicare’s financial survival — and the efficiency of the health system generally. Medicare could, for example, offer financial incentives to providers that follow established best practices. Medicare could also reward those that make information about its practices and outcomes publicly available. The incentives to do this can be positive, in the form of bonuses, or negative, in the form of penalties. Medicare might also encourage seniors to enroll in integrated practice settings, like the highly regarded Group Health of Puget Sound, which have been shown time and again to offer some of the most cost-effective — and, by most measures, the best — medical care available. This is not the same as simply herding seniors into loosely organized managed care systems, only some of which actually integrate care and emphasize prevention the way places like Group Health do.

Although these sorts of initiatives worry some doctors and hospital lobbyists, who fear the government will get too involved in micromanaging care, the idea actually enjoys bipartisan support in Washington. For all of the damage the Bush administration has done to Medicare through the design of its prescription-drug benefit, it has made steady progress toward introducing payment reforms, which many experts call “pay for performance.” (Mark McLellan, former secretary of health and human services, deserves much of the credit.) Presumptive Republican presidential nominee John McCain, although an opponent of universal health insurance, has nevertheless included similar reform proposals in his campaign platform, as have both Hillary Clinton and Barack Obama. Yet because of the overall system’s fragmentation, its commercialization, and perverse incentives to spend money in the wrong places, these reforms would be far more potent in the context of a truly universal system.

Another key payment reform is far more controversial: changing the way Medicare buys prescription drugs. One reason Bush and his supporters were so determined to channel the new drug benefit through private insurers was that they didn’t want to give government the kind of pricing leverage over the pharmaceutical industry that it already has over doctors and hospitals. And while the opposition to government drug purchasing has more than a little to do with the drug industry’s history of campaign contributions to Republicans, it also reflects a philosophical conviction that government pricing would deter innovation.

It’s a respectable argument but, again, not one supported by much evidence, because the current system isn’t particularly well suited to fostering innovation in the first place. The driving force behind developing new drugs isn’t a push for the best new treatments science can concoct. It’s a push for the best new products that the pharmaceutical industry can market to gullible consumers and compliant doctors, often trivial variations on existing drugs about to go off-patent. It’s undoubtedly true that too much government pressure on drug prices, particularly if applied arbitrarily, could deter useful innovations. But most sensible reformers don’t advocate that. Rather, they call for linking drug purchasing to more aggressive judgments on which drugs work — and which drugs are most cost-effective.

But here again, there are limits to what any Medicare reform can accomplish, if limited to Medicare’s part of the system. Medicare is already the largest purchaser of medical services in the United States. But the fragmentation of the system greatly diminishes Medicare’s ability to change the way medicine is practiced — and, in so doing, blunts its ability to control costs. Fragmentation also leads to the cost-shifting problem. When Medicare squeezes — whether intelligently or crudely — the providers of medical care react by increasing charges to their other customers, like working-age people covered by private insurers. And what happens when doctors and hospitals can’t simply charge more to make up for declining Medicare payments? If they don’t simply decide to see fewer Medicare patients, they might decide instead to provide less discounted and free care to the uninsured. That’s a form of cost-shifting, too, only the “cost” comes in the form of higher medical debt — or unmet medical needs — for people who find themselves without adequate insurance.

All of this suggests why true Medicare reform would go far beyond Medicare. It would fix the whole health-care system by creating incentives for all providers of medical care to observe cost-effective medical practices. It would create new scientific institutions (or redirect existing ones) to establish what those best practices are. It would create some sort of electronic medical record system, to cut down on errors and improve coordination of care — both of which ought to help reduce costs (not to mention make people healthier). Above all, it would also make sure all patients had a way to pay their bills, so that doctors and hospitals now performing charity care won’t have to steal from other funding sources to do it.

In other words, the best way to keep Medicare affordable would be to create a well-functioning universal system. The idea of fixing a program by creating another, even larger one might sound paradoxical. But that’s only a function of today’s political sensibilities. The argument would make perfect sense to many of Medicare’s founders; indeed, it would be true to their original hope that Medicare would open the door to covering everybody. Sometimes, the first impulse is the right one.

Reprinted with permission from Jonathan Cohn, “What Really Ails Medicare,” The American Prospect, Volume 19, Number 5: May 12, 2008. The American Prospect, 2000 L Street, Suite 717, Washington, DC 20036. All Rights Reserved.

Jonathan Cohn is a senior editor at The New Republic, where he has written about national politics and its influence on American communities for the past decade. He is also a senior fellow at the think-tank Demos and a contributing editor at The American Prospect, where he served previously as the executive editor. Cohn, who has been a media fellow with the Kaiser Family Foundation, has written for the New York Times, Washington Post, Newsweek, Mother Jones, Rolling Stone, and Slate. A graduate of Harvard University, he now lives in Ann Arbor, Michigan, with his wife and two children.

June 2, 2008

McCain’s Free-Market Health Plan Would Boost Role of High-Risk Pools

By Laura Meckler and Anna Wilde Mathews

John McCain’s plan for a health-care system built around consumers shopping for their own insurance comes with a significant downside: for people with a history of illness, it can be impossible to find coverage on their own.

The Republican presidential candidate’s main answer is to bolster the role of high-risk pools, which sell insurance to people with pre-existing conditions such as diabetes, cancer and AIDS.

These pools, typically created by state governments, require significant government subsidies, charge high premiums and sometimes sharply restrict benefits or enrollment. Nationally, fewer than 200,000 people are enrolled in such pools, while 47 million people in the U.S. are without insurance.

“They tend not to work particularly well,” said Sara Collins, an assistant vice president at the Commonwealth Fund, a nonprofit health-care-research group. “States have really struggled to finance these adequately.”

Sen. McCain… would rely on tax cuts, market forces and consumers themselves to broaden access to coverage, and give a smaller role to employers as a source of coverage.

To fill the gap, Sen. McCain proposed new high-risk pools that would scoop up those who can’t get insurance on their own. He called it a Guaranteed Access Plan. Premiums would be reasonable, with subsidies for low-income participants, but he has given few other details.

(Douglas Holtz-Eakin, Sen. McCain’s chief policy adviser) has suggested the federal government might need to spend $7 billion to $10 billion to subsidize these pools — an estimate he calls “extremely preliminary.” Many experts said that is nowhere near enough, particularly given the large number of people with pre-existing conditions who would need this help if employers send their workers out to the open market.

http://online.wsj.com/article/SB121236916701936663.html?mod=googlenews_wsj

Comment:  Sen. John McCain’s initial proposal for health care reform was simply to change tax incentives, reducing support for moderately-regulated, employer-sponsored health plans, and providing tax credit incentives that would encourage individuals to shop in the less-regulated, individual insurance market - a market capable of providing a much greater choice of innovative health plans. It quickly became obvious that these innovative products would be designed to avoid paying for much of our health care. He had to come up with a proposal to answer critics of his plan.

Over half of us receive our coverage through employer-sponsored group plans. Although employer-sponsored plans cover a lower-cost, healthier segment of our population, health care has now become so expensive that premiums for these more comprehensive plans have become much less affordable. Employers have been attempting to reduce their costs by trimming benefits and expanding out-of-pocket expenses for their employees, but even these changes have failed to make premiums affordable.

Sen. McCain contends that a less-regulated individual insurance market is capable of offering innovative products with premiums that would be affordable for most of us if we were to use his proposed tax credit. In reality, the tax credit is not large enough to make premiums affordable for plans comparable to what most employers provide. For premiums to be competitive, the plans would have to reduce benefits and require much greater out-of-pocket cost sharing. These plans would work only for individuals who are healthy and who will remain healthy, defeating the purpose of insurance. 

In a less-regulated market, more comprehensive coverage comparable to current employer-sponsored plans attracts individuals who have greater health care needs. It is unlikely that those plans would even be offered in the individual market under Sen. McCain’s proposal, but if they were, they would rapidly withdraw from the market because of the death spiral caused by the ever higher premiums that must be charged as the sick enroll and the healthy drop out. People who need care would be shut out of the individual market.

Sen. McCain could not really sit on a proposal that would cover only the 80 percent of us who are healthy. He had to propose some mechanism of paying for the 80 percent of health care that is used by the 20 percent of us who have significant health care needs. His solution is to promote state-run high-risk pools that would provide that coverage. 

We do already have considerable experience with these pools, and it certainly is not good. The primary problem is that the cost per participant is extremely high. Most states severely restrict the number of participants, and many states haven’t even established such pools. The high premiums are even less affordable, and coverage is very skimpy, usually with very low lifetime caps.

In 2006, private plans, out-of-pocket expenses, and other private spending financed 54.7 percent of national personal health care expenditures (KFF/Urban Institute). CMS projects for 2008 a total personal health care expenditure of $1,999 billion. Thus private health care spending is projected to be $1,093 billion this year. The 20 percent of health care consumed by the 80 percent of us who are relatively healthy would cost about $218 billion. The 80 percent consumed by the 20 percent of individuals with significant health care needs would cost about $874 billion in private spending. 

It is much of this $874 billion that would be transferred to the state high-risk pools under Sen. McCain’s proposal. His adviser, Douglas Holtz-Eakin, provides an “extremely preliminary” estimate of $7 billion to $10 billion in federal subsidies for these pools. Who pays the other $864 billion? The individual?

Excluding those covered by Medicare, Medicaid and other public programs, 225 million of us have private insurance or are uninsured. Twenty percent of those, or 45 million people, theoretically would be in the high-risk pool if everyone were to obtain coverage under his program. If the high-risk individuals were responsible for the remaining $864 billion, each would have to pay $19,200. Obviously, that can’t work.

Others propose that high-risk pools be funded by an assessment on commercial insurers. But that moves the financing for high-risk individuals back into the private insurance risk pools. Not only would that drive up premiums, which are already unaffordable, it would also add another layer of administrative costs in a system that is already overburdened with administrative excesses.

Now you know why state high-risk pools don’t work. There is only one reason to propose them in the first place - that is to relieve the private insurance industry of its responsibility of paying for necessary health care, merely to enhance its successful business model of selling insurance primarily to the people who don’t need care now, and hopefully won’t in the future.

As John Geyman says, the private insurance industry is dying, and we shouldn’t try to resuscitate it - certainly not if we we taxpayers are the ones who are going to be indemnifying those who actually need health care. 

Government-Funded Care Is the Best Health Solution

Multiple Insurers, Multiple Plans Create Expensive, Draining Hassle

THE DOCTOR‘S OFFICE

By BENJAMIN BREWER, M.D.
THE WALL STREET JOUNRAL

A recently approved Massachusetts plan designed to force all residents to get health insurance was a step in the right direction, but it doesn’t go far enough.

Under the Massachusetts approach, there will still be a maze of plans provided by any number of insurers. That multiplicity is the problem. Multiple insurers and multiple plans create layers of unneeded expense and bureaucracy related to billing, collections and the entire assembly line of middlemen between the service rendered and the payment.

It took me a while to conclude that a single-payer health system was the best approach. My fear had been that government would screw up medicine to the detriment of my patients and my practice. If done poorly, the result might be worse than what I’m dealing with now.

But increasingly I’ve come to believe that if done right, health care in America could be dramatically better with true single-payer coverage; not just another layer — a part D on top of a part B on top of a part A, but a simplified, single payer that would cover all Americans, including those who could afford the best right now. Representatives and senators in Washington should have to use the same system my patients and I do were they to vote it in.

Doctors in private practice fear a loss of autonomy with a single-payer system. After being in the private practice of family medicine for 8 1/2 years, I see that autonomy is largely an illusion. Through Medicare and Medicaid, the government is already writing its own rules for 45% of the patients I see.

The rest are privately insured under 301 different insurance products (my staff and I counted). The companies set the fees and the contracts are largely non-negotiable by individual doctors.

The amount of time, staff costs and IT overhead associated with keeping track of all those plans eats up most of the money we make above Medicare rates. As it is now, I see patients and wait between 30 and 90 days to get paid. My practice requires two full-time staff members for billing. My two secretaries spend about half their time collecting insurance information. Plus, there’s $9,000 in computer expenses yearly to handle the insurance information and billing follow up. I suspect I could go from four people in the paper chase to one with a single-payer system.

It would be simpler and better for the patient, and for me, if the patient could choose a doctor, bring their ID card with them, swipe it in a card reader at the time of service and have the doctor get paid on the spot with electronic funds transfer.

Instead, patients have to negotiate a maze of deductibles, provider networks, out-of-network costs, exclusions, policy riders, ER surcharges, etc. Wouldn’t a card swipe be simpler? No preexisting conditions to worry about. No indecipherable hospital bills. One formulary to deal with and one set of administrative rules to learn instead of 300.

With a single-payer system, there are concerns about waiting times for procedures and not getting access to the “best doctors.” These are real issues, but not unsolvable ones. We have these disparities now. Fact is, they are mostly a matter of geography, insurance status and personal wealth.

A single-payer system would increase access to care for the uninsured and the underinsured, including the working poor. It would lower total health costs, in part by replacing 50 different state Medicaid programs and umpteen insurers with one system. This approach has the potential to improve quality and lower costs by improving care for chronic illnesses such as diabetes, high blood pressure and heart disease.

Such a system of care would rely on evidenced-based interventions, that is, providing the right care at the right time to the right patients, according to generally accepted best practices, and it would reduce the disparities in access to and quality of care among ethnic groups. Better tracking of chronic diseases, outbreaks and identification of bioterrorism would also be benefits.

There are powerful forces that oppose a single-payer system — the health insurance industry for one. The insurance industry got its share of the Medicare drug benefit pie, as did the pharma industry. It would have been better and simpler for the government to design one plan with a standard drug fee schedule that everyone could understand, as the government does with care that doctors provide to Medicare patients. But that’s not the way it happened.

Doctors have been supportive of the idea of universal access to care, but not necessarily a single-payer system. Some fear delays in obtaining necessary testing and surgeries. What I suspect they fear most is a loss of income and the fear of the unknown.

A single-payer system would admittedly lower fees for subspecialty care, such as radiology and cardiology. But if more doctors went into family medicine or obstetrics and fewer into subspecialties like plastic surgery, that shift might help correct the physician manpower imbalances that exist now. That wouldn’t necessarily break my heart.

I suspect doctors would be more likely to support a single-payer system if national malpractice reform was part of the package — which it should be.

I used to think a single-payer system would keep my income down and inject bureaucracy into my medical decision-making. But with the efficiency it could bring, it would at worst be an economic wash; more likely, the trimmed costs would more than make up for any foregone revenue. As for autonomy, I’m already struggling to maintain it amid the interference of insurers.

On the whole, the efficiency — and equality — that a single-payer system would provide would more than compensate for its shortcomings.

Write to Dr. Benjamin Brewer at thedoctorsoffice@wsj.com

June 5, 2008

Research Finds Wide Disparities in

Health Care by Race and Region 

By KEVIN SACK

Race and place of residence can have a staggering impact on the course and quality of the medical treatment a patient receives, according to new research showing that blacks with diabetes or vascular disease are nearly five times more likely than whites to have a leg amputated and that women in Mississippi are far less likely to have mammograms than those in Maine.

The study, by researchers at Dartmouth, examined Medicare claims for evidence of racial and geographic disparities and found that on a variety of quality indices, blacks typically were less likely to receive recommended care than whites within a given region. But the most striking disparities were found from place to place.

For instance, the widest racial gaps in mammogram rates within a state were in and , with a difference of 12 percentage points between the white rate and the black rate. But the country’s lowest rate for blacks - 48 percent in - was 24 percentage points below the highest rate - 72 percent in . The statistics were for women ages 65 to 69 who received screening in 2004 or 2005.MassachusettsCaliforniaIllinoisCalifornia

In all but two states, black diabetics were less likely than whites to receive annual hemoglobin testing. But blacks in (66 percent) were far less likely to be screened than those in (88 percent). MassachusettsColorado

The study was commissioned by the nation’s largest health-related philanthropy, the Robert Wood Johnson Foundation, which on Thursday planned to announce a three-year, $300 million initiative intended to narrow health care disparities across lines of race and geography. Officials said it would be the largest effort to improve health care quality ever undertaken by a charity in the . United States

The foundation hopes to better understand and confront the causes of those regional variations by focusing its spending on 14 regions, like the city of and the state of . WisconsinMemphis

Dr. Bruce Siegel, the George Washington University professor who will direct the program, said one community might use its grant money to study how long it takes hospitals to move heart attack patients from emergency room to catheterization laboratory. Others might work to coordinate electronic record-keeping or to provide patients with better information about taking medications after discharge.

“In my book,” Dr. Siegel said, “health care is local, just like politics, so you’re going to see a lot of differences in what communities do.”

That point is reinforced time and again in the new research conducted by the Dartmouth Atlas Project of the college’s Institute for Health Policy and Clinical Practice, which has used Medicare data to document health care disparities over the last two decades. It found substantial variation in the proportion of Medicare beneficiaries who had been seen in a two-year period by a primary care physician, ranging from 86 percent in and to 65 percent in . It found far higher rates of unnecessary hospitalizations in , and than in , and .West VirginiaLouisianaKentuckyWashingtonUtahHawaiiNew JerseySouth DakotaNebraska

Disparities in the rate of leg amputations were particularly stark. The rate for blacks was about 6 per 1,000 in , and , but less than 2 per 1,000 in and . The rates for whites in the three Southern states were much lower, about 1.3 per 1,000, but were still more than double the rates for whites in the two Western states.NevadaColoradoSouth CarolinaMississippiLouisiana

Such variations may be partly explained by regional differences in education and poverty levels, but researchers increasingly believe that variations in medical practice and spending also are factors.

“In health care, it’s not only who you are that matters; it’s also where you live,” wrote the study’s authors, led by Dr. Elliott S. Fisher.U.S.

Dr. John R. Lumpkin, senior vice president of the foundation, said that more than a third of the $300 million would be spent to hire national experts to help regional coalitions tailor their quality improvement plans. The remainder of the money will be devoted to research, evaluation and the promotion of quality standards.

“We want to build a template in each of these communities that will teach how to improve health care quality in a dramatic way,” Dr. Lumpkin said. America

The areas selected for the grants are Cincinnati; Cleveland; Detroit; Humboldt County, Calif.; Kansas City, Mo.; Maine; Memphis; Minnesota; Seattle; south central Pennsylvania; western Michigan; western New York; Willamette Valley in Oregon; and Wisconsin.

The foundation’s endowment, now about $10 billion, was financed originally from the wealth of its namesake, who died in 1968 after building Johnson & Johnson into one of the world’s largest sellers of health and medical products. The group has been a major force in curbing tobacco use, and has more recently turned its attention to obesity, announcing a five-year, $500 million effort on that front last year.

Our sixteen years in the health care justice movement have allowed us to develop relationships with every part of our broad and diverse movement. We have operated as an inclusive network that promotes collaboration and works to help other groups succeed. We celebrate the growth and development of new coalitions and campaigns and help advocates for differing approaches learn from and work with each other to advance the cause of health care for all.  
 
UHCAN has decided to devote significant organizational resources to this active unity initiative because we believe that active unity in the health care movement is an absolute necessity for success in the fight for health care justice in America.  This is an historic political moment in the U.S. with health care at or near its core.  Divide and conquer is the basic organizing strategy of the opponents of health care justice.  If they succeed, we all lose, as we have time and again.   Actively unified we have the opportunity ensure their divide-and-conquer strategy fails this time.  But, for active unity to work, we all must do our part.
 
For the last few months UHCAN has circulated our thoughts on this active unity initiative among both longstanding and new colleagues, and are gratified at the responses we have received.   Their ideas and suggestions have helped us deepen our understanding of the need for this initiative and the specific challenges our movement faces.  The result is an open letter to our colleagues in the health care justice movement, On the Road Together in 2008-2009:  Building Active Unity for Health Care for All (reprinted below).
 
We have received statements of support from a number of leaders in our movement (see excerpted quotes and list of those who have submitted statements of support to date below) which have reinforced our commitment to building active unity.  We want to call special attention to the following words from one of America’s foremost champions for health care justice:
 

U.S. Representative John Conyers (D-MI)
Statement in Response to UHCAN’s Open Letter:

“Health care reform is coming in America.  I am very proud of my years of work on health care, including H Con Res 99, and my sponsorship of HR 676.  But I deeply believe that the health care legislation I work on in 2009 will be the most exciting and important bill of my career.  It will be more than life saving.  It will have a global dimension.  Other countries will be watching what we do.”                 
 
“It won’t be easy. We will need much more active support than exists now. 
We need to expand the people we are talking to, to make sure we are not always talking to ourselves. I am doing that in Congress and hope that everybody does it where they are.  2008 really is the year to work together and learn from each other. Many people and groups have good ideas that can help us get the health care America deserves.  Working together, we will win.  We have long been on the right side.  If we are united, we will be on the winning side as well.”

 
UHCAN is proud that Congressman Conyers and other leaders and organizations with strongly held positions see the value of this unity building effort.  This public commitment by these leaders is an explicit first step in an ongoing initiative UHCAN is working to pursue.
 
Unity in the health care movement has been elusive in the past - to be achieved it must be actively sought. We do not underestimate the difficulties of finding better ways to disagree and still work together. This is true whether inside a single coalition or between different organizations. The higher health care reform moves up the political agenda, the greater will be the attempts to divide us. That is why UHCAN believes that leaders in the movement for health care reform in 2009 must first lead the way in building and maintaining unity within our movement in 2008.
 
UHCAN has begun to promote dialogue and tools that we and others are developing that will help groups stick together more, work together better, and resist efforts to divide and conquer us.  We view this active unity initiative like an organizing campaign - there are no shortcuts. Unity is built step-by-step, organization by organization, coalition by coalition.  In pursuit of active unity, over the next six months UHCAN intends to organize dialogues and actions with national and state partners to identify ways to build unity and find common ground.  We aim to:
 
Facilitate connections and relationship-building between national organizations and their affiliates with state-based health care justice groups:
 

-engage state groups with national campaigns, efforts, resources and materials
 
-incorporate active unity discussions into UHCAN monthly conference calls with
  health care justice leaders, and expanding 1-on-1 consultations and hands-on 
  support from UHCAN staff
 
-enhance UHCAN communications tools with a focus toward building collaborative 
  mutual support and respect for shared values and goals
 
-develop peer-to-peer learning opportunities to promote learning from states where
  advocates with diverse perspectives have successfully united around a common
  reform agenda

 

Organize networking and training workshops to help build unity and find common ground, (both regionally and organization specific) topics will include how to:
 

-embrace our differences instead of letting them divide us
 
-improve effective ways to talk about health care and coordinating messaging
 
-promote public health insurance as an essential component of health care reform
 
-focus attention on inequities and the economic impact of the lack of quality, 
  affordable health care on families, business and all levels of government
 
-expose failures of market-based solutions that leave people on their own in the
  private insurance market
 
-work together to engage key constituencies and the public, and keep health care
  a top priority issue during this election season

   
UHCAN believes that focusing on these ideas and actions will help deflect attacks that can derail comprehensive health reform and strengthen the health care justice base.   Working together our movement can build the united power that will be needed during the 2009 policy debates to secure guaranteed, quality, affordable health care for all in America. 

Building Active Unity for Health Care for All:
Excerpts from Statements of Support from Health Care Justice Leaders
 

“With private insurers unable to control health care costs, protect us from financial risk and guarantee health security, the entire health care system is falling down.  2008 is the chance we have been waiting for.  And, all together is the way to win health care for America now.” 

-Diane Archer, Founder,
Special Counsel, Institute for America’s FutureMedicare Rights Center and

“Creating a health care system that works for all of us must start with the vision that we are all in this together.”

-Jeff Blum, Executive Director, USAction

“As the healthcare reform debate in this country heats up once again, all organizations that support any role of government in healthcare must come together and work to ensure that we defeat the profit interests in our system.  We must recognize that the policy disagreements between our groups are much smaller than our collective disagreement with the profit-driven special interests in healthcare.” 

-Flavio Casoy, Health Policy Team Chair,
American Medical Student Association (AMSA)

“Like UHCAN, we recognize that it’s going to take all of us, working together, to win a mandate for guaranteed access to quality, affordable health care for all in 2008 and to hold our political leaders accountable for change in 2009.”                                

-Margarida Jorge, Director, Americans for Health Care,
A Project of the Service Employees International Union (SEIU) 

“[we are] pleased to join in the Universal Health Care Action Network’s call for unity around quality, affordable, health care for all. We believe that there exists an inherent ideological divide between people who believe in continuing to rely on health insurance companies and those who believe in true quality, affordable, health care for all.”                                                   

-Richard Kirsch, National Campaign Director,
Health Care for America Now! (HCAN)    

“It is essential that we remain united and allegiant to our overarching goal and consider alternative reform ideas on the basis of their relative merits and not through an ideological filter. Unity, all above else, demands an acceptance of divergent views as we work for the common good. All of us share the responsibility to reform health care in America and by working together, we will.”

 -Steve Kreisberg, Director of Collective Bargaining and HealthCare Policy,
American Federation of State, County and Municipal Employees (AFSCME) 

“It is time for us to unite together in support of health policies that would ensure that every individual would have access to reasonably comprehensive health care services in an equitably funded system that is affordable for each and every individual and affordable for society. Trading away these principles would divide us, but by uniting behind them, we can finally get the job done.”

-
Physicians for a National Health Program (PNHP)      Don McCanne, MD, Senior Health Policy Fellow,

“The elimination of segregation and unequal access should take utmost priority.  Lets us all work for affordable, quality healthcare for all not based on market forces but patient- centered care.”

-Jaime Torres, DPM, National Coordinator,
Latinos for National Health Insurance    

“Make no mistake - we must present a unified front if we have any hope of helping the millions of people in this country who can not wait any longer for real change in our health care.  We must work together - to seize the political opportunity and demand change - or face the same fate as our last attempt.”

-Judy Waxman, Vice President for Health and Reproductive Rights, National Women’s Law Center

Dr.  McCanne served as PNHP President in 2003-2004 and writes a daily health policy “quote of the day” for single payer advocates.  Subscribe by dropping a note to don@mccanne.org.

PNHP:  How would you characterize Sen. McCain’s health care plan?

Dr. Don McCanne: Of the two candidates, McCain would rely more on the private sector and market forces to produce changes in the health care system. He says he would free up the market to allow private insurers to compete with each other to create plans with premiums we could afford.

Compared to Obama’s proposals, McCain’s program represents a much greater change from what we have now. He would shift responsibility for health care from employers to individuals by providing tax incentives for people to move to a deregulated, individual private insurance market.

What would be the impact?

McCain’s plan will likely result in many more people being uninsured and underinsured.

First of all, with workers receiving a government subsidy for health insurance - $2,500 for individuals, $5,000 for a family - employers are going to be motivated to terminate their health insurance programs and turn people over to the individual market.   

McCain is basically proposing to change health insurance from a defined benefit to a defined contribution.  In today’s market, what kind of family health insurance can be purchased with a $5,000 defined contribution? The average family premium is about $12,000, and that doesn’t include deductibles, co-pays and other out-of-pocket expenses.

I believe the private insurance companies will treat people in the marketplace very shabbily. Many people will be unable to afford any insurance - and it won’t only be those who are older or who have pre-existing conditions, sectors the insurance companies don’t want to cover at all.

Second, his proposal for less regulation of the insurance industry means that industry will be offering grossly inadequate insurance products to people in order to compete on price. The insurers can’t afford to provide real, comprehensive insurance and at the same time make their premiums affordable.

As a result, there will be a huge increase in the underinsured population. People will be losing their employer-based insurance and will be swelling the ranks of the uninsured and underinsured. This will result in a massive, catastrophic failure of the system. It will be horrible.

What about his claim that he’s not turning his back on people who have difficulty getting insurance, e.g. those with pre-existing conditions?

McCain proposes to cover such people through his “guaranteed access plan”, but that’s just a continuation of the state high-risk pools that we already have in place for individuals who typically can’t obtain insurance.  These plans don’t work.

States are supposed to do their part in this scenario. But currently only about 190,000 people nationally are in these pools of high-risk individuals. These are very expensive pools. States just don’t have the funds to adequately finance them. So turning to the states - that’s no solution at all.   It’s not a serious approach.

Would McCain’s plan give people more choice or control costs?

No.  

Most insurance companies have preferred provider lists and most HMOs have closed panels that restrict patients to doctors in the HMO.  Although McCain touts the freedom to choose your insurer or HMO, these institutions actually take away your freedom to choose who your doctor is or which hospital you can use - the choice we really want.

McCain’s proposals for containing costs are very weak.

The greatest source of administrative waste in U.S. health care today is our dysfunctional, fragmented private insurance system. That’s where the largest administrative costs are. And the individual insurance market - the market that McCain wants to expand - involves even higher administrative costs. So costs will likely go up.

Cost control is only achieved when you have real control over the health dollars. Only then can you develop incentives, for example, to expand primary care. Only then can you realign financial incentives away from an array of excessive, non-beneficial high-tech services that yield little value, and redirect it to primary care, which delivers greater value at lower cost.

What about Sen. Obama’s proposals?

Obama’s plan emphasizes increased government regulation and oversight of private and public insurance plans, leading to an incremental expansion of the existing system. As part of this, he would introduce a new Medicare-like plan for persons under 65 to serve as an alternative to private health insurance plans.

In terms of universal coverage, Obama’s plan probably will not expand coverage very much, mainly because his plan doesn’t do much to bring down the cost of health care. It continues to use the defective private insurance model.

The problem is that private insurers will not accept everyone in the risk pool, lest their costs go up. Even if regulations require them to do so, they still game the system through measures such as selective marketing. So people who are at higher risk will head for the new public or semi-public plans.

These plans, which under Obama’s proposal would be available through a new National Health Insurance Exchange, would be required to accept people with pre-existing conditions. But they would still involve payment of premiums, co-pays and deductibles.

He says these plans will be as good as what members of Congress get, right?

Obama says they would be patterned after the Federal Employee Health Benefits Program, but that may not be all that great.   The plans that are offered to federal employees vary in price and a Senator can afford a plan that has far better benefits that his staffers.  The FEHBP plans are not totally stripped down, but they still have deductibles, co-pays and other out-of-pocket expenses, and restrict people to a limited list of providers.  In fact, 100,000 federal workers eligible for the FEHBP plans remain uninsured primarily because they cannot afford their share of the costs.  Obviously that program wouldn’t work for far too many of us.

Additionally, the program Obama describes will be costly. He says individuals who can’t afford the premiums offered through the health insurance exchange plans will receive subsidies. But I think these subsidies will have to be much larger than estimated and will have to be provided to a much larger number of people than he currently estimates - not only low-income, but middle-income people and even those at the lower end of the high-income group.

So Obama’s stated goal of universal coverage will be foiled by the lack of availability of affordable plans that have adequate benefits. His approach is flawed because the private health plans are not going to be able to have enough benefits if they’re going to have affordable premiums.

Some say Obama’s new public plan could lead to something bigger and better.

The offering of a public plan option, which, incidentally, he shares with Sen. Hillary Clinton and professor Jacob Hacker, is not as simple as it would seem.   Depending on the details and amount of funding, it has the potential to be the most important feature of his plan, or it could be a disaster.  But even so, it alone won’t lead to anything even close to universal coverage.  Obama has stated repeatedly that he knows that single payer is a superior solution for health care reform.  

It’s likely that the public plan will be impacted by adverse selection - i.e. that individuals who are sick, or small businesses who have workers with costly disorders such as diabetes or cancer, will tend to seek out the public plans because the private plans would likely withdraw from markets that include high-cost individuals - markets in which they would be losing money. These individuals and small businesses will end up in relatively high-risk pools. It is essential those pools be adequately funded.

To fund the public high risk pools, either the private insurance companies would have to shift some of their funds into the public program through risk adjustment, or, as the public program uses up its funds, the government would have to make a greater contribution. To compete with the private plans, the public program and private plans would have to be funded at the same levels accurately corrected for the level of risk in their pools.   That’s not technically feasible.  Nobody has a way to do that.  So insurers are always able to game the system.

Even if you could get private insurers to compete with the public program on a level playing field, that still leaves a lot of problems. You still don’t get the administrative savings you would under a single-payer system. Providers would still have to deal with multiple insurers. And both the Organization for Economic Cooperation and Development and the World Health Organization say systems that leave private plans in place are more expensive, less efficient and less equitable than a single public system.

What about cost control?

Again, Obama’s proposals, like McCain’s, are weak in this area. The defective private insurance model, to the extent in remains in place, drives up costs and blocks effective group bargaining and health planning.

The private health insurance plans of the 21st century have decided that they should cover only the healthy, putting an end to risk pools that enable a transfer from the many who are healthy to those with sickness or injury. They also realize that they should avoid competing with each other based on lower premiums, but should instead use their oligopolies to push premiums up to the maximum that the market will bear.

Only this month the two largest publicly traded health insurers, WellPoint and UnitedHealth Group, said they would not try to hold down premiums in the name of getting more members. “We will not sacrifice profitability for membership,” said one WellPoint official.

Yet both McCain and Obama propose to leave this industry in charge.

What’s the alternative?

What we really need is a system that removes the financial burden from patients and more effectively pools our funds into a public program that is able to address costs more effectively by introducing greater efficiency and value into our health care system.

Such a system would guarantee comprehensive health care to everyone by replacing the private insurance industry with a tax-supported government agency or agencies that would pay all medical bills, similar to the way Medicare operates today, but even better than Medicare. People would have the freedom to choose their own doctors and hospitals.

That’s a single-payer system. Such a system is embodied in H.R. 676, the “U.S. National Health Insurance Act,” introduced by Rep. John Conyers. It currently has 90 co-sponsors in Congress, more than any other health reform proposal.

How do you reply to those who say single payer is politically infeasible?

There are some in the political arena and health policy field who say the 2008 policy debate is over.  They say single payer has lost out, and it’s time to move on.  

The only problem is that single payer is the only plan that will work.

Keep in mind that any health care reform will have to be crafted and enacted by Congress. Whatever bill Congress comes up with will most likely not resemble either of the presidential candidates’ proposals very much. Only the general concepts will come into play. Congress will need to enact the specifics.

So it’s important to continue to educate people on basic health policy, contrasting the defective private insurance model with single-payer national health insurance. For members of groups like Physicians for a National Health Program, that means continuing to speak at forums and grand rounds, to write op-eds and letters to the editor, and to attend campaign-related events and raise the issue of why we need single payer.

SIDEBAR: At a glance

McCain’s proposal

• Increases number of uninsured and “underinsured”
• Increases administrative overhead (currently 31 percent of health spending)
• No effective cost containment
• Relies on private insurance market to shape system
• Moves people away from employer-based system to the individual market by offering tax credits ($2,500 individual, $5,000 family) that can be used to buy individual insurance
• Deregulates insurance markets, e.g. by dropping state-defined standards
• Encourages Health Savings Accounts
• Offers vague “Guaranteed Access Program” to address problem of the historically uninsurable - e.g. people with pre-existing conditions - that involves state-based risk pools

Obama’s proposal

• Partially reduces number of uninsured with $100 billion in new public funding
• Requires some employers to provide insurance or pay into a public insurance program, i.e. “play or pay”
• No effective cost-containment
• Mandates that all children be insured
• Expands Medicaid and State Children’s Health Insurance Program
• Sets up public insurance program as alternative to private insurers
• Sets up “National Health Insurance Exchange” through which insurers could not deny coverage to people with pre-existing conditions with tax subsidies to low-income
• Provides government reinsurance to employers for handling catastrophic illness or injury

ATLANTA, Georgia (AP) — For the first time, U.S. life expectancy has surpassed 78 years, the government reported Wednesday.

The increase is due mainly to falling mortality rates in almost all the leading causes of death, federal health officials said. The average life expectancy for babies born in 2006 was about four months greater than for children born in 2005.

However, the United States continues to lag behind about 30 other countries in estimated life span, according to World Health Organization data.

Japan is No. 1 on the list, with a life expectancy of 83 for children born in 2006. Switzerland and Australia were also near the top of the list.

“The international comparisons are not that appealing, but we may be in the process of catching up,” said Samuel Preston, a University of Pennsylvania demographer. He is co-chair of a National Research Council panel looking at why America’s life expectancy is lower than other nations’.

The new U.S. data, released Wednesday, come from the National Center for Health Statistics. It’s a preliminary report of 2006 numbers, based on data from more than 95 percent of the death certificates collected that year.

Life expectancy is the period a child born in 2006 is expected to live, assuming the mortality trends observed in that year stay constant.

The 2006 increase is due mainly to falling mortality rates for nine of the 15 leading causes of death, including heart disease, cancer, accidents and diabetes.

“I think the most surprising thing is that we had declines in just about every major cause of death,” said Robert Anderson, who oversaw work on the report for the health statistics center.

Health statisticians noted declines of more than 6 percent in stroke and chronic lower respiratory disease (including bronchitis and emphysema), and a drop of more than 5 percent in heart disease and diabetes deaths. Indeed, the drop in diabetes deaths was steep enough to allow Alzheimer’s disease — which held about steady — to pass diabetes to become the nation’s sixth leading cause of death.

The U.S. infant mortality rate dropped more than 2 percent, to 6.7 infant deaths per 1,000 births, from 6.9.

Perhaps the most influential factor in the 2006 success story, however, was the flu. Flu and pneumonia deaths dropped by 13 percent from 2005, reflecting a mild flu season in 2006, Anderson said. That also meant a diminished threat to people with heart disease and other conditions. Taken together, it’s a primary explanation for the 22,000 fewer deaths in 2006 from 2005, experts said.

U.S. life expectancy has been steadily rising, usually by about two to three months from year to year. This year’s jump of fourth months is “an unusually rapid improvement,” Preston said.

Life expectancy was up for both men and women, and whites and blacks. Although the gaps are closing, white women continue to have the highest life expectancy (81 years), followed by black women (about 77 years), white men (76) and black men (70). Health statisticians said they don’t have reliable data to calculate Hispanic life expectancy, but they hope to by next year.

Increases in female smoking are a major reason that men’s life expectancy is catching up with the women’s, Preston said. Improvements in the care of heart disease — a major health problem for black Americans — helps explain an improving racial gap, he said.

About 2.4 milli