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In Brief
California Health Care
Foundation Projects 5
Million In State Will
Obtain Coverage
The California HealthCare
Foundation estimates that as many
as 5 million Californians will obtain
either public coverage or private
insurance as a result of national
healthcare reform, but that
insurance premiums will remain
unaffordable for many residents.
“Many childless adults will
now be eligible for Medi-Cal.
People could not be denied private
coverage based on their health
status or pre-existing conditions,
nor will they remain tied to jobs
solely to keep their health
insurance,” said Foundation
President and Chief Executive
Officer Mark D. Smith, M.D.
Smith predicted that as many
as 2 million Californians will
eventually be enrolled in Medi-Cal
and other public insurance
programs. Another 3 million are
expected to obtain private
coverage.
If the projection is accurate,
that would reduce the ranks of
California’s uninsured by more than
60%. A study released by the UCLA
Center for Health Policy Research
earlier this month concluded that
8.2 million Californians were
uninsured as of 2009.
However, Smith noted that the
ranks of uninsured are likely to
grow until the portions of reform
intended to expand coverage go
into effect in 2014. And those who
will have access to insurance may
not be able to afford it.
“The cost of health insurance
will still remain out of reach for
many consumers," Smith says.
"Younger and middle-income
Californians who are not insured by
an employer may find mandated
Continued on Page 3
HEALTHCARE REFORM
Quotes From Around The Country
A Variety of People Speak Up About Reform
“Not since the passage of Medicare and
Medicaid has this nation witnessed the
enactment of such broad health
legislation that protects so many in our
cities and communities.” – Tom Cochran,
CEO, U.S. Conference of Mayors
Though impactful to the lives of many, it
is Cigna's strong belief that this law does
not adequately improve quality and
address the dramatic cost increases of our
healthcare delivery system...we must
change from pay per service (or quantity)
to pay for outcomes and efficiency.” –
Cigna, Inc.
"I stand with the seven out of ten
Americans who do not support the use of
their tax money to end human
life. I stand with the vast majority of
Americans who did not want the
government to take over their healthcare.
And I will be standing with them in the
fall when those members of Congress
who voted for this mess are called to
account for their colossal mistake.” –
Gary Bauer, Chairman, Campaign for
Working Families
"In historic fashion, our nation decided to
put families first and to change the lives
of our youngest to our most eldest
citizens. However, this spirited debate on
health care and other pressing issues is
far from over.” – Albert E. Dotson, Jr.,
chairman, 100 Black Men of America,
Inc.
"The legislation will burden small
business owners with crushing taxes and
costs. It will not lower the cost of health
coverage. It will kill jobs. – Karen
Kerrigan, CEO, Small Business &
Entrepreneurship Council
We believe that access to healthcare for
all is a fundamental right, especially for
children. The action taken shows an
unprecedented effort to make real and
positive change for the health and
well-being of all children in this country.”
– Irwin Redlener, M.D., President,
Children’s Health Fund
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Page 2
“Reform will help get our economy back
on track by lowering skyrocketing health
care costs, saving jobs and relieving
working families and businesses from
the crushing medical bills that are causing
bankruptcy and heartache.” – Leo W.
Gerard, President, United Steelworkers
With the signing of health reform
legislation today, millions of Americans
can look forward to gaining access to
health insurance, a significant milestone
for this country. The challenge unmet by
this bill...is how to effectively deal with
the critical issue of affordability.” –
Ronald A. Williams, CEO, Aetna.
“This bill includes the ingredients needed
to ensure we get the returns that
prevention offers, including a focused
national prevention strategy, a reliable
public health funding stream, and
evidence-based programs that will be held
accountable for improving health
outcomes." –!Jeffrey Levi, Executive
Director, Trust for America’s Health.
Americans have said clearly they don't
want the versions of healthcare bills
Congress is offering. How much closer to
November will we be before vulnerable
lawmakers wake up and realize this poor
piece of legislation is not worth betting
their careers on any longer? –!Pete Sepp,
Vice President, National Taxpayers Union
“We’ve long been advocates of expanding
access to the uninsured and are extremely
pleased to see that more Americans will
now have access to coverage.!!Our
priority remains meeting the healthcare
security needs of our 34 million members,
and ensuring they have access to
affordable, high-quality care.” – Anthem
Blue Cross!
"The healthcare reform bill will give
consumers more choices about where and
how they receive long-term care and
services, and every long-term care
setting--from one's nursing home to one's
own home--will be safer when it is
implemented." – Sarah F. Wells, executive
director, National Citizens' Coalition for
Nursing Home Reform
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In Brief
coverage unaffordable. And the
undocumented will receive no
direct help,” he said.
Reported Tuberculosis
Cases in California
Plunge
The California Department of
Public Health reported an 8.6%
drop in reported tuberculosis cases
in 2009, pushing the rate of the
respiratory disease to the lowest in
the state’s history.
According to state officials,
2,472 cases of active TB were
reported last year, down from
2,695 cases in 2008. The rate of
infection in 2009 was just 6.4
cases per 100,000 residents.
The drop in cases is welcome
news, given the resurgence of the
disease in the past decade, and the
development of mutations that are
resistant to antibiotics.
“We have come a long way in
our struggle to eliminate TB and we
can be proud of our aggressive
efforts to control the disease,” said
Mark Horton, M.D., director of the
CDPH. “We need to continue to be
vigilant so that we don't see a
resurgence in our state.”
The number of cases among
foreign-born Californians in the
U.S. for less than a year dropped to
176 cases in 2009, down from 279
cases in 2008. Horton attributed
the drop to improved TB screenings
of immigrants.
However, there were
significant disparities in infection
rates among ethnic groups. Among
Caucasians, the rate of infection
was 1.3 per 100,000, but 6.5 per
100,000 among Latinos, 7.8 per
100,000 among African-Americans;
and 22 per 100,000 among
Asians.
OPINION
How This Battle Was Very Different
Reform’s Leaders Speak of America’s Changes
Something remarkable occurred in the House
of Representatives on Sunday, and it was not
just the passage of healthcare reform.
In the debate leading up to the vote,
Republican House members lined up to offer
ominous proclamations. As expected, they
were cut short by the majority Democrats
wielding parliamentary rules.
But the wielders were striking: Rep.
Louise Slaughter, D-NY, deected repetitive
questions. Rep. Jesse
Jackson Jr., D-IL, banged the
gavel.
“This is what change
looks like,” President Barack
Obama declared after the
bill was passed. And he’s
right: this is the rst time in
America landmark
legislation was crafted,
shepherded and enacted by
leaders who were not white
males. It is not just
historical, but epochal.
When Medicare – the
last major healthcare reform
passed by Congress – went
into effect in 1965, the
handful of African-
Americans and women who served
in that body were kept on the Jim Lott
sidelines by party leaders, virtually
all of whom were white Southern Democrats.
The uber Southern Democrat was
President Lyndon B. Johnson. His relentless
buttonholing and strong-arming has long been ofces.
credited with getting both Medicare and
historic civil rights legislation passed.
But Johnson’s remarkable biographer,
Robert A. Caro, has portrayed the 36th
president as a man of his times: whip-quick to
ridicule African-Americans, Latinos and
Asians. He once told his longtime driver,
Robert Parker, to let the racial epithets roll off who lack insurance in far larger proportions
his back. “Just pretend you’re a (expletive)
piece of furniture,” Johnson snarled.
Parker, who later became maitre d’ of the
Senate Dining Room, wrote after the
president’s death that he was torn between the
Lyndon Johnson who pushed civil rights as
hard as he did Medicare – and the Lyndon
Johnson who mercilessly humiliated him.
At other times, Medicare and civil rights
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Page 3
seemed to conate. Just days after the former
was enacted, the South Los Angeles
neighborhood where I was raised exploded.
Its residents no longer wanted to be pieces of
furniture.
Time – and to some degree, Johnson’s
better angels – are among the reasons Obama
now occupies the Oval Ofce. In tone and
temperament, he is Johnson’s polar opposite,
yet is no less dogged. Like Johnson, he took
legislation presumed dead and
made it law.
Johnson had patrons who
shared in his success, among
them Georgia Senator Richard
B. Russell – a segregationist for
most of his career – and
longtime House Speaker Sam
Rayburn. Obama’s biggest
help came from current House
Speaker Nancy Pelosi. One
can only imagine what words
these political legends might
have had for a woman who
presumed to attain such
power.
Sadly, the backlash to this
bill – and its champions – have
By been all but inevitable. The
legendary Rep. John Lewis, D-GA and
two other African-American members
of Congress were subjected to racial
epithets and spitting as they walked to the
House chamber over the weekend. Someone
smashed a window at Slaughter’s district
Such conduct is disgusting, although far
milder than the murders and institutionally-
endorsed mayhem that were hallmarks of the
civil rights era.
This bill and its backers are a legacy of
that struggle. It will help cover the tens of
millions of African-Americans and Latinos
than any other portion of the populace. In that
way and many others, it is far closer to
government by the people and for the people
than even Lincoln could have envisioned.
Jim Lott is Executive Vice President of the
Hospital Association of Southern California.
He is a member of the Payers & Providers
Editorial Board.
Payers & Providers
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OPINION
The Work Of Reform Is Just Beginning
Now That Legislation’s Been Passed, Costs Are Next
It’s been a long three years in California. !
We spent two full years embroiled in state
healthcare reform efforts.! After that failed, affordable health care, all health care sectors
we spent another year debating reform
nationally.
After this weekend’s
passage of health reform
legislation, I’m sure
many people are ready
to move on to new
issues…or just to take a
long rest. But there’s no
rest for the weary.! Now
it’s time to seriously
tackle skyrocketing
medical costs.
While Congress and
the President have made
some progress in
covering the uninsured,
the health reform
legislation falls short of
controlling costs for the
most expensive part of
insurance – doctors, hospitals,
medicines, and medical equipment.!
Over the past decade medical costs,
which consume 87 cents of each Johnston health records online. While the upfront
premium dollar, have increased two-
to-three times faster than the rate of
inflation.!
In February, federal government data
confirmed that rising healthcare costs are
driven by increased spending on hospital
care, doctors and prescription drugs.! !
A recent Health Affairs report revealed
to all that hospitals and physicians have
considerable leverage to demand double-
digit rate increases due to consolidation.!
The weakened economy has changed the
individual market.! With more young
healthy people dropping coverage, the
market is more dominated by people with
higher health care costs, making premiums
more expensive.
Unemployment has also lead to greater
enrollment in government-funded health
programs or, worse, more people who are
uninsured.! This strains our health care
system because hospitals and doctors have
to shift their losses for care that is
unfunded or underfunded by the
government to the insured.!
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Page 4
It’s not going to be easy, but if we want to
ensure that everyone has access to quality,
– health plans included – must be willing to
play a part in controlling
costs.!
Health plans have work
underway.! !
Many doctors’ offices are
frustrated with the timely
process of using different
processes and computer
systems to submit claims
to the different health
plans.! They say this time
takes away from the
important work of caring
for patients. !
There is work in
California to develop
one-stop shopping for
claims submissions,
regardless of health plan.!
When it is complete, it
By should save doctors considerable time
Patrick and money.!
We are also heavily engaged in moving
expense is considerable, over the long
term the improved efficiency achieved by
sharing information among different doctors
for each patient will be worth the investment.!!
The most important reason for electronic
health records is that clear, accurate medical
records that are portable between different
health care providers will improve the quality
of care patients receive and reduce medical
errors and repeat procedures. A benefit to the
patient and a cost savings to the system.
These projects represent a sample of the
type of innovation, collaboration and hard
work it will take to begin controlling costs in
our healthcare system.!
With the leadership of state and federal
policymakers we could, and must, do more.!
Patrick Johnston, who represented the San
Joaquin Valley as a state Senator and
Assemblyman from 1981 to 2000, is President
of the California Associaton of Health Plans.
Payers & Providers OPINION
Reform Is Both A Tonic And Strain For Hospitals
Some Will Face Medicare and Medi-Cal Cuts; Some Will Reap Gains
California’s hospitals have long supported the goal of
meaningful health care reform.! That goal is closer to reality
than ever before, now that President Obama has signed H.R.
3590.
Although the bill is not perfect, the passage
of this legislation is a significant step forward
in the history of our nation.! For the first time,
a significant percentage of our population will
have access to comprehensive health care
coverage.! And, the reforms to the health
insurance marketplace will benefit us all.!
It’s important to understand, however, that
the legislation does present some significant
challenges for health care providers.! Among
the chief concerns are the scheduled cuts in
Medicare payments to hospitals.! Beginning
April 1, 2010 and stretching through next year,
the Medicare hospital payment update will
be reduced by 0.25 percentage points.!
Larger reductions in the update factor will By
occur later in the decade. !
Most of the other direct payment cuts C. Duane Dauner
that affect hospitals will begin in FY 2013 or
FY 2014, varying from reductions in
Medicare and Medicaid DSH, to penalties for hospital
readmissions and hospital-acquired infections, the
implementation of value-based purchasing, bundling of
payments, IT “meaningful use” adjustments and geographic
variation to rural hospital providers.!
While most of the public debate this past weekend was
focused on insurance market reforms and expanded coverage,
the California Hospital Association was focused on the top
priority of California hospitals – geographic variation.! Facing and creating a brighter future for California hospitals and
a $3 billion cut in Medicare payments to California hospitals
during the next decade, CHA worked long and hard with the
California congressional delegation to negotiate an 11th hour
compromise that did not transfer Medicare payments from
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Page 5
California hospitals to hospitals in so-called low-cost/high
value states.!
A two-year deal was struck that allocates $400 million
from the Hospital Insurance Trust Fund in federal FY 2011
and 2012 for payments to hospitals that are located
in counties that rank among the lowest in the
nation in Medicare spending, based on age, sex
and race.! Hospitals located in counties ranked in
the lowest quartile will be eligible for an add-on to
their Medicare payments for this two-year period.
This hard-fought battle resulted in a great victory
for California’s hospitals and the patients they
serve.!
With many of the positive components of
H.R. 3590 now in place and the opportunity to
amend some of the more detrimental provisions
that become effective in 2013 and 2014,
California’s hospitals supported the legislation.!
No major health reform bill will be perfect or
satisfy every segment of our society.! But the two
bills passed by the House create a strong
foundation to expand coverage and open the door
for future improvements and additional reforms.
During the next few years, CHA will strive to
ensure that the necessary changes to the financial aspects of
the legislation are enacted.! !
The adoption of this legislation means that major steps
have been taken towards achieving CHA’s vision of an
“optimally healthy society” and the Association’s goal that
“every Californian should have equitable access to
affordable, safe, high-quality, medically necessary health
care.”! CHA is looking forward to building on this foundation
their patients.
C. Duane Dauner is President and CEO of the California
Hospital Association.
Payers & Providers OPINION Page 6

Reform Puts Doctor-Patient Relationship Under Knife

To Preserve It, Americans Should Consider Cutting Ties With Insurers

Now that the Senate version of reform is moments from
becoming the law of the land, we need strategies to safeguard
the doctor-patient relationship from government intrusion.
The most effective approach is for both patients and
physicians to opt out of the third party payment system.
From the patients’ perspective, opting out makes sense.!
Insurance companies will not be allowed to deny care for
pre-existing conditions.! Thus, even if the individual mandate
is not thrown out on constitutional grounds, it will be smarter
to pay the penalty, not buy insurance, and put
as much money as possible into a health
savings account.!Prompt excellent medical
care can readily be found in the burgeoning
free market.!Prices should be transparent to
facilitate comparison shopping.
Physicians have an ethical obligation to
use their skills and training for the betterment
of our patients, and to pass this art to the next
generation.! For those who choose to remain
in practice, opting out of third party payment
will be an increasingly attractive option.
Accepting payment directly from the
insurer is a relatively recent aberration in the
long history of the profession.!There was
never a crisis in access to doctors’ services in
the pre-Medicare/Medicaid era.!! Physician
fees were usual, customary, and reasonable.!
Doctors charged well-heeled patients a bit
more and those less well off a bit less.!! Pro
bono care was a part of every practice.! Richard Amerling, M.D. must lay out money.!! This is easy to assert
There was, and still is, competition between
physicians for patients, and this restrained
charges.! Patients valued the doctors’ time and vice verse. !
Doctors worked exclusively for the patient and were their
strong advocates. There was a high degree of trust and
medical care was used selectively.! Direct third party
physician payment changed all of this for the worse.
Initially, doctors “accepted assignment” as a courtesy.!
Medicare eventually required participating physicians to
agree to this.!Over the years, it became the norm.! This was,
in some ways, convenient to patient and physician. But by
insulating both from the true costs of care, it led to over-
utilization and massive increases in healthcare spending.!
Payers responded with price controls and attempts to
micromanage medical decision-making such as managed
care, and its new version, pay-for-performance.!! Price
controls on physicians drove volume increases that resulted
in overall spending escalation.! Higher volume inevitably
impacts quality of care.!! No “quality improvement” measures
can adequately compensate for this.!!!
Widespread opting out of the third party payment system
will lead to lower utilization with huge cost savings.!! There is
no more efficient model than direct pay since it eliminates
the middleman for the majority of charges.!! Office costs are
dramatically reduced when third party
billing is abandoned.! By setting their own
rates, doctors will be in control of their
time and patient volume would decrease.!
Quality of care would improve, again
saving money.! The doctor-patient
relationship, arguably the essential
ingredient to cure and comfort, would be
strengthened.!
The immediate objection to opting out is
that not everyone can afford to pay at time
of service.! The same argument could be
made for dental and legal care (Note the
absence of crises in the delivery of
cosmetic surgery, dental, veterinary, and
legal care---all outside third party systems).!!
We have simply become accustomed to
having “someone else” pay.
Another frequent objection is that some
By patients will not go for needed care if they
and impossible to disprove, but should
bureaucrats make these decisions?! This,
plus unsustainable overuse of the system, are the inevitable
alternatives.
It is now left to individual physicians and patients to act
in their own interests, and to defend the medical profession
and doctor-patient relationship from government intrusion,
and ultimately, destruction.!!
It is time to opt out.
Richard Amerling is an associate professor at Albert Einstein
College of Medicine in New York, and the director of
outpatient dialysis at the Beth Israel Medical Center.

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Payers & Providers OPINION Page 7

Healthcare Reform As A Runaway Production

Now That It’s Been Greenlighted, The “Studio” Will Likely Regret it

Reformers tend to delude themselves that they control not
only the story, but the script, the art direction, the
distribution, and all the actors.! Congress, Speaker Pelosi, and
the President all manifest this delusion. They also believe that
the viewing public has gone along with this
new film in a willing “suspension of disbelief.”!
Two things are wrong with this belief:! the
public has not suspended disbelief—it has
been learning just how controlling and costly
this film will be. !
The “Studio” behind the film seems
unaware that their grand plans will begin to
unravel the instant the film is released.
Hackers will do it on-line in real time.!
The population of the US being 307
million people, and the health-care system
being 17% of it, universal belief is not to be
expected. Now that Obama signed the Senate
bill as passed by the House, every type of
movie-goer is eager for their own version of
the film.! !
So far, 11 state attorneys general have filed
suit to contest the bill.! The CBO estimated that By
the IRS would need $10 billion to hire enough
agents to enforce the mandatory provisions of the
Wanda Jones exercise
November as it declines to cut Physician reimbursement
under Medicare by 20%.! !
One great fear about centralizing the health system’s
oversight process is that the 110 new agencies in Washington
that are supposed to implement this law are
geared toward regulation as a device for making
many enterprises toe the line at once.! They use
bad math, and disdain looking for causes.!
The public is now a movie-goer who goes to
a theatre with many other people, pays a portion
of his paycheck to see a film he doesn’t think is
credible. It is made by a production company
seen as corrupt, unable to be candid or factual
about the content of the film, which proposes to
make him act in a certain way, no matter their
private preferences. The producers are genuinely
astonished that the audience survey showed
considerable rage.!
A counter film begins to be created by
innumerable independent film directors.! It
shows how people really are impacted by the
first film’s “solutions.”! The original benevolent
screenplay is now seen as a futuristic special effects!
monster.!
showing every character turning into a

Reform Act.! Now that the Democratic “Studio” has launched

In six months, insurers will have no ability to
cap lifetime benefits, even though they will not
have had time to re-price their policies and sell them.! !
Many of the public will believe that their care will now
be free, so they will demand services that are open-ended.!
Physicians over 55 will see the ugly end to their practices, so
will leave early.!Taxpayer associations will add up all the sub-
rosa fees and taxes that conceal the actual impact on all
citizens, then will publicize just how much more people are
being taxed than the reform plan revealed.!
Congress will tear up the production budget before
this self-created adventure, all effects, all
backlashes, all costs, all moronic regulations and all
lawsuits are theirs.! The Republican and Independent Studios
should produce a modern and realistic film showing the
transition of old forms and models to modern healthcare
delivery and payment. The producers, cast and director
should demonstrate leadership at a level of integrity higher
than this.
Wanda Jones is President of New Century Healthcare
Institute in San Francisco

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