Managed Care

 

A Conversation with Steffie J. Woolhandler, MD, MPH: Despite the Reform Law, Don’t Write Off Single Payer

MANAGED CARE April 2010. © MediMedia USA
Q&A

A Conversation with Steffie J. Woolhandler, MD, MPH: Despite the Reform Law, Don’t Write Off Single Payer

A longtime advocate is still betting on a single payer system because, she says, the new reform law won’t come near to doing what’s needed

All of the talk about health care reform has been a little like debating whether to “give a cancer patient Tylenol or aspirin when the person needs a surgeon,” says Steffie J. Woolhandler, MD, MPH, a Harvard Medical School professor and a founder of Physicians for a National Health Program. “It might relieve the pain, but it is not solving the problem,” she says. Woolhandler has advocated for years that a Medicare-for-all health care system is the only way to insure every American. “Every other developed nation has used not-for-profit national health insurance as a mechanism to get to universal coverage, and that is what is needed in the United States,” she says. A native of Shreveport, La., Woolhandler has taught at Harvard since 1987, where she is now a professor of medicine. She earned her bachelor’s degree at Stanford University and her medical degree at Louisiana State University School of Medicine. She completed her training at at the University of California–San Francisco and at Harvard, and earned her master’s degree in public health at the University of California–Berkeley. She also pursued a residency and completed a fellowship in national health services research and general internal medicine at the Cambridge Hospital. She has published widely and is the author of dozens of peer-reviewed articles in the medical literature. She spoke recently with MANAGED CARE Editor John Marcille.

MANAGED CARE: Did you and other advocates of a single payer system attempt to be heard in the health care reform debate?

STEFFIE WOOLHANDLER, MD, MPH: If you think about this round of debate as having a left, right, and center, with the left being single payer, President Obama being the center, and the opponents of any change being on the right, the insurance industry stepped in with hundreds of millions of dollars and was able to amplify the voices of the center and the right and to nearly drown out the left. Nevertheless, if you ask the American people if they support the idea of Medicare for all, using those words instead of “single payer,” that still polls extremely well.

MC: Does talking about coverage for all benefit your efforts?

WOOLHANDLER: Absolutely. The only way to get to a single payer program is to have a vigorous national debate, so anything that furthers that debate is helpful for us. Physicians for a National Health Program has 17,000 members, and our largest growth came this year. We got a similar surge during the Clinton reform discussions. When reform is on the front burner, we get a lot more membership growth than in the years in between.

MC: How has political support of the idea changed over time?

WOOLHANDLER: At various times we have had between 80 and 125 cosponsors for single payer legislation in the House of Representatives. Politicians come and go, but as a doctor, I can’t come and go. My job is to take care of patients, and I can tell you as a doctor, as a policy expert, the only affordable way to cover all Americans is through a single payer health care system.

MC: Would you say that a single payer system is inevitable?

WOOLHANDLER: I never use the word inevitable. What I will say is that no other reform will actually control costs and get us to universal coverage. What is inevitable is that the problem will remain until we have a single payer system in place.

MC: Is there any chance of seeing it in the next 10 years?

WOOLHANDLER: Yes. Even with the reform package, all of the same problems will remain in the health care system. There will be tens of millions of Americans with no insurance — 23 million according to the Congressional Budget Office’s analysis of the Senate bill — and tens of millions more who are underinsured and who face the risk of medical bankruptcy if they get a serious illness. The costs are going to continue to climb, making health care unaffordable for American families and unaffordable for the American economy. Those problems are going to remain, and it is those problems that are pushing the American society toward not-for-profit national health insurance.

MC: Is the concern of Physicians for a National Health Program more for the effects on patients and society or for the effects of physicians and the system?

WOOLHANDLER: Our goal is universal health care, and while we think that physicians’ work lives will be better under national health insurance, we don’t think physicians as a group will be particularly better or worse off financially. So the national health program we are advocating for doesn’t have important financial implications for physicians. The group’s purpose is really about patients.

MC: Let’s say that in a few years, things get pretty bad, the economy is still in the tank, we haven’t controlled health care costs, and single payer is enacted. What happens to insurance companies under such a program?

WOOLHANDLER: In the proposal that we have put forward, not-for-profit HMOs that provide health care services, such as the Kaiser Permanente system, would be allowed.

MC: What happens to Aetna, Cigna and other insurers?

WOOLHANDLER: The people who work at insurance companies would be protected by a conversion program. Several years ago we worked with the Labor Institute in New York to figure out how much it would cost to give people in the health insurance industry income support, retraining, and job placement services. We came up with a figure in the $20 billion to $40 billion range, which would be a one-time expenditure. In health care dollars, that’s peanuts. Even twice that amount for a one-time expenditure to transition insurance workers into other jobs is peanuts. The problem, of course, isn’t the people who work on the ground in the insurance industry. The biggest problem is actually the CEOs who get vast incomes based on the profitability of firms. It would be very difficult to find jobs for people who expect $10 million or $25 million or $50 million in compensation. We would not be able to support that out of any type of conversion plan.

MC: What about the shareholders?

WOOLHANDLER: They would be out of luck. There is not really a role for profit making in health care.

MC: But aren’t the shares of these companies spread out over a lot of mutual funds that would be concerned about their income, which would have some political effect?

WOOLHANDLER: As discussions began about implementing a single payer system, the shares would begin to drift down in value, and people would lose money. It is conceivable that the federal government would decide that they had to compensate shareholders. They are certainly not obligated to do so, but that might end up happening in the political struggle that would go on to get to single payer. The government could bail out insurance company shareholders. They bailed out the banks. They bailed out the savings and loans.

MC: What about job skills? Would medical directors, for example, find a place in the single payer system’s administration?

WOOLHANDLER: The national system would have to hire people. However, the administrative costs in the traditional part of Medicare are only 2.5 percent, where the administrative costs in private managed care plans are at least four or five times that. That implies that there are fewer administrators in Medicare. Some displaced insurance administrators would find roles in the national plan. At my hospital here at Harvard, we have a lot of people working on creating a more integrated system. In Massachusetts, there is also a lot of interest in creating accountable care organizations. If that idea spreads and becomes part of the medical landscape, there would be a demand for administrators, and new jobs, within those systems.

MC: Do you see any scenario in which health plans could support a move to single payer?

WOOLHANDLER: It would be an about-face for the insurance industry. It is quite possible that the bulk of people who work in the insurance industry might embrace the idea of not-for-profit national health insurance, might envision a role for themselves in that system. However, the leadership of the health insurance industry will remain opposed to single payer.

MC: What would you say is the biggest lie that is told about single payer?

WOOLHANDLER: The biggest lie is that it is unaffordable. Countries with single payer systems cover everyone for less than what we spend. Canada’s health care costs are at least 40 percent lower than health care costs in the United States. Canadians are no different from Americans; they just have a system that is much simpler to administer than the health insurance system and hospital system in the United States. In Canada, everybody’s automatically enrolled. Everybody’s automatically covered until the day they die. The hospitals are budgeted globally. That is, they negotiate their entire budget with the province and then the province deposits one-twelfth of the budget in the hospital’s bank account every month. Total administrative costs, including insurance, hospitals, doctors, et cetera, are about 16.7 percent of total health care spending in Canada, where total administrative costs in the U.S. are about 31 percent. That difference is nearly $400 billion annually, money that would allow a single payer system to cover all of the uninsured and also plug the gaps for many who now have only partial coverage. A single payer system would not break the bank. In fact, it is the only way to affordably cover all Americans.

MC: Has there been any work done on how such a conversion would affect the international competitiveness of American industry?

WOOLHANDLER: I haven’t seen a study on it, but I can tell you that as the U.S. auto industry has been collapsing, companies have been investing millions of dollars in automotive plants in Canada. And whereas Canadian and U.S. workers have similar take-home pay, the benefit costs of labor in Canada are dramatically lower than in the United States.

MC: What would the effect of the single payer system be on small employers?

WOOLHANDLER: Single payer is actually a system for paying for health care delivery. You have all the money in one pot and then you can simplify the way you pay for delivery. Getting money into that one pot can be done in a variety of ways. You could have a single payer system that was funded entirely with payroll taxes. You could finance completely out of income taxes. The actual tax structure that you would use to finance single payer is a separate issue from how the single payer system would work. I’m not an expert in tax policy, but I know we don’t want to discourage job creation and small business. At the same time, everybody will need to pay a fair share.

MC: With insurers gone, would we lose the benefits of their efforts to standardize care or dampen overutilization?

WOOLHANDLER: Overutilization is a serious problem, both in terms of costs and in terms of quality, but the insurance industry has not done much of a job of reining it in. Some areas of the United States have health care costs that are twice as high as other areas. Things might even be worse without the insurance industry, but that is a theoretical argument that no one can support or dispute.

MC: But we’d be going back to a fee-for-service system?

WOOLHANDLER: A single payer system would allow three models: a fee-for-service system, but with the kinds of controls on physician fees and the utilization of high-tech equipment that they have in Canada; not-for-profit HMOs within integrated systems that deliver care; and salaried practice, which is the way most university professors are paid.

MC: Would this be the end of solo and dual practices?

WOOLHANDLER: Not necessarily. You don’t want isolated solo practices, but small practices that share information systems and referral networks with more integrated systems, that might be OK. What you don’t want is some doctor out there on his own who is not actually part of a group of doctors trying to improve care.

MC: But physicians would be paid differently, based on what kind of practice they have?

WOOLHANDLER: Yes, but there is no good way to pay doctors. Fee-for-service encourages physicians to do too much, capitated practice encourages physicians to do too little, and salaried practice encourages doctors to just show up. It feels good to be a good doctor, but money and payment get in the way of that basic human motivation to do a good job. Over and over I hear doctors express frustration that if they really did the best possible job, it would very much reduce what they earn. They are very frustrated about it, but that’s a reality in the way doctors are paid.

MC: Many groups are working on payment reform today. Could those efforts affect your proposal for a single payer system?

WOOLHANDLER: We haven’t done a lot of writing or analysis on pay for performance or accountable care organizations, but in general, we’re not enthusiastic about using financial incentives to change doctors’ behavior. You need to make sure doctors are fairly paid and then use academic, collegial, and peer-reviewed educational methods to get doctors to change behavior. Most doctors are motivated to do a good job, and we need to strengthen that part of their motivation.

MC: Physician compensation in Western Europe is significantly below what it is in the U.S. Are they unfairly compensated?

WOOLHANDLER: I’m less familiar with the details in Europe. In Canada, compensation is different. Primary care doctors there are paid about as much as they are in the U.S., and specialists are paid 50 or 75 percent more. In the U.S., some specialists, like oncologists, earn three times what other specialists, like geriatricians earn, although oncologists and geriatricians have similar training. If pay is so uneven, the resources will flow into oncology care and away from geriatrics. That is a problem. We obviously need oncology care, but things are out of balance in our health care system, with way too many resources going for expensive specialized care and far too little of the resources going toward the coordination and day-to-day management of patient care.

MC: With a basic level of service covered in a single payer system, does a role exist for private insurers to offer buy-up health plans?

WOOLHANDLER: I think the national health program has to cover everything. If it doesn’t, people with low or moderate incomes and lots of health care needs wouldn’t be able to afford the care that is not covered. The national health plan should cover all medically necessary care.

MC: So medical care that is deemed unnecessary would be paid for out of pocket?

WOOLHANDLER: Medical care that isn’t necessary shouldn’t be given. I have seen doctors use cardiac scans as a routine screening tool. A cardiac scan, equivalent to 600 chest X-rays, is only needed if you have a very strong suspicion of heart disease and a plan to do something if you discover heart disease. Radiologic screening tests or unnecessary surgeries should not be performed on people who don’t need them, whether they are willing to pay for them or not.

MC: There would be a panel that determines that?

WOOLHANDLER: Medicare has a panel that makes those decisions. They have taken the view that if it is effective, they will pay for it, and they have not put cost-effectiveness analysis in place. Canada has something similar that makes their coverage decisions. Sometimes the decisions are right. Occasionally they are wrong and have to be changed.

MC: But cost-effectiveness would have to be considered by a national health care system.

WOOLHANDLER: Every day in my practice, I see tests and procedures that were unnecessary and either added nothing or were harmful to the patient. First we have to get rid of that. Then we’ll see if we still need to cut back on what we spend.

MC: The government will buy all of the pharmaceuticals that people need?

WOOLHANDLER: Yes, it should. We’ve seen that our own Department of Defense, which is the largest purchaser of pharmaceuticals in the United States, is able to get the same drugs that the rest of us get at a 40 percent discount. So by giving all of the American people the purchasing power of the Department of Defense, we could save a tremendous amount on the price of pharmaceuticals.

MC: Would there be a downside in research and development?

WOOLHANDLER: Were there a downside in reduced R&D, that’s fairly easy to manage by increasing funding to the National Institutes of Health. The NIH is already responsible for about half of all R&D in this country, with private companies picking up the other half. So if you are worried there is not enough R&D, the most efficient way to get money in is to give it to the NIH. Paying twice as much for pharmaceuticals, hoping that some of it will trickle down to R&D, is a very inefficient way to encourage R&D.

MC: What have you learned from your research on medical bankruptcies, and how has that influenced your thinking about national health insurance?

WOOLHANDLER: We’ve done national surveys of nearly 4,000 families in bankruptcy courts and found that medical illness or medical bills contributed to the bankruptcies in more than half of the cases. In 2007, medical illness and medical bills contributed to 62 percent of all bankruptcies. The most surprising finding has been that the majority of people in medical bankruptcy had health insurance at the onset of the illness that bankrupted them. Sometimes they would have health insurance through a private employer. They would get sick or have to take time off to care for a sick family member, and lose their insurance. More commonly, though, people managed to hold on to their insurance throughout the illness but were bankrupted anyway by gaps in their coverage like copayments, deductibles, and uncovered services. To protect families from bankruptcy, coverage has to be comprehensive — it would have to cover everything — and continuous, that is, it could not be cancelled. That heavily influences our thinking. We are obviously most concerned about the 47 million uninsured Americans, but we also need to be concerned about folks who have insurance but who have so many gaps in their coverage that they would face bankruptcy in the event of a prolonged, extensive illness.

MC: So medical bankruptcies would be eliminated or minimized under a single payer system?

WOOLHANDLER: They would be minimized. Data from Canada suggest well under 15 percent of bankruptcies there are related to medical illness.

MC: What is the largest area of debate within Physicians for a National Health Program?

WOOLHANDLER: Some of our members believe we should make a comprehensive plan available to everyone but also allow people to purchase private coverage that duplicates the public insurance. As a group we’ve taken a position against that, but there are people who believe that.

MC: Thank you for speaking with us. In many ways, you were in the lion’s den here, as many of our readers work at health plans.

WOOLHANDLER: You’re welcome. You might be surprised at how many people I have convinced.

“The biggest lie is that it is unaffordable. Countries with single payer systems cover everyone for less than what we spend.”

“While we think that physicians’ work lives will be better under national health insurance, we don’t think physicians as a group will be particularly better or worse off financially.”

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