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State of Reform 

click to enlarge State Sen. Jim Ferlo at a single-payer health-care rally last summer.
  • State Sen. Jim Ferlo at a single-payer health-care rally last summer.

State Sen. Jim Ferlo likens his quest for health-care reform to breaking a concrete wall with a five-pound sledgehammer: Hit the wall once, it shakes. Strike it 10 times, it cracks. Twenty times and it crumbles.

"This is like the sledgehammer against the Berlin Wall," Ferlo says of his effort to create a statewide single-payer health-care plan. Such a measure would bypass insurance companies entirely, having a government agency reimburse doctors and hospitals for medical treatment. "But it's doable."

During much of 2009, debate over the health-care system focused on Washington, D.C., but Democratic efforts at a nationwide reform stalled after a Massachusetts election placed Republican Scott Brown in the late Democrat Ted Kennedy's U.S. Senate seat. That deprived Democrats of the 60-vote majority they need to head off a Republican filibuster of the bill. 

But with efforts in Congress faltering, advocates see an opportunity for change at the state level. 

"The chance of anything of substance happening in Washington, D.C. ... is less than zero," says Chuck Pennacchio, executive director of Health Care for All Pennsylvania. "We've been saying that for more than three years. Now people are finally listening."

In fact, this month the Pennsylvania Democratic State Committee called for the passage of a single-payer system. Pittsburgh City Council and Allegheny County Council also previously passed resolutions supporting various single-payer initiatives. 

Ferlo says he's not sure the most viable Democratic candidate ran against Brown in Massachusetts, and he believes Brown's victory was voter reaction to the Democratic Party. "We finally win power in the House, Senate and White House and we're sitting on our hands. That's why I think a lot of people are frustrated," Ferlo says. "They want decisive action. 

"I hate to criticize my own party," Ferlo adds -- but "[w]hat great things have they done?"


Ferlo's own initiative is Senate Bill 400, known with a companion measure in the House as the Pennsylvania Family and Business Health Care Security Act of 2009. The legislation proposes a statewide, publicly funded health-insurance system to replace what Ferlo calls "profit-driven insurers."

"We're basically talking about keeping private choice for providers and consumers," Ferlo says, while using a "cost-effective method" of paying for it. Ferlo likens his approach to a "'Medicare for All' system" -- citing the federally funded health-insurance system offered to seniors. Twelve percent of Pennsylvanians are enrolled in Medicare; 62 percent use a private insurer. But despite Medicare and other government programs, fully 1 million Pennsylvanians have no insurance at all -- something Ferlo calls "morally repugnant." 

Ferlo's bill, which he plans to reintroduce this year, would allow patients to keep their choice of doctors. It would cover medical bills for everyone in the state -- including the homeless, legal immigrants, migrant workers and their families.

The measure would establish a state health-care agency to pay and process all residents' medical bills. Money would come from a 3 percent personal income tax and a 10 percent employer tax paid on payrolls. But residents, municipalities and businesses alike should come out ahead, Ferlo says, because his plan would eliminate insurance premiums, deductibles and co-pays. 

Citing figures from the U.S. Census and the Kaiser Family Foundation, Pennacchio says Pennsylvanians spent $101 billion on health care last year. A single-payer plan will shave $50 billion off that, he says, largely by trimming administrative costs. He anticipates a cost around $80 billion to provide coverage for Pennsylvanians if the plan goes into effect next year. 

Ferlo acknowledges that insurance giants like Highmark and UPMC, which operates its own insurance plan, will be brought "dragged and kicking" into the new environment. His bill could essentially legislate enterprises like Highmark out of existence, or reduce them into a niche market for add-on insurance for procedures like elective plastic surgery, something not covered under SB400 unless it's medically necessary.

Ferlo doesn't have precise estimates for how many people in the insurance business would lose their jobs, though Pennacchio puts the figure at 60,000.

Ferlo envisions his bill offering them "comparable positions" in the single-payer system. It also pledges money for retraining and placement in other fields, as well as temporary compensation. Ferlo says many insurance workers would be rehired to administer the public system, or retrained to be health-care workers. Such work, he said, would be more productive than "paper-pushers at the end of a phone line and saying 'no' and why you can't have health care."

There will also be transition costs for retraining and rehiring, which Pennacchio hopes to fund with the $18 billion he says is being sat on by the four major Blue Cross consortiums around the state. 

Ferlo is far from alone in seeking to change health care at the state level. At least 26 other states have various kinds of health-care reform proposals on the table, according to the National Conference of State Legislatures. The NCSL also reports that 30 state legislatures are seeking to limit, alter or oppose selected state or federal actions, including single-payer provisions. 

Single-payer advocates have also gained hope from a public hearing on Ferlo's bill, held in December by state Sen. Don White, R-Indiana, chairman of the Senate Banking and Insurance Committee.

Says Gary Tuma, Gov. Ed Rendell's press secretary: "Always we'd want to see the details of a bill, but in general, if a bill for single payer got through the House and Senate, yes, he'd sign." 

Many see that as a significant concession. "California passed [a reform proposal] twice and now a third time, and [Gov. Arnold] Schwarzenegger vetoed it," says Pennacchio, of Health Care for All Pennsylvania. "What's different about Pennsylvania than other states is we have a commitment from the governor to sign."

But challenges still lie ahead. A cost study still needs to be done, and Rendell's term expires next January, which has advocates wanting to get things done this year.

"We don't know what awaits us," Pennacchio says.

Reformers hope to gain Republican support in the Senate, then eventually win over House Democrats and the governor. Ferlo admits he needs to continue to build political traction to garner legislative support, which he believes will come through more public hearings, and to break through to the mainstream media.


Insurers, for one, will continue to fight the bill. 

"The goal is to get more people covered with better health care at prices they can afford. The question is, 'How to do that?'" says Sam Marshall, president of the Insurance Federation of Pennsylvania, a trade association representing commercial insurers in the state.

"I don't think the single-payer system in one state works for residents of that state, because it has to be a national solution."

But he doesn't support single-payer as the solution at any level because, he contends, innovation in health care is driven by competition, something he feels the plan would eliminate.

Some doctors have misgivings as well, says James A. Goodyear, president of the Pennsylvania Medical Society. 

Among Goodyear's concerns are that proposals floated at the state and federal level do not include medical-malpractice reform -- changing the law to reduce the threat of lawsuits filed against doctors and hospitals.

Doctors have long claimed that the cost of such lawsuits drives up the price of care in a number of ways: Doctors must pay higher malpractice-insurance premiums, and are more likely to engage in "defensive medicine" -- procedures that may not be medically necessary but that could head off a lawsuit. Reform also needs to strengthen criteria for expert witnesses, and capping attorney's fees, he says.

"You can't do some things. It has to be the total package. That's our philosophy," says Goodyear, a general surgeon from Montgomery County. "We need to improve the climate of practice in Pennsylvania if we're going to extend coverage for all Pennsylvanians."

Goodyear says the public is conflicted about changing the system. He cites a poll conducted by the Institute for Good Medicine at PAMS: The findings suggest nearly two-thirds of Pennsylvania adults surveyed believed the nation should enact some kind of universal health care. But nearly half said they would not be willing to pay higher taxes for it.

"Everybody wants everybody taken care of, but they don't want to pay for it."


If this all sounds familiar, there's a reason. Theodore Roosevelt first tried to overhaul health care in 1912, after all. 

"A lot of people in health-policy work talk about déjà vu. [Reform] discussion happens every 10 to 20 years," says David Dausey, a Carnegie Mellon University professor and senior director of the school's Health Care Programs and Initiatives.

"Comprehensive reform has been avoided largely because of special interests that have set out to prevent a large, comprehensive change from happening," Dausey says.

If federal reform fails -- and he thinks it might -- Dausey believes it's because the American public generally doesn't like the increased intrusiveness of the federal government. Nor does he consider federal plans under discussion comprehensive health-care reform, in part because they still leave a portion of the population uninsured.

But Dausey allows that a single-payer option at the state level may get more support if federal reform fails. On the other hand, "those state proposals could go down with the entire ship of health-care reform. The state may follow the federal government if it doesn't happen at the federal level."

Upcoming midterm elections also complicate the matter, he says. "I think the election in Massachusetts has a lot of Democrats reconsidering and being much more cautious. ... It's so politically charged right now, heading into an election year, and politicians are risk-averse individuals. Unless they can claim a clear victory, they won't pursue something."

That's not true of all politicians, though. Ferlo acknowledges that he may not get the votes he needs this year, either. But he plans to keep chipping away. 

"People said the Berlin Wall would never come down," he points out. "Hope springs eternal."


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