The great health policy debate of 2010 - theoretical political debate on the status of health care in the future

Senator Kennedy: Ladies and gentlemen, I stand here tonight watching the greatest health care system in the world teetering on the brink of disaster. In the 15 years since the failure of the Clinton reform proposal and the subsequent decimation of Medicaid and Medicare by the Republican Congress, 1,500 of our great hospitals have closed; virtually every urban public hospital that survives (and, as you know, 30 percent of them have been closed or "privatized" since 1995) is turning away desperately sick and injured people because of a lack of resources; and the sudden recent collapse of Columbia/HCA/Tenet/Wellpoint/United-U.S.-Oxford Healthcare has left tens of millions of Americans with neither coverage nor access to local health services.

In addition, 100,000 physicians and 300,000 nurses are unemployed or underemployed; many unemployed physicians are offering dubious services to the uninsured at cut-rate prices, with no guarantee of quality. The American Nurses, Association continues to point out the basic insanity of nurses going without work while children die for lack of care.

Furthermore, the insurance situation is desperate. Despite the passage by most states and, subsequently, the federal government of legislation prohibiting insurer, HMO, and health system discrimination against most persons with preexisting conditions, the exclusion of persons with HIV disease from that legislation means that 2 million Americans with this condition are uninsured, except in those states that still maintain a Medicaid program--if that program covers HIV-related illness.

Also, 75 million self-employed Americans were excluded from protection against coverage discrimination, and 15 million of them are uninsured as a result (most because they cannot afford the $1,500 fee for the two-day comprehensive physical and genetic examination needed to be approved for coverage). Add to these numbers the 10 million women and children who lost their welfare and Medicaid benefits through state actions in 1996-99, and it is easy to see why between 90 and 100 million Americans are uninsured. With most insured people enrolled in closed-panel health plan arrangements that do not provide or pay for indigent care, public-sector providers are swamped, and preventive health services are a fiasco, as the recent national polio epidemic so tragically illustrated.

Even those who do have theoretical coverage do not always have access. Indeed, one of the forces fueling continued increases in utilization of public-sector services and independent physician and nursing practices is inappropriate constraints on access imposed by many HMOs and integrated delivery systems.

The inability to get care when they need it is driving millions of Americans--not just the poor, but people of all income levels and circumstances--to public hospital emergency departments and clinics for even basic health services. This has caused a rethinking of the belief that the private sector can handle all health care responsibilities--a belief that pervaded our thinking in the first decade of this century. Indeed, states and localities are now increasing their subsidies of public hospitals, clinics, and systems, and at least three cities--New York City, Los Angeles, and Tampa--are seriously considering reopening the public hospitals they closed in the late 1990s.

And the scandals continue. To date, 10 states, including California, Florida, and Illinois, have failed to honor their promises regarding administration of federal Medicaid funds (and Medicare funds, where waivers were granted to allow states to administer that program, as well). Several simply spent the money on other purposes; their Medicaid programs ceased to exist. The involvement of organized crime in one Illinois Medicaid HMO, which was serving as a money-laundering operation, was especially troubling, given the large number of polio deaths recorded among the children in that plan who were never immunized. And. of course, how could we possibly excuse the secret contract between the HealthTrap HMO in Florida and the Kevorkian Institute that encouraged physician-assisted suicides among chronically ill Medicare beneficiaries--and gave the Institute a "donation" for every suicide?

And the profiteers continue to ply their trade; recent data from California show that the average for-profit HMO in that state spends 50 percent of premiums on marketing, administrative costs, dividends, and executive compensation. Meanwhile, the recent conviction of the president of HealthTrap for the plan, s evasion of $6 billion in taxes did nothing to help the cause of managed care--especially when, in his statement to the press after his conviction. he claimed that "only little HMOs pay taxes."

The situation is clear; we are in a crisis. During the election campaign of 2008, access to health care was named by more voters as their top concern than any other problem, even more than the environment--which is surprising, given the pollution of most of the Pacific Coast as a result of wildcat oil drillers accidentally blowing up the Alaska Pipeline.

The market has failed. Entrusting the states with health care regulation and policymaking has failed. Handing most health care responsibilities to the private sector has failed. We have a new, leaner, more efficient federal government that can, and must, step in. This time it will succeed.

Senator Bush: My esteemed colleague is giving us an illustration of the classic question of whether the glass is half full or half empty. Even if it is half empty, however, the solution proposed by S.B. I--nothing short of a federal takeover of American health care--is hardly the answer.

In the first place, he fails to mention what the market has accomplished in this country. Yes, 1,500 hospitals have closed; but hospital occupancy in this country was running at 50 percent in most urban markets by 1995, and much lower in rural areas. We needed to close hospitals, and because the hospital sector refused to make any moves in terms of planned closures, the market did its work. And it did that work well; most of the facilities that closed were unneeded. Had it not been for the untimely failure of Columbia/HCA/Tenet/Well point/-United-U.S.-Oxford Healthcare, almost all areas of this country would have health services available within a reasonable distance. And for insured patients in isolated areas, there are computer-assisted health care, home health service, and local health aide programs, usually with transportation available to more sophisticated services if needed.

The Columbia failure was simply the result of the system overextending itself by purchasing the entire U.S. Postal Service, coupled with the departure and exercising of stock options by too many of the firm's executives within a short period. Several suitors are seeking to buy the assets of the organization, and it will rise again; even as we speak, the Mayo Health Care System, which was almost as large as Columbia at the time of the collapse, is said to be close to a purchase agreement.

My colleague also fails to recognize just how successfully the health care field has converted from a fragmented, disorganized, ping-pong collection of independent entities to a group of organized, well-run, competitive integrated systems that operate smoothly under capitation and provide a continuum of care for most patients with coverage. In fact, the rise of these systems has, in many cases, eliminated the insurance middleman; had the Blue Cross and Blue Shield plans not merged with hospitals and group practices in the late 1990s and early 2000s, they might have ceased to exist altogether. That is, after all, what happened to most commercial indemnity insurance companies, save those that offer boutique extrasupplemental policies to augment the secondary supplemental policies that are commonly purchased to fill in the gaps left by managed care plans and the primary supplemental policies those plans offer.

Certainly the Senator cannot complain about the emergence, especially in the Midwest and Northeast, of organized, integrated systems that accept capitation directly from public and private payers, without an insurer or IPA taking 20 percent off the top! Certainly the Senator welcomes the fact that most American physicians are now salaried employees of group practices or integrated systems, free of the perverse incentives that led to unnecessary services or undertreatment during the 1990s and early 2000s! Can the Senator complain about the seamless continuum of care now available to 150 million Americans, with everything from childhood immunization to hospice care offered by the same organization?

There is a crisis in the public sector, to be sure, but much of it is the public sector's fault. When so much health care money and policy responsibility was passed to the states in 1996-98, many state governments were ill-prepared; as a result, many sought to privatize services, and others just passed the bills on to localities and not-for-profit hospitals and other providers. I concede that this has caused tremendous pressure on public hospitals, clinics, and systems, as well as those few not-for-profit providers that still offer indigent care.

But public sector providers could have formed systems that would use the public dollar more efficiently, and they did not; they could have challenged the medical school contracts that often were draining them dry, and they did not; they could have reformed antiquated governance structures, political interference, and cushy union contracts, and they did not. They are overwhelmed today, where they still exist, but they must look to themselves, and to their state governments, for help. Saving them is not the federal government's business.

Speaking of state government, my colleague concentrates only on those instances where the transfer of Medicaid and other federal programs to the states has failed. It is true that the absence of substantive federal oversight has led to some state abuses, and I agree that this is an area that we should take a look at.

But in many states, the transfer of power has worked. In Minnesota, which has long been a bellwether state in health policy, every single health care provider is part of a larger system, and virtually everyone in the state has at least basic coverage through membership in one of those systems, with even the poorest of the poor and the sickest of the sick subsidized by the state or federal Medicaid funds. The inclusion of long-term care in this system serves as a national model.

The public-private partnership that led to, essentially, a two-state integrated, capitated system involving hospitals and group practices in both Vermont and New Hampshire gives us the promise of a rural model for managed care that could well sweep the nation. And, I might add, Vermont's level of medical indigence is quite low, as most employers and other payers in the state have agreed to pay the system an extra I percent of premiums to subsidize those who have fallen through the cracks. New Hampshire, sadly, has refused to follow suit.

As for California, well, things are not as bad as my colleague would have you think. Owing to the efficiencies of the market, employers, health care costs have decreased in 12 of the previous 15 years, allowing many firms to continue to provide coverage to their workers. Furthermore, California has been an incubator for marvelous new forms of health services delivery, from the merger of the two Kaiser Permanente regions, allowing statewide access to a single plan and delivery system no matter where in the state one lives, to the innovative alliance among the Catholic, children's, and public hospitals in the state.

It is true that almost all persons with HIV disease, legal and undocumented immigrants, farmworkers, former Medi-Cal beneficiaries, and unemployed physicians lack coverage, and that as a result 40 percent of the population of the state is uninsured, but the initiative on the California ballot this fall, Proposition 1536, calls for state subsidy of coverage for many of these people, and it is expected to pass overwhelmingly. After all, it has been endorsed by recent Nobel laureate Ralph Nader. That should, one hopes, lead to an end of the unfortunate practice of sick people in public hospital emergency departments being chosen for care by the casting of lots.

In terms of insurance, it is unfair to condemn managed care because of the excesses of a few organizations such as HealthTrap. Capitation, in becoming the predominant form of health care payment, has reduced unnecessary care and has led to a more objective basis for the making of clinical decisions. The outcomes movement, coupled with sophisticated quality control systems, has unquestionably improved the quality of care provided to members of managed care plans and systems--and efforts continue to assess overall community health status and levels of access, although progress is slow. Managed care has proved its worth, in terms of preventive care, organization of care, protection of physicians from inappropriate incentives, continuum of care, and appropriateness of care. The fact that the field has a few bad actors is a regulatory problem, not a structural one.

In fact, several of us in the Congress, to prove our good faith, are considering joining managed care plans; as you know, we remain the only employee group in the United States automatically entitled to first-dollar indemnity coverage with free choice of providers. But that doesn't mean that we are not supportive of managed care 1,000 percent.

As for my colleague's complaints about coverage discrimination, it is simply a fact of health care economics. As competition for enrollees and contracts mounted and premiums leveled out or dropped, no managed care plan or system wanted sick, expensive patients; they therefore sought to avoid enrolling them. It was an industrywide decision to target certain costly patients who could be excluded without political backlash. Those with HIV disease, who were made official legal outcasts by the HIV Exclusion Act of 1996 (sponsored by Sen. Jesse Helms), and the self-employed, who have never had a lobby to speak of, were the easiest candidates.

In short, then, the market has not failed; it has streamlined and improved the system. The states have not failed; some have not been quite up to the task, but they can learn. And this country has not failed, although we really should do something about the 90 million uninsured Americans. Besides, if the American people cared about the uninsured, they would demand action. Perhaps they do not really believe that health care is a right; perhaps, in the end, they think it is a privilege--especially if they have to subsidize other people's care. As far as I,m concerned, the continued growth in the number of uninsured simply reflects the will of the people.

Former Senator Kassebaum: I want to start by saying that I am gravely concerned about the degree to which even the most basic health care issues become political footballs in this country. Most other nations do not consider health policy to be an ideological question, but rather a logistical one: How do you keep your people as healthy as possible as much of the time as possible for as reasonable a cost as possible? In the United States, we have never agreed on principles governing universal access, the appropriate role of the public and private sectors, or how coverage should be configured. As a result, we continue to debate issues that should have been settled long ago.

As you know, the Commission has been meeting regularly to examine the plight of American health care and the key issues hat are central to its survival. We have identified six such issues and believe they must be addressed immediately. Because of the partisan nature of the health care debate, however, we cannot offer specific solutions, as they would be denounced by both traditional political parties, largely because neither party is willing to compromise or learn from the other. We therefore offer the following brief list of issues, along with a fervent hope that we can replace rhetoric with action before it is too late:

* First, restructuring of the health care system has proceeded quickly and, in our opinion, largely successfully. Changes in payment, delivery system organization, and incentives seem, to date, to have improved the availability and quality of health care for those who have access to the system.

* Second, the fact that 90 to 100 million Americans have no coverage, and millions more are mired in health plans that do not afford them appropriate access, is a national scandal. If we are to continue to have a health care system at all, coverage must be provided to these people, or calamity is certain. The fact that the health care system--and the nation itself, for that matter--has not completely collapsed under the burden of the uninsured and declining national health status is a tribute to the stamina and commitment of our health care providers, but they cannot hold out forever. Denial of coverage for any reason, whether clinical, social, or economic, must end.

* Third, the only way to achieve universal access and coverage is for this country to bite the bullet and limit increases in health care spending--not simply by cutting public programs, which we did in the 1990s with little to show for it, but by putting the entire country on a health care diet.

That means not only patients, but also providers, policymakers, consultants, health plans, and everyone and everything else in health care. To date, all we have done is redistribute an ever-growing pot of money among those lined up at the health care trough--and the only people who ever seem to lose are patients and those who would be patients if they had access.

* Fourth, there is a role for the federal government in health care regulation, and there is a role for the states. Those roles should be defined, with the understanding that there is a gray zone between them that both will claim from time to time and that both will abandon from time to time. To abrogate one's responsibility by simply shifting duties from one side to the other with no requirement that oversight be exercised or protections guaranteed is both unproductive and inexcusable.

* Fifth, there must be some accountability on the part of all who are involved. The trend of the past 20 years toward providers, being responsible for only a narrowly defined patient population, or for one segment of care, or for a short period has limited the ability of patients to have access to a true continuum of care. The trend of the past 20 years of patients, demanding that the health care system be perfect, infallible, and unerringly responsive has led, among other things, to a malpractice mess so distorted and distasteful that one despairs of its accomplishing anything, let alone the patient protection that is supposed to be its responsibility. And the trend of the past 20 years of government on all levels viewing what should be a glad responsibility--ensuring access to good health care for all who live here--as an intolerable burden has only further poisoned what was already an inordinately sour public policy debate. When the stakes are this high, the degree of accountability should be high as well.

* Sixth and finally, there is a moral dimension to the debate that has not been voiced, and the Commission wishes to do so here. We in health policy have reduced the profoundly human issues of access to health care, accountability, responsible husbanding of public funds, and the integrity of the patient-provider relationship to a series of partisan fights over money. The fact is that when people are sick, or injured, or frightened about sickness and injury in themselves or others, or when people are dying or afraid of dying, their experience is not an economic transaction; it is a deeply, irrevocably human event. All the values we treasure in this democracy--trust, fairness, equality of opportunity, justice, and honor--are involved every time a human being seeks succor from another.

Health care cannot be defined solely as an investment opportunity, or a source of employment, or a political issue; it lies at the very root of who we think we are as a people. Because of this, health policy deserves far more respect, and far more serious consideration, than we have given it.

Moderator (thinking his microphone is turned off): That was truly eloquent, Ms. Kassebaum, but aren't those the issues they were debating in the mid-1990s?

Former Senator Kassebaum: They most certainly were.

Moderator (to the audience): This has been a debate on the Health Care System Salvage and Coverage Overhaul Act of 20010 (Senate Bill 1). We'd like to thank the participants in the debate and would like to invite you to stay tuned for "E.R.," the ongoing story of a public hospital emergency room, the most popular show on television, now in its 17th season.

Emily Friedman is a Chicago-based health policy and ethics analyst and an adjunct assistant professor at the Boston University School of Public Health. The author would like to state that this is a fable. "The views attributed to the three debaters come from a general knowledge of their beliefs and, in some cases, their legislative records. I make no claim as to their specific beliefs. Besides, 15 years from now, who knows what any of us will believe?" Mrs. Friedman may be reached at 851 W. Gunnison, Unit G, Chicago, Ill. 60640, 312/784-5050, FAX 312/784-5224.

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