Volume , Number 0
There are no articles.Commentary
There are no articles.Culture
There are no articles.Features
Journal of the 16th Year
On Second Street
There are no articles.
NOTE: Z Magazine subscribers and sustainers have access to all Z Magazine articles here and in the archive. The latest Z Magazine articles available to everyone are listed in the Free Articles box at the top of the table of contents, and are starred in the list below. Questions? e-mail Z Magazine Online.
R epublicans have publicly supported the privatization of Medicare since they took control of Congress in 1995. Democrats have supported adding drug coverage to Medicare since 1999. In 2003, Republicans linked the issues.
President Bush announced last January that he would support adding a scrawny drug benefit to Medicare on the condition that Medicare beneficiaries be given financial inducements to join HMOs, and on June 12 House Republican leaders introduced a bill that adds scrawny drug coverage to Medicare and puts great financial pressure on seniors to join HMOs beginning in 2010. On June 27, the House passed the Republican bill by a single vote. The bill must now be reconciled with a similar Senate bill that also passed on June 27, which puts considerably less pressure on seniors to enroll in HMOs.
The media has given the drug coverage portion of this story extensive coverage and has done a good job of reporting on Bush’s campaign to hold drug coverage hostage to his privatization plans. But the media has devoted very little ink to explaining how privatization would work under the Bush and House proposals. Worst of all, the mainstream media has made no effort to represent the views of experts who believe HMOs cannot possibly save Medicare money and might damage the quality of care.
The New York Times ’ coverage represents the best and the worst of the media’s coverage of the drug and privatization issues. Last January, the Times was the first news outlet to report that Bush intended to give the two issues high priority in 2003. The article, which ran on January 3, made it clear that Bush was seriously considering making seniors leave the traditional Medi- care program (where 89 percent get their coverage now) and enroll in an HMO (where the other 11 percent are covered), and that some Democrats were opposed to such a plan. The article quoted the chief of staff of Rep. Pete Stark (D-CA) saying, “If the price of a prescription drug benefit is the end of Medicare as we know it, that’s not a price worth paying.”
But the lengthy article gave no indication that a substantial body of research demonstrates that the HMOs that are now insuring seniors add to rather than lower Medicare’s costs. In fact, the article created the impression that HMOs were lowering costs by describing HMOs as “more efficient [and] less costly” than traditional Medicare, and by presenting the HMO industry’s claim that Medicare doesn’t pay HMOs enough.
Two factors make it impossible for HMOs to insure the elderly for less money than the traditional Medicare program does: HMOs have overhead costs that providers (doctors and hospitals) serving traditional Medicare patients do not incur and that Medicare therefore does not pay for; and HMOs pay providers more than traditional Medicare does.
HMO overhead expenditures, that is, their payments for things other than medical care, equal about 20 percent of total HMO revenues. The main categories of HMO overhead expenditures are marketing, policing doctors, lobbying, obscene salaries and perks for management, and profit for insurance company shareholders. Under the traditional Medicare program, Medicare pays providers directly; there is no HMO middleperson and, therefore, no HMO overhead to siphon off 20 percent of Medicare’s payments before it reaches providers. But under the HMO portion of the Medicare program, Medicare pays the HMO middlepeople and HMOs, in turn, pay providers, but only after the HMOs have scraped off 20 percent of their payments from Medicare to cover their overhead.
The evidence that HMOs have overhead costs in the range of 20 percent of revenues comes from Wall Street. On Wall Street, HMOs brag about their “medical loss” ratios—the ratio of their medical expenditures (their payments to providers) to their total revenues. An HMO loss-to-revenue ratio of 70 percent is considered great for investors whereas a ratio of 90 percent is considered abysmal. No one has calculated the average medical loss ratio for the entire US health insurance industry, but it’s possible to do so for the largest insurers. In 1999, the medical expenditures of today’s four largest health insurance companies (United Health- Care, Aetna, Cigna, and Wellpoint) averaged about 80 percent of the revenues of these companies.
The existence of HMO overhead means that HMOs have to reduce their medical costs by more than 20 percent in order to save Medicare money. That’s an enormous handicap. But huge overhead is not the only HMO handicap. HMOs also pay higher rates to providers than traditional Medicare does. The New York Times was apparently the only major news outlet to report this fact. Paul Ginsburg, president of the Center for Studying Health System Change, recently told the Times , “In most areas of the country, payment rates for hospitals and physicians that are negotiated by private plans are higher than those paid by the [traditional] Medicare ...program.” According to the Medicare Payment Advisory Commission, which advises Congress, hospitals charge HMOs about 40 percent more than they charge Medicare and physicians charge HMOs about 15 percent more. Together, these differences in provider rates add another 20 percent to HMO costs.
Medicare’s ability to pay lower fees is due to its size. With 36 million people, traditional Medicare is far and away the nation’s largest insurance program. It’s so big and provides such a large portion of the average provider’s revenues that providers can’t afford to walk away from the Medicare population.
When we add HMOs’ higher overhead (20 percent) to their fee disadvantage (20 percent), we’re looking at a handicap equal to roughly 40 percent. HMOs have only two ways to offset this enormous handicap: (1) they can deny much more medical care to their patients than traditional Medicare denies its patients; (2) they can seek to avoid the sickest patients and enroll only the healthy. Neither strategy is morally or politically acceptable.
The HMO industry’s efforts to ration health care in the nonelderly market backfired so badly in the mid-1990s that the industry has begun to back away from its most aggressive managed-care tactics. If the nation wouldn’t tolerate aggressive rationing by HMOs among the nonelderly, it would certainly not tolerate even more aggressive rationing among the elderly.
That leaves the HMOs with only one strategy: to enroll only the healthiest seniors—a tactic called cherry picking—but get paid as if they were enrolling average seniors. At least two dozen studies have demonstrated that HMOs have benefited from this strategy for at least the last two decades. Congress has been apprised repeatedly of this fact. The U.S. General Accounting Office (GAO), the Congressional Budget Office, and the Medicare Payment Advisory Commission have all sent reports to Congress stating that Medicare is overpaying Medicare HMOs by large amounts because the HMOs attract disproportionately healthy seniors. The GAO reported in 1999, for example, “studies conducted by us, ...the Medicare Payment Advisory Commission...and others demonstrated that the Medicare program spent more on beneficiaries enrolled in health plans than it would have if the same individuals had been in [traditional Medicare]. This unexpected result occurred because Medicare payments were based on the estimated cost of... beneficiaries [in traditional Medi- care] in average health and were not adequately adjusted to reflect the fact that plans tended to enroll beneficiaries with better- than- average health....”
The studies the GAO cited indicate the Medicare overpayment to HMOs lies somewhere in the range of 15 to 45 percent. If this seems hard to believe, consider just one of the studies the GAO was referring to—a study by the Physician Payment Review Commission, a predecessor to the Medicare Payment Advisory Commission. In its 1996 report to Congress, this commission reported a study it had done which found that the seniors who enrolled in Medicare HMOs were so healthy they cost the HMOs only 60 percent of the average cost of Medicare beneficiaries.
If we tack on another type of overpayment—this one equal to about 5 percent of Medicare payments to HMOs—caused by HMOs fraudulently inflating their administrative costs, a problem documented by a 1998 report of the Department of Health and Human Services, we may say Medicare has been overpaying the average HMO by somewhere in the range of 20 to 50 percent. It is this gigantic, unintended overpayment that makes it possible for some HMOs to survive in the Medicare “market” despite big handicaps—high overhead and relatively high provider payments.
Medicare HMOs may continue forever to get away with inflating their administrative costs and inducing Medicare to pay it (the Clinton administration showed, and the Bush administration has so far shown, no interest in preventing HMOs from padding their Medicare charges), but they can’t continue forever to cherry pick. Enrolling the healthiest of the Medi- care population is possible only as long as the HMOs enroll a tiny proportion of that population. If and when HMOs begin to enroll a growing proportion of the Medicare population, which is the Republicans’ goal, HMOs will find it more and more difficult to avoid their share of the sick. As the HMO industry’s share of Medicare beneficiaries rises from its current level of 11 percent, and as the typical HMO enrollee becomes more typical of the Medicare population, the unintended cherry-picking subsidy to the HMOs will vanish.
HMOs start out with two financial disadvantages against traditional Medicare: (1) they generate administrative costs equal to roughly 20 percent of their revenues; (2) they pay higher provider fees equal to about another 20 percent. It’s conceivable that a pro-HMO Congress could eliminate the latter handicap by simply ordering providers to charge Medicare HMOs no more than they charge the traditional Medical program. But even if Congress would do that over the objections of the physicians, hospitals, and (if drug coverage is added to Medicare) the drug companies, the HMO overhead problem would still remain. The HMOs’ two remaining weapons—rationing and cherry picking—will be nowhere near potent enough to offset their overheads. Aggressive rationing of Medicare beneficiaries by HMOs is not politically and morally acceptable, and the HMO cherry-picking advantage will disappear as privatization gradually brings a larger and larger portion of the Medicare population into HMOs.
Privatization cannot save Medicare money. Republicans should drop their privatization proposal and kick the HMOs out of Medi- care all together.
Kip Sullivan lives in Minneapolis. He writes frequently about health policy.
Z Magazine Archive
AnnouncementsLABOR - May 1 is May Day. Workers of the world will celebrate the 124th anniversary of International Worker’s Day. Born out of a call for an 8-hour workday in the United States, this day is an opportunity for all workers to show their solidarity with one another, as well as to renew the call for labor rights.
FARM CONFERENCE - The Farm Conference on Community and Sustainability will be held May 24-26 in Summertown, TN, in partnership with the Fellowship of Intentional Communities. Tour green homes, see sustainable food production, learn about solar installations, alternative education, midwifery, and more.
Contact: Douglas@thefarmcommunity.com; http://www.thefarmcommunity.com/.
PALESTINE - The Conference of the Palestinian Shatat in North American will be held June 3-5 in Vancouver. The conference will examine the future of the Palestinian liberation movement.
Contact: firstname.lastname@example.org; http://www.palestinianconference.org/.
LABOR - The Pacific Northwest Labor History Association’s 45th annual conference will be held May 3-5, in Portland, OR. This year’s theme is Labor Under Attack: Learning from the Past and Preparing for the Future. A call for presentations, workshops and papers is currently underway.
Contact: PNLHA, 27920 68th Ave. East, Graham, WA 98338; 206-406-2604; PNLHA1@aol.com; http://www3.telus.net.
MARIJUANA - On the first Saturday of May marijuana legalization activists will hold informational and educational events, rallies and marches in over 300 cities around the world.
ECONOMICS - The Union For Radical Political Economics will hold its 39th annual conference May 9-11 in New York City.
RECLAIM THE DREAM - The 2013 Poor People’s Campaign & March from Baltimore to Washington D.C. will be May 11. Communities, schools and unions interested in participating are encouraged to contact the Baltimore People’s Assembly.
Contact: 410-500-2168; 410-218-4835; BaltimorePeoplesAssembly@gmail.com; Southern Christian Leadership Conference of Baltimore and the Baltimore Peoples Power Assembly, 2011 N. Charles St., Baltimore, MD 21218.
MOTHER’S DAY - The 17th Annual Mother’s Day Walk For Peace will be May 12th, in Dorchester, MA. The walk began in 1996 for families who had lost children to violence. The day has become a way for thousands of people to financially support the work of the Louis Brown Peace Institute.
Contact: http://www.ldbpeaceinstitute.org/; http://mothersdaywalk4peace.org/.
NATO 5 - An International Week of Solidarity with the NATO 5 has been called for May 16-21. Supports call on supporters to raise awareness of the NATO 5 and support funds for the defendants on the one-year anniversary of their preemptive arrests.
Contact: email@example.com; https://nato5support.wordpress.com.
MOUNTAINTOP - The 2013 Mountain Justice Summer Activist Training Camp will be held May 19-27 in Damascus, VA. It will be a week of workshops, field trips to view Mountain Top Removal coal mines, direct actions, and service project.
FEMINIST SCI-FI - The feminist science fiction convention WisCon 37 is scheduled for May 24-27 in Madison, WI.
Contact: WisCon, ? SF3, PO Box 1624, Madison, WI 53701; firstname.lastname@example.org; http://www.wiscon.info/.
ANARCHY FEST - A month-long Festival of Anarchy is scheduled for May in Montreal. The festival includes The Montreal Anarchist Bookfair (May 19-20).
Contact: http://www.anarchistbookfair.ca/; http://www.radicalmontreal.com/.
LABOR - The International Labor Rights Forum will present: Down the Supply Chain, Driving Corporate Accountability, on May 22 in Washington, DC. The Labor Rights Awards Ceremony and Reception will honor pioneers in supply chain worker organizing, working solidarity and international labor rights policy.
MULTICULTURE - The 26th annual National Conference on Race & Ethnicity in American Higher Education (NCORE) will take place May 28-June 1, in New Orleans.
Contact: SWCHRS, 3200 Marshall Avenue, Suite 290, Norman, OK 73072; 405-325-3694; email@example.com; www.ncore.ou.edu.
MEDIA - The 2013 Alliance for Community Media Annual Conference will be held May 29-31, in San Francisco, CA. Participants will include educators, community leaders, media professionals, journalists, nonprofit leaders, policymakers and students.
RADIO - The 38th Annual Community Radio Conference is schedule for May 29-June 1, in San Francisco, CA, with discussions and workshops.
Contact: 1101 Pennsylvania Ave. NW, Suite 600, Washington, DC 20004; 202-756-2268; firstname.lastname@example.org; http://www.nfcb.org/.
BRADLEY MANNING - On June 1, a rally will be held at Fort Meade in support of Bradley Manning.
BIKES - Bikes Not Bombs is holding its 24th annual Bike-A-Thon and Green Roots Festival in Boston, MA on June 3, with several bike rides scheduled, music, exhibitors and more.
Contact: Bikes Not Bombs, 284 Amory St., Jamaica Plain, MA 02130; 617-522-0222; email@example.com; www.bikesnotbombs.org.
LEFT FORUM - The 2013 Left Forum will be held June 7-9, at Pace University in New York City.
Contact: 365 Fifth Avenue, CUNY Graduated Center, ? Sociology Dept., New York, NY 10016; http://www.leftforum.org/.
VEGAN FEST - Mad City Vegan Fest will be held in Madison, WI, June 8. The annual event features food, speakers, and exhibitors.
Contact: 122 State Street, Suite 405 B, Madison, WI 53701; firstname.lastname@example.org; http://veganfest.org/.
ADC CONFERENCE - The American-Arab Anti-Discrimination Committee (ADC) holds its annual conference June 13-16, in Washington, DC, with panel discussions and workshops on civil rights, media and other topics.
Contact: 1990 M Street, Suite 610, Washington, DC, 20036; 202-244-2990; email@example.com http://convention.adc.org/.
CUBA/SOCIALISM - A Cuban-North American Dialog on Socialist Renewal and Global Capitalist Crisis will be held in Havana, Cuba, June 16-30. There will be a 5 day Seminar at University of Havana, plus visits to a cooperative, urban garden, community development project, social research centers, and educational & medical institutions.
Contact: firstname.lastname@example.org; http://www.globaljusticecenter.org/.
NETROOTS - The 8th Annual Netroots Nation conference will take place June 20-23 in San Jose, CA. The event features panels, trainings, networking, screenings, and keynotes.
Contact: 164 Robles Way, #276, Vallejo, CA 94591; email@example.com; http://www.netrootsnation.org/.
MEDIA - The 15th annual Allied Media Conference will be held June 20-23, in Detroit.
Contact: 4126 Third Street, Detroit, MI 48201; http://alliedmedia.org/.
GRASSROOTS - The United We Stand Festival will be hosted by Free & Equal, June 22 in Little Rock, Arkansas. The festival aims to reform the electoral process throughout the U.S.
SOCIALISM - The Socialism 2013 Conference is scheduled for June 27-30 in Chicago, featuring talks and panel discussions.
Contact: firstname.lastname@example.org; http://www.socialismconference.org.
LITERACY - The National Association for Media Literacy Education (NAMLE) will hold its conference July 12-13 in Los Angeles under the heading, Intersections: Teaching and Learning Across Media.
Contact: 10 Laurel Hill Drive, Cherry Hill, NJ 08003; http://namle.net/conference/.
IWW - The North American Work People’s College will take place July 12-16 at Mesaba Co-op Park in northern Minnesota. The event will bring together Wobblies from branches across the continent to learn new skills and build One Big Union.
PEACESTOCK - On July 13th, the 11th Annual Peacestock: A Gathering for Peace, will take place at Windbeam Farm in Hager City, WI. The event is a mixture of music, speakers and community for peace. Sponsored by Veterans for Peace.
Contact: Bill Habedank, 1913 Grandview Ave., Red Wing, MN 55066; 651-388-7733; email@example.com; http://www.peacestockvfp.org.
CHILDREN’S DEFENSE - July 15-19, join clergy, seminarians, Christian educators, young adult leaders and other faith-based advocates for children at CDF Haley Farm in Clinton, Tennessee, for five days of spiritual renewal, networking, movement building workshops, and continuing education about the urgent needs of children at the 19th annual Proctor Institute for Child Advocacy Ministry.
Contact: firstname.lastname@example.org; http://www.childrensdefense.org.
ACTIVIST CAMP - Youth Empowered Action (YEA) Camp will have sessions in July and August in Ben Lomond, CA; Portland, OR; Charlton, MA. YEA Camp is designed for activists 12-17 years old who want to make a difference in the world.
Contact: email@example.com; http://yeacamp.org/.
LA RAZA - The annual National Council of La Raza (NCLR) Conference is scheduled for July 18-19 in New Orleans, with workshops, presentations and panel discussions.
Contact: NCLR Headquarters Office, Raul Yzaguirre Building, 1126 16th Street, NW, Washington, DC 20036; 202-785-1670; www.nclr.org.
LABOR - The Eastern Conference For Workplace Democracy: Growing Our Cooperatives, Growing Our Communities, will be held at Drexel University in Philadelphia, PA, July 26-28.
Contact: firstname.lastname@example.org; http://east.usworker.coop/.
WOMEN/LYNNE STEWART- Radical Women is asking for support letters and cards to be sent to Lynne Stewart. Stewart is a civil rights attorney and political prisoner who is currently in jail. She has breast cancer and authorities have denied her request for transfer from her Texas prison to the New York City hospital where she received medical attention during a prior bout of breast cancer. Send messages and cards to: Lynne Stewart 53504-054, Federal Medical Center Carswell, P.O. Box 27137, Fort Worth, TX 76127.
Contact: 747 Polk Street, San Francisco, CA 94109; 415-864-1278; RadicalWomenUS@gmail.com; http://lynnestewart.org/; http://www.radicalwomen.org/.
HAITI/WOMEN - Haiti’s government is considering a legal reform measure that would prohibit and punish all sexual assault, including marital rape. MADRE and the International Campaign to Stop Rape & Gender Violence in Conflict are launching a petition to raise international support for this push to address violence against women in Haiti.
Contact: 121 West 27th Street, #301, New York, NY 10001; 212-627-0444; email@example.com; http://www.madre.org.
SYRIA/MIDDLE EAST - The Middle East Children’s Alliance (MECA) is currently seeking funds to assist more than 200,000 refugees fleeing violence in Syria.
FOLK FESTIVAL - The Falcon Ridge Folk Festival will be held August 2-4, in the Berkshires, NY.
Contact: http://www.falconridgefolk.com/; firstname.lastname@example.org.
WAR RESISTERS - The War Resisters League will hold its 90th anniversary conference, Revolutionary Nonviolence: Building Bridges Across Generations and Communities, August 1-4, at Georgetown University. The event will focus on the U.S.’ long history of antimilitarism.
Contact: 339 Lafayette Street, New York, NY 10012; 212-228-0450; email@example.com; http://www.warresisters.org.
POPULAR ECONOMICS - The Center for Popular Economics is holding its 2013 Summer Institute August 4-9 at Hampshire College in Amherst, MA. No background in economics is needed for this intensive training. This year’s theme is, The Care Economy: Building a Just Economy with a Heart.
Contact: Center for Popular Economics, PO Box 785 Amherst, MA 01004; 413-545-0743; firstname.lastname@example.org; www.populareconomics.org.
VETERANS - Veterans for Peace is holding the 28th annual convention August 6-11 in Madison, WI. This year’s theme is, Power To The Peaceful.
DEMOCRACY - The Democracy Convention will take place August 7-11 in Madison, WI. The convention brings together nine conferences including topics such as media, education, defense, race, environment and others.
MEN - The 38th National Conference on Men & Masculinity: Forging Justice: Creating Safe, Equal and Accountable Communities, presented in partnership with HAVEN, will be held in Detroit, MI, August 8-10.
Contact: email@example.com; http://www.nomas.org/.
OCCUPY - An Occupy National Gathering will be held in Kalamazoo, MI, August 21-25.
Contact: firstname.lastname@example.org; http://occupynationalgathering.net/.
COMMUNITIES - The Communities Conference is a networking and learning opportunity for co-operative or communal lifestyles, with workshops, events and entertainment; scheduled for August 30-September 2 at the Twin Oaks Community in Louisa, Virginia.
LABOR DAY - The 29th annual Bread and Roses Festival, a celebration of the ethnic diversity and labor history of Lawrence, MA, will be held September 2, in honor of the 1912 Bread and Roses Strike. There will be music, dance, poetry, drama, ethnic food, historical demonstrations, walking & trolley tours.
Contact: PO Box 1137, Lawrence, MA 01842; 978-794-1655; http://www.breadandrosesheritage.org/.
OCCUPY WALL STREET - September 17 is the two-year anniversary of the Occupy Wall Street movement. Events are planned in New York City and worldwide.
TEACHERS - The 13th Annual Conference, “Teaching for Social Justice: The Politics of Pedagogy,” will be held October 12 in San Francisco, CA. The free event features workshops, resources, and free childcare.
Contact: 415-676-7844; email@example.com; http://www.t4sj.org/.
HAITI - International Action, which brings clean water and chlorinators to Haiti, seeks office space capable of housing up to six people and their office equipment.
Contact: Zach Bremer, Zbrehmer@haitiwater.org; 202-488-0735; http://www.haitiwater.org/.
MEDIA - The Union for Democratic Communications and Project Censored are sponsoring a joint conference on media democracy, media activism and social justice to be held November 1-3 at the University of San Francisco. Proposals for presentations, workshops and panels from activists and critical scholars are invited.