For Profit Insurance
Baucus and Grassley, What Is Wrong with This Picture?
Published April 16, 2009 @ 10:17PM PT
As promised, the Senate Finance Committee will be diving head-first back into hearings and roundtables aimed at producing health care legislation by the summer. Chairman Baucus and Ranking Member Grassley have sent out their first press release about a roundtable on improving the health care delivery system. Before you get excited, I should warn you: one-third of the speakers at that roundtable have ties to the insurance industry. Awesome times.
The first roundtable is scheduled for April 21 and will focus on the delivery system. As announced in the press release, they're hoping to get a conversation about "improving the quality and efficiency of care through establishing value-based purchasing programs and strengthening the role of primary care, better managing patients with chronic illnesses, facilitating the use of comparative effectiveness research and other tools that support evidence-based care, reducing hospital readmissions, reforming payments to private plans in Medicare, and increasing transparency and reducing fraud and abuse in federally financed health care programs.”
If you were selecting speakers in order to have a productive discussion, who would you invite? Someone to speak for hospitals? Yup, the CEO of the American Hospital Association. Experts on evaluating quality, Health IT and health economics? Sure, they have those. A nurse? Well, sort of – a former nurse and professor at the University of Pennsylvania School of Nursing anyway. Doctors? We have a surgeon for the specialist perspective and someone from the American College of Physicians for the primary care perspective. Curiously, despite the fact that the VA has shown far more success managing patients with chronic diseases and comparative effectiveness research, as well as Health IT, no one from the VA will be present. No one representing coordinated care – not even from the Mayo Clinic. No one to talk about the medical home. No patient advocates. Only one “activist” group in the National Partnership for Women and Families (a great advocacy group, but hardly the first name you think of in the health care reform community.)
Every other speaker has a connection to private insurance. There’s Dr. Allan M. Korn, Chief Medical Office for the Blue Cross Blue Shield Association. There’s Roy Williams, CEO of Aetna. There’s Glenn Hackbarth, who is currently chair of MedPac, the payment advisory committee tasked with analyzing cost and quality of care in Medicare. What prepared Mr. Hackbrath for being able to advise Medicare on, say, how much we should pay the private plans that make up Medicare Advantage? How about some time as an executive for Harvard Community Health Plan? There’s also Dr. Glenn Steele, also with a background as a surgeon, who’s president of the Geisinger Health System in Danville, PA, a network of provider physicians and hospitals, complete with … yes, surprise, the Geisinger Health Plan, selling HMO and PPO products since the 1970s.
That’s four people out of a total of twelve speakers. I understand the insurance industry is involved in these issues and so should be represented. And yes, the largely non-profit Blue Cross Blue Shield might have a different perspective than the ridiculously profitable Aetna. But four? Really? In a roundtable focused on better managing patients, openness, transparency and with so many of the key players and ideas not represented, you found room for four men who could each give you the private insurance perspective?
What’s wrong with this picture, Senators?
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(Photo credit: essentialfabrication on Flickr.)
Get 20th Century Coverage - Today!
Published April 14, 2009 @ 11:04PM PT
The Wall Street Journal profiles an increasingly widely-used coverage agreements between the University of Texas Medical Branch and small businesses in the Galveston, TX area to bring affordable coverage to their employees. The headline hails it as “Novel Approach to Health Plans Gains Traction.” Except it’s not particularly a novel approach. Instead it hearkens back to the very origins of health insurance, and includes some of the same trends that got us into our inadequate health care mess in the first place.
The concept seems simple enough – UTMB offers to cut out the middleman and provide care directly to small business and their employees at a greatly reduced costs. Where an insurance plan might cost $350-400 per employee, the UTMB association costs $180, split between the employer, the worker and a foundation grant. It sounds great but, as you might suspect, it’s extremely limited coverage. As WSJ describes it, “The UTMB plan in Galveston pays for 20 doctor visits a year and covers maternity care, visits to the emergency room, medical imaging such as CT scans and MRIs, and surgery. Enrollees can go only to UTMB and its staff doctors, and the coverage limits are lower than those of most employer-sponsored insurance plans: $1,200 per year for drugs, for instance, and a lifetime cap of $250,000. Family members aren't covered.” So no such thing as a family plan, a very low lifetime cap that immediately precludes coverage for cancer, say, and a threshold of doctor visits that would be sufficient for healthy people, but woefully insufficient for any serious illness or onset of a chronic disease. And, of course, virtually no choice of doctor. Being a hospital association deal, not insurance, it’s also exempt from the Texas state regulations on insurance – which, as you might suggest, are not exactly game-changers. But the UTMB plan offers no mental health parity, no substance abuse coverage, no appeals process, and no financial protections – if the hospital plan goes under because of too many people are using care, or if the foundation stops funding patient enrollment, tough noogies.
I suppose it’s somewhat innovative, yet remarkably retro. The Blue Cross Blue Shield framework for private for- and non-profit insurance grew out Hospital Associations in the 1920s and 1930s (ironically also starting in Texas). You’d pay a low fee and get a set number of days’ coverage should you need to use the hospital for care. It’s never entirely gone away – many hospitals give their own employees limited coverage that requires you to use the hospital or the web of providers affiliated with the hospital in order to pay in-network rates. The UTMB plan as structured also shows the bias towards healthy customers that have become so commonplace in the private insurance industry – and the same problems. A single, healthy employee not likely to use health care will be easily tempted into this plan. That same person developing a major chronic condition or a frightening acute injury or heck, even just driving to Austin for the weekend will be dangerously out of coverage.
The WSJ article points out the extreme pressure small businesses are under, and it’s easy to see why limited Hospital Associations might be considered a good deal. Eventually, you’re likely to hear this touted as a sensible free-market solution and the antidote to “excessive state regulations.” It’s possible whoever’s doing the touting will acknowledge that it’s rationing in the extreme (20 visits, limited to the capacity of the UTMB campus???), but you know what? I doubt it. But it can’t be denied that what makes this cost effective is there’s such a firm cap on what care you can and cannot get.
If we really want to build a 21st century health care delivery system, the place to start is not to go back to 20th century coverage.
(Photo credit: scruffdog1231 on Flickr.)
Getting Extra Credit for Being Sane
Published April 13, 2009 @ 10:14PM PT
Reading Harvard Business School Professor Regina Herzlinger once again misrepresent the Swiss health care system as a consumer-driven model of care that conservatives can get behind is just the thing that would normally set me off. Yet I’m actually thrilled that she wrote it. For one thing, she presents a clear conservative rationale for supporting health care reform. For another, as much as I disagree with some of her analysis, there’s no doubt she’s actually using analysis and not using the worst case scenario sprung from significant leaps to conclusion to fuel an ideological-driven argument. In short, she gets extra credit for being sane.
Herzlinger’s article in The Atlantic, entitled “Why Republicans Should Back Universal Health Care” offers as a conservative vision for reform the entirely private insurance-based model of the Swiss, which I wrote about at somewhat excruciating length six weeks ago. It’s the same general point that she’s written about for years (at least as early as 2004), that the individual mandate and generous subsidies of the Swiss government create a consumer-driven market where patients shop for the best deals and the plan that best fits their needs, or “in which the people, not the government, control how much they spend on health.” I won’t spend a lot of time refuting this because Maggie Mahar has already done a masterful deconstruction of this misdiagnosis (back in 2007), and Jonathan Cohn on The Treatment brings up Uwe Reinhardt’s counter-Herzlinger analysis that “One can just as plausibly ascribe that performance to the pervasive government regulation that guides the Swiss health system.” Indeed, because the insurance companies are non-profit, charging government-set prices and have a government-fixed comprehensive set of benefits, comparing our insurance market to there is like comparing Earth’s atmosphere to Venus’: sure, they both have carbon dioxide and similar weather system, but I’d avoid standing out in the rain and taking a deep breath on Venus, if I were you.
But despite my objections, I can’t help but rejoice to see an article like this. I disagree with her on many points, but she’s demonstrated some deep analysis and some absorption of lessons from health care systems beyond our borders. More particularly, she’s brought up the main reason why the conservative obstructionist stance against health care reform is short-sighted: it’s in the natural interests of big business and the GOP’s fundraisers and constituents that it succeed.
CEOs rarely say "Know what I love about my job? Buying health care." The chore is so unrewarding -- corporate buyers have failed to create effective cost or quality improvements -- that many small business CEOs simply skip it. As a result, millions distort the efficient allocation of labor in our economy by opting for jobs in dying, big companies that offer health insurance, rather than productive ones in small companies that do not. Furthermore, our employer-based health insurance system forces American businesses to pack our massive health care costs -- about 70 percent greater as a share of GDP than other countries' -- into the cost of their exports, a huge albatross in a globally competitive economy.
What do you know – a free-market and pro-economy argument for supporting health care reform. In order to get to her thesis, she doesn’t need to present an “everything you know is wrong/black is white” thesis like Weems and Sasse’s attempted takedown of the notion that public coverage is more cost-efficient than private coverage, despite years of data on Medicare and the VA to the contrary. She doesn’t need to take the fact that many people would choose to have stable public coverage rather than unpredictable private insurance if it were an option and exaggerate it into a dystopian vision of a depleted Treasury, a bankrupt private insurance system, and waiting lines to the crack of doom if we even try a public option. She's not disguising an obvious ideological push poll as an open form. There’s not a tea bag in sight. In a public debate where the conservative anti-reform message has been all about being anti-Obama, and whose connection to the reality that I and you and most of the people we know experience in our broken health care system is roughly as tenuous as The Hills’ connection to the working world, that counts for something.
It’s been so long since we’ve heard a reasoned, conservative vision on health care reform, I almost forgot what it sounded like.
How the Public Option Is Like Ken Griffey, Jr.
Published April 07, 2009 @ 04:15PM PT
As Yogi Berra once said, "It's tough to make predictions, especially about the future." When Ken Griffey Jr. was traded to the Cincinnati Reds in 2000, a mega-superstar returning to the same team his father had played for and the city where he grew up, it seemed like the sky was the limit. Cincinnati gave him a parade and a hero's welcome on the day he was traded, pundits speculated on his ability to lift the Reds - who had come within one game of a playoff berth - to the playoffs, and I and my roommate rushed to pick him first in my fantasy baseball draft. But our predictions were off. Griffey had one of his worst seasons, the Reds finished 10 games behind the Cardinals, and our fantasy baseball team tanked.
Keep this in mind as you read the articles pondering the Lewin Group's new analysis on the public option that would compete with private insurance as part of a health care reform package.
Despite their reputation as being one of the leading go-to firms for giving ammunition to conservative fears that any public option would "crowd out" private insurance, a reputation stoked by Vice President and maverick quotation machine John Shiels (who delightfully gives the not-at-all restrained analysis "The private insurance industry might just fizzle out altogether" in today's AP report - way to stoke those fears, John!), the report itself recognizes its own shortcomings and the somewhat impossible nature of its task. They disclaim up front, "The public plan is difficult to evaluate because no one has specified in legislation how it would work." The best they can do is make an educated guess: less on what President Obama or Senators Max Baucus or Ted Kennedy have revealed about the public option, and more on what other candidates described, particularly about the public option using the leverage of Medicare rates and being open to everyone, not just the uninsured and small businesses. It's not a bad guess - akin to guessing that Griffey's performance as a Red would be in the realm of his 1999 stats with 48 homers, 24 stolen bases and 134 runs batted in.
Except in 2000, Griffey only hit 40 home runs, had 6 stolen bases and had 118 RBIs - and would never get that high in any of those categories again.
Job Losses and Health Care: How to Make a Bad Situation Worse
Published April 03, 2009 @ 07:16PM PT
In October 2007, unemployment in the U.S. was a robust 5.5%. According to the latest figures out today, it has jumped to 8.5%. That may not seem like a lot, but it’s the highest level since 1983. Not reflected is that numbers, however, is the increase in the uninsured. By Kaiser Family Foundations’ rule of thumb, 3.3 million Americans have lost their insurance when they lost their job in the past year and a half. And it’s a good question whether they’ll get their benefits back.
The Economic Recovery Act addressed this domino effect where lost jobs become lost insurance by partially subsidizing COBRA – the program under which you can continue to receive benefits from your former employee if you pay 100+% of the premium. The stimulus funded subsidies up to 65% to enable more people to participate (because if you think about it, how many people have $300-$500 to spare each month when they’re unemployed?), but giving more people access to COBRA is just the tip of the iceberg.
Jane Sarasohn-Khan on Health Populi talks about the “stickiness” of employer-based benefits: “once benefits are offered, they are difficult to take away.” This makes a lot of sense – the easiest way to alienate and anger your employees is to take away a benefit they used to have, or ask them to pay substantially more out of pocket for it. Once you have the Point-of-Service plan with minimal co-pays, it’s hard to walk that back to an HMO with $50 co-pays. But given the volatility of the job market and how many companies are now concerned about staying afloat, all bets are off. We know that two out of three employers are planning to cut back on the health coverage they offer – some by an annoying but not infuriating 8%, but some by dropping coverage altogether. Indeed, given that employers have been consistently reducing or dropping benefits over the last ten years, the economy gives them cover to “unstick” the benefits expectations of their employees – after all, they'll say, aren’t you glad to still have a job at all?
This recession will eventually end (and if it doesn’t, we’ve got bigger problems – “Fall of Rome”-type problems), but what will happen to the unemployed when they find new jobs? With the expectations bar lowered, will they still settle for jobs with less than stellar benefits? In the meantime, what will happen to their medical needs, particularly if their employer does not offer COBRA? This question is sadly much easier to answer – fewer people will get the primary care they need when they need it; more people will have nowhere else to go for care except community clinics and their local Emergency Room; and health care disparities will only increase. After all, the unemployment rate for African-Americans is above 13% and Latinos range from 8-14%. These same communities are already more likely to be uninsured or on Medicaid and, as a completely related factor, are at much higher risk for treatable chronic diseases like asthma, diabetes, hypertension, etc.
Given how dependent our health care is on our job, the economic recession has the real ability to do lasting-damage to both the coverage we can get from our employer and on the health of those who have lost their jobs or are between jobs. If you need more motivation to work for health care reform this year, think of it this way – the crash of our job market means for too many of our citizens, we’re out of time.
(Photo credit: solidstate on Flickr.)
Betraying Our Veterans By Giving Them Our Insurance
Published March 18, 2009 @ 09:31PM PT
Because I am a self-professed admirer of the VA system, I’ll be the first to affirm that our veterans deserve no less than the very best care we can give them. I am not thrilled by Obama budget proposal that would save a few dollars by charging private insurance for care at the VA hospitals and clinics for conditions related to service injuries. The $530 million saved per year is just not worth the disrespect, intended or otherwise, currently being felt by those who put themselves in harm’s way to defend our freedom. All the same, the health care gadfly in me can’t help but think the problem is less an Administration looking to cut corners and more an admission of how bad the health care system the rest of us inhabit really is.
Because this isn’t about denying veterans the care they unquestionably deserve. You’ll hear that a lot from those who wish to demagogue, but it’s simply not true (in fact the Obama budget also increases overall funding to the VA by 11%). It’s about who pays for that care. Currently, veterans who have private insurance and go to the VA hospitals for care related to their service are taken care of within the VA, at no cost to their insurance. Under the proposal, the care would be the same, but insurance would pay the bill.
In a country with universal health care, that’d be an “inside baseball” story of accounting – who cares who’s footing the bill if the service received is exactly the same? In the U.S., it’s a matter of subjecting veterans to the possibility of bankruptcy, unemployment and financial ruin. There are the inevitable premium escalations as a result of veterans actually using their health care. Some will have to be exposed to high deductible plans. Others fear that, having earned their pre-existing conditions for the sake of the country, they now won’t be hired by small businesses or employers concerned about the bottom line. And yes, for some, the lifetime maximum benefit will possibly come into play – you reach a certain level of health care dollars spent, and your policy is canceled.
The fact that the patient and customer is a hero matters as little to the CEO and shareholders of a private insurance company as when patient and customers are depending on their coverage for survival.
Put another way, according to the Wall Street Journal, the New York Post and many others, it’s an unconscionable breach of trust and a betrayal for our veterans to have to deal with the normal business practices private, employer-based insurance – the same insurance companies that the enemies of reform will tell us shouldn’t be reformed, regulated, “crowded out,” or subject to the "unfair advantages" of cost-control and efficiencies of a public competitor.
Think about that.
(Photo credit: Scott Abelman on Flickr.)
The Merry-Go-Round of Escalating Costs
Published March 07, 2009 @ 11:26AM PT
(Programming note: You and I, we got a good thing going here. You know what would make it even better? If you submitted a question for next week’s debate between representatives of Physicians for a National Health Plan and Health Care for America Now, that’s what.)
If we don’t reform health care this year, it will be far more expensive for all of us next year. This isn’t meant to scare you. It’s just fact. How do I know? The employers of America are guaranteeing it.
Health care costs are not just skyrocketing, they’re accelerating. Some of this is driven by unhealthy lifestyles and what we’re consuming as health care – there’s always a new medical device or a new drug or a new treatment, and a gradual increase of use for the ones that are not new. But our reliance on an employer-based system for more than 60% of the population and the subsequent increase in the uninsured and underinsured as the economy worsens is also a major driver. It also creates a very expensive merry-go-round. Health care costs too much, and employers are feeling the pinch. So they cut back on how much they pay – as two out of three are promising to do for 2010. They increase the employees’ share of the premium – about 8% in 2009 and an estimated 9% in 2010. Or they switch to a plan that requires more out-of-pocket in terms of co-pays, particularly for prescription drugs, or carry higher deductibles. And finally, 4% of businesses say they’ll have to stop providing benefits for their employees altogether.
The sadistic part of the merry-go-round is that when employers cut benefits like this, they’re actually helping to accelerate the costs for the system as a whole. We know that the uninsured, who all too often show up for expensive treatments in the emergency room when earlier preventative care would have been more cost-effective, wind up being paid for by all of us. Some of our tax dollars go to compensate hospitals for treating patients who have no ability to pay them back, and hospitals also pass on some of those costs who can pay – those with insurance predominately. The 4% of employees who will lose their coverage will be added to the mix of those who lost their job and so lost their health care and those who are already uninsured.
But employers cutting benefits or switching plans to those with higher deductibles creates more of the underinsured. The underinsured – as many as 25 million Americans, and quite possibly much more – have coverage, but not enough when major illness or injury hit. More than the uninsured, they’re the most likely to go bankrupt due to medical bills – as high as 75% in one estimate of bankruptcies involving medical debt. What happens when they can’t pay and go bankrupt? Wynn Bailey, a health care expert at the consulting firm AT Kearney, has the answer: "That's the government, private insurers and the self-insured." He estimates employers will spend 5-10% more next year as a direct result. That will push more employers to cut costs… and the cycle continues.
This is why we need comprehensive reform on a national level – this problem is just too big and too system-wide for individual businesses choosing on a competitive marker to deal with. As much as we may want to separate costs from universal access or vice versa, it can’t be done – they’re too tightly bound together.
(Photo credit: jim.dimo on Flickr.)
