Kennedy : Universal Health

‘The Cause of My Life’

Inside the fight for universal health care.
Edward M. Kennedy
NEWSWEEK
From the magazine issue dated Jul 27, 2009

In 1964, I was flying with several companions to the Massachusetts Democratic Convention when our small plane crashed and burned short of the runway. My friend and colleague in the Senate, Birch Bayh, risked his life to pull me from the wreckage. Our pilot, Edwin Zimny, and my administrative assistant, Ed Moss, didn't survive. With crushed vertebrae, broken ribs, and a collapsed lung, I spent months in New England Baptist Hospital in Boston. To prevent paralysis, I was strapped into a special bed that immobilizes a patient between two canvas slings. Nurses would regularly turn me over so my lungs didn't fill with fluid. I knew the care was expensive, but I didn't have to worry about that. I needed the care and I got it.

Now I face another medical challenge. Last year, I was diagnosed with a malignant brain tumor. Surgeons at Duke University Medical Center removed part of the tumor, and I had proton-beam radiation at Massachusetts General Hospital. I've undergone many rounds of chemotherapy and continue to receive treatment. Again, I have enjoyed the best medical care money (and a good insurance policy) can buy.

But quality care shouldn't depend on your financial resources, or the type of job you have, or the medical condition you face. Every American should be able to get the same treatment that U.S. senators are entitled to. Really ? who pays for it?

This is the cause of my life. It is a key reason that I defied my illness last summer to speak at the Democratic convention in Denver—to support Barack Obama, but also to make sure, as I said, "that we will break the old gridlock and guarantee that every American…will have decent, quality health care as a fundamental right and not just a privilege." For four decades I have carried this cause—from the floor of the United States Senate to every part of this country. It has never been merely a question of policy; it goes to the heart of my belief in a just society. Now the issue has more meaning for me—and more urgency—than ever before. But it's always been deeply personal, because the importance of health care has been a recurrent lesson throughout most of my 77 years.

Nothing I'm enduring now can compare to hearing that my children were seriously ill. In 1973, when I was first fighting in the Senate for universal coverage, we learned that my 12-year-old son Teddy had bone cancer. He had to have his right leg amputated above the knee. Even then, the pathology report showed that some of the cancer cells were very aggressive. There were only a few long-shot options to stop it from spreading further. I decided his best chance for survival was a clinical trial involving massive doses of chemotherapy. Every three weeks, at Children's Hospital Boston, he had to lie still for six hours while the fluid dripped into his arm. I remember watching and praying for him, all the while knowing how sick he would be for days afterward.

During those many hours at the hospital, I came to know other parents whose children had been stricken with the same deadly disease. We all hoped that our child's life would be saved by this experimental treatment. Because we were part of a clinical trial, none of us paid for it. Then the trial was declared a success and terminated before some patients had completed their treatments. That meant families had to have insurance to cover the rest or pay for them out of pocket. Our family had the necessary resources as well as excellent insurance coverage. But other heartbroken parents pleaded with the doctors: What chance does my child have if I can only afford half of the prescribed treatments? Or two thirds? I've sold everything. I've mortgaged as much as possible. No parent should suffer that torment. Not in this country. Not in the richest country in the world.

That experience with Teddy made it clear to me, as never before, that health care must be affordable and available for every mother or father who hears a sick child cry in the night and worries about the deductibles and copays if they go to the doctor. But that was just one medical crisis. My family, like every other, has faced many—at every stage of life. I think of my parents and the medical care they needed after their strokes. I think of my son Patrick, who suffered serious asthma as a child and sometimes had to be rushed to the hospital for treatment. (For this reason, we had no dogs in the house when Patrick was young.) I think of my daughter, Kara, diagnosed with lung cancer in 2002. Few doctors were willing to try an operation. One did—and after that surgery and arduous rounds of chemotherapy and radiation, she's alive and healthy today. My family has had the care it needed. Other families have not, simply because they could not afford it.

I have seen letters and e-mails from many of these less fortunate Americans. In their pleas, there's always dignity, but too often desperation. "Our school is closing in June of 2010, which means that I will be losing my job and my health insurance," writes Mary Dunn, a 58-year-old schoolteacher in Eden, S.D. "I am a Type I diabetic, and I had heart bypass surgery in 2005. My husband is also a teacher [here], so we will both be losing insurance. I am exploring options and have been told that I cannot stay on our group policy or transfer to another policy after our jobs cease because of my medical condition. What am I to do after 39 years of teaching to acquire adequate health coverage?" Dunn also serves as mayor of Eden, for which she is paid $45 a month with no health benefits.

How will we, as a nation, answer her? I've heard countless such stories, including one from the family of Cassandra Wilson, a 14-year-old who once was a competitive ice skater. She's uninsured because she has petit mal seizures, often 200 times a day. Her parents have run up $30,000 on their credit cards. They've sold her skating equipment on eBay to pay for her care.

These two cases represent only those patients who lack coverage. We also need to find answers for the increasing number of Americans whose insurance costs too much, covers too little, and can be too easily revoked when they face the most serious illnesses.

Our response to these challenges will define our character as a country. But the challenges themselves—and the demands for reform—are not new. In 1912, when Theodore Roosevelt ran for a third term as president, the platform of his newly created Progressive Party called for national health insurance. Harry Truman proposed it again more than 30 years after Roosevelt was defeated. The plan was attacked, not for the last time, as "socialized medicine," and members of Truman's White House staff were branded "followers of the Moscow party line."

For the next generation, no one ventured to tread where T.R. and Truman fell short. But in the early 1960s, a new young president was determined to take a first step—to free the elderly from the threat of medical poverty. John Kennedy called Medicare "one of the most important measures I have advocated." He understood the pain of injury and illness: as a senator, he had almost died after surgery to repair a back injury sustained during World War II, an injury that would plague him all of his life. I was in college as he recuperated and learned to walk without crutches at my parents' winter home in Florida. I visited often, and we spent afternoons painting landscapes and seascapes. (It was a competition: at dinner after we finished, we would ask family members to decide whose painting was better.) I saw how the pain would periodically hit him as we were painting; he'd have to put down his brush for a while. And I saw, too, how hard he fought as president to pass Medicare. It was a battle he didn't have the opportunity to finish. But I was in the Senate to vote for the Medicare bill before Lyndon Johnson signed it into law—with Harry Truman at his side. In the Senate, I viewed Medicare as a great achievement, but only a beginning. In 1966, I visited the Columbia Point Neighborhood Health Center in Boston; it was a pilot project providing health services to low-income families in the two-floor office of an apartment building. I saw mothers in rocking chairs, tending their children in a warm and welcoming setting. They told me this was the first time they could get basic care without spending hours on public transportation and in hospital waiting rooms. I authored legislation, which passed a few months later, establishing the network of community health centers that are all around America today.

Some years later, I decided the time was right to renew the quest for universal and affordable coverage. When I first introduced the bill in 1970, I didn't expect an easy victory (although I never suspected that it would take this long). I eventually came to believe that we'd have to give up on the ideal of a government-run, single-payer system if we wanted to get universal care. Some of my allies called me a sellout because I was willing to compromise. Even so, we almost had a plan that President Richard Nixon was willing to sign in 1974—but that chance was lost as the Watergate storm swept Washington and the country, and swept Nixon out of the White House. I tried to negotiate an agreement with President Carter but became frustrated when he decided that he'd rather take a piecemeal approach. I ran against Carter, a sitting president from my own party, in large part because of this disagreement. Health reform became central to my 1980 presidential campaign: I argued then that the issue wasn't just coverage but also out-of-control costs that would ultimately break both family and federal budgets, and increasingly burden the national economy. I even predicted, optimistically, that the business community, largely opposed to reform, would come around to supporting it.

That didn't happen as soon as I thought it would. When Bill Clinton returned to the issue in the first years of his presidency, I fought the battle in Congress. We lost to a virtually united front of corporations, insurance companies, and other interest groups. The Clinton proposal never even came to a vote. But we didn't just walk away and do nothing—even though Republicans were again in control of Congress. We returned to a step-by-step approach. With Sen. Nancy Landon Kassebaum of Kansas, the daughter of the 1936 Republican presidential nominee, I crafted a law to make health insurance more portable for those who change or lose jobs. It didn't do enough to fully guarantee that, but we made progress. I worked with my friend Sen. Orrin Hatch of Utah, the Republican chair of our committee, to enact CHIP, the Children's Health Insurance Program; today it covers more than 7 million children from low-income families, although too many of them could soon lose coverage as impoverished state governments cut their contributions.

Incremental measures won't suffice anymore. We need to succeed where Teddy Roosevelt and all others since have failed. The conditions now are better than ever. In Barack Obama, we have a president who's announced that he's determined to sign a bill into law this fall. And much of the business community, which has suffered the economic cost of inaction, is helping to shape change, not lobbying against it. I know this because I've spent the past year, along with my staff, negotiating with business leaders, hospital administrators, and doctors. As soon as I left the hospital last summer, I was on the phone, and I've kept at it. Since the inauguration, the administration has been deeply involved in the process. So have my Senate colleagues—in particular Max Baucus, the chair of the Finance Committee, and my friend and partner in this mission, Chris Dodd. Even those most ardently opposed to reform in the past have been willing to make constructive gestures now.

To help finance a bill, the pharmaceutical industry has agreed to lower prices for seniors, not only saving them money for prescriptions but also saving the government tens of billions in Medicare payments over the next decade. Senator Baucus has agreed with hospitals on more than $100 billion in savings. We're working with Republicans to make this a bipartisan effort. Everyone won't be satisfied—and no one will get everything they want. But we need to come together, just as we've done in other great struggles—in World War II and the Cold War, in passing the great civil-rights laws of the 1960s, and in daring to send a man to the moon. If we don't get every provision right, we can adjust and improve the program next year or in the years to come. What we can't afford is to wait another generation.

I long ago learned that you have to be a realist as you pursue your ideals. But whatever the compromises, there are several elements that are essential to any health-reform plan worthy of the name.

First, we have to cover the uninsured. When President Clinton proposed his plan, 33 million Americans had no health insurance. Today the official number has reached 47 million, but the economic crisis will certainly push the total higher. Unless we act now, within a few years, 55 million Americans could be left without coverage even as the economy recovers.

All Americans should be required to have insurance. For those who can't afford the premiums, we can provide subsidies. We'll make it illegal to deny coverage due to preexisting conditions. We'll also prohibit the practice of charging women higher premiums than men, and the elderly far higher premiums than anyone else. The bill drafted by the Senate health committee will let children be covered by their parents' policy until the age of 26, since first jobs after high school or college often don't offer health benefits.

To accomplish all of this, we have to cut the costs of health care. For families who've seen health-insurance premiums more than double—from an average of less than $6,000 a year to nearly $13,000 since 1999—one of the most controversial features of reform is one of the most vital. It's been called the "public plan." Despite what its detractors allege, it's not "socialism." It could take a number of different forms. Our bill favors a "community health-insurance option." In short, this means that the federal government would negotiate rates—in keeping with local economic conditions—for a plan that would be offered alongside private insurance options. This will foster competition in pricing and services. It will be a safety net, giving Americans a place to go when they can't find or afford private insurance, and it's critical to holding costs down for everyone.

We also need to move from a system that rewards doctors for the sheer volume of tests and treatments they prescribe to one that rewards quality and positive outcomes. For example, in Medicare today, 18 percent of patients discharged from a hospital are readmitted within 30 days—at a cost of more than $15 billion in 2005. Most of these readmissions are unnecessary, but we don't reward hospitals and doctors for preventing them. By changing that, we'll save billions of dollars while improving the quality of care for patients.

Social justice is often the best economics. We can help disabled Americans who want to live in their homes instead of a nursing home. Simple things can make all the difference, like having the money to install handrails or have someone stop by and help every day. It's more humane and less costly—for the government and for families—than paying for institutionalized care. That's why we should give all Americans a tax deduction to set aside a small portion of their earnings each month to provide for long-term care.

Another cardinal principle of reform: we have to make certain that people can keep the coverage they already have. Millions of employers already provide health insurance for their employees. We shouldn't do anything to disturb this. On the contrary, we need to mandate employer responsibility: except for small businesses with fewer than 25 employees, every company should have to cover its workers or pay into a system that will.

We need to prevent disease and not just cure it. (Today 80 percent of health spending pays for care for the 20 percent of Americans with chronic illnesses like diabetes, cancer, or heart disease.) Too many people get to the doctor too seldom or too late—or know too little about how to stay healthy. No one knows better than I do that when it comes to advanced, highly specialized treatments, America can boast the best health care in the world—at least for those who can afford it. But we still have to modernize a system that doesn't always provide the basics.

I've heard the critics complain about the costs of change. I'm confident that at the end of the process, the change will be paid for—fairly, responsibly, and without adding to the federal deficit. It doesn't make sense to negotiate in the pages of NEWSWEEK, but I will say that I'm open to many options, including a surtax on the wealthy, as long as it meets the principle laid down by President Obama: that there will be no tax increases on anyone making less than $250,000 a year. What I haven't heard the critics discuss is the cost of inaction. If we don't reform the system, if we leave things as they are, health-care inflation will cost far more over the next decade than health-care reform. We will pay far more for far less—with millions more Americans uninsured or underinsured.

This would threaten not just the health of Americans but also the strength of the American economy. Health-care spending already accounts for 17 percent of our entire domestic product. In other advanced nations, where the figure is around 10 percent, everyone has insurance and health outcomes that are equal or better than ours. This disparity undermines our ability to compete and succeed in the global economy. General Motors spends more per vehicle on health care than on steel.

We will bring health-care reform to the Senate and House floors soon, and there will be a vote. A century-long struggle will reach its climax. We're almost there. In the meantime, I will continue what I've been doing—making calls, urging progress. I've had dinner twice recently at my home in Hyannis Port with Senator Dodd, and when President Obama called me during his Rome trip after meeting with the Pope, much of our discussion was about health care. I believe the bill will pass, and we will end the disgrace of America as the only major industrialized nation in the world that doesn't guarantee health care for all of its people.

At another Democratic convention, in arguing for this cause, I spoke of the insurance coverage senators and members of Congress provide for themselves. That was 1980. In the last year, I've often relied on that Congressional insurance. My wife, Vicki, and I have worried about many things, but not whether we could afford my care and treatment. Each time I've made a phone call or held a meeting about the health bill—or even when I've had the opportunity to get out for a sail along the Massachusetts coast—I've thought in an even more powerful way than before about what this will mean to others. And I am resolved to see to it this year that we create a system to ensure that someday, when there is a cure for the disease I now have, no American who needs it will be denied it.

This story was written with Robert Shrum, Senator Kennedy’s friend and longtime speechwriter.

Healthcare Fever

Sonia Sotamayor will be he soap opera du jour this week and will displace he health care debate.
This "time out" should allow up to reconsider some of the isssues and proposed solutions.
In a series of Op Ed presentations in the New York Times this morning the debate concerning some of the issues is played out.
Taxes for health care benefits is a contentious topic. Liberals believe that it is a God given salary increase that must be given by an employer as long as it is not taxed to the employee.
The origins of our health insurance system exist from World War II wage price controls. Unions unable to get wage increases accepted health benefits in lieu of them.
The conservative view point allows for taxation of these benefits, arguing that the individual taxed would then become a more discrimminating purchaser of health care and more appropriate in the use of expensive interventions.
Both points are presented below

July 12, 2009
Op-Ed Contributor
Don't Tax Health Benefits.
By ROGER HICKEY

AMERICANS are demanding health care reform that guarantees them quality, affordable insurance, reduces the burden of health costs on employers and individuals and provides backup coverage through a public health insurance option.

But the suggestion that we pay for these needed reforms by taxing the health benefits that millions of us get through our employers is very unpopular — Americans fear that it could undo the one part of our health care system that now works (sort of). And we worry about new tax burdens on people who have worked hard to get and keep decent health coverage. If Democrats want to avoid a serious reaction against their important reform efforts, they should heed these concerns.

America’s health insurance system has evolved over the decades since World War II, when companies began offering health insurance — untaxed as income by government policy. Today, around 160 million of us get our health insurance from employers. And in these difficult times, millions of workers have repeatedly given up wage increases in order to keep their health benefits.
John McCain, when he was running for president last year, proposed taxing all employer-provided health benefits. Were we to do that, some 20 million Americans would lose employment-based health insurance, according to some estimates. And many employers would stop contributing to group health insurance — forcing their workers into the more expensive individual insurance market.

While many health experts acknowledge that taxing all benefits would cause chaos, some share the conservative view that a lot of people are getting “too much” insurance coverage from their employers and are pushing to get new revenues by taxing plans that are more expensive than average. But several recent studies find that it is almost impossible to design a tax that doesn’t overburden workers in firms with older or low-income employees or companies in regions with higher-than-average insurance premiums.

The Communications Workers of America looked at one proposal (to tax all employer-paid health benefits worth over $13,000 for a family) and found a typical member of its union in Pennsylvania with a working spouse and one child would pay $3,165 more in taxes in the first year, and $27,949 more over eight years. The issue is heating up. The Senate majority leader, Harry Reid, has told colleagues that they should not tax health benefits. But the debate continues.

It is dangerous for politicians to focus the government’s taxing power on the hard-won benefits of middle-class families. Fair and progressive income and wealth taxes are a better way to pay for health reform — and keep workers feeling as though they have a positive stake in achieving good health care for all.

Roger Hickey is a co-director of the Institute for America’s Future and a member of the steering committee of the Health Care for America Now coalition.





July 12, 2009
Op-Ed Contributor
A Loophole Worth Closing
By JONATHAN GRUBER

POLLS show most Americans are in favor of universal health care. But how will we pay for it? There is an obvious place to look for the money: the tax exclusion for employer-sponsored insurance.

When my employer pays me in cash wages, I am taxed. Not taxed is the $10,000 per year that my employer spends on my health insurance, and this leaves me with an effective tax break of about $4,000. Over all, this break costs the federal government $250 billion per year in forgone revenue.
This is more than we would need to cover every American who now lacks health insurance. Ending the exclusion would provide a progressive source of financing for universal coverage, since higher-income taxpayers would contribute most of the revenues. It would stop discrimination against those who can’t obtain insurance through their employers and therefore have to pay with after-tax dollars. And it would end a policy of providing a bigger tax break the more one spends on health insurance, which drives overspending on medical care.

Some worry that without this “tax bribe,” employers would no longer offer health insurance, and sicker and older people would not be treated as fairly on their own as they are in employer groups. This is not an issue for medium and large employers, which have continued to offer health insurance as the value of this tax bribe has gone up and down through the years. Small employers might reduce coverage, but this blow would be softened if the policy helped finance a universal plan in which all Americans would get group rates.
Removing the exclusion need not mean an across-the-board tax increase. We might consider merely capping the dollar amount of employer-sponsored health insurance that is excluded from income taxation. Individuals would include in their income taxes the amount of premiums over and above, say, the average cost of employer-sponsored insurance. A typical middle-class employee with premiums of $1,000 a year higher than the average would pay only about $150 in extra taxes, yet such a policy would raise $500 billion in federal revenues over the next decade. This policy would provide strong incentives to purchase insurance more efficiently, since the highest-cost plans would be taxed but lower-cost plans would not. To ensure that the cap was not unfair to employees with relatively high insurance costs, employers could be allowed to compute an adjustment in the cap based on their location or their workers’ ages.

Closing this tax loophole would fix a fundamental flaw in our health care system. Even just capping it would provide the revenues to take us much of the way to universal coverage, without raising taxes on those who purchase average cost insurance.

Jonathan Gruber is a professor of economics at the Massachusetts Institute of Technology.

Medical malpractice is a topic that rapidly arouses physician passions. Most find that such actions are frivolous and the cause of excessive testing breeding a cover your ass culture.
The articles below both written by lawyers argue that medical malpractice has in fact had salutory benefits.
Mr. Baker argues that some of the safety practices adopted in medical institutions are in fact fall outs from a malpractice explosion.
Michelle Mello was one of the authors of the original Harvard Liability Study which purported that malpractice was more prevalent that liability action and injuries due to medical error more prevalent than believed.
Thoufh she does not suggest a cap on payments she does suggest defense by the practice of evidence based medicine. Mr. Baker also supports this though less vigorously.
The sixty four million dollar question who creates the evidence? After all evidence is based on the opinions of experts and every palintiff and defense malpractice lawyer knows such experts are not exactly an endangered species



July 12, 2009
Op-Ed Contributor
Liability = Responsibility
By TOM BAKER

OUR medical liability system needs reform. But anyone who thinks that limiting liability would reduce health care costs is fooling himself. Preventable medical injuries, not patient compensation, are what ring up extra costs for additional treatment. This means taxpayers, employers and everyone else who buys health insurance — all of us — have a big stake in patient safety.

Eighty percent of malpractice claims involve significant disability or death, a 2006 analysis of medical malpractice claims conducted by the Harvard School of Public Health shows, and the amount of compensation patients receive strongly depends on the merits of their claims. Most people injured by medical malpractice do not bring legal claims, earlier studies by the same researchers have found.

On the other hand, medical liability has improved patient safety — by leading hospitals to hire risk managers, for example, and spurring anesthesiologists to improve their safety standards and practices. Even medical societies’ efforts to attack the liability system have helped, by inspiring the research that has documented the surprising extent of preventable injuries in hospitals. That research helped start the patient safety movement.

When it comes to rising medical costs, liability is a symptom, not the disease. Getting rid of liability might save money for hospitals and some high-risk specialists, but it would cost society more by taking away one of the few hard-wired patient safety incentives.

Besides, there’s a better answer for doctors worried about high malpractice insurance premiums.

Critics point to defensive medicine as the hidden burden that liability imposes on health care. Yet research shows that while the fear of liability changes doctors’ behavior, that isn’t necessarily a burden. Some defensive medicine is, like defensive driving, good practice. Too often, we can’t distinguish between treatments that are necessary and those that are wasteful. Better research on what works and what doesn’t — evidence-based medicine — will help. And it will address the more general challenge of avoiding costly but unnecessary care.

Just as we need evidence-based medicine, we also need evidence-based medical liability reform. The research shows, overwhelmingly, that the real problem is too much malpractice, not too many malpractice lawsuits. So medical providers should be required to disclose injuries, provide quicker compensation to deserving patients and — here’s the answer for doctors worried about their premiums — shift the responsibility for buying malpractice insurance to hospitals and other large medical institutions. Evidence-based liability reform would give these institutions the incentive they need to cut back on the most wasteful aspect of American health care: preventable medical injuries.

Tom Baker, a professor at the University of Pennsylvania Law School, is the author of “The Medical Malpractice Myth.”





July 12, 2009
Op-Ed Contributors
The Cap Doesn’t Fit
By MICHELLE MELLO and AMITABH CHANDRA

DOCTORS are battered by the medical malpractice system. They complain, with reason, about unpredictable jury awards, escalating insurance premiums, the emotional toll of litigation and the cost to their reputations of being labeled “negligent” because of outcomes beyond their control.

Patients, too, often feel victimized by the system, enduring an average wait of five years for compensation for their injuries, and suffering the same emotional exhaustion from the drawn-out legal battle. The public gets stuck with a large part of the bill. When doctors practice “defensive medicine” to minimize their legal risk, we all pay for it.

Doctors tend to believe capping damages on malpractice awards would solve their troubles. But the best evidence shows that although caps modestly constrain the growth of insurance premiums, they don’t reduce the number of claims or address any of the fundamental pathologies of the system.
Two kinds of reforms are especially promising. First, in areas where we have reliable scientific evidence about what constitutes optimal clinical care, we should enable doctors to defend themselves against malpractice claims by simply showing that they adhered to evidence-based practice guidelines. An emergency room doctor, for example, could invoke well-accepted guidelines to explain his decision to refuse to order a stress test for a patient with chest pain that appeared not to be due to coronary disease.

This would address doctors’ complaints that malpractice suits often succeed even when care was not negligent, and also reduce incentives to practice defensive medicine and encourage doctors to adopt evidence-based practices.

Second, certain medical injuries should be pulled out of the court system and be handled by an alternative process in which the patient needn’t prove negligence. Severe birth injuries are a good place to start, for they can occur even with exceptional care. We should route these claims into a birth injury fund administered by the Department of Health and Human Services or a state-level counterpart, which would assign fair compensation on a no-fault basis.

Florida and Virginia have operated birth injury funds for nearly a quarter-century, and though not perfect, they have done a commendable job of balancing the needs of health care providers and patients. Doctors can buy into the program, avoiding lawsuits for severe neurological birth injuries, for under $6,000 per year (hospitals for about $50 per birth).

Our proposal would not do away with that hobgoblin of the malpractice system, the negligence standard, but it would curb its worst mischief.

Michelle Mello is a professor of public health and Amitabh Chandra is a professor of public policy at Harvard.


The third debate is one over Medicare costs. I found his one especially interesting.
Background:Mr. Obama has exerted his "regulatory authority" to allow the Medicare Payment Commission (MedPAC) to dictate payment policy rather than suggest it and leave its enactment to the regulatory whims of a fractitious Congress.
Nancy Kane is a member of the MedPAC and she publically argues that Medicare payments to hospitals not be cut. She believes that such cost constraints would result in higher out patient costs, an area that is rising far more rapidly than the costs of hospitals.
Interestingly, she argues that a solution is a bundling of payments for hospitals and physicians for episodes of care. There is some validity to her arguments. Though hospital costs are largely opaque to patients and physicians, the latter are responsible for generating them. The most expensive medical instrument is the physician's pen and the illegibility of the product makes an understanding of costs difficult.
It would be interesting to determine who will control the purse strings the physician or the hospital.
Paul Ginsburg a noted health economist argues that cutting hospital costs is necessary. He buttresses his arguments with references to high quality hospitals which have lower costs than those with higher costs and worse outcomes.
As the debate proceeds August will be a warm month in Washington.



July 12, 2009
Op-Ed Contributor
Keep Hospitals Whole
By NANCY KANE

ONE way that the Obama administration proposes to pay for universal coverage is by cutting Medicare payments to hospitals. True, at 35 percent of 2007 Medicare spending, hospitals represent the largest provider group, but they are not necessarily the most rational target for draconian payment cuts. Cutting payments to specific provider types is not the answer. When payments go down in one area, they end up increasing elsewhere. For instance, Medicare has more constraints for inpatient payments than for outpatient, home health care or skilled nursing care.

As a result, per beneficiary inpatient costs grew only 18 percent from 2002 to 2007, while outpatient costs increased 47 percent and skilled nursing and home health costs each rose more than 50 percent. These differences partly reflect the trend of hospitals discharging Medicare patients “quicker and sicker” so that they go from a tightly controlled inpatient payment system to a less constrained one. Another problem is that the more Medicare restricts payments to hospitals, the more hospitals ask of their privately insured patients.
Real, sustainable containment of medical costs will require an approach in which one government agency at the state or federal level sets uniform rates for all payers, public and private. Also, units of payment like doctor visits and lab tests need to be packaged into a single amount that covers all services related to that spell of illness, so that constraints on one part of the system do not create explosive cost growth in another. An all-payer feature would limit the ability of providers to raise private sector rates to make up for public sector constraints on rates. An integrated payment unit across all providers involved with treating an illness or medical condition would also encourage better coordination of care for patients with multiple chronic diseases.

Integrated payment units might start as bundled payments for services by all providers delivered during a hospitalization and a post-acute stay. Such payment units would encourage individual provider types like hospitals, skilled nursing facilities and primary-care doctors to come together in “accountable care organizations” that take responsibility for the cost and quality of all medical services.
The Medicare program’s long-term viability, as well as hopes for universal coverage, rest on our ability to get payment reform right.

Nancy Kane is a professor of management at the Harvard School of Public Health and a commissioner on the Medicare Payment Advisory Commission.



July 12, 2009
Op-Ed Contributor
Cut Medicare With a Scalpel
By PAUL B. GINSBURG

THE deal struck by the Obama administration and the hospital industry to reduce the growth of annual Medicare payment increases by about $100 billion over 10 years deserves scrutiny. In the weeks before the deal, the hospital industry predictably screamed foul at proposals to rein in the growth of those payments, pointing out that 58 percent of hospitals lost money treating Medicare patients in 2007.

But what about the 42 percent of hospitals that didn’t lose money? Is the problem that Medicare is a stingy payer? Or that too many hospitals have grown cavalier about controlling costs and have the market power to demand higher payment rates from private insurers to stay in the black regardless of Medicare rates?
A report in March by the Medicare Payment Advisory Commission makes a good case for the latter, suggesting there is room to trim the fat from Medicare payments without hitting bone in many hospitals.

According to the commission, high payments by private insurers — which exceeded hospitals’ actual costs by 32 percent in 2007 — resulted in overall hospital profit/surplus margins of 6 percent in 2007, the highest since 1997. The commission points to hospital consolidation and consumer and employer pressure on insurers to offer a broad choice of hospitals as tilting the balance of power toward hospitals in price negotiations.

But not all hospitals can increase fees for private insurers, especially not hospitals that treat a relatively large number of Medicaid patients. Not surprisingly, many of these hospitals did a much better job of holding their costs down.

The commission found that nonprofit hospitals facing the least financial pressure, those with high non-Medicare profits, spent more per unit of service. Nonprofit hospitals facing the most financial pressure, those with little income outside Medicare, controlled their costs better.

Worried that financial pressures might lead to lower quality of care, the Medicare commission also examined how hospitals that did a good job of controlling costs compared on measures like mortality rates and readmissions. These hospitals typically had higher quality and lower costs, and will likely be the ones hit hardest by across-the board reductions.
The recent deal between Mr. Obama and the hospital industry can hardly be called “health reform.” What is clear, however, is that hospital market power, left unchecked, will pose a formidable obstacle to the president’s promise to make health care more affordable.

Paul B. Ginburg is the president of the Center for Studying Health System Change, a policy research organization

Its the dollars,dummy

Published June 27, 2009 Stockton REcord
Wealth trumps health for many

It's the dollars, dummy!

A year ago, I found myself at the other end of the stethoscope. As a patient, I personally experienced American health care.

I was fortunate to have access to the best care that one could get, but a pervasive burden as I made my medical journey was my insurance.

It determined which physician or hospital I could seek treatment from and the medications I could get.

The day after surgery, a discharge planner informed me that I had exceeded their approved "length of stay" for the recently performed surgery. I would now be responsible for any costs incurred by continued hospitalization. I willingly signed an agreement of responsibility as an intravenous drip transported me to a pain-free narcotic nirvana.

Health care reform is the current conversation du jour. Discussions about it are passionate, with liberals describing it as a social necessity and conservatives as a socialist conspiracy.

A television talk show host with attractive "experts" recently expounded on the topic; a Google search revealed the "experts" had degrees in art history and law. Cyberblather is driven by interests not really interested in health but in their wealth.

The contentious parties all agree that health care should be available to all Americans. The debate shifts to costs and what interest groups must sacrifice to control them. Every dollar of medical care is a dollar of income for them.

In excess of $2 trillion is consumed by health care, more than all the expenditures of a billion Chinese and twice as much per person as countries with standards of living similar to ours.

Yet we have nearly 50 million uninsured Americans and areas of overutilization where Medicare costs per individual exceed their per-capita income.

Who really pays for this? The answer is, you do.

In the past 30 years, after adjustments for inflation, health insurance premiums have increased 300 percent, corporate profits per worker before taxes 150 percent and 200 percent after taxes, and average hourly earnings for nonagricultural workers have decreased 4 percent as wages stagnate to pay for health care.

The American Medical Association opposes a public option, fearing that physician fees would be subject to Medicare-like price controls.

Forgotten is their opposition to this program, a major source of its members' wealth. Lip service is given to primary care; organized medicine is afraid that pay increases would lead to reduction in prices of overutilized specialist services. Removing a skin blemish is better compensated than treating a gangrenous appendix.

Health plans oppose a public option, citing competitive reasons. Sen. Lindsey Graham, R-S.C., rejects it as putting a "government bureaucrat between a doctor and the patient."

Not mentioned are insurance dictates that result in physician effort which, if compensated, would increase the average physician income nearly $70,000 per year.

This sum translates to nearly $31 billion a year, enough to cover a significant portion of costs of health reform.

Pharmaceutical companies fear change would force them to bid competitively in the public marketplace while they ask Americans to pay multiples more for the same drugs they sell at a discount in controlled health economies.

The losers may be your community hospitals; they operate on margin caring for the poor and uninsured. Their survival depends on the abolition of community tax benefits for their "not for profit" competitors, whose charity is clothed in legal sack cloth and ashes.

The difference between wealth and health is a single letter of the alphabet.

We can measure the former, but not every health care intervention promotes health.

When health care waste is abolished, we will be healthy and wealthy.

It's Now or Never: Healthcare Reform.

It's Now or Never।










There is an increasing acceptance that a bill reforming our current healthcare mess will be signed by the President by October.

However like one on a blind date one hopes this new piece of legislation like the unseen date will be acceptable and attractive.

Nearly a decade ago Hillary Clinton attempted to fashion a similar piece of legislation. Her complex legislative proposal was crafted behind closed doors and its rejection by Harry and Louise

Obama’s approach is different he prods Congress to pass healthcare legislation using surrogates like Peter Orzag and Rahm Emmanuel to make Congress accept ideas he champions as their own.

Central to providing care for the uninsured is a proposal that would create a “public plan” one similar to Medicare with government financial subsidies. This proposal though supported by liberals is opposed by the Republican minority who argue that it would destroy “competition” in the health insurance marketplace. They seek to transfuse their anemic political future with opposition to it. This opposition is also shared by some Democrats who have offered a c.ompromise which will create private health cooperatives. These entities would be operated by local business and community groups with no federal or other subsidies.
The American Medical Association also opposes such a measure . Their opposition may be tempered by remarks and concessions that the President will offer when he addresses this body on June 16^th .

American healthcare when appropriately delivered is the envy of the world. A failing of this system is its costs. These can only be truly appreciated when compared with comparable economies.

The McKinsey Global Institute has done such a comparison.

The findings are dramatic. This country spends more on healthcare than it does on food and our healthcare costs exceed all personal spending in China! Adjusting for our economic advantages we spend more than any of the member nations of the Organization for Economic Cooperation and Development (OECD) our life expectancy and infant mortality statistics are inferior to most of them. If we were able to reduce our costs to levels equivalent to these nations we would have savings of $650 billion on an annualized basis.

Two third of this excess is from outpatient care. While the United States has more successfully shifted healthcare delivery from in hospital care to ambulatory settings any cost savings have been negated by excess utilization. Payments are directed to quantity not quality and the former grows exponentially. High profit margins for outpatient ventures lead to their proliferation and overutilization, both fertilized by lack of price consciousness by patient and low or absent co pays.Inpatient care is shorter in the United States but the savings negated by larger volumes of high cost procedures and greater supply and fixed hospital outlays.

Healthcare administration and insurance is five times more expensive than that of the OECD average with private health plans accounting for $63 billion of the excess (poor argument for the preservation of these plans) and the public payers for $28 billion. Duplication of management, regulatory excess and lack of an adequate information technology support are cost drivers. Less money is spent in this country for long term care and out of pocket expenses are higher explaining some of the inpatient excess. Less than expected outlays are also evident for durable medical equipment where costs are largely not covered by insurance. Personal responsibility for costs tends to slow their growth.

Other observations of the McKinsey Study were that in 2006, 49 % of healthcare expenditures were paid for by public funds, Medicare (20%), other federal programs (14%),state and other public funds (15%). The costs of private health insurance increased as Medicare or other public programs restricted their payments. Industry and individuals already subsidize public healthcare.

A piece of medical policy reporting by a Harvard surgeon writing in The New Yorker entitled the Cost Conundrum has grabbed the attention of the administration where it is now required reading.

Its author Dr. Gawande writes

‘McAllen has another distinction, too: it is one of the most expensive health-care markets in the country. Only Miami—which has much higher labor and living costs—spends more per person on health care. In 2006, Medicare spent fifteen thousand dollars per enrollee here, almost twice the national average. The income per capita is twelve thousand dollars. In other words, Medicare spends three thousand dollars more per person here than the average person earns.’

He found

“Public-health statistics show that cardiovascular-disease rates in the county are actually lower than average, probably because its smoking rates are quite low. Rates of asthma, H.I.V., infant mortality, cancer, and injury are lower, too. El Paso County, eight hundred miles up the border, has essentially the same demographics. Both counties have a population of roughly seven hundred thousand, similar public-health statistics, and similar percentages of non-English speakers, illegal immigrants, and the unemployed. Yet in 2006 Medicare expenditures (our best approximation of over-all spending patterns) in El Paso were $7,504 per enrollee—half as much as in McAllen. An unhealthy population couldn’t possibly be the reason that McAllen’s health-care costs are so high. (Or the reason that America’s are. We may be more obese than any other industrialized nation, but we have among the lowest rates of smoking and alcoholism, and we are in the middle of the range for cardiovascular disease and diabetes.)”

“The place had virtually all the technology that you’d find at Harvard and Stanford and the Mayo Clinic, and, as I walked through that hospital on a dusty road in South Texas, this struck me as a remarkable thing. Rich towns get the new school buildings, fire trucks, and roads, not to mention the better teachers and police officers and civil engineers. Poor towns don’t. But that rule doesn’t hold for health care.”

“Nor does the care given in McAllen stand out for its quality. Medicare ranks hospitals on twenty-five metrics of care. On all but two of these, McAllen’s five largest hospitals performed worse, on average, than El Paso’s. McAllen costs Medicare seven thousand dollars more per person each year than does the average city in America. But not, so far as one can tell, because it’s delivering better health care.”

A search for answers from the area physicians elicited

““Come on,” the general surgeon finally said. “We all know these arguments are bullshit. There is overutilization here, pure and simple.” Doctors, he said, were racking up charges with extra tests, services, and procedures.”

“The primary cause of McAllen’s extreme costs was, very simply, the across-the-board overuse of medicine.”

These observations make it increasingly apparent that the most expensive technological device driving up healthcare costs is the physician’s pen. Peter Orzag the principle architect of healthcare reform testified before Congress in July 2008 putting a wonks imprimatur on Gawande’s literary efforts.
Does increased spending buy quality?

“Rochester, Minnesota, where the Mayo Clinic dominates the scene, has fantastically high levels of technological capability and quality, but its Medicare spending is in the lowest fifteen per cent of the country—$6,688 per enrollee in 2006, which is eight thousand dollars less than the figure for McAllen”

“That’s because nothing in medicine is without risks. Complications can arise from hospital stays, medications, procedures, and tests, and when these things are of marginal value the harm can be greater than the benefits. In recent years, we doctors have markedly increased the number of operations we do, for instance. In 2006, doctors performed at least sixty million surgical procedures, one for every five Americans. No other country does anything like as many operations on its citizens. Are we better off for it? No one knows for sure, but it seems highly unlikely. After all, some hundred thousand people die each year from complications of surgery—far more than die in car crashes.”

“Nearly thirty per cent of Medicare’s costs could be saved without negatively affecting health outcomes if spending in high- and medium-cost areas could be reduced to the level in low-cost areas,” Peter Orszag, the President’s budget director, has stated”

Gawande’s observations have provided a cudgel for doctor bashing

The New York Times in a slanted editorial states

“Doctors largely decide what medical or surgical treatments are needed, whether it will be delivered in a hospital, what tests will be performed, and what drugs will be prescribed or medical devices implanted.”

“When President Obama speaks at the annual meeting of the American Medical Association on Monday he will need all of his persuasive powers to bring doctors into the campaign for health care reform. Doctors have been complicit in driving up health care costs. They need to become part of the solution.”

The editorial failed to make mention of the stake of prominent law makers in healthcare entities though this was reported in the same issue of that publication.
Forgotten also is the sweat equity of physicians burdened by the onerous demands of a for profit insurance industry that is reported in time and equated in unearned revenue .

“Physicians reported spending three hours weekly interacting with plans; nursing and clerical staff spent much larger amounts of time. When time is converted to dollars, we estimate that the national time cost to practices of interactions with plans is at least $23 billion to $31 billion each year”

Aside from the creation of a public plan and cooperatives, how will Obama reform healthcare and afford care to the 47 million uninsured. He is a pragmatist and is aware that this bill will have to demonstrate that it will eventually reduce healthcare costs.

Proposals advanced include an end to the subsidies to Medicare HMOs.

The subsidies are 12% greater than spending on Medicare fee for service enrollees and are estimated to cost $25 billion yearly. This subsidy should be easy to eliminate for legislators calling for a level playing field.
Other proposals include changes in the Medicare Prescription (Part D) program with preferences given to products proven to be most effective in their class

This proposal is vigorously resisted by the pharmaceutical industry.

Another proposal is the use of information technology to reduce cost

“Barack Obama and Joe Biden will invest $10 billion a year over the next five years to move the U.S. health care system to broad adoption of standards-based electronic health information systems, including electronic health records. They will also phase in requirements for full implementation of health IT and commit the necessary federal resources to make it happen. Barack Obama and Joe Biden will ensure that these systems are developed in coordination with providers and frontline workers, including those in rural and underserved areas. Barack Obama and Joe Biden will ensure that patients’ privacy is protected. A study by the Rand Corporation found that if most hospitals and doctors offices adopted electronic health records, up to $77 billion of savings would be realized each year through improvements such as reduced hospital stays, avoidance of duplicative and unnecessary testing, more appropriate drug utilization, and other efficiencies.”

This policies critics argue

“RAND’s vision of "gold in them thar hills" owes more to Merlin than to metallurgy. For believers, we offer the following investment opportunity. We have invented a floppy disc with a screen saver that says "Don’t Smoke." Since 450,000 Americans die each year of smoking, with each life worth $2 million, if we assume 100 percent compliance by eligible participants, such an invention is worth $9 trillion. And since we are willing sell the invention for only $800 billion—less than a tenth of its value—even minimalist assumptions for packaging, distribution, installation, and the like imply a return on investment (ROI) even better than that forecast in the RAND estimates.

The RAND researchers offer an attractive hypothesis; it should be tested first in one hospital (with its surrounding practices) and then in several hospitals. As Woody Allen might say, "At the moment it’s just a notion, but with a bit of backing I think I could turn it into a concept, and then an idea." To mount a national program to do in every hospital what has yet to be done in any hospital might benefit the computer vendors who paid for the RAND research, but it risks failure on a colossal scale.”

Physicians and hospital systems are reluctant to implement these capital intensive investments as any return on investment will not directly benefit them but the biggest beneficiaries financially will be the health plans who have no skin in the game. Yet there are examples where simple electronic medical exchanges are successful, one such effort is described in Western Colorado and new federal funding to support this is detailed. Communities such as ours should visit this idea.
Most recently Obama in an address promises further savings from reduction in costs associated with hospital waste and geographic cost variations. Orzag attempts to explain these savings and Jonathan Skinner the health economist attempts to provide a defense for these reductions but howls from the hospital industry (justified) and barbs from the editorial page of the Wall Street Journal criticize the findings that justify these cuts.
For these to be successful a new relationship between hospital administrations and their medical staffs will need to be crafted. This will depend on a shared responsibility for care and profit. Reform is inevitable a visit to an emergency waiting room is adequate proof of its urgency and the cries of anguish from those beyond the pale of the current system proof of its necessity