Below, a response to novelist Jane Smiley that I am publishing on the Huffington Post tomorrow. Earlier this week, Smiley posted on Huffington expressing her dismay that President Obama seems to be folding on health-care reform. I don’t blame her for coming to the conclusion: this is what the mainstream media has been telling her. My response begins:
An Open Letter to Jane Smiley: Please Don’t Believe Everything You Read
(The Media Is Not Always a Reliable Narrator )
Dear Jane Smiley,
I understand why you are disappointed with President Obama.
First, the New York Times reported that he had made a “deal” with drug-makers. Then came the second blow: the news that the president was “back-tracking” on the public insurance option that in the past, he had said was essential to “provide choices and keep [for-profit] insurers honest.”
Earlier this week, you told the Huffington Post’s that you felt “jilted.”
“We on the left can and must come to the conclusion that he used us and our money, but never intended to listen to us . . . Health care has been the real test, and if his administration caves to Republican intimidation and lies and foregoes the public option in the health care bill, Obama is failing that test. If there is no public option and no way of lowering the price of drugs — if Obama is determined to make back room deals with the same old corporate shills–then what have I gotten for my campaign contribution? It's not nothing, it's worse than nothing, because if the man who promised hope does the same old thing, then that is the end of hope.”
I don’t blame you for beginning to lose hope. Based on what the mainstream (and supposedly “liberal”) press has been reporting, the president is letting us down.
But the truth is that in recent months, the media has begun to sour on the president. The “honeymoon” is over. I am afraid that some reporters are now engaging in a time-honored media sport: first build someone up then tear him down. This gives both journalists and pundits something new to say.
Even within the liberal press, support for health care reform has turned to skepticism.
Moreover, many in the media are frustrated that the president has been playing his cards so close to his vest. So, in the quest for headlines and certainty, the press has been “punching up” the news, turning scraps of dubious information into scoops. "The White House Made a Deal", or "Obama is Caving" are headlines. "We Really Aren't Sure What's Going on in Obama's Mind" will not sell newspapers. Too often, reporters pretend to a certainty that they don't possess.
Consider what has been reported, and the quality of the evidence behind the headlines.
In the letter to Smiley, I then go on to explain that, in the context of Pharma’s revenues, $80 billion is a paltry sum—and not worth a quid pro quo from the president.
“At least $30 of the $80 billion represents the revenues Pharma will forego by giving Medicare patients a 50 percent discount when they reach the “donut hole”—the point where they have to begin paying for drugs out- of- pocket. But keep in mind, without the discount, many patients would simply stop buying the drugs altogether—or switch to generics. And Pharma will still turn a profit on many of its over-priced drugs, even while selling them at half-price.
“Then the $30 billion needs to be but in the context of Pharma’s annual revenues. This year, the industry will rake in $252 billion. If sales continue to rise, and drug-makers continue to hike prices at the current rate, Pharma expects revenues to double over the next ten years, to $500 billion in 2019. In that context, giving up $30 billion worth of revenues over ten years –or roughly $3 billion a year–just isn’t a big sacrifice.
I quote Bloomberg: “Unlike most in the mainstream media, Bloomberg’s financial journalists understood this. When the deal was announced, Bloomberg quoted Tim Anderson, an analyst with Sanford C. Bernstein & Co. in New York telling clients: ‘Filling the doughnut hole should help seniors stay on their branded therapies and lessen the tendency for seniors to switch from brands to generics once they hit the donut hole. This is critical because once patients convert to generics, they seldom revert back to the brand and are essentially lost to cheaper generics forever.”
Bloomberg acknowledged that the $80 billion contribution wouldn’t just trim revenues, it also would make a dent in profits. But, bottom line: “Anderson estimated [that giving up $80 billion would] have a ‘profit impact’ of no more than 4 percent, which he described as ‘low.’”
It’s also worth remembering that when Pharma announced that it would give up the $80 billion, President Obama said: “this is a first step.” At the time, I added, “Pharma is going to have to do more.”
I also explain that the only evidence of a deal is that Billy Tauzin has said so—plus an unsigned, typed memo that anyone could have written, and an
unnamed source. As I explained in this HealthBeat post it’s very unlikely that the White House made a deal.
As for the idea that the President was sending a signal last week-end, that he was “giving up” on the public option, I explain that, as a matter of strategy, this makes little sense. Moreover, as I noted in this HealthBeat post, the full text of the president’s speech at the Town Hall meeting shows that he spent a good part of the speech arguing for the public option. Finally, his remarks prompted liberal Democrats to rally around the public insurance plan, making it clear that many consider it essential to reform. This, I think, is what the President hoped and expected would happen.
Why is the public option so critical? It seems to me that a lot of the evidence of inefficiencies, waste, fraud, etc. apply to fee-for-service Medicare, which has made little headway in dealing with widely agreed upon distortions (e.g. underpayment of primary-care) because of the difficulty in passing the legislation required to make a change. Why would a public option for the under-65 population have any less difficulty with these issues?
Obviously, there are abuses in the private sector; by all means address rescission of coverage issues! But the really critical issue for cost growth (the thing that matters unless we want to be even deeper trouble in ten years) is altering incentives for providers and consumers, not who is channeling the money from consumers to providers. That’s why you have examples of excellent health systems that are both private and public (Kaiser, VA). Address the fee-for-service incentives for physicians. Make sure that primary care physicians are adequately paid to handle the care that is within their scope of practice.
Second, get consumers involved at a point where they can reasonably assess quality and make a choice – in the purchase of insurance. Allow consumers to see that their choices matter by giving them some ability to direct where their health care dollars are going, and let them get the benefit/bear the cost of more or less generous coverage. Look at the experience with Wisconsin state employees coverage. In Dane County, WI, the state gives employees a flat amount towards premiums and makes them pay the difference if they want something more expensive. The nature of coverage and the quality care are monitored and information made available to employees. The result: premiums are lower in Dane Country (where state employees account for 20% of pop.)by about $1000 in comparison with the rest of the state with no measurable difference in quality of care. While consumers can’t reasonably choose a provider and a course of care in catastrophic situations, they can exercise discretion in selecting the nature of insurance coverage that they want, IF they have alternatives that are well-documented and standardized, and which include enough variation to allow for innovation in benefit design.
I said that the key thing is provider and consumer incentives, and that you could have a well-designed system regardless of payor. However, there is one caveat. As mentioned above, making changes to incentives through Medicare is like pulling teeth because it is so politicised(kind of like the current health reform process!) Private organizations have the flexibility to make changes without dealing with uninformed people who look at a discussion of the need for palliative care and claim that it is a code-word for “death panels”. So why do we want to build that kind of inflexibility into the system? Properly regulated, it is the best way to get the kind of innovation in process that is needed.
Dear Cordelia,
I am not the owner of this blog, nor am I a liberal. I don’t believe in bail outs or big government.
What I am is experienced at the inside of healthcare in America.
I can tell you this for certainty, the problem in American healthcare is that it is money-driven.
The public option is the best and fastest way to change the system away from being money-driven and make it health-driven.
Anything else will simply be gamed by those money-driven types who populate the high position in healthcare insurers, providers, and drug/device suppliers.
Its pretty much as simple as that.
Public Insurance Option = GOOD
Money-driven medicine = BAD
Cheers,
Maggie,
Oh my gosh, so so so many words.
I admit it, you are more complete, more accurate, and more well thought out than I am. You are faster, better, and cheaper too. Likely more attractive as well and probably younger!
I’m convinced, I give in….
Now can we summarize?
1) Money-driven medicine is bad.
2) We people become food for sharks in money-driven medicine.
3) The public option is the best, fastest, most certain way to get profit-driven sharks to swim elsewhere where the food supply is greater.
Couldn’t post this two Health Beat (MM) blogs ago. So I’ll say it now
TRUST IS INDEED THE ISSUE HERE!
Big Insurance and Big PhRMA cannot and should not be trusted!
It will take years -if ever-for them to deserve our trust.
Don’t give them an inch right now.Their actions over the past decade in particular which have literally and directly harmed millions of Americans deserve only our disdain and very justifiable rage.
Dr.Rick Lippin
Southampton,Pa
Ed–
Thank you very much. Your comment made me smile (actually grin) out loud. I have to admit I don’t smile out loud often enough –working too hard, wriing all of those words.
Where did Ed come from. I like him.
Wow Maggie. Haven’t thought much about you and the book since Jon’s death. Now a documentary! I just posted the You Tube trailer on my Facebook and also announced the Moyer broadcast.
Thanks,
Dave
FIGHT 4 PUBLIC OPTION: 300,00 Carrots for Progressive Reps
Oh the public option is by no means over: 60 members of the House made it clear they won’t vote for a bill without a public option.
In three days, FDL and partners raised over $300,000 for those progressive members of Congress who agree to draw a line in the sand over a public plan.
You, too, can offer carrots to these progressive politicians at ACT Blue:
http://www.actblue.com/page/theytookthepledge
Myth 14 I would expect them to leave out that the government can’t run the Indian Health Service worth a crap. Their stats would be good if you lived in Haiti or subsahara Africa.
Myth – Obama “50,000 immediately goes to the surgeon” for amputating a foot.
No matter how you spin it a flat out lie.
Fact- Medicare pays about 700 bucks for the surgery which includes unlimited postop checkups for 3 months.
Myth Obama- Pediatricians recommend tonsillectomies for financial gain.
The bottomline statement in his bloviating press conference where he tried to channel his inner Dr. Oz talking about childhood allergies. Except for the fact he has no knowledge of the subject or how some of the most basic doctor-patient relationships work.
Insulting and another blatant lie.
“If you like your insurance you get to keep it.”
One of the biggest whoppers of all. Why doesn’t he promise it will rain gumdrops and licorice when he passes his bill. It’s about as likely as that coming true.
Jenga,
I fear you are on to something. In the world of credibility, the President is suffering.
Anyhow, the pediatrician isnt the surgeon, so why again does the pediatrician care about the surgeon’s volume?
The truth is the pediatrician cares if he gets something for the referral. Perhaps not directly, but indirectly.
This is the case in real big health centers. They all profit when they raise volume and refer internally to a doc in the same center.
So is that the doc’s fault or the center’s fault? In my world, its neighter, they are simply abiding by self-interest.
Its the way the system is set up, including large monopolists or dualopolists who reap the benefit of the pipeline from primary care to specialists.
That might be bashing the big players though, and heck, they seem to be unable or unwilling to do that.
Back to credibility where I started …. people know that these large powerful providers and insurers are the problem. It seems the politicians and pundants are talking more about “your doctor” and not these big healthcare businesses. So, NOT placing the blame where it belongs smacks of special treatment for powerful buddies.
With the average person like me, we thought maybe Obama would be different, but now he seems more like all the rest, so he is loosing credibility.
I really think if his administration would come out with some federal law enforcement action on the worst offender companies/doctors/insurers/lawyers/businessmen, it would go a very long way to improving the President’s credibility.
He needs to choose example cases in all of the above, antitrust, RICO, fraud, malpractice, frivolous suits, and start making examples of those shafting the public.
Increase Federal Law Enforcement in Healthcare = GOOD
Cordelia, Ed, Dr. Rick, Dave, Judy Ed
Cordelia- I’m afraid you have been mis-led on many issues.
First, for the past 10 years Medicare has done a much better job of keeping a lid on costs that private insuerers. Medicare’s reimbursements have been rising by about 5% a year; private insurers by 8.5%
Meanwhile patient satisfiacation with Medicare is much, much higher.
Kaiser is excellent- particualrly in N. California -it’s also non-profit.
There are no for-profit insuers running multi-specialty organizationslike Kaiser –with docs on salary–
It’s ironic that you think that changes can’t be made to Medicare because they can’t get through Congress.
The 4 House committees have now approved a bill that: hikes fees for primary care docs, pediatiricians and geriatricians by 5% to 10%, depending on whether they are practicing in an area where there is a shortage; adds bonuses for quality and chronic disease managements; makes it possible for Medicare to adjust co-pays and fees based on the benefit of the service to the patient.
Unfortunately for-profit insurers have not been making any of these changes.
There are some excellent non-profit insurers out there (though most were driven out of business by the for-profits in the late 80s and 1990s.)
But there is world of difference between the non-profits and the for-profits.
Ed– Yes a public option could set a standard for healthcare that focuses on what is best for the patient rather than what is most profitable.
Dr. Rick– I agree. The experience of the past 20 years or so gives us little reason to trust Pharma or for-profit insurers.
Dave–Thank you. I remember you and your son.
I hope you’re well.
judy– you are right. The public option is far from dead.
Ed —
We know that health care costs less–and quality is higher–in most large multi-specialty centers.
So what you are saying about unnecessary referrals really doesn’t make sense .
Hi Maggie,
Love your blog. I was wondering if you have read this article. This gentleman poses some thought provoking and radical ideas for reform (most of which have no chance of even being heard–kind of like single payer). I generally believe in single payer, but this article has given me pause.
Best
G
http://www.theatlantic.com/doc/200909/health-care
Gary–
Thanks very muc for your comment.
I read the article you sent me.
The author wries:
I’m a businessman, and in no sense a health-care expert. But the persistence of bad industry practices—from long lines at the doctor’s office to ever-rising prices to astonishing numbers of preventable deaths—seems beyond all normal logic, and must have an underlying cause. There needs to be a business reason why an industry, year in and year out, would be able to get away with poor customer service, unaffordable prices, and uneven results—a reason my father and so many others are unnecessarily killed.”
What the write doesn’t understand is that in the health care business, the “customer” is a patient–i.e a person who is sick, often olden, sometimes in pain and firghtened.
80% of our health care dollars are spent when the patient is very sick, suffering from chronic disase like cancer or congestive heat failure.
Unlike consumers in other sectors of thee economy , these “consumers” have very little control over the system.
Think of it this way: If I were shopping for a thin-screen TV, I might decide to wait until prices come down.
If I am suffering from cancer, and am told I need a particular medication, I can’t do that.
Nor am I in a positon to judge whether the new mediation really is that much better than older medications that I mgiht be able to afford. Or maybe none of them are worth the price; in many cases, cancer patients are suffering form a cancer tha tcannot be cured, and pricey drugs will, at best, prolong the process of dying by weeks, or even monhts– without giving them a single extra day fo high-quality life.
Some patients might feel that the extra days or weeks of life are worth it–no mater how painful.
But my point its that healthcare is not an industry where hte consumer has much leverage.
By and large, he will buy what his doctor or hospital tells him he needs. He’s not in a position to bargain over the price. And he’s not in a position to be a “savvy shopper” comparing products– he doesn’t have the ability to do comparative effectiveness research.
Finally, if he doesn’t like the long lines at his doctor’s office, he can find another doctor–and mroe long lines.
Most doctors overbook so that they dont’ waste any time waiting for patients.
The very few doctors who book one patient every half hour –or one patient every 20 minutes– charge much,much more. Most people can’t afford them.