Category Archives: Privatization

Paul Ryan’s Plan for Medicare: A Disaster for Seniors (Why Doctors Might Stop Taking Medicare)

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“Robin Hood in reverse, on steroids”–that’s how Robert Greenstein, President of the Center on Budget Policy and Priorities (CBPP),  has described vice-presidential candidate Paul Ryan’s blueprint for the 2013 budget: It could likely produce the largest redistribution of income from the bottom to the top in modern U.S. history.”

I quoted Greenstein in April, in a post that originally appeared on HealthInsurance.org. There, I explained that Ryan’s budget would shift Medicare costs to seniors  and slash Medicaid, while simultaneously offering tax breaks for Americans perched on the top of a our income ladder.

Under the newest version of the Ryan plan, Washington would give seniors a voucher equal to the cost of the second-cheapest private-sector Medicare plan in their region. In theory, this gives seniors “choice” — the opportunity to pick a Medicare policy that best suits their needs, and their pocketbook.

If they don’t want to buy a plan from a for-profit insurer, they could, if they wish, use the voucher to buy traditional government-sponsored Medicare–though if it costs more than that second-cheapest private plan in their area, they will have to make up the difference.

Romney and Ryan are convinced that the private sector is always more efficient than government. Thus, for-profit insurers will be bound to offer better care at a lower price. Their faith is remarkable, given that past attempts to privatize Medicare (Medicare + Choice and Medicare Advantage) have largely failed on both counts.

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The Democratic National Convention, 1980 and 2012: Turning Points in American History

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I originally published this post on HealthInsurance.org (www.null.com) Check there for other posts on the election–just click on “Blog” at the top of the page.

Ted Kennedy’s speech at the 1980 Democratic convention still echoes in my mind. It remains the finest, most inspiring political oration that I have ever heard. Kennedy was speaking from a position of defeat. He had just lost the Democratic nomination to Jimmy Carter.

And yet this was a full-hearted, rousing speech delivered by a man who realized that in the battle ahead, the issues at stake were far, far more important than his own loss. Intuitively, he knew that the country had reached a turning point. (You can listen to the speech at The  History Place.

At that moment, Conservatives were ready to launch a revolution, and they would succeed. In November, Ronald Reagan won the White House, and his administration would set the tone for much of the next 30 years. Tax cuts for the rich, deregulation, a campaign to privatize both Social Security and Medicare. Health care reform would be off the table for many years.

Kennedy saw the danger ahead and addressed it: “My fellow Democrats and my fellow Americans, I have come here tonight, not to argue as a candidate but to affirm a cause. I’m asking you–to renew the commitment of the Democratic Party to economic justice.

“I am asking you to renew our commitment to a fair and lasting prosperity that can put America back to work.” Then, as now, unemployment was a pressing issue. In April of 1980, the unemployment rate jumped to 6.9%; in May it hit 7.5%.  “Let us pledge that employment will be the first priority of our economic policy,” Kennedy declared. “We will not compromise on the issue of jobs.”

Universal Coverage “The Passion of My Life”

Kennedy understood that “we cannot have a fair prosperity in isolation from a fair society. So,” he declared, “I will continue to stand for a national health insurance.”

“We must not surrender to the relentless medical inflation that can bankrupt almost anyone and that may soon break the budgets of government at every level. Let us insist on real control over what doctors and hospitals can charge, and let us resolve that the state of a family’s health shall never depend on the size of a family’s wealth.”

Kennedy had witnessed what economic inequality can mean when a child is sick.  Many years later he recalled “One of the searing memories in my life was being in a children’s hospital in Boston, where my son had lost his leg to cancer. He was under a regime that was going to take three days of treatment, every three weeks, for two years …
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Donating an Organ: Should It Be A Gift?

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A story in yesterday’s New York Times Magazine raised some very thorny questions about organ transplants. I spent the afternoon reading more about transplants; by evening I had stumbled onto what seems to me at least a partial solution.

The NYT piece tells the story of Sally Satel, a 49-year-old psychiatrist in need of a kidney transplant. In 2004, her kidneys suddenly, quite inexplicably, began to fail. (The cause may have been a medication she had taken in her twenties.)  She had no living relatives except a couple of cousins whom she rarely saw. A close friend came forward, was tested, found that her blood was a match, volunteered to donate a kidney–and then reneged. (It turns out that when she went to chorus practice one evening, “a fellow alto” talked her out of it. The fellow-alto was, of all things, an organ transplant specialist. Satel was enraged: “a transplant surgeon should know how hard it is to get a donor.”)

A second friend volunteered, and again proved a match. But then she, too, got cold feet– though she didn’t tell Satel right away.

Finally, a 62-year-old stranger in Canada saw Satel’s message on an organ match website, called and offered to help her.  He was the right blood type, he seemed “steady” and “honest,” and after a few weeks of phone calls and e-mails, they set a date to do the operations in early January. Then, just before Thanksgiving, he went dark. “Everything turned to radio silence as my e-mail and phone messages went unanswered,” Satel recalls. When her transplant coordinator contacted him, he waffled. He wasn’t sure he would be able to make it in January; he was too heavily involved in a political campaign…

“I was astonished at the Canadian’s . . . what? Negligence, cowardice, rudeness?” Satel writes. “It was a sickening roller-coaster ride: hope yielding to helpless frustration, gratitude giving way to fury. How dare he reduce me to groveling and dependence? Yet I assume he intended no such thing. I think the Canadian was actually quite devoted to the idea of giving a kidney — just not necessarily now or to me.”

By now Satel is desperate. She realizes that her only alternative is dialysis “three days a week, for four debilitating hours at a time, I would be tethered to a blood-cleansing machine… I had an especially morbid dread of dialysis,” Satel admits.  She was haunted by what she had read about “the playwright Neil Simon [who] received a kidney from his longtime publicist in 2004 . . .but before that he endured 18 wretched months on dialysis, suffering cramps and vomiting spells that kept him largely confined to his house. His memory deteriorated, and he hated the time away from his writing. Shortly before his donor came forward (unsolicited, it should be noted), Simon’s doctors said he might have to start spending more time on dialysis. If that were necessary, he said, he had decided, ‘I didn’t want to live my life anymore.’ Neither, I thought, would I.”

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New CDC Report: The Nail in the Coffin for Health Care Myths

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On Monday the CDC released a landmark, and in many ways devastating, report on health care in the U.S. The report contains a wealth of data that, while not surprising to some, should help silence the dwindling few who insist that America’s health care system is doing just fine. As a public service, I thought it’d be helpful to list some of the myths that the report demolishes (with some help from other sources as needed).

Myth: If people don’t have health insurance or get medical care, it’s because they don’t want it.

Reality: Actually, the big issue with access is cost. According to the CDC report, more than 40 million Americans—almost one in five Americans over the age of 18—have foregone one of the following in the past year because they couldn’t afford it: medical care, prescription medicines, mental health care, dental care, or eyeglasses.

It’s not that uninsured people don’t understand the value of coverage. Last year a study from the Urban Institute found that less than 3 percent of uninsured adults and children have never had insurance or report having no need for insurance. That same report also found that the high cost of coverage alone explained over 50 percent of those cases where people are uninsured 

And even when the uninsured cite job-related difficulties as the reason why they can’t access employer sponsored coverage, the problem isn’t just that they can’t get it through work—it’s also that they can’t afford individual policies. (Individual policies are much more expensive than group policies, and in many states private insurers can charge individuals astronomical premiums if individuals have any “pre-existing conditions.)  According to the Urban Institute, for 79 percent of adults and 74 percent of children who are uninsured because of job-related problems, the high cost of individual insurance is a major problem.

Myth: The American system relies mostly, if not exclusively, on private enterprise to support health care.

Reality: Yes and no. While the U.S. does have the biggest private sector share of health expenditures in the world, making up 55 percent of our funding, personal health care expenditures (i.e. spending on actual patient care) is mostly public. The CDC reports that in 2005 the federal government and state and local governments combined paid 45 percent of personal health care expenditures; private insurers only paid 36 percent, with 15 percent coming from out-of-pocket payments. So much for the libertarian utopia.

There’s also a bigger public sector coverage presence than many would like to admit. Though two-thirds of insurance policyholders have private coverage, a Census bureau report from earlier this year noted that more than one quarter of Americans (about 27 percent) are covered by government insurance. The American model is much more of a private-public mix than some pundits—and candidates—are willing to admit.

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Healthcare IT Is Not a Done Deal—Even in Theory

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In a previous post, I briefly mentioned how the U.S. Department of Health and Human Services has started developing regional networks of electronic health information. Eventually, these networks will merge into a “network of networks,” thus working toward a nationwide, compatible system of electronic health records by 2014.

Unfortunately this “network of networks” approach of regional heath information organizations (RHIOs) has some serious faults. And the alternative system currently favored by many, health record data banks, still poses a lot of unanswered questions.

According to an October report from the Information Technology and Innovation Foundation (ITIF), the major problem with RHIOs is coordination: “multiple, heterogeneous databases” require “the extensive use of middleware—that is, software used to interface between incompatible databases and data formats.” Otherwise it’s like trying to run Mac software on a PC. Other coordination challenges include accurate patient identification (is John Smith in the Bronx the same as John Q. Smith in Cleveland?) and ensuring comparable service quality—each network needs to be as fast and secure as its peers.

With all of these inefficiencies, the ITIF study notes that RHIOs don’t make a very compelling business case to the health care providers who are expected to implement and operate the networks. Most of the system’s savings go to patients (because they can expect better care) and insurers (because mistakes can be avoided) rather than hospitals and doctors, who incur all the costs of transitioning to a new IT platform—a fact of which they’re well aware. A 2006 JAMA study showed that health care providers are worried about IT transitions primarily because of start-up costs (installation, consultation, training, etc), ongoing costs (such as compliance with privacy laws—no small matter, given the ambiguity of HIPPA) and the potential loss of productivity as employees learn the new system.

In lieu of RHIOs, ITIF recommends health record data banks (HRDBs), a model that has gotten a lot of buzz over recent months—including its own bill in Congress last year.

The simplest way to explain HRDBs is via analogy: think of how you engage with a commercial bank account, and you’re on the right track. Just as you choose a bank from a competitive marketplace of financial institutions, so would you pick an HRDB provider from many vying for your business; just as you open a bank account, so would you start a medical record account; and just as you log in to access financial information, make transactions, and monitor your activity with a bank, so would the HRDB service let you sign in online to access to your medical history, test results, and so on.

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Herzlinger’s Meme on Switzerland and Consumer Driven Medicine

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In today’s Wall Street Journal, Harvard Business School professor Regina Herzlinger offers an upside-down account of what’s right and what’s wrong with Switzerland’s health care system.  A leading advocate of “consumer driven” health care, Herzlinger assumes that because the Swiss pay for so much of their care out of their own pockets, consumer choice drives their system. 

But the truth is that Swiss patients have relatively little say over either the cost or the quality of the care they receive. Prices are regulated by the government, which also tries to make sure that consumers are getting value for their health care dollars by selecting which drugs, devices and tests insurance will cover. In fact, it is the very visible hand of a smart, largely efficient government that accounts for Switzerland’s relative success.

Before explaining how Herzlinger gets so much so wrong, let’s look at what she gets right. “The Swiss have achieved universal coverage,” Herzlinger points out “at a far lower cost than the U.S.”  In 2003 Switzerland spent 12 percent of GDP on health care while we laid out “a staggering 15 percent of GDP” while leaving roughly 14 percent of our population uncovered. Switzerland also has “far better health outcomes than the U.S., even when Switzerland is compared to socio-demographically similar U.S. states such as Connecticut and Massachusetts,” Herzlinger acknowledges. Moreover, while U.S. insurers in most states can shun sick customers, either by refusing to cover them—or by charging them astronomical premiums—in Switzerland you are not penalized for having cancer. The sick “can afford health insurance and pay the same price” as everyone else.

Finally, while the cost of care continues to snowball in both countries, the Swiss seem to have a better handle on health care inflation. From 1996 to 2003 health care spending in Switzerland rose by an average of 2.8 percent a year, Herzlinger says, versus 4.1 percent in the U.S.  Meanwhile “Switzerland boasts substantially more in the way of health-care resources and . . . tops the world in most measures of user satisfaction.”

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UnitedHealth Care vs. the Kids

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Wednesday night, the House voted 225–209 to pass a bill that would, in the words of a Wall Street Journal editorial, “steal nearly $50 billion from Medicare Advantage, the innovative attempt to bring private competition to senior health care” in order to beef up the State Children’s Health Insurance Program (SCHIP), a program that delivers health care to poor children.

SCHIP is scheduled to expire September 30; the House bill would renew the program while expanding it to include another 5.1 million children at a cost of an extra $50 billion over five years. The bill’s backers propose to fund the legislation by increasing the federal cigarette tax by 45 cents while simultaneously paring the premium that Medicare pays private insurers who provide Medicare to seniors. The goal of the bill, reformers say, is to ensure that all children in the United States have health insurance. The Wall Street Journal’s editors see things otherwise: “Democrats apparently want to starve any private option for Medicare,” the editorial concluded.

Rupert Murdoch hasn’t yet weighed in, so I decided to take a look at the proposal. Would the legislation really make it impossible for private sector insurers to continue to offer needed benefits to seniors?
I began by looking at insurers’ finances only to discover that the health care insurance industry is, in fact, facing rough weather ahead. While the cost of providing health care continues to climb, more and more employers are backing away from providing health care benefits for their employees. Others are raising premiums and co-pays to a point that some workers can’t afford to participate in the plans. This means that insurers are losing customers.

As a result, one might expect that insurers’ profits would be falling. One would be wrong

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