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THE RENEWABLE DEAL, ASPECT TWO, PLANK 6: HEALTH
THE CAUSES OF THE UNITED STATES HEALTHCARE SYSTEM CRISIS
Sixteen percent of the U.S. economy as of 2006 is consumed by health care costs; in 1960, 5.2percent of GDP went to pay for health care. From 1997 to 2003 U.S. health care spending wentfrom 13.1 percent to 15.3 percent of GDP. In March 2008 the Centers for Medicare andMedicaid Service reported that health care consumed 16.3 percent of the U.S. GDP in 2007 andwas now projected to total $4.3 trillion dollars by 2017. Health care insurance premiumsincreased 66 percent from 2000 to 2004, five times faster than wages. In 1960, the average out-of-pocket share of all national health care costs was 42 percent, amounting to $148. In 2006, theaverage out-of-pocket share of all national health care costs by individual citizens was 12percent, amounting to $6,697. Today, the typical patient with private health insurance isresponsible for 23 percent of medical bills, more than twice the co-pay cost in 1980. In a poll ofover 26,000 people by the AFL-CIO and Working America in 2008, one in three reported theirfamily had skipped getting medical care because of cost, and one in two respondents said theyhad spent between $1,000 and $5,000 out-of-pocket for healthcare in the last year and that theirhealth insurance does not meet their family needs at an affordable price.
In 2003, spending in the U.S. on government health programs only reached 7 percent of GDP,which is equivalent to the cost other nations’ universal coverage health care systems that coverall the nation’s citizens. On a per capita basis, the United States spends 55 percent more moneyon health care than the next-highest nation on the planet, which is Switzerland.
On 24 Sep 08 the Kaiser Family Foundation and Center for Studying Health System Changepublished a report which found that employees are paying an average of $3,354 in premiums forfamily coverage, and pay a total of $12,680 a year in health costs out-of-pocket, up 5 percentfrom a year ago in 2007. One in five households had problems paying their medical bills in2007. In another 2007 poll, 41 percent of working-age adults said they were either paying offmedical debt or had problems paying their medical bills, up from 34 percent in 2005. More thanhalf of these households borrowed money with which to pay medical bills, and 20 percent of thehouseholds having problems paying their medical bills contemplated taking bankruptcy becauseof their medical debt. In October 2008 AARP reported a survey in which 2 in 5 adults aged 19to 64 reported having problems paying medical bills or accumulating medical debt in 2007.
In the October 20, 2008 U.S. News and World Report
, Bernadine Healy, M.D., said: “Healthcarecosts are growing so fast that they are eating up state and federal budgets, overwhelmingpeople’s ability to afford premiums, and promising to crush families who find they must pay forcare on their own. Some 158 million working Americans are at risk, as their total family
insurance premiums have risen in round numbers from $6,000 in 1999 to $13,000 in 2008. Ofthis, the worker contribution is now about $3,400, a hefty sum, but one that obscures the realfive-figure expense - which is even greater of one adds on the Medicare payroll tax that can runin the thousands. Overall, healthcare spending has grown numbingly from almost $700 billion in1985 to almost $2 trillion in 2005, and common sense says that is unsustainable. For reference,the entire federal budget is $3 trillion.”
“According to the Congressional Budget Office, the biggest drivers of growth -
accounting for about half - are new treatments and technologies.”
“Insurers stay solvent as their costs rise by charging higher premiums, increasing
copayments and deductibles, and limiting coverage and denying claims. But what’s needed iscost reduction, not cost shifting.”
According to Physicians for a National Health Program, 31 cents of every U.S. healthcare dollaris sucked up by bureaucracy and paperwork. PNHP advocates switching to a single-payernational health insurance system, which they claim would save $350 billion a year inadministrative overhead costs.
Adding to the health care overhead is the fact that the U.S. medical-industrial complex nowspends more than $110 billion on research and facility construction each year.
According to AARP, studies show that 10-15% of all workers consume 75-80% of the nation’shealth care resources. In February 2007, a study found the average cost to employers in lostproductivity per employee caring for aged parents was $2110. The same study reported that 45percent of 2005 healthcare costs nationally were paid for by local, state, or federal government.
In the health care system as a whole, 80% of costs are entailed providing care to people whoprove to be in the last year of their lives. Average per capita health spending on those 85 yearsand older is three times average annual spending on persons 65-74 years of age. Each eldercitizen consumes an average of four times more medical services than each young adult, andseven times more medical services, in cost outlay terms, than each child. Elders constituting 13percent of the U.S. population accounted for 40 percent of all medical costs incurred in thenation.
Dr. Sidney Wolfe of Public Citizen has publicized the finding that 50 percent of insuredAmericans are taking prescription medications for chronic health problems.
Business research firm McKinsey Global Institute reports that U.S. health and hospital costs arehighest in the world. Comparing our cost structure with that of other industrialized nations,McKinsey found that our hospital costs for equivalent services are nearly twice the average forall industrialized countries. Costs of levels of hospital staffing, salaries paid to doctors andnurses, insurance and the costs of equipment and administration are all higher in the U.S. thanelsewhere.
According to the Centers for Medicare and Medicaid Services’ National Health Statistics Group,
the total national health bill and who paid it in 1993 versus 2006 (amounts shown are in billionsof dollars) was:
This is an increase of 232.6 percent in 13 years, or an average increase of 17.9 percent per year.
According to the Agency for Healthcare Research and Quality, as of 2004 total spending peryear for cancer patients averaged $5,727; for heart disease, $4,506; and for diabetes $1,904. Anationwide study published in 2006 in Northwestern University Law Review
found that 46percent of bankruptcy filers cited a medical reason for their insolvency. In a study of cancerpatients conducted by the Kaiser Family Foundation and the Harvard School of Public Health, 1in 4 families affected by cancer used up all or most of their savings coping with the disease.
In an effort to preserve private sector profits and government funds, health insurance entitieshave been keeping reimbursements to physicians for services flat or lowering them (e.g., theMedicare proposal for FY 2008). Albert Fuchs, M.D., summarized the results in the April 16,2007, U.S. News and World Report
: “Physicians are responding to flat or decliningreimbursements by squeezing more patients into their schedules. Patients are frustrated bylonger waits for shorter appointments, which frequently leave no time for education, counseling,or reassurance. A small but growing number of doctors have responded by severingrelationships with third-party payers and are working directly for out patients.”
The Organization for Economic Cooperation and Development reports that per capita healthspending in the United States ($6,102) is about twice as high as in Canada ($3,165), France($3,159), Australia ($3,120), or Great Britain ($2,508), yet U.S. life expectancy is lower (77.5)and our infant mortality rate is higher (6.9 per 1,000 births) than in these other four nations. Theimplications of this lack of cost-effectiveness of the U.S. healthcare system on our nation’s
international economic competitiveness is addressed in the section on “Big Business Case forUniversal Health Care” below.
The December 2007 AARP Bulletin
summarized the health care situation for their United WeFail campaign: “Health care consumes 16 cents of every dollar, prescription drug prices outpaceinflation, and Medicare premiums have doubled in seven years.
Yet we have lower life expectancy and higher child mortality than other industrialized
Look at the consequences. There are 47 million uninsured Americans. Half of
Americans with health insurance say that because of higher prices [co-pays, deductibles] theydelayed doctor visits; two-thirds say they’ve limited them to only serious conditions orsymptoms; and 28 percent say they skipped or did not fill prescribed medications.”
The following table was circulated on the internet following the release of Michael Moore’s filmSicko
Data: CDC, Commonwealth Fund; Blue Cross and Blue Shield; OECD Health Data 2006
The Health Consequences of Transportation Choices
385 = Bicycles per 1,000 people in the U.S. in the mid-1990s 588 = Bicycles per 1,000 people in Germany1,000 = Bicycles per 1,000 people in the Netherlands
1 = Percent of urban travel accounted for by bicycles in the United States in 1995 12 = Percent of urban travel accounted for by bicycles in Germany
28 = Percent of urban travel accounted for by bicycles in the Netherlands
30.6 = Percent of adults who are obese in the United States, 2003 12.9 = Percent of adults who are obese in Germany 10.0 = Percent of adults who are obese in the Netherlands
14.6 = Total spending on health as percent of GNP in the United States (2002) - rank of U.S.
among nations in terms of overall health index = 34th 10.9 = Total spending on health as percent of GNP in Germany 8.8 = Total spending on health as percent of GNP in the Netherlands - note both haveuniversal coverage single-payer national health systems
People over 65 occupy 40 percent of hospitals’ acute care beds, spend 50 percent of U.S. healthcare dollars and buy 25 percent of all prescription drugs. A 2006 study by the Department ofHealth And Human Services’ Agency for Healthcare Research and Quality found older adultsare five times as likely to die during hospitalization as younger patients.
Recent estimates by Fidelity Investments show that a 65-year-old couple retiring in 2006 shouldhave at least $200,000 saved just to cover out-of-pocket medical expenses during their retirementyears. Four couples ages 60, 55, and 50 planning to leave the work force at age 65, the numbersjump to $275,000, $350,000 and $425,000 respectively.
To escape these costs, increasing numbers of people are going abroad as “medical tourists.” In2006 an estimated 500,000 Americans obtained medical and dental care abroad. A growingnumber of countries cater to foreign patients, among them Thailand, India, Singapore, Hungary,South Africa, Dubai, Costa Rica and Brazil. Thailand’s Bumrungrad hospital alone treated64,000 American patients in 2006, up 11 percent from 2005. A spinal stenosis surgery atBumrungrad cost Bruce Pearson $4,618.03 versus $14,000 out-of-pocket at home. Another U.S.
citizen paid $15,000 for hip surgery in New Delhi, including travel costs, that would have cost$60,000 in the U.S. The Joint Commission International, the international arm of the JointCommission for the Accreditation of Hospitals (JCAH) in the U.S., has accredited 130 hospitalsserving foreign patients worldwide.
The combined costs of Social Security, Medicare and Medicaid are on track to grow from $1.1trillion in 2006 to $2.27 trillion in 2016. The Centers for Medicare and Medicaid Servicesprojected in 2006 that prescription drug spending will increase from $188 billion in 2005 to $446billion in 2015. Health care costs are rising because of diet-related diseases: The Institute ofMedicine estimates that national health care expenditures related to obesity range from $98 -$117 billion annually. Due to diet-related diseases and childhood obesity increasing, the U.S.
Surgeon General has predicted that children of this generation may be the first to be less healthyand have a shorter life span than their parents.
The 1999 Dartmouth Atlas of Health Care found the average inpatient cost per patient during thelast six months of life was $9,943.
The private health insurance coverage crisis: The tradition of employer-based health insurancecoverage, now unique to the United States among nations on planet Earth, is rooted in the 1860'spractice of railroads, then lumber and mining corporations, hiring doctors to keep their workershealthy and on the job. The approach flourished during World War II when wages were frozen,so companies competed for scarce skilled labor by offering better benefit packages. Today,employer-financed insurance covers about 160 million Americans, receiving $160 billion in taxdeductions for health insurance outlays. Workers save $200 billion a year in income tax becausethe value of employer-paid health insurance premiums is not taxed as employee income. Thepercentage of Americans covered by employer-provided policies has dropped from 69 to 59percent in the past five years alone, according to the Kaiser Family Foundation. For retirees, in1988 two thirds of large companies offered retiree insurance plans; in 2005 one third did.
The Economic Policy Institute studied health coverage through employers trends for the years1995-2006. Nationally, in 2006 48.8 percent of Americans had health care coverage throughtheir employer, a percentage point below 1995. In California, the drop was 1.5 percent from1995 to the 46.2 percent covered in 2006. The Economic Policy Institute study’s primaryobjective was to determine whether loss of employer-based health insurance coverage was due to“between” losses - where people change jobs from working for employers who offer healthinsurance benefits to employers who do not; or to “within” job loss of health care insurancebenefit coverage where workers continuing to work for the same employers have the employerdrop health care coverage for employees as an employment benefit. The study found the loss incoverage was the “within” type; the loss of coverage of U.S. citizens through employer-basedhealth insurance benefit plans is due to employers dropping such coverage due to its cost.
According to U.S. Census statistics for 2005, 46.6 million Americans lacked health insurance, upfrom 40 million in 2000. In 2006 the number increased to 47 million; the percentage ofAmericans without health insurance rose to 15.8% in 2006 from 15.3% in 2005, the secondconsecutive year of increase. In 2007, 42 percent of U.S. adults under age 65 were rated asunderinsured or uninsured for health coverage. Only 60 percent of Americans had job-basedhealth insurance coverage in 2005, down from 63.6 percent in 2000 - and this after five straightyears of robust economic growth. One in every five women ages 18-64 is uninsured, and onlyabout 38 percent of working women have job-based health insurance. 78% of the uninsured areemployed, 80% are U.S. citizens, and only 18% receive subsidized health care benefits.
According to the Kaiser Commission on Medicaid and the Uninsured, 18.6% of the above
uninsured Americans live in a family containing no workers; 12.1% have at least one part-timeworker, 55.7% have one full-time worker, and 13.6% have two full-time workers in theuninsured family.
A recent study of the private health insurance industry by the Commonwealth Fund found that ifyou have allergies or use popular medications like Prevacid for acid reflux, insurers in moststates can turn you down for coverage or charge a premium price (surcharge) for healthinsurance coverage. Pre-existing conditions such as athsma, varicose veins, a history of earinfections, or a long-ago cancer are also grounds for denial as high risk. Commonwealth foundthat 21 percent of applicants for individual health insurance coverage nationally were turneddown or charged higher premiums because of their perceived health risk. AARP cites the case ofthe Kelly family, in their late 50's, who were found completely healthy in comprehensivephysicals, yet were refused coverage because Mr. Kelly takes 10 mg daily of the statin Lipitor tolower his cholesterol.
Another factor in the insurance crisis is that people who do have health insurance coveragethrough their employers sense that it is dangling by a fraying thread. Most everyone isexperiencing a yearly rise in co-pays and deductibles on their employer health policies. InPennsylvania, family health premiums increased by 75.6 percent from 2000 to 2006, comparedwith a 13.3 percent increase in median wages. Paul Ginsburg, president of the Center forStudying Health System Change, says “The core motivation [for reform] is that for the last fewyears health insurance premiums have been going up faster than earnings. That means there area lot of people who have insurance who feel vulnerable to losing it.” In addition, in 38 statesinsurance premiums can be pegged to age categories, which means that older persons in perfecthealth get charged considerably more for insurance. My own Blue Cross HSA policy premiumgoes up considerably each time a customer ages into the next five-year bracket, e.g., 60-65, evenif Blue Cross has never been paid a medical claim during the customer’s tenure with thecompany. In today’s piecemeal health care insurance system, “we’re all just a pink slip awayfrom being one of the uninsured,” says Michael Campbell, executive director of thePennsylvania Health Law Project.
In addition to rising co-pays and deductibles, there is the problem that 10 to 15 percent of healthinsurance claims are denied for various reasons, according to Bernadine Healy, M.D. Healyreports this problem is bound to grow as electronic medical records meet sophisticated data toolsdubbed “denial engines” which their vendors claim will reduce health insurance reimbursementsfrom an insurer by 3 to 10 percent. Another trend is for insurance companies to outsource claimsadjudication to India. Healy points out that patients should have the stamina to go through aninsuror’s internal appeal process, even if they will most likely lose, because they then becomeeligible for the independent external review available in most states. Such reviews overturnabout half of insurance company denials, and the external review decision is final. NancyNielsen, president of the American Medical Association and a former chief medical officer of anonprofit insurance plan, says, “If health insurers are making coverage decisions that are fair andcompassionate, very few will be overturned by the state’s appeal process.” The numbers speakfor themselves. New York Attorney General Andrew Cuomo has launched an investigation into
medical claims denial by insurors, stating: “All too often insurers play a game of deny, delay,and deceive.”
The Schneider Institute for Health Policy at Brandeis University released a report in fall 2007 onhealth insurance status of non-corporate farm and ranch operators in 7 midwestern states. 90percent reported all family members were continuously insured in the past year, versus 72percent of adults nationally. More than half said their household’s health insurance came fromoff-farm or ranch employment. Over one third of farm and ranch families purchase individualhealth insurance policies, about four times the national average. Individual policies typicallyoffer less coverage at higher premium and out-of-pocket costs than employment-based healthinsurance. About 20 percent said a household member delayed seeking health care, primarilydue to cost; 20 percent reported having outstanding medical debt.
The Winter 2008 AARP UT
reports: “The best indicator that a person will skip preventative careis having no insurance, or not enough.” “Since 2001, premiums for family coverage have risen78 percent but wages have increased only 19 percent.” The May 2008 AARP Bulletin
reportedthat more than a third of U.S. uninsured have incomes over $40,000. Thirty-five percent ofhouseholds with incomes between $50,000 and $75,000 report having trouble paying medicalbills and health insurance. More than a third who carry both health insurance and medical debthave college or graduate degrees.
The Robert Wood Johnson Foundation reported in April 08 that the amount people pay for healthinsurance alone increased 30 percent between 2001 and 2005, while the income of insuredpeople went up 3 percent. In May 2008 AARP stated: “Family premiums have increased 87percent since 2000, compared to an 18 percent rise in inflation and a 20 percent rise in wages.”
Princeton health economist Uwe Reinhardt has harsh things to say about the political proposalsthat put citizens in charge of choosing their health care on the theory that they will act tominimize costs by selecting superior values in health care services if they have an allocatedamount, such as in a Health Savings Account, available for them to spend on medical care. Theproblem, says Reinhardt, is the lack of “transparency” on the cost and effectiveness of treatmentsprovided by alternative medical providers. Reinhardt likens the current system to thrustingsomeone blindfolded into Macy’s and saying, “Go around; shop smartly.”
The distortion-of-care problem even if you have health insurance: Aldebra Schroll, M.D., ofChico, California wrote in the October 2008 AARP Bulletin
: “I am one of those primary caredoctors, struggling to keep my office open. The dysfunction of our current health care system isa social crisis. The variety of insurance plans, with their byzantine rules, is confusing to thepatients and the providers. Frequently, patients have little understanding of their plan, oftenventing their frustrations over insurance denials at my staff.
The insurance industry is the elephant in the room sitting between my patients and me.
The companies dictate what can be prescribed, what tests are performed, how much time wespend together, even where prescriptions can be filled.
In this past year alone three of my partners have left our primary care office for other
opportunities. The current practice environment has eroded the relationship between physicianand patient. Isn’t it time we kicked the elephant out of the room?”
Case Study: Utah: In Utah, the 2005 Utah Health Status Survey by the Utah Department ofHealth found 292,800 uninsured individuals. Of that number, 59 percent cite the cost of healthinsurance as a reason they lack coverage. There are 45,400 Utah adults working full time whocould be covered under their employer health plans if they felt they could better afford themonthly premium. A 2004 Medical Expenditure Panel Survey in Utah found that the totalmonthly insurance premium for family coverage under Utah employer health plans averaged$721, despite the fact that on average Utah employers pay 72 percent of health plan premiums. The Utah Healthcare Access Survey through 2007 reported that the percentage of Utah citizenswithout health insurance dropped from 11.9 percent in 2006 to 10.6 percent in 2007, or 287,200individuals. The drop occurred in a number of demographic categories: children under 18showed a 7.8 percent decrease, probably attributable to changes in the Utah Children’s HealthInsurance Program (CHIP) to allow open enrollment without limitation; and 7.2 percent decreasein adults 18 or older, probably due to the boom in energy-related employment in rural areas ofUtah by employers offering health insurance benefits. In 2007, the medical access survey found35 percent of adults under 150 percent of poverty level in income were uninsured, as were 34percent of Hispanics, 31 percent of adults without a high school diploma, 23 percent of self-employed Utahns, and 18 percent of adults between 18 and 34 years of age. The percentage ofuninsured who work report a rise in the percentage of their employers who do not offer healthinsurance benefits at all from 33.5 percent in 2006 to 37.9 percent in 2007. Nearly four out offive Utahns with medical insurance obtained it through a current or former union or employer. In 2008, the Utah Legislature passed House Bill 144 which creates a legislative task force todevelop and implement changes in the state healthcare system.
Means of ensuring health care coverage preferred by citizens in polls: In an AARP poll, thefollowing percentages of respondents “strongly favor” these means of ensuring Americans haveaccess to health insurance:•
56% - individual tax break for insurance premium expenses
48% - business tax break for covering employees’ health costs
46% - mandated business coverage for employees
44% - expansion of Medicare and/or Medicaid to cover everyone
40% - individual option to subscribe to the existing U.S. government employee grouphealth plan
38% - individual option to subscribe to Medicare or Medicaid health programs
36% - mandatory enrollment requirement of all citizens
In April, 2007, AARP reported a new New York Times
/CBS poll that found that access toaffordable health care was now the public’s top domestic concern. The poll found that,regardless of political affiliation, people were willing to make sacrifices in order to ensure thateveryone has access to health insurance.
Then there’s Senator Ron Wyden (D-OR), who introduced a bill giving all Americans the same
private health insurance coverage that members of Congress receive.
Separate and unequal treatment of the insured and uninsured - why health insurance coverage isimportant: A Families USA study released March 2, 2007, found hospitalized children withouthealth insurance are twice as likely to die from their injuries as children who are covered byhealth insurance. The study examined 25,000 general injury cases and 6,500 traumatic braininjury cases. Children hospitalized with general injuries were twice as likely to die in thehospital if they did not have health insurance coverage. Uninsured children with traumatic braininjury were 44% less likely to receive rehabilitation services than insured children. Brain-injured uninsured children were 32% less likely to receive intercranial pressure modeling, anintensive monitoring method which detects cell-damaging swelling in the injured brain whichcan be treated before damage is done if it is detected. Brain-injured uninsured children weredischarged after an average of 5 days in hospital, versus an average of 8 days for insuredchildren with the same diagnosis. Children with middle ear infections were 57% less likely tohave drainage tubes surgically installed if they were uninsured than if insured.
This replicated a recent American College of Physicians study which also found higher deathrates among the uninsured of all ages who entered a hospital, compared to insured people withthe same diagnosis. A preceding Institute of Medicine study of all patients found the uninsuredget less treatment prescribed in hospitals than patients with insurance. The Institute alsoobserved that the uninsured are less likely to obtain preventative care and to seek timelytreatment.
On December 20, 2007, CBS News reported on a study of cancer patients with and withouthealth insurance. Cancer patients without health insurance were twice as likely to die within fiveyears from their disease.
Runaway prescription drug costs: The cost of prescription drugs has inflated at xx% from
Pharmaceutical companies claim that high drug costs for patented drugs support research intonew life-saving medicines. In fact, only xx% of drug company budgets go into research;advertising costs and distribution of profits to shareholders are larger budget items. Pharmaceutical companies spend little of their research budgets on developing new, innovativedrugs to treat serious health conditions. During the 12 years 1989-2000 65 percent of new-drugapplications approved by the FDA contained active ingredients already on the market in otherdrug formulations (such as the widely-advertised , which is simply a combination of already-approved Norvasc hypertensive and a statin drug), and an additional 11 percent of approved“new” drugs were identical in content to products already approved and on the market (such asan antacid drug where the “new” formulation was a different color than the old formulationwhose patent had expired, but contained exactly the same proton pump inhibitor activeingredient). Of truly new drugs, analysts find that virtually all were originally developedutilizing government, not private pharmaceutical research funding. About the only drugs whichpharmaceutical companies are researching with their own money are “lifestyle” drugs such asweight and hair-loss remedies.
As of 2007 consulting firm McKinsey & Co. calculates that each American spends $728 onaverage for prescriptions, nearly twice the average for the industrialized world. The drug andhealth products industry has directed $93 million to congressional and presidential candidatessince 2000, according to the Center for Responsive Politics. An army of 1,100 lawyers and otherlobbyists have spent over $1 billion since 1998 on Congress, more than any other industry, toinfluence public officials and shape drug legislation.
Our Daily Meds
by Melody Peterson is a 2008 expose of U.S. Big Pharma. She shows how thepharmaceutical industry has evolved from focusing on patient health to focusing on the bottomcorporate line. In the past, CEOs of pharmaceutical companies were often scientists. Now theyare M.B.A. graduates of what I call “pirate school,” who consider their job to sell as many drugsas possible at as high a profit as possible in order to maximize “shareholder value.” Big Pharmacompanies lust after developing “blockbuster drugs,” e.g., those that will bring in sales of $1billion or more a year. This directs drug company attention to the maladies for which they cansell the largest amount of drugs - even if it means making up new diseases. A case study isincontinence, for which the drug company Pharmacia created the disease term “overactivebladder,” and launched an advertising campaign promoting treating it with their drug Detrol. Now, Detrol is among the top 200 prescription drugs sold in the U.S.
MEDICARE PART D PRESCRIPTION DRUG COVERAGE: In 2002 a government study ofMedicare beneficiaries found that 86.4% reported “getting the drugs they needed in the past 6months” “no problem.” 9.4% reported having a “small problem,” and only 4.2% reported havinga “big problem.” Then there is the problem of overconsumption: 40% of seniors take 5+prescription drugs, and 12% take 10 or more. According to the American Medical Associationin 2003, 200,000 seniors suffered fatal or life-threatening “adverse drug events” every year durto drug interaction or mis-dosing involving prescription drugs. Among Medicare Part Dbeneficiaries, about 3 million are predicted to hit the “doughnut hole” gap in coverage in 2007,according to the Kaiser Family Foundation. Overall, the Medicare Part D prescription drugprogram spends most of its money paying for drug costs to people who don’t need the financialhelp in the first place, and probably do not need the drugs they are prescribed in the second. Asnoted above, drug costs per capita are much higher in the U.S. than elsewhere in industrializednations’ health care systems. One reason for this is that national health insurance schemesnegotiate bulk drug purchases from pharmaceutical companies to supply the national system ofpharmacies, lowering costs. The larger reason does is invisible in the U.S. medical dialogue: inall other nations on earth, official government commissions have reviewed unpatentable herbaland traditional drugs to determine which ones work for what, how they work, dosages,counterindications and adverse interaction potentials, et al. The results of this review arepublished in a Physician’s Desk Reference. Any physician can prescribe any natural drug fromthis official PDR as an “on-label” use. The patient can take the prescription to any pharmacyand get it filled with the non-synthetic drug, which the national health insurance scheme pays forjust as it does any other on-label prescription. In the European Economic Union, studies show60 percent of prescriptions written are for non-synthetic drugs which were not developed bypharmaceutical companies. As a rule, these non-synthetic drugs are much cheaper (e.g., amonth’s supply of Arjuna to control elevated cholesterol and triglycerides in the blood is $13.60,
versus over $85 for most statins - and numerous studies published in medical journals abroadhave consistently found Arjuna is more effective than statins in comparison trials, with noadverse effects reported during its 2,600 years of medical use.
State Children’s Health Insurance Program (SCHIP): came into being in 1997 when Congressvoted to give federal funds to states that set up health insurance coverage programs for uninsuredchildren who do not qualify for Medicaid coverage. SCHIP reduced the overall percentage ofuninsured children by a third: from over 22 percent in 1997 to 15 percent by 2005, in partbecause SCHIP outreach identified many children eligible for Medicaid enrollment as well.
SCHIP sunsets on September 30, 2007, unless re-authorized. The Bush administration proposesholding federal funding to $5 billion a year, the amount set in 1997, and limiting eligibility tofamilies earning up to 200 percent of the federal poverty level, $34,340 per year for a family ofthree as of 2007. Under existing rules, 18 states have income cutoffs that exceed 200 percent offederal poverty level. The most generous, New Jersey, sets the limit at 350 percent of poverty,or $60,000 for a family of three. New Jersey covers 127,500 children under SCHIP, withfamilies paying premiums of $36 - $120 per month and copays of $5 to $35 according to income. A bill that would give extra federal funds to states that raise the eligibility limit to 400 percent offederal poverty, or $70,000 for a family of three, was introduced by Senator Hillary Clinton andRepresentative John Dingell in the 110th Congress.
A plan to bring vaccine costs down: Harvard Economist Michael Kremer advocates constructinga kind of artificial market for a vaccine. A donor would commit to paying a certain sum, a fewhundred million up to $5 billion, on delivery of a viable new vaccine. Once a vaccine ismanufactured, the donor would purchase it at a high price per dose until the sum pledged isexhausted. Thereafter, the company would be obliged to supply the vaccine to poor countries ata low price.
Gridlock in Emergency Rooms and Hospitals
In June, 2006, the Institute of Medicine released three pessimistic reports. With more patientsbut fewer emergency departments and hospital beds, patients are being “boarded” - held inhallways or wherever there’s room, sometimes for days, until a bed opens up - and diverted toother hospitals because of overcrowding. One of the reports found that, in the event of anycalamity, emergency rooms would quickly be overwhelmed. In June 2006 the Institute ofMedicine released a study which concluded that hospital emergency care is at the breaking pointwith 114 million visits a year and growing. The study found the vast majority of ER patientshave medical insurance coverage; only 13 percent of visits are non-urgent complaints.
In 2008, 40 percent of ERs are reported to be overcrowded on a daily basis. In 15 years thenumber of emergency department visits increased 25 percent, to 118 million in 2006. At thesame time, the number of hospital emergency departments shrank from more than 5,100 in 1991to just under 4,600 in 2006 as hospitals cut costs and insurers slashed reimbursements.
One reason there are more patients is that emergency rooms are the medical treatment source oflast and only resort for those who lack health insurance coverage and cannot afford to payprivate doctors and hospitals out-of-pocket in full for health care. Increasingly, emergencydepartments are being used by people because of lack of access to a primary-care physician. In asurvey in 2006 by the California HealthCare Foundation, almost half of the patients treated inCalifornia emergency rooms could have been handled by a primary-care physician in theiroffice. Two thirds of these people said they couldn’t get an appointment with a primary caredoctor. A 2007 survey by the Commonwealth Fund found two-thirds of Americans say they havea hard time getting medical care on nights, weekends, and holidays. 30 percent of Americanssay they can get in to see their primary care doctor - if they have one - the same day, putting theU.S. second to last among industrialized countries; only Canada is worse.
Emergency room care is the costliest form of care. Federal law requires hospitals to accept andcare for all patients presenting with acute injury or symptoms of illness to an emergency room. They cannot be turned away because of inability to pay. When uninsured people are treated, thecost of their care which cannot be collected from them personally is covered by one of twosources: tax-funded programs, or through the hospital raising their rates for services to peoplewith insurance coverage to recoup the losses.
The hospitals are failing to recoup their losses. Uncompensated care cost U.S. hospitals $31.2billion in 2006, up from $19 billion in 1998, according to the American Hospital Association,which represents the nation’s nearly 5,000 community facilities. Nearly half of all hospitals losemoney on patient care; one in four hospitals ends up operating in the red because they can’tmake up the difference from grants and community donations or subsidies such as “indigentfunds” or hospital special service districts’ levies on local properties. The nation’s 2,919nonprofit community hospitals also receive some $50 billion in annual tax exemptions and othersubsidies. Worse yet, according to the AHA the service that generates a dollar in income from aninsured patient generates 92 cents from Medicare and 87 cents from Medicaid, on average.
There also appear to be institutional abuses in the community hospital system. Senator ChuckGrassley, R-Iowa, has requested a Government Accountability Office report on how nonprofithospitals are actually fulfilling their charitable mission while paying executives annual salariesexceeding one million dollars.
When people lose health insurance coverage from private or public insurance programs, the costof providing medical care for them does not disappear from the economy. The “savings” to theMedicaid program by lowering the income criteria for eligibility, as states exhausting theirMedicaid budgets have been doing to maintain program solvency, appears to me to produce alarge net liability economically for two reasons:
First, people who cannot afford to pay private doctors for outpatient care do not seek medicalattention for problems until they become severe. A medical condition that has been allowed toprogress until it is too serious to ignore is likely to debilitate the patient, so their economicproductivity is impaired or lost. If permanently disabled, they will end up on Social Security
Disability and Medicaid, supported entirely at public expense for the remainder of their lives. Any medical condition is more expensive to treat the further it has advanced in severity, and theprognosis for recovery from the condition gets poorer. Thus, not funding a medical systemwhich provides for preventative and early-stage diagnosis and treatment of diseases means thatthe polity is losing income from productive workers on the one hand and spending far moremoney treating severely ill workers on the other.
Second, people without wealth or health insurance coverage obtain their health care in extremisfrom the most expensive of all sources: the hospital emergency room.
It is no wonder that the U.S. enjoys about half the health improvement per dollar spent on healthcare than the other 30 industrialized nations do with their single-payer nationalized healthcaresystems. Since 45 percent of all our health care costs are already paid for from public taxsources, if our health care system operated as cost-effectively as that of any other industrializednation on earth and had similar overhead expenses (0.5% for public single-payer systems v. anaverage of 12% for our private health insurors), we can roughly estimate that we could finance auniversal coverage national healthcare system in the United States, funded entirely by taxdollars, without imposing any new taxes or spending any more tax money than we do now tocompletely finance such a system which would cover all American citizens. In case you think Iam engaging in some sort of socialist fantasy in posing this, I got the conclusion from a study ofvarious health care financing scenarios done by an official subcommittee of the AmericanMedical Association.
Retail Medical Clinics: have cropped up in supermarkets and drugstores around the country. They are open on weekends and evenings as well as weekdays, typically staffed by nursepractitioners. They provide an alternative to emergency rooms or primary care physicians fortreatment of a limited range of acute conditions such as infections.
A couple of new studies published in the September/October 2008 issue of Health Affairs
foundthat nearly two thirds of 1.33 million retail clinic patients seen between 2000 and 2007 said theydidn’t have a primary care physician; the figure for the general population is 80 percent. Retailclinic patients are more likely to be female, between 18-44, and uninsured than patients who visiteither primary care physicians or emergency rooms. More than 90 percent of the visits were forten simple conditions, such as upper respiratory tract infections, sinusitis, and sore throats; thesesame conditions made up 13 percent of adult visits to primary-care physicians and 30 percent ofvisits to pediatric primary care physicians.
The Cause of the U.S. Health Care System Crisis
Sicko: In “Sicko,” Michael Moore explains the cause of the U.S. health care system
Insurance companies make their profits by denying coverage. Health insurance coveragein the U.S. acts as a “helping hand” for routine medical expenses, but does not offer a“safety net” for the cost of major health episodes.
The people who represent us and make our laws receive huge sums of money incampaign contributions from the drug and insurance industries
There are four times as many insurance company lobbyists in Washington, D.C., as thereare congressmen.
Health Care Meltdown
: Rocky White, M.D., is a conservative evangelical who practices
in Alamosa, Colorado, and now sits on the board of the nonprofit Health Care for All Colorado. White has updated and re-issued Dr. Robert LeBow’s book, Health Care Meltdown: Confrontingthe Myths and Fixing Our Failing System
. White reports: “You’re seeing an ever-increasingnumber of people starting to support a national health program. In fact, 59 percent of practicingphysicians today believe that we need to have a national health program.” White differentiatesbetween the “socialized medicine” of England where the government owns all the hospitals andclinics and doctors work for the government, with the Canadian system where doctors are inprivate practice but medical care for all Canadians is paid for under the Canadian equivalent ofthe Medicare program. White notes the U.S. healthcare insurance industry is an entrenched $2trillion industry which resists a single-payer national health care system being instituted in theU.S., but says, “.until we move to a single-payer system and get rid of the profit motive infinancing health care, we will not be able to fix the problems we have.”
AARP backs up these points with the following statistics: “The drug and health productsindustry has directed $93 million to congressional and presidential candidates since 2000,according to the nonpartisan Center for Responsive Politics. An army of 1,100 lawyers and arm-twisters has spent over $1 billion since 1998, more than any other industry, to influence publicofficials and shape drug legislation.A recent study by the management consulting firmMcKinsey & Co. calculated that each American pays $728 a year for prescriptions, nearly twicethe average cost for the industrial world. The pharmaceutical industry is fond of saying that as ashare of the total health bill, Americans pay no more for their drugs than they did in 1960. Thatignores the fact that the cost of health care today is three times what it was in 1960.”
John Kennedy’s speechwriter, Theodore C. Sorenson, said this in the speech he wants the 2008Democratic presidential nominee to give: “At home, as health care costs have grown andcoverage disappeared, we have done nothing but coddle the insurance, pharmaceutical, andhealth care industries that feed the problem.”
AARP three dominant trends in crisis: John Rother, policy director of AARP, identifies
three dominant trends in the U.S. that are creating our health care system crisis:•
increasing fragmentation of our health care system: in the 1950's there was a singleprivate insurer, the nonprofit Blue Cross, so the well and the sick, young and old, were allin one pool of risk. Today the many insurers fighting to make a profit try to avoidinsuring sick and other high-risk people. The delivery of medicine is also morefragmented. In the 1950's most people got all their medical care from a single familydoctor; today one frequently has four or five doctors, none of which know what theothers are doing or prescribing.
employer-based health insurance coverage is declining: there are 46 million Americans
without health insurance today, and their number is growing. Employer-based healthinsurance policies are steadily demanding larger co-pays and deductibles, thus reducinghealth care cost coverage for those “with health insurance.”
health care costs are rising at twice the rate of inflation.
“When you take these costs into account,” Rother says, “most Americans haven’t had a raise inthe past three years.”
The End of Medicine
: Andy Kessler’s new book, The End of Medicine
compares medicine as we know it to witchcraft and looks to a rebirth of medicine under adifferent paradigm. Kessler was led to prepare this book by the question of why a systemcharacterized by bigness - big pharma, hospital chains, managed care organizations - is notdisplaying the dramatically reduced costs other industries enjoy from the phenomenon of“scaling?” Rapid innovation and adoption of expensive new technologies is normal within anindustry which is big enough to enjoy the economies of scale that permits the industry to financenew technology, the adoption of which improves productivity so much that it brings industrycosts down per unit of output. Kessler notes that heart attacks, strokes, and cancer consumemuch of the $1.8 trillion spent on medicine in the U.S. annually (15 percent of the entireeconomy), yet very little is spent on early detection, much less on health maintenanceprevention. Kessler sees the medical system as being isolated from normal market forces bynear-socialization. Kessler believes doctors, nurses, and medical bureaucrats are a significantcause of the problem of high medical costs because they are participants in a bureaucracy thatbogs everything down and limits expenditures for remedial actions. Kessler’s vision of a rebornmedicine is one in which silicon chips embed the knowledge of the best doctors and theprofession of physician largely disappears, as have other obsolete professions such asstockbrokers, telephone switchboard operators, draftsmen, film editors, and postal sorters. Theemphasis in Kessler’s new world of medicine would be on employing inexpensive technology tokeep us healthy by preventing the development of diseases, or detecting and treating them intheir very early stages.
Medical Veritus Association: Marc Sircus, Ac., OMD, Director of the International
Medical Veritas Association <naturalallopathic.com> declares “The enemy has been andcontinues to be the terrorism of the pharmaceutical companies and leagues of card carryingmembers of the AMA and medical officials everywhere who endorse a massive effort to imposefascist medical practices on the public from birth to death.” “Allopathic medicine allowed itselfto be butchered by an industry whose prime interest is to make scandalous fortunes by poisoningpeople.” He cites Dr. Barbara Starfield’s research published in the Journal of the AmericanMedical Association
which reported the following numbers of deaths per year from iatrogeniccauses: 12,000 due to unnecessary surgery, 7,000 from medication errors in hospitals, 20,000from other medical errors in hospitals, 80,000 from hospital-acquired infections, and 106,000from non-error negative effects of prescribed drugs.
The “Natural Allopathic Medicine” advocated and practiced by the Medical Veritus Associationrelies primarily on use of iodine, magnesium chloride, and sodium bicarbonate for front-lineacute and chronic care. They also use many other “ natural non-pharmeceutical medicines that
have been thoroughly investigated by universities around the world” and which are not on theCODEX list of controlled substances and which lack toxic side effects. They advocatingmedicine into our homes through creation of what they call “Home Hospitals” which would usethese iodine, magnesium chloride, and sodium bicarbonate “emergency room medicines” forboth acute and chronic care.
Most health care expenditures are for chronic diseases which are preventable, and which patientscan be taught to manage: Bernadine Healy, M.D., observed in the 12 May 08 U.S. News &World Report
that “70 percent of the healthcare dollar is spent on chronic diseases, probably halfof which are linked to preventable problems like smoking, obesity, and physical inactivity. Model programs have shown that health is better and cost falls when patients with chronicillnesses such as diabetes and athsma get involved in their own care.”
There is nothing new to this view, except the spin and phrasing. Benjamin Rush, M.D., signer ofthe Declaration of Independence and physician to George Washington, wrote in 1789: “Unlesswe put medical freedom into the Constitution, the time will come when medicine will organizeinto an undercover dictatorship.To restrict the art of healing to one class of men and deny equalprivileges to others will constitute the Bastille of medical science. All such laws are un-American and despotic and have no place in a republic.The Constitution of this republic shouldmake a special privilege for medical freedom.”
Dr. Hyla Cass says, “We are in the middle of a health care revolution, replacing ‘doctor asauthority’ with ‘doctor as resource’ in a shift towards self-education, self-care, and sharedresponsibility.” She subscribes to three guiding principles for how medicine should be practiced:
(1) Treat the whole person - mind, body, spirit and environment.
(2) Look first for the deepest root problems beneath any symptoms.
(3) Apply a continuum of treatments, always beginning with the safest, most natural, andmost benign.
Chaotic Medical Records Non-Systems: Currently medical records are kept in a plethora offormats, some paper-based, some on PCs in individual clinics or hospitals. There is nocentralized data base, or even a forum for inquiring whether records for a given person (whomight have turned up in an ambulance at an emergency room) exist concerning past medicaldiagnoses, treatment, and current pharmaceutical regime provided by health care providerselsewhere. This situation is said to increase the cost of health care due to medical error andduplication due to lack of information. It also makes possible health care identity theft andvarious forms of fraud, e.g., against Medicare.
President-elect Obama included several billion in his January 2008 draft economic stimuluspackage to subsidize installation of electronic medical record-keeping systems among healthproviders. According to health policy research organization Commonwealth Fund, theseimprovements in health information technology will save $88 billion over 10 years, but willproduce no savings gains in the first few years of implementation.
The Collapse of the U.S. Primary Care System: A county-by-county study of patient access toprimary care physicians in their area was conducted by the National Association of CommunityHealth Centers and the Robert Graham Center. The study, “Access Denied,” found 56 millionAmericans, almost one in five in the population, to be “medically disenfranchised” due toinadequate access to primary care physicians due to shortages in the area. Experts say theshortage of primary care physicians - those trained in general internal, family, or pediatricmedicine - is already a crisis. “To say that primary care is collapsing is not hyperbole,” saysJeffrey Harris, M.D., president of the American College of Physicians.
Harris explains why primary care physicians are retiring early and not being replaced: Primarycare physicians’ earnings are half or a third of those in many specialties, yet their workdays arelonger and their overhead higher. Hours spent on paperwork and phone calls for priorauthorizations demanded by insurance companies reduce the time spent with individual patients. Reimbursement rates force primary care physicians to run “cattle call” practices to move asmany patients through in an hour as possible in order to meet practice expenses.
New medical school graduates, who graduate with an average of $130,000 in educational debt,get the picture. The number of new doctors going into family medicine declined by more thanhalf from 1997 to 2005. By 2006 only 13 percent of first-year residents in internal medicine saidthey intended to pursue it in general practice. A study in 2008 found 2 percent of fourth-yearmedical students plan to work in primary care internal medicine, down from 9 percent in 1990. The number of medical school graduates taking residencies in family practice, internal medicine,and pediatrics fell 7 percent from 1995 to 2006, according to a report in February 2008 from theGovernment Accountability Office.
Fred Ralston Jr., M.D., in Fayetteville, Tennessee, explains the changes that push existingprimary care physicians out of practice: His world is totally different now than it was when hestarted practice in the 1980s. “There were plenty of primary care physicians, and we had time tosee and get good relationships with patients,” Ralston says. There was little paperwork, and thepractice’s overhead was “less than 40 percent of every dollar we took in.” Now, he says, it’saround 65 percent, of which at least 40 percent is spent dealing with insurance companies. “It’sa very large part of our expense.”
An American College of Physicians study reported in 2008 compared the U.S. health caresystem with that of 12 other countries, analyzing why all had better health care outcomes withless funding. “The take-away message,” says Dr. Harris, “is that systems with primary care as acornerstone are less expensive and have better quality.” Dr. Harris advocates reform of U.S.
medical school training, which he says favors overspecialization. Other reforms underconsideration would forgive medical school debts for graduates who go into primary care,restructuring the way doctors are compensated, and establishing “patient-centered medicalhomes.”
Robert H. Potter, Jr., M.D. of Genesis Medical Associates in Pittsburgh notes that “One featureof other industrialized countries, which do much better statistically on many health parameters,
is that they have an emphasis on the importance of primary care.Our resources in this countrywould be better spent emphasizing primary care as opposed to treatment of end-stage diseases.” Hope Erica Ring, M.D., of Charlton, Massachusetts, points to the perverse financial incentives inthe U.S. healthcare system: “An invasive cardiologist will be paid more for a half-hour cardiaccatherization than a primary-care physician will be paid for several years of visits to control theblood pressure, high cholesterol, and diabetes that ultimately lead to heart disease. Anobstetrician who spends 20 hours with a patient in labor - cancelling appointments and foregoingsleep to do so - will very likely be paid less than the colleague who schedules an unnecessary C-section and is in and out of the hospital in 90 minutes.” Ring concludes: “Attracting youngdoctors to primary care - with longer hours and much less pay than their specialist colleagues - isbecoming almost impossible.”
The loss of general surgeons: Not only is the medical reimbursement scheme in the UnitedStates discouraging preventative and primary care by primary care-oriented medicalpractitioners, but it is also causing loss of general surgeons in favor of surgical specialists whoenjoy more regular hours at higher pay. The number of general surgeons in the United Statesdeclined from 17,394 in 1981 to 16,662 in 2005 as the U.S. population grew by 66 millionpeople, resulting in a 26 percent drop in the number of general surgeons per 100,000 populationin the U.S. from 7.68 in 1981 to 5.69 in 2005, with an ever-greater proportion over 50 and thussubject to loss from practice due to retirement. General surgeons are those who attend accidentvictims in emergency rooms, repair hernias, remove gallbladders, appendexes, and most tumors,and are about the only surgical specialists present in rural hospitals. The number of generalsurgeries needed per 100,000 population increases as the average age of the U.S. populationincreases. New graduates of medical school are discouraged from becoming general surgeons, astudy shows, by the combination of having a mountain of debt for their educational loans torepay and confronting being on call 24/7 every other day for emergency room service. If thenew doctor specializes in plastic, thoracic or other specialty surgeries, she can earn more whileperforming most surgeries on a scheduled basis, thus having a fairly normal and predictable timeoff work for family involvement and other activities.
Smoking tobacco: According to the American Cancer Society, smoking causes more than $345million per year in direct and indirect health care costs in the state of Utah alone. Smoking-related health costs to the Medicaid program exceeded $104 million in 2007, or roughly $535 inadded state and federal tax burden per household. Tobacco-caused health care expenditures andloss of productivity due to smoking results in a cost of $7.40 per pack of cigarettes sold andconsumed.
Periodontal prevention of chronic disease problems: Speaking of the cost-benefits of prevention,Japanese researchers investigated the associations between periodontal disease and increasedcosts for inpatient, outpatient, and other healthcare services for 4285 civil servants. The Ss’dental histories were categorized into severe, moderate, or no periodontal disease. Healthinsurance claims and medical records were then evaluated. Overall costs were 21% higher formen and women with severe periodontal disease than for those with none. Ss with severe PDwere more likely to be admitted to a hospital than those with none, and among men, hospital
costs were 75% higher for those with severe PD than with none [Huggins C. Preventing gumdisease would save teeth and money. Reuters Health, July 11, 2006]. In the U.S., researchfound pregnant women with untreated periodontal disease are several times more likely todelivery a preterm, low-birth-weight baby because high levels of labor-inducing prostaglandinsare associated with severe gum disease. Pilot trials suggest deep cleanings in such womenreduce premature birth and low birth weight. When Aetna offered stepped-up periodontal carefor its insured in a trial at Columbia University College of Dental Medicine, Aetna saw areduction in total medical costs of 9 percent for members with diabetes, 16 percent for memberswith coronary heart disease, and 11 percent for those with stroke or other cerebrovasculardisease [Sarah Baldauf, 3 Mar 08 U.S. News
The waste of medical equipment and supplies: Each year, operating rooms in U.S. hospitalsthrow away about 2,000 tons of perfectly good medical equipment and supplies, much of itunused. Hospitals are hostage to their fear of liability; hold on to one item for a day past itsexpiration date, and if something goes wrong (regardless of whether that item was to blame)you’re likely to find yourself facing a crippling lawsuit. Cognizant of this, manufacturers stampitems with conservative use-by dates - a very effective marketing technique. Also, companiescompete furiously for lucrative hospital supply contracts, and Global Links discovered that whena supplier is changed, everything from the old supplier must be junked. Parts are notinterchangeable, nor are service contracts. These supply practices greatly inflate hospital costs.
Inflation of hospital costs by hospital-acquired infection due to poor santitation: A
hidden cost inflating hospital care outlays is the financial impact of hospital-acquired infectionsand other liabilities of patient health due to failures of sanitation and other medical errors. Eachyear a company called HealthGrades assesses admissions to all 5,122 of the nation’s non-federalhospitals and ranks the institutions based on their mortality and complication rates. Analysis ofthese figures shows 158,264 deaths and 12,409 major complication events could have beenavoided between 2003-2005 if the quality of care at all 5,122 hospitals was as good as in the top5 percent. The study found that entering a top-rated hospital increases a patient’s chance ofsurvival by as much as 28 percent compared to entering other hospitals.
In a recent Johns Hopkins Hospital study, 26% of supply cabinets in hospitals examined werecontaminated with methicillin-resistant Staphylococcus aureus
(MRSA) and 21% withvancomycin-resistant Enterococcus
(VRE). Keyboards on computers were found to be aparticularly deadly reservoir of bacteria. A study in the Journal of Hospital Infection
found that76% of various hospital sites checked had unacceptably high levels of bacteria, but only 18% ofthe sites looked dirty to the eye. The good news is that when Rush University Medical Center inChicago trained their staff to soak surfaces with detergent rather than simply spraying andwiping, and to clean common objects such as telephones, remote controls, and faucets, thespread of VRE to patients was reduced by two thirds. The British National Health Service foundthat by doubling cleaning-staff hours on a hospital ward, a hospital in Dorchester reduced thespread of MRSA by 90%, saving 3.5 times more than the increased cleaning cost.
Hospitals once tested surfaces for bacteria, but in 1970, the Centers for Disease Control and the
American Hospital Association advised them to stop, saying such testing was unnecessary andnot cost effective. MRSA infections have since increased 32-fold, and numerous studies havelinked this increase to unclean hospital equipment and rooms. Yet the CDC’s newest guidelinesstill deem routine testing for bacteria unnecessary. The Association for Professionals inInfection Control and Epidemiology, a nursing organization, found that the CDC has consistentlyunderreported MRSA in hospitals, giving them an excuse to do little. California hospitalinspectors, investigating complaints from the public, found 25% of hospitals where conditionswere unsanitary had been inspected and accredited by the Joint Commission for theAccreditation of Hospitals within the previous year.
Fortunately, it has proven cost-effective to clean up hospitals. Ventilator-associated pneumonia(VAP) strikes about 15% of patients who have a breathing tube inserted. When hospital workerswashed their hands frequently, closely monitored incision sites, and raised patient beds to at least30 degrees to prevent stomach fluids from backing up into the lungs, more than 30 hospitalsachieved a zero VAP rate for at least a year. Allegheny General Hospital reduced the rate ofblood-stream infections caused by large-vein catheters by 90 percent and ventilator pneumoniasby 85% through such measures, saving the hospital $1.2 million over two years. An article inthe November-December 2006 American Journal of Medical Quality
found that eliminating asingle blood-stream infection case pays for nearly a year’s worth of measures taken to stop theinfections. A report on Pennsylvania’s hospitals found that the average charge for hospital-acquired infection cases was $185,260 versus $31,389 for noninfection cases. In 1989, whenNew York State started publishing hospitals’ death rates after bypass surgery, the hospitalsconducted internal reviews, hired new personnel and pushed out surgeons with the highest deathfigures. Statewide mortality after bypass surgery dropped 41% in four years.
Inflation of hospital costs due to complications from transfusions: Another major cause
of hospital cost inflation besides failures in sanitation and case management is the use oftransfusions. According to Dr. David Williams, it is conservatively estimated that 25 percent ofall transfusions are medically unnecessary. One out of every 10 people admitted to a hospital isgiven blood. Yet research shows the odds of a hospital patient having any kind of infectionincreases threefold if they receive a transfusion than if they do not. A study of 9,218 bypasspatients 65 or older by the University of Michigan found that patients receiving a bloodtransfusion were five times more likely to die within 100 days of their operation compared tothose who received no transfusion. Dr. Williams points out that blood contains hundreds ofpathogens, allergens, antigens and pollutants which cause an immediate assault on thetransfusion recipient’s immune system - at the worst possible time for a hospitalized surgery ortrauma patient. The Michigan study found immediate, usually fatal immune system reactions totransfusions in 9 percent of the women and 6 percent of the men receiving bypasses. Inindividuals undergoing hip replacement surgery, blood transfusion resulted in a 55 percentgreater risk of serious bacterial infection and a 52 percent greater risk of developing pneumonia. In a European study of lung cancer surgery outcomes, thirty-day mortality was 2.4 percent inthose without transfusion, 10.9 in those who received 2 units of blood or less, and 21.9 percent inthose who received more than 2 units of blood; taking all aspects of the patient’s medicalcondition into account, receiving transfusion was the most powerful predictor of 30-day
mortality, respiratory failure, and infectious complications.
Technology can improve care while controlling costs. The RP-7, a 5-foot robot with a screen fora head, is now in 21 Michigan hospitals. It allows stroke specialists to communicate with localdoctors and provide immediate, around-the-clock care to hospital stroke patients from milesaway. The stroke specialist uses a laptop to control the robot to remotely examine the patient,dowload scans, check medication charts, and walk local physicians through administration ofstroke treatment drugs. InTouch Technologies, maker of the RP-7, argues “The local hospitalkeeps 90 percent of its patients, the expert bills for his services and a phenomenal amount ofmoney is saved by preventing disability from stroke.” From a medical systems point of view, Inote that this approach saves vast sums in transporting patients to hospitals with specialists, oralternatively reduces hospitalization time due to successful treatment and thus prevention ofdisability requiring institutional treatment.
Inflation of hospital costs due to unsafe food supply: Each year, 76 million Americans get
sick from food; more than 300,000 end up in the hospital, and 5,000 die, according to the Centersfor Disease Control and Prevention. In May, 2007, former FDA Commissioner David Kesslertold a Congressional hearing: “Our food-safety system is broken.”
Inflation of medical costs due to adverse drug reactions: Researchers at the Institute for
Safe Medical Practices analyzed all of the serious adverse drug events and medication errorsreported to the FDA from 1998 through 2005. Serious adverse drug events increased more than2.5 times during the study period, from 34,966 events to more than 89,800 events per year. Fataladverse drug events increased 2.7 times from 5,519 to more than 15,000 per annum. The authorsnote these are only adverse drug events reported to the FDA; the actual number is assumed to bemuch higher. Of central concern is the finding that the prevalence of adverse drug reactions toprescription medications increased four times faster during the study period than the number ofprescriptions written. [Serious Adverse Drug Events Reported to the Food and DrugAdministration, 1998-2005. Archives of Internal Medicine
10 Sep 07;167(16)]
Inflation of medical costs for cancer treatment due to elevated risk from antibiotic use: A
Finnish study analyzed the health history of over 3,000,000 Ss, tracked their antibiotic use fortwo years, and then the incidence of cancer for the next six years. Those with no antibiotic usewere the reference group. In the group having 2-5 prescriptions, the relative risk of cancerincreased 27 percent. Among those having over 6 prescriptions, the risk of cancer increased 37percent. The most common sites for cancers following antibiotic use were the endocrine glands,prostate, lung, breast, and colon [Int J Cancer
The University of Washington and National Cancer Institute found that women who tookantibiotics for more than 500 dys, or had more than 25 prescriptions, over an average period of17 years had more than twice the risk of breast cancer compared to women who had not takenany antibiotics. Women who had between one and 25 prescriptions for antibiotics over 17 yearshad an increased risk of 1.5 times that of women who took none [JAMA
David Williams, M.D., and others believe this elevation of cancer risk following antibiotic use is due to disturbance of the balance of flora in the intestinal tract by antibiotics, on which floraabout 80 percent of immune system function is dependent.
Inflation of medical treatment costs due to failure to invest in prevention: 1. Lack of healthy lifestyle incentives: Maxine Allen of Enfield, Connecticut noted in the
10 Dec 07 U.S. News and World Report
that “I’ve worked in more than one New Englandhospital, and none have offered incentives for healthy lifestyle practices.I believe offeringincentives for a healthy lifestyle will be the standard in the near future.” There are some healthylifestyle incentives in place here and there in the current U.S. economy: health and life insurersoffering better premium rates to people who do not smoke tobacco, and companies offering on-campus fitness facilities and paid time off for employees to use them, free healthy eating andlifestyle workshops and seminars, or subsidizing gym memberships for employees. Somecompanies offer favorable terms on company health insurance or other financial bonuses toemployees who are enrolled in healthy lifestyle/fitness programs.
2. Prevention of spread of AIDS and other sexually-transmitted diseases: A study
published in the first week of December, 2007, in the Journal of the American MedicalAssociation
showed the number of AIDS infections caused by sex between men rose 13 percentfrom 2001 to 2005. One in 779 people nationwide in the U.S. have HIV or AIDS; in the Districtof Columbia it is 1 in 40 residents.
3. Lack of transportation for medical care: As of November, 2008, some patients who
make frequent trips to doctors or treatment facilities, such as those undergoing chemotherapy ordialysis, are skipping weekly treatments or discontinuing them to save transportation costs. There are some community transportation alternatives. LogistiCare, a transportationmanagement company with chapters in 37 states, has seen a 12 percent increase in servicerequests as of October, 2008, and projects providing 28 million rides total in 2008.
Failure to Finance Long Term Care: More than 30 million American adults provide care
for others at home. This caregiving service is estimated by AARP to be worth $150 billion ayear if these services were rendered by hired caregivers or in long term care facilities. A laterstudy reported in November 2008 places the value of the care 44 million Americans provide forfamily members at $350 billion - this includes long-term and acute care. This gives rise to thequestion as to whether family caregivers should be compensated for their financial sacraficesgiving up paying work for caregiving at home, and funding of in-home services by professionalcaregivers. In 18.5 million of these households, the caregiver is caring for a family member whois 50 or older.
According to the Family Caregiver Alliance, the number of “unpaid family caregivers” is set toreach 37 million by 2050, an 85 percent increase from the year 2000.
<www.medicare.gov/caregivers> includes information on navigating through Medicare, healthcare services, links to partner organizations that assist caregivers, and caregiver anecdotes.
In a study of the Laguna Honda 1,200-bed nursing home in San Francisco, 80 percent ofresidents were assessed as being able to live at home or in community housing with assistance,and all of the residents wanted to take that option. Restricting a person who prefers to live in thecommunity, if care or services would cost the same or less, to a nursing home is isolating anddiscriminatory; a violation of federal disability laws. Nationally, about 70% of Medicaid clientsgo to nursing homes and 30% to community-based long-term care facilities. And it is lessexpensive to provide care in a community setting: the average cost for nursing home care is$74,000 per year versus $35,000 for professionally-assisted living care. In Florida, the averagein 2007 was $65,000 per year per person for nursing home versus $39,000 per year for assistedliving or community-based care, according to the AARP Foundation. A pending lawsuit inFlorida charges the state with, in effect, unlawfully incarcerating people with disabilities innursing homes. Because Medicaid allows nursing home residents only $35 per month inspending money, disabled but socially functional patients cannot afford transportation or foodwhich they are able and willing to leave the care facility to get, or to have a personal telephone.
In an AARP poll, 89 percent of respondents over 50 want to stay in their homes, agingindependently and comfortably. “Poor medication management is the No. 1 reason for leavingan independent living situation and going into supervised care,” says Elinor Ginzler, coauthor ofCaring for Your Parents: The Complete AARP Guide
An elderly lady was observed by customers on a Princess Cruise Ship and they were told she hadbeen on the last four cruises back-to-back. She explained “It’s cheaper than a nursing home.” The average cost for a nursing home is $200 per day. Princess offers a long-term discount inaddition to a senior discount resulting in a cost of $135 per day, which buys:•
As many as 10 meals per day, and room service (you can have breakfast in bed)
Access to three swimming pools, workout room, free laundry facilities, and shows everynight.
Free toothpaste and razors, soap and shampoo.
T.V. broken? Light bulb need changing? Need to have the mattress replaced? Noproblem and an apology for the inconvenience. You are treated as a customer, not apatient.
Clean sheets and towels every day, automatically.
If you fall in a nursing home and break a hip you are on Medicare. If you fall and break ahip on the Princess ship they upgrade you to a suite.
Going to South America, the Panama Canal, Tahiti, Australia, New Zealand and Asia.
Increase in medical costs due to prescription error
Researchers at the Unversity of Arizona discovered that the busier a pharmacist gets, the morelikely the customer is to walk away with medications that will harm the patient. The Es studiedpharmacists at 672 locations in 18 cities, and found pharmacists filled about 14 prescriptions in atypical hour. With each additional prescription filled beyond that number, the risk of dispensinga potentially harmful drug went up by 3 percent.
Inflation of medical demand due to unregulated genetic testing: According to the
Genetics and Public Policy Center at Johns Hopkins University in Baltimore, there are genetictests for about 1,500 diseases and conditions. A study sponsored by the Center, published inScience
in April 2008, found there are no mechanisms in place to ensure that genetic tests aresupported by adequate evidence before they are marketed, or that marketing claims for the testsgiven to the public are truthful.
Tort/malpractice costs are not the problem
In search of a scapegoat for rising and increasingly unaffordable health care insurance costs,Bush and the Republican leadership have fastened upon the story that malpractice lawsuits anddamages are largely responsible. This suits the Republican partisan cause well because entitiesin industrialized medicine are majority donors to Republicans while trial lawyers are majoritydonors to Democrats.
Malpractice reform is a hot-button issue. More than 400 state bills were introduced, and 63passed, in 2005 alone. According to the National Conference of State Legislatures, 32 stateshave passed malpractice tort reform measures. Some limit the injured patient’s ability to sue,and some cap damage awards. An example is Arkansas’ tort reform law, which limitsnoneconomic damages that compensate for pain and suffering to $250,000, and allows suchdamages to be awarded only if the plaintiff can prove malicious intent or recklessness by thedoctor, which is difficult to do. Consequently injured patients in Arkansas have been unable toget attorneys to represent them in suits on contingency because the opportunity for recovery ofcontingency fees is so limited and poor. In 2006, many states are considering bills that wouldput limits on doctors’ malpractice premiums or introduce alternatives to malpractice litigation incourt.
President Bush has called on Congress to tackle tort reform for medical malpractice. The Househas passed legislation capping pain and suffering damages at $250,000 three times, but theSenate has failed to enact it.
1. Malpractice lawsuits and awards to patients have increased only slightly over the
same years that health insurance and care costs have skyrocketed. A survey of 17 statesconducted from 1998 to 2002 by the National Center for State Courts found the nationwidenumber of malpractice suits filed rose from 12,321 to 13,091 during that time. A studypublished in Health Affairs
reported that from 1991 to 2003 payments in malpractice suits wonby patients grew only 4 percent a year, consistent with increases in general healthcare spending.
2. Caps on malpractice pain and suffering awards do not lower the frequency with which
malpractice lawsuits are filed and have had little effect on malpractice insurance premiums in thestates which have enacted such caps, according to a summary of studies done by HarvardUniversity’s School of Public Health (Dr. David Studdert).
3. There is no evidence of widespread flight of doctors to other states because of
malpractice insurance rates. The U.S. Government Accountability Office examined five statesclaiming a malpractice “crisis” and found only localized decreases in hospital services, often inrural areas that have difficulty keeping such services in any event. The data suggests thatdoctors cited malpractice costs as a socially-acceptable excuse for abandoning practices in areaswhere they were not earning as much as they desired in order to relocate to greener medicalpastures, and/or that malpractice insurance costs made continuing practice unfeasible only fordoctors in low-reimbursement rural areas.
4. Malpractice insurance premiums do not play a significant role in either overall health
care system costs or in the inflation in these costs over the last 20 years. According to the GAO,malpractice premiums account for about 2 percent of total health care system spending, and ifcaps and other proposed federal reforms in House legislation were all enacted, national healthcosts in general would drop by only 0.4 to 0.5 percent.
5. Frivolous medical malpractice lawsuits do not jam the courts and routinely win
excessive jury awards. The fact is that most suits filed are withdrawn before they get to trial. In80 percent of the cases with a jury verdict, there is no award for damages made to plaintiffs ortheir families.
6. Claims that malpractice insurance premium rises reflect investment losses by the
insurance carriers and not underwriting experience from malpractice awards are not true. AGAO study found that how aggressive attorneys are in a given region seems to have the mosteffect on malpractice awards and hence premiums: the premium rate for general surgeons inMiami is $174,300 per year while in Minnesota identical practitioners are quoted $10,140. Health systems studies suggest that income inequality and lack of community support has amajor effect on the rate of medical errors and malpractice lawsuits in different areas. Inresponse, the American Medical Association points to the impact of Texas legislation whichallows injured patients unlimited recovery of expenses including medical costs and lost income,but limits subjective “noneconomic awards” for “pain and suffering.” The AMA claims that onemedical malpractice insuror reduced premiums by over 20 percent, and the legislation “halted aserious erosion in access to care for vulnerable patient populations.”
7. There is not strong evidence that the existing legal system which punishes doctors for
malpractice errors helps make the health care system safer. In the 1980's, anaesthesiologists,once the target of frequent malpractice negligence suits, adopted safety standards which haveresulted in a marked drop in both patient deaths and malpractice suits. No other medicalspecialty groups has been moved to adopt safety-enhancing standards of practice to lower orlimit medical malpractice risk. A recent study by RAND Health found that less than 50 percentof patients studied nationwide in urban areas received care appropriate to their conditionaccording to accepted standards of care; RAND attributed these sorry results to a “chaotic andfragmented” U.S. healthcare system and recommended adoption of extensive computerizedmedical record and treatment support technology (already adopted by the VA medical systemwith dramatic quality improvement results) to correct the problem.
8. There is no evidence that a few bad doctors cause most malpractice suits and getting
them out of practice would case malpractice suit filing rates and awards, and thus overallmalpractice premiums, to fall. In 1999 the National Institute of Medicine reported that medicalmistakes in hospitals cause as many as 98,000 deaths a year, and most are caused by health caresystem failures, not the occasional bad doctor. The RAND Health study also supports theimplication that it is health care system chaos and dis-integration that results in most sins ofomission and commission in medical practice, and suggests that if everyone who suffered fromnegligence in the sense of failure to receive appropriate medical care sued for malpractice, thevast majority of all citizens of the U.S.A. would be qualified plaintiffs who had suffered injuryfrom this negligence.
AARP policy director John Rother wants to see reform, but not the kind of malpractice lawsuittort reform being pursued by states and the Bush administration: “what the country needs is acompensation system that is speedy, fair, inexpensive and promotes health care quality. Thecurrent system fails on all those counts. Caps on awards just make it worse.” David Studdert atHarvard School of Public Health notes, “The vast majority of people who suffer never getcompensated for their injuries.” One Harvard study of 30,000 hospital discharges in New Yorkstate found that only 3 percent of some 300 patients injured because of medical negligencereceived compensation. Patients need accountability and candor from health professionals, butthese goals are lost when doctors must play a defensive game against lawyers.
In summary, what is badly needed is not tort reform for malpractice lawsuits, but (1) reform ofthe chaotic, un-integrated health care system so people get accurate diagnosis and appropriatecare, with safeguards against medical error and oversight, which a computer-based medical caresystem can largely achieve; and (2) development of a speedy, fair, inexpensive system forcompensating malpractice victims for care costs and income losses suffered due to their being victims of medical error. Scientific American
’s editors recommend replicating the combinationof liability limits with a compensation fund provided for in the 1986 National ChildhoodVaccine Injury Act.
On January 31, 2007, President Bush said “We should not have a legal system that’s runninggood doctors out of practice and running up the cost of your medicine,” in the State of theEconomy Report. He claimed that “lawsuits are driving many good doctors out of practice -leaving women in nearly 1,500 American counties without a single [ob-gyn].” Public Citizenfound in two reports that: (1) the total number and inflation-adjusted value of malpracticepayments to patients are almost the same as in 1991; (2) the number of counties without an ob-gyn is actually declining every year while the number of ob-gyns per woman of childbearing ageis growing. Access to ob-gyn care is, in fact, improving.
Recommendations for Universal Coverage, Citizens’ Health Care Working Group
The Citizens’ Health Care Working Group is an independent committee established by Congressin the 2003 Medicare Modernization Act. Members of the Committee were appointed by theComptroller of the United States to represent a cross-section of health care providers, consumers,
and benefit providers. The U.S. Secretary of Health and Human Services is a statuatory member.
In the spring of 2006 the Group issued a report, “Health Care that Works for All Americans.” Finding a health care system it describes as “unintelligible to most people” and that is“disconnected from the mission of providing people with humane, respectful, and technicallyexcellent health care,” it recommended the following to address those deficiencies:
Make it U.S. public policy that all Americans have access to a “set of core health careservices.” A related point is defining a “core benefit package” for all Americans.
Make it U.S. public policy that all Americans have affordable health care available tothem, with financial assistance to those who need it to obtain the core set of health careservices. The group admits this will “require new revenues” from revenue streams suchas enrollee contributions, income taxes or surcharges, “sin taxes,” business or payrolltaxes, or a value-added tax targeted to funding this healthcare initiative.
Guarantee all U.S. citizens financial protection against very high (“catastrophic”) healthcare costs through a national program that also ensures universal health care coverageand financial assistance for low-income Americans healthcare insurance coverage. Thisinsurance program might be either public or private.
Provide a national program of support for community health provider networks whichprovide health care services in underserved areas and for vulnerable populations,including rural areas and rural residents.
Promote efforts to improve quality of care and efficiency to lower health care systemcosts (per unit of health promotion or improvement).
The Group contacted 23,000 U.S. citizens concerning their views of the federal government’sappropriate role in providing affordable health care coverage. “.over 90 percent.believed itshould be public policy that all Americans have affordable coverage.” The Group’s report callson Congress to enact this policy by 2012.
The report may be accessed online at <www.CitizensHealthCare.gov> and citizens can registercomments on it there or at the E-mail address <CitizensHealth@ahrq.gov> until August 31,2006. Five committees in Congress will subsequently hold hearings on the report and citizenreview and comment on it.
Currently a project called the National Health Information Network is aiming to create acomplete record of every American’s health care and link all the records into a giant medicalserver. It has a 2014 target date for implementation. When operational, all the professionalstreating a patient anywhere in the national health care system is supposed to have access to anypatient’s file, with safeguards to protect privacy.
Former Surgeon General Bernadine Healy, M.D. notes that emergency health care is much lessexpensive under the Franco-German approach in Europe, where ambulances staffed with doctorsand nurses provide emergency care in the field. Only patients who need admission aretransported to hospitals.
Recommendations for a National Healthcare System, Critical Condition
In Critical Condition
(Doubleday, 2004) Donald L. Barlett and James B. Steele present anexhaustive critique of the current U.S. healthcare anarchy, then propose a detailed solution toestablishing a national healthcare policy and financing system.
Their critique can be summarized that Mathematica Policy Research under contract to the Stateof Maine in 2002 found that Medicare overhead in that state averaged 2 percent a year, whileadministrative overhead of private insurers in Maine ranged from 12-30+ percent a year of thehealthcare dollar spent. They observe that Medicare enjoys economies of scale and standardizeduniversal coverage terms, while private insurance is “.built on bewilderingly complex layers ofplans and providers that require a costly bureaucracy to administer, much of which is gearedtoward denying claims.”
Their structural proposal is to establish a “U.S. Council on Health Care” modeled on the FederalReserve System. The Federal Reserve is a quasi-governmental organization which oversees ournation’s money and banking policies. Its trustees serve staggered 14-year terms to which theyare appointed by the President with the advice and consent of the Senate. Barlett and Steelepropose that this Council establish and administer a national single-payer, universal coveragehealth care system funded by a gross-receipts tax on businesses and a flat tax on individualincome from all sources. They project that this health care financing system would cost businessand individual taxpayers less than the current healthcare financing arrangement. Their remedyhas the following policy features:
guarantee that all Americans receive a defined level of basic care
establish flexible co-payments, with a sliding scale of co-pays based on individualincome and on the nature of healthcare system usage by the patient, including a creditagainst co-pay which accrues for people not using health care services. Use ofpreventative and chronic disease management services would be encouraged throughlower or no co-payments.
pay all costs for catastrophic illness: no copays or deductibles. My recommendation toCongress regarding long-term care coverage under Medicare is to establish a deductiblefor long-term care equal to 7 percent of gross taxable income, payable once for eachepisode of admission to long-term residential health care.
freedom of choice of doctors and hospitals restored - the national healthcare system willpay for services from any provider so patients would not be confined to HMO staffphysicians or “preferred providers” under contract to a health insuror.
reallocate health care spending to prevention
provide accurate drug information to consumers to counter drug advertising biases
concentrate health care spending on areas that prove cost-effective from evaluation ofnational health care cost and outcome data analysis
control health care costs by getting to the root of irrational disparities in the existingsystem, e.g., 48% higher Medicare expenditures on seniors in Mississippi than SouthDakota after adjustment for cost of living
stop unrealistically low reimbursement rates to physicians and hospitals
stop overdiagnosis and overtreatment by identifying the most cost-effective treatmentsthrough research on health care outcomes
establish a single information technology system to reduce medical errors
allow supplementation of the government insurance with private health care insurance asthe customer may please
decriminalize health care fraud, making it a civil offense with provisions for bothfinancial recovery and penalty assessment with ability to seize any assets by the offenderto satisfy the judgment.
Recommendations to Inform Consumer Choice Through “Transparency”
Bush administration Secretary of Health and Human Services Michael Leavitt said thegovernment, as the largest purchaser of healthcare, can gather information on care quality in astandardized way and insist on tying payments to performance. The government can also ensurethat this information is made transparent to consumers.
Bernadine Healy, M.D., illustrates how publishing comparative information can improve healthcare. When New York State started publishing volume and mortality figures for heart surgeonsand hospitals a few years ago, outcomes were unexpectedly spotty. After publication started, thedata quickly improved. The poor performing surgeons and hospitals either got better or stoppedperforming the cardiovascular procedures being evaluated. This was good for consumers and theeconomy because “botched care is expensive.”
State Initiatives to Provide Universal Health Coverage
There are two outstanding state “experiments” in actualizing the recommendations of theCitizens’ Health Care Working Group: Massachusetts and Vermont. In both cases, the universalhealth care legislation was passed by a Democrat-controlled legislature and signed into law by aRepublican governor. Both states have smaller uninsured populations than the national average,tight regulations on health insurors already in place, and sufficient financing in hand (mainlyfederal) to fund the experimental programs for a few years. Both states hope their approach willactually lead to lower total state health subsidy outlays. As more residents get coverage, thefunds the two states now use to pay the hospital bills and other health costs of the uninsured canbe shifted to paying for the subsidies for insurance coverage for lower-income families.
Massachusetts: Under its new law, people in Massachusetts who are uninsured must buycoverage by July 1, 2007, and all businesses with more than 10 employees that do not provideinsurance must pay a “fair share” contribution of up to $295 per year for the state for each
worker. That concept of “shared responsibility” was reportedly key to the law’s passage;companies that already provide medical insurance benefits welcomed the opportunity to level theplaying field with companies that do not. Governor Mitt Romney vetoed the $295 assessmentbut the legislature overrode his veto.
To implement the law, Massachusetts adopted an idea from the Heritage Foundation, aconservative think tank: the law sets up a clearinghouse called “The Connector” intended to linkuninsured individuals and companies having fewer than 50 employees to a choice of“affordable” health plans designed by private insurers and regulated by the state. The Connectoraims to offer individuals and small businesses the same advantages large companies are able tocommand in securing health care insurance coverage: discounts on plan premiums, premiumspaid out of pre-tax dollars, and an opportunity to change plans each year. Unlike currentemployer-based health insurance plans, the health insurance obtained by individuals or asemployees is portable: if they change full-time jobs or are part-time or temporary employeesworking several jobs, their health care coverage remains in place. The law offers subsidizedinsurance coverage (no deductibles, premiums on a sliding scale) to residents with incomes up to300 percent of the federal poverty level (currently $30,630 for a single person or $61,950 for afamily of four). The state is finalizing a plan to totally subsidize health insurance premiums foranyone whose income is 150 percent or less of the federal poverty level.
Individuals who do not purchase health care coverage by July 1, 2007, will lose their personalstate income tax exemption for 2007 and will confront fines equal to 50 percent of the monthlycost of health care insurance for each month they are without it. But there is a caveat in the law:you are not required to buy insurance if you can’t find “affordable” coverage, and the state hasso far not defined what “affordable” means. Early estimates of how much people who are noteligible for subsidies will have to pay in premiums through The Connector were $300 for anindividual and $600 for a couple’s coverage policy, but this is far from firmly established.
Critic Dr. David Himmelstein, M.D., associate professor of medicine at Harvard Medical School,is co-founder of a physicians group that promotes a national single-payer healthcare insurancesystem. The Massachusetts law, he says, “will force you to purchase either something you can’tafford or something you can afford but which will be nearly useless in the actual coverage itoffers.” This latter point bears on the fact that the Massachusetts law does not prevent privatehealth insurors from developing “affordable” health policies by limiting coverage benefits: apolicy with a $5,000 deductible, 25 percent co-pays to $100,000 per year outlay, and a $100,000cap on coverage per year per covered individuals could have an “affordable” premium, but itwould leave a person earning at 301 percent of federal poverty level prostrate and bankrupt frommedical costs if they had a serious illness or accident. Greg Marchildon, state director for AARPVermont, says “Most folks tell us they do not want to be in a high-deductible health savingaccount where they’re paying $5,000 out of pocket before they reach some sort of catastropicbenefit. They basically describe it as paying to be uninsured.”
Vermont: The state’s law is a “carrot” approach versus Masachusetts’ “stick” approach toachieving universal health care coverage in Vermont by the Legislature’s target date of 2010.
Vermont will offer a voluntary, standardized plan, called “Catamount Health,” for uninsuredresidents. It starts October 1, 2007. It will be offered by private insurers, with benefits andcharges similar to the average BlueCross BlueShield plan in Vermont. The Vermont plan hasdefined costs. Enrollees will pay $10 for office visits to a doctor, $20 percent coinsurance formedical services, tiered copays of $10, $30 or $50 for prescription drugs, and a $250 annualdeductible for an individual or $500 for a family for in-network services (double these amountsfor out-of-network). A very big benefit is that out-of-pocket health expenses will be capped at$800 a year for an individual and $1,600 per year for a family using in-network services; the capfor using out-of-network services is about twice this.
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