DISCUSSION OF UHC/SP ACTIVISTS TALKING WITH BUSINESS ABOUT FUNDAMENTAL CHANGE IN OUR HEALTH CARE SYSTEM

On Jan 4 a message to this list-serve was sent from Michael Lyon RE: Deb Richter’s Presentation at the PNHP national meeting on "How to Talk to Business About Health Care Reform". So far Dr. Richter has not written a response (she is extremely busy with good work and probably will be writing something). In the meantime I received a commentary from Terry Doran who works with Deb in the context of "Vermont Health Care for All" ( ).

Dennis Lazof has edited Mr. Doran’s original commentary since it was written in fragments throughout the whole summary from Mr. Lyon of Dr. Richter’s presentation (was not very readable). We note that the bulk of Deb’s original presentation has been supported by all correspondents. Mr. Lazof, director of Project EINO (www.EverybodyInNobodyOut.org ) has been an occasional collaborator with Deb Richter for several years and was present for the presentation in San Francisco. DR= Deb Richter, ML= Michael Lyon, TD= Terry Doran, DL= Dennis Lazof

MICHAEL LYON'S LETTER TO SPIRIT OF 1848 DISCUSSION GROUP, JAN 4, 2004

"How to Talk to Business about Health Care Reform"

The November 15 2003 Physicians for a National Health Program convention in San Francisco featured a talk "How to Talk to Business about Health Care Reform" by Deb Richter, MD.  Dr Richter has spent the last two years speaking to small business in Vermont, making many of her contacts through Rotary Clubs.

Her overall point: "The business community is a potential influential and powerful ally in health care reform. They are rapidly recognizing they are losing out in the health care financing mess."

I disagree with this conclusion, but she makes valid and very interesting assumptions that we must consider.  On one hand, they are very inspiring; but on the other hand, they menacingly suggest a scenario of how severe healthcare rationing could take place.

Dr. Richter's points cover three main themes:  (All quotes are from notes distributed for the talk.)

First:  The only effective way to reduce health costs is to reduce the health infrastructure:

  *  "Most of the costs of services are fixed costs (buildings, supplies, staffing that you have to pay for whether they are used or not."  (She estimates 70% of the health dollar is infrastructure.)

  *  "Cost containment measures leveled at individual usage, therefore, are ineffective because most costs are fixed."  "Trying to lower cost by limiting individual usage is like buying a car and trying to lessen the cost of it by using it less."

  *  "Cost containment is most effective BEFORE the investment in services is made, not after.  Rising costs have everything to do with the amount of infrastructure you have in place."

  *  "With all this in mind, it becomes obvious why the most effective way to contain costs is to "right-size" the infrastructure to meet the needs of the population."

Second: The distribution of healthcare must be unequal, because our needs are unequal.  Yet all of us are in the high-need group for at least part of our lives.

  *  "At any one time, most of the health care dollar is spent on 10% of the population."  (75% of Vermonters spend less than $600 per year on healthcare, but 10% spend more than $35,000.)

  *  "Most of the population (80%) uses very little care, so cost containment measures aimed at limiting utilization are not only inefficient, but ineffective."

Third:  Patients, healthworkers, and business must decide together how much care we want:

   *  "All of us will be in the group that consumes 70% of the care at one or many points in our lives."

   *  "Ultimately the only thing we have in common is that we all want health care. That is where you should start.  Another common thread is we all agree health care costs too damn much."

*  "To have high quality services available requires a certain volume of patients getting that care per year.  In other words, the people getting care now are keeping the bed warm for you.  Paying for the healthcare of the sick ensures that the hospital and other health care services will be there for you. "

  *  "Since the most effective way to contain costs is to tailor the size of the infrastructure to the needs of the population, those making the decisions about the cuts might have to go without certain services if they cut too far.  This increases the chances of keeping a needed service in place."

  *  "A decision to invest in services needs to be made by all of us in a public process.  We need to fully understand that when we need to make an investment, we also have to pay for that investment. "

  *  "We as a society have to decide what health care services we all want, how much we want it and how much we are willing to pay."

What conclusions can we draw from these statements?

1.) First, PNHP gives us an amazing and inspiring vision:  the vision of society as a family that collectively and consciously makes the commitment that its very young, very old, and very sick members will be supported by its healthy and productive members. You don't often seen this. This is really what the PNHP's principle of "Everybody in! Nobody out!" is all about.

2.)  The article is convincing in saying infrastructure reduction is the only effective way to reduce healthcare costs.  A corollary of this statement is that government would need to drive this process, because only the government has the power to restrain investment in healthcare infrastructure, which the hospital-insurer sector of the economy wants as a source of profits.  (Examples of this in the past were the Certificates of Need required for capital investment in health during the 1970s, and the 1995 UCSF Pew Health Policy Report recommending closing half of US hospital and hospital beds, closing 20% of medical schools, nursing programs etc.)

3.)  The article is convincing in saying that deep reductions in the health infrastructure could be made without badly hurting the majority of the population that is in relatively good health, but where the elderly, the sick, the frail, and the disabled would simply go without care. As we have seen,  Dr. Richter is clearly NOT advocating this, yet she shows that the possibility of doing this exists.

(Some past examples where this WAS advocated were:  Colorado Governor Richard: Lamm's speeches saying the elderly have the duty to die to free up scarce resources (SF Chronicle, 3-29-84), and  the 1983 Journal of the American Medical Association articles "Health Care Technology and the Inevitability of Resource Allocation and Rationing Decisions" which said:  "The longer people live, the greater the likelihood that they will exhibit chronic disease, have subsequent disability, make use of new and expensive medical technology, and ultimately fall into the category of high-cost users of medical care. ... Only when society is fully able to come to grips with death and dying is it likely that policies and  procedures for decisions not to treat will not only will be formulated, but will also be followed. This period is likely to be hastened as financial constraints force the issue.")

4.)  If these two assumptions are correct,  (infrastructure reduction is the only effective way to control health costs, and there could be deep reductions in infrastructure that would only affect the frail and the sick), then proposing we partner with business in deciding how to "right-size" the health infrastrucure is dangerously naive.

There will come a point where health costs have risen to the point where health care profits are too expensive to the rest of the economy, and the business community is ready to adapt single payer. But by the time this happens, the business community will want cost reductions far, far  beyond the savings of eliminating insurer profits and private payer bureaucracy.  Business is already in a quandary about how to care for 20 million new seniors with chronic diseases in the next decade.

We need to be realistic about who makes decisions now.  The richest 1% has enough power to amass more wealth than the bottom 80%.  They are not about to give us the same health care as theirs without a fight that goes far beyond health politics and even electoral politics. They are not in the same boat as us.  Whatever they plan for our healthcare will not apply to them, any more than the violence un an unraveling society affects them in their gated communities.

What would business' plan be?  This article makes a convincing case: business would  propose reducing the health infrastructure to something that would serve the basic needs of the healthy 80 % of the population. The high-using 20% among us, the old, sick, and frail, would simply go without care. Do you think business would not do that? In Gulf War I they destroyed the Iraqi water system and then prevented its reconstruction, killing a half million kids, all to protect their oil.  Why should our kids be more important?  Or our parents?  The only way to assure we get as good healthcare as the leaders of business is fight them, not partner with them.

5.)  We have a history of fighting.  The most significant social reform laws were passed because of the pressure of millions of people who worked and their families, in social upheavals that shook the foundations of government, and forced passage of Social Security and Unemployment Insurance in the 1930s, and Medicare and Medicaid in the 1960s.  We won Social Security and Unemployment during the Depression, when business and government could least afford it.  As PNPH's Brief History of Universal Healthcare points out ,"... the British and German systems were developed by the more conservative governments in power, specifically as a defense to counter expansion of the socialist and labor parties."

6.) We should all fight for high-quality, universal, comprehensive, single-tier, government-sponsored healthcare.   But we need to be realistic about identifying our friends and enemies.

Michael Lyon
mlyon01@comcast.net

EDITED RESPONSE FROM VERMONT HEALTH CARE FOR ALL (Terry and Debby Doran) with Project EINO comments

1) Is the business community rapidly coming to recognize that they are losing out in the present US health care system (as DR asserted)?

ML: says he disagrees with this conclusion.

TD: What are you disagreeing with? That the business community is a potential influential and powerful ally in reform? Or that businesses recognize the mess they are in? If the former, you cannot be aware of the political reality in Vermont. If the latter, you cannot be aware of the tenor of opinion in the business community in Vermont.

DL: In the context of ML’s whole commentary, we think he disagrees with the idea that business is coming around to supporting genuine reform, universal health care or single-payer in particular. It is legitimate that DR’s presentation be relevant to most states, not just Vermont given the national meeting and the interests of the audience. Furthermore, Project EINO would argue that the frustration of business with the current "health care mess" is indeed a national phenomenon.

2) What did DR mean by the unequal distribution of health care.

TD: This seems to be a misunderstanding. DR means that the use of medical services will be unequal among the general population (of a state or of a nation) in the sense of services being used by any one individual, because the health status and need for using health and medical services will always be enormously variable (i.e. a small subpopulation, the sick, will always use vastly more services and health products than the vast majority who are basically healthy).

3) ML wrote that DR asserted that patients, health care workers, and business must decide together how much care we want.

TD: DR’s point was that the extent of health care responsibility (how much will be covered and assured for everyone) is a societal decision including patients, health care workers and business (as well as everyone in that state or nation).

DL: Indeed as ML included in his letter, DR presented that we will all be within the group of intensive users of health care at some point in our life (unless we die instantaneously in an accident while enjoying perfect health). So, the idea of patient or "health care consumer" is more or less all inclusive.

4) ML (main criticism): DR convinces that infrastructure reduction is the only effective way to reduce health care costs. A corollary of this statement is that government would need to drive this process, because only the government has the power to restrain investment in health care infrastructure, which the hospital-insurer sector of the economy wants as a source of profits.

TD: This is misleading. It is the universal health care system’s AGENCY not the vague and ominous government"(the agency can be a governmental agency, a quasi-governmental agency and even " in theory at least " a private agency with vested powers). Secondly, in Vermont a certificate of need agency already exists. (Examples of this in the past were the Certificates of Need required for capital investment in health during the 1970s, and the 1995 UCSF Pew Health Policy Report recommending closing half of US hospital and hospital beds, closing 20% of medical schools, nursing programs etc.)

DL: I believe DR’s point was that most of the total health care budget is for infrastructure (which is absolutely true and not being questioned by any of the correspondents). This means that facilities, equipment and personnel mostly have to be in place and spread geographically in case of need (individual, or large public epidemic/disaster). This largest portion of health care spending cannot be reduced without curtailing care available for everyone (insured well or not at all) and crippling the health care system, that was her point.

5) ML: DR asserted that deep reductions in the health infrastructure could be made without badly hurting the majority of the population that is in relatively good health.

TD: This represents a crucial failure of understanding. Dr. Richter is not saying, and never has said, that what you call deep reductions can be made in the infrastructure without hurting the majority. In fact, her point is that any sizable reductions in the overall infrastructure would affect everyone (the sick and the well, poor and wealthy, old or young) and thus it must be a societal question.

TD: Systematic cost-containment, or the less likely case of cost-saving, is only achieved across the system and not, as you seem to infer, by targeting social groups. The targets are unnecessary expansion of services deemed less necessary FOR EVERYONE. One example of the former might be competing MRIs [in a single city neighborhood], of the latter perhaps most cosmetic surgery. The underlying point of this analysis is that at a fundamental level health care services are shared services

ML acknowledges: DR is clearly NOT advocating this, yet she shows that the possibility of doing this exists.

But ML is fearful: (Some past examples where this WAS advocated were: Colorado Governor Richard: Lamm's speeches saying the elderly have the duty to die to free up scarce resources (SF Chronicle, 3-29-84), or the JAMA 1983 article Health Care Technology and the Inevitability of Resource Allocation and Rationing Decisions" which said: "The longer people live, the greater the likelihood that they will exhibit chronic disease, have subsequent disability, make use of new and expensive medical technology, and ultimately fall into the category of high-cost users of medical care. ... Only when society is fully able to come to grips with death and dying is it likely that policies and procedures for decisions not to treat will not only will be formulated, but will also be followed. This period is likely to be hastened as financial constraints force the issue."

ML: There could be deep reductions in infrastructure that would only affect the frail and the sick, then proposing we partner with business in deciding how to "right-size" the health infrastructure is dangerously naive. There will come a point where health costs have risen to the point where health care profits are too expensive to the rest of the economy, and the business community is ready to adapt single payer. But by the time this happens, the business community will want cost reductions far, far beyond the savings of eliminating insurer profits and private payer bureaucracy. Business is already in a quandary about how to care for 20 million new seniors with chronic diseases in the next decade.

TD: You are well off the rails at this point. Dr. Richter nowhere says that businesses ought to be making the decisions. And your scenario immediately below has little application to political or social conditions in Vermont. She is NOT asking the business community to "propose" a health care system; she is proposing to educate them on how a universal health care system can work to their immediate .

DL (to end): ML might have a point that some portion of the big business (powerful enough) might like to go ahead with "cost-savings" which will cripple the health infrastructure we all need and depend on (to be there should we need it). In fact this does seem to be the drift of our system in the clutches of the Tommy Thompson, Bush/Cheney administration. Can we trust business to have a sudden altruistic realization?

In fact, there is no need to depend on or imagine any such realization. It’s a fact that an automobile costs about $400 more to produce in Detroit, MI than in Windsor Canada a few miles across the border "just due to the difference in what is spent in the US to cover most people for most needs, vs. in Canada to cover everyone for all their health care needs. [US built cars have been called HMO’s on wheels because of the money spent on health care vs. steel] Of course, this has been tending to wake up big business in recent years (even though they may be seduced by short-term profit harvesting and plundering during years of reduced corporate taxes and those of the super-rich.

As for small businesses (which employ many more Americans than large corporations do), the current health care mess is even much worse. They cannot afford to cover the employees at a decent level and thus have trouble attracting the employees they would prefer and otherwise employ. Often they cannot even offer health coverage for the managers or owners and their families. They are forced into being insurance brokers for their employees, taking huge time and energy away from their primary business. And health coverage brokering is not the business they want to be in, and not where the talents lie. The first state to get genuine UHC might just get flooded with startup and relocating small businesses which will be eager to free themselves from this burden. Albeit there are also some small businesses who are "cheating" the system currently, a system they support of "employer based coverage" in which they themselves find ways to pay nothing (getting an advantage over larger or more conscientious competitors and managing to stay out of the health care brokering business).

DR and many of us actively involved in genuine UHC organizing (especially state and grassroots work) realize that we will have to win some business support before we achieve our goals. And we are making progress (yes, we meet with business leaders who are supportive, more all the time and well outside of Vermont) based on their frustrations. We agree with Dr. Richter that business is "coming around" more and more to the logical conclusions of their own rational best interests. They should not be trusted to devise their own solutions. That’s why DR and all 20 grassroots organizations linked on the homepage map of www.EverybodyInNobodyOut.org are involved in broad education and mobilization throughout their states. But neither should we see "business" as monolithic and completely uninterested in building a new structure for health care in this country. Definitely, we need to make alliances wherever possible.

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