July 27th, 2009 by EvanFalchukJD in Better Health Network, Health Policy
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Gary Schwitzer links to a Business Week article that says health insurance is a very uncompetitive market. Schwitzer notes this hasn’t gotten much attention, and wonders if it is a reason why health insurance premiums keep going up.
It is – and it isn’t. As with most things in health care, there’s more to it than it seems.
Business Week and Schwitzer are right that the market for health insurance is not especially competitive. Most states have one or two dominant health insurers, and a number of other much smaller players. The smaller insurers are often at a big disadvantage. I blogged about this a couple of months ago.
But the question of the cost of health insurance is something that mostly affects small employers – the companies that employ some 55 million Americans.
As companies get bigger, they minimize their exposure to the insurance market. Mid-sized employers (between about 500 and 2,500 employees) buy so-called “stop loss” coverage. Under these plans, they self-insure for some of the risk, and buy coverage for unexpectedly high expenses. It’s sort of like a high deductible plan, except it’s for the company. That market is, in fact, highly competitive, and serves many of the 14 million Americans who work for companies of this size.
Really big companies – which employ 43 million Americans – don’t buy health insurance at all. They hire a health plan to administer their expenses, but have completely opted out of the health insurance market.
So is the uncompetitive health insurance market driving health care premium increases?
It doesn’t help, but there here are three other things that we don’t talk enough about that are driving these increases:
1. State coverage mandates. Each state requires that insurers who wish to sell there comply with a huge variety of coverage mandates. In fact, there are nearly 2,000 mandates, some of which add significant costs to health insurance. Adding new mandates is a regular activity of state governments, based on the political clout of patient groups, pharmaceutical companies and others. State governments have had an important role to play in driving premium increases.
2. Guarantee issue requirements. The other thing some states have done is outlaw medical underwriting. This means that if an uninsured person gets diagnosed with an illness, he can just go out and buy an insurance policy and, for the cost of an annual premium, get all the care he needs. He can even cancel the policy after he’s done being treated, and buy one again if he gets sick again. There may be valid public policy reasons to make health insurance guarantee-issue. But the reality is that insurers have to add in additional premium to account for the fact that their risk pool includes in it much more costly individuals than otherwise would. There is no free lunch.
3. Other cost-shifting. Studies show that tens of billions of dollars a year of uncompensated health care to the uninsured is provided by medical providers. They try to offset these costs by negotiating higher payment rates from private insurers. The same is true for government-funded programs. As these programs have attempted to control costs by simply paying less, providers have tried to recoup those reductions through higher fees to health plans. In each case, the ultimate cost is passed on to the consumer. Some groups think this kind of cost-shifting adds 5-10% to annual premium rates.
There are, of course, lots of other reasons for the rapidly increasing health insurance rates. These are few of the less discussed that we ought to talk about more.
*This blog post was originally published at See First Blog*
July 18th, 2009 by EvanFalchukJD in Better Health Network, Health Policy
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I belong to a terrific organization that brings together C-level executives, once a month, to discuss issues each of us face. It’s called Vistage. One of the subjects we talked about yesterday was health care. It was like a focus group made up of seasoned, senior executives from many different industries.
The discussion revealed the tremendous divide between what ordinary Americans think about health care and what policy makers in Washington are doing. It’s a combination that is almost certain to ensure that whatever reform passes may make our problems worse, rather than better.
At the meeting were about 30 executives, representing everything from financial services, commercial real estate, manufacturing, high technology, pharmaceuticals, insurance, retail, non-profits, travel and others. Although all thought health care costs were in a state of crisis in America, I did not hear anyone say this was the case in their business. To be sure, some complained that health costs were high, and that there were few alternatives available. But others described changes they had made to their plan designs that had actually reduced their corporate health expenses.
We talked about the proper role of government, the comparative worth of systems in other countries, the responsibility of people to take care of their own health, end-of-life care, over-treatment, the uninsured, access to care, comparative effectiveness, and our own expectations of what the system should do for all of us. There was no consensus among this group of 30 business leaders as to these subjects and what we should do about them, other than that they are important topics that we need to address. I suspect this is true outside of this group, too. Indeed, the huge collection of issues that fall under the category of health care reform is something I’ve pointed out before.
But the President and leaders in Congress want debate on health care to end. They want a a bill to pass in the next couple of weeks.
Most of the group members were surprised to hear that Congress had already drafted legislation and was getting ready to vote on it.
It’s a remarkable thing. We are in the midst of trying to redesign the largest health care system in the world, and we’re barely debating the merits of it. How many members of Congress will have read the 1,1018-page bill once they vote on it? How many Americans will understand what implications it has for their health care if it — or something like it — becomes law?
The President often says that the status quo in health care is “not an option.” The trouble is, the status quo in health care is a rapidly changing thing. Today, every day, employers and doctors and so many others are busy making real, meaningful changes to our health care system. Not by waiting for committees of Congress to pass legislation, but by getting together and doing things that improve the quality and cost of care and the lives of patients. We need to be listening to their stories, and learning from them. Congress hasn’t done this, and can’t now.
There is an opportunity to build a real consensus around the important issues we talked about yesterday. We can transform our health care system in ways that make all of us proud. But it can only happen by working through these hard questions, not by hurrying to pass a bill before the August recess. Those who say we have a once in a generation chance to reform health care today may be right, but not for the reasons they think. By passing bills without consensus on this deeply important and emotional issue, they are ensuring that no one will really want to try to reform health care again for a very long time.
Which leaves us very much where we started. I will continue to do my part to share the important stories of how real people are making real reform. The political attention to reform may end sometime this year, but the reality of people trying to figure out what to do when sick will continue.
*This blog post was originally published at See First Blog*
July 12th, 2009 by EvanFalchukJD in Better Health Network, Health Policy
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Many Americans look to Canada, as an example of a government-run health care system that works.
But is that really what it is?
Health care in Canada is funded mostly publicly, but is provided mostly privately. That is, most care is delivered by privately run hospitals and medical clinics, with fees paid for by the various provincial governments.
Americans often call this system “single payer,” but it’s really not true. There are many other payers.
For example, if you’re injured on the job, your care is paid by a workers compensation insurance plan funded by employer premiums. Millions of Canadians also have supplementary health insurance policies, typically called “extended health care” coverage, which cover things not paid for by the government, like prescription drugs and other medical services. There is also a growing market for full medical insurance plans, and critical illness plans to provide cash to offset the out of pocket burdens of medical cost. As much as 30% of Canadian health care expenses are funded through these non-government payers.
However paid for, supply (and funding) for health care has not been able to keep up with increasing demand. The result has been well-documented: long waits for health care services. Waiting is a normal part of the Canadian health care experience, with provincial governments publishing information on wait times and working to fix them. The Canadian Supreme Court admonished the provincial governments in 2005, saying “access to a wait list is not access to health care.”
And so an interesting dynamic has emerged.
Canadians are justifiably proud of their extraordinary health care system, and care deeply about preserving its core principles. But they also care deeply about looking after each other, and are as creative and innovative as any people on the planet. As wait times have grown, so has a burgeoning private market.
Hospitals running diagnostic imaging equipment like MRIs are only paid by the government to run during certain hours of the day. So creative hospitals decided to run the same machines during the overnight hours, charging patients (rather than the government) a fee for the service, which could be provided on an expedited basis. While politically controversial, it made it possible to serve more patients without the need for additional government funding.
These types of ideas have grown, extending now to stand-alone diagnostic centers. A couple of days ago, I visited one, Mayfair Diagnostics, in Calgary. This center was created by a group of physicians, who, like others I have met, knew they couldn’t change the system, but could improve the part in which they work. So they bought leading imaging equipment and opened up centers that cater to self-pay patients, as well as those funded through other sources. They actively promote themselves as a way to get needed medical insight only a couple of days – as opposed to the 6-8 week average wait patients would otherwise face. Doctors working in this center also work in hospitals serving government-sponsored patients, making the Mayfair center and others like it a supplement to the government system. And at a price of $650 for an MRI, it’s inexpensive by U.S. standards.
Other kinds of private centers have opened up as well. Some operate almost as membership-only medical practices, offering much of what might be considered primary care. Others provide even more comprehensive services, making most aspects of ambulatory care available on a privately-paid basis. For certain specialties like orthopedics, some even offer complete hospital surgical services.
The Canadian system remains very different from the American one. Canadians do not want their system transformed into anything that reflects American “rugged individualism.” And yet the natural human desire to look after oneself and ones family poses dilemmas. When a loved one is sick, all the abstract ideas melt away, and you think – how can I do everything I can to get help, now.
We’re all entitled to that kind of help — Americans, Canadians, whatever.
The ways Canadians are trying to make sure everyone gets that help are slowly changing the face of Canadian health care.
*This blog post was originally published at See First Blog*
July 7th, 2009 by EvanFalchukJD in Better Health Network, Health Policy
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At healthreform.gov, the Department of Health and Human Services publishes data on the “Health Care Status Quo.”
It reads a bit like what would happen if you took the Dartmouth Atlas of Healthcare and buried it in Stephen King’s Pet Sematary.
The front page of healthreform.gov now has a map of the 50 states where you can click and read about the “current status of health care and the need for reform.”
(I should add that DC is included in the map, too. But as of the time of posting the link doesn’t seem to work).
It lists a grab-bag of categories of information on each state. But no matter what the data shows in a state, the HHS report always concludes the same thing. Fifty times out of fifty:
[Insert state name here] families simply can’t afford the status quo and deserve better. President Obama is committed to working with Congress to pass health reform this year that reduces costs for families, businesses and government; protects people’s choice of doctors, hospitals and health plans; and assures affordable, quality health care for all Americans.
A good example are the reports for Massachusetts and Texas- two very different states with very different data.
- 25% of Texans are uninsured, while only 2.6% of “Massachusettsans” are.
- Overall “quality of care” in Texas is “Weak,” while in Massachusetts it is “Strong.”
- The percentage of people with employer-based coverage in Texas dropped from 57% to 50% from 2000 to 2007, but held steady at 72% in Massachusetts
- 20% of Texans reported not visiting a doctor due to high costs, but only 7% of Massachusetts residents did, and “this has significantly improved since 2007.”
- Average premiums for health insurance are about 5% cheaper in Texas, even though the market is described as being less competitive than Massachusetts
- 27% of middle income Massachusetts families spend more than 10% of their earnings on health care, compared to 17% in Texas
What’s going on? The HHS doesn’t seem terribly interested in exploring it. It just says it wants some kind of unspecified health care reform, this year.
I suppose this is the way the political process works. Make the case there is a serious problem, and seek support to do something – anything – about it, now. As Secretary Sebelius put it: “we cannot wait to pass reform that protects what’s good about health care and fixes what’s broken.“ I don’t think anyone really knows what this means, but maybe that’s the point.
It’s a strategy for a political victory, but not for real, needed reform of our system.
http://www.healthreform.gov/index.html
*This blog post was originally published at See First Blog*
June 29th, 2009 by EvanFalchukJD in Better Health Network, Health Policy
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Everything is McAllen, Texas.
It’s all part of our “uniquely American” approach to many issues: oversimplify the problem, so we can solve it. Ideally, on an artificially short time line.
In the case of health care reform, let’s say we get ‘er done by August 1.
When we talk about health care reform, we are really talking about dozens of different issues. Is health care reform about covering the uninsured, or about cutting costs for employers? Is it about having a publicly-funded health plan, or changing reimbursements to doctors? Is it about longer life expectancies or creating insurance cooperatives? Is it about caps on medical malpractice awards, or comparative effectiveness? Is it about healthier lifestyles, or cutting the cost of prescription drugs? Is it about cutting administrative waste, or incentives for more people to go to medical school? Is it about implementing new health care IT, or preventing insurers from making excessive profits?
It’s about all of these things, and more. And that’s the problem, if you’re an ambitious reformer. There is no simple way to get all of these things under one roof.
Well, until Atul Gawande introduced us to McAllen.
The President quickly made Dr. Gawande’s article on McAllen required reading at the White House, telling Senators this is the problem we are trying to solve. His point man on health care, Peter Orszag, has been blogging about it repeatedly. Members of Congress and the press have taken to talking about McAllen as the center of the health care debate. Even doctors from McAllen are calling on the President to come and see for himself.
Others are using it, too. Paul Krugman, in his blog, took on Harvard economist Greg Mankiw for saying that some comparisons of the US and foreign health care systems may be flawed as a premise for U.S. reform. In response Krugman said “read Atul Gawande!” I saw this, too, when I questioned Steven Pearlstein about why he had such a problem with doctors. His only response was “Maybe you should talk to Atul.”
The problems of McAllen make easy talking points. But they are also a convenient way of avoiding dealing with the enormous complexity of the health care system. There are nearly 650,000 doctors in America, millions of patients, thousands of hospitals, tens of thousands of insurance and pharmaceutical companies, hundreds of thousands of employers who provide health benefits, and thousands of other charities, academics, consultants, government agencies and others who have strongly held views about our system. Too often, their voices are not being heard in all the loud talking about McAllen.
And so, if reforming our health care system is, as the President says, a “moral imperative,” why can’t we have a process that treats reform that way? Why the rush to pass reforms that have to be sold under the premise of solving the problems of McAllen?
The President and the Congress are perfectly capable of putting together a respected commission of experts to study health care, in depth, and then return with serious, comprehensive recommendations that Congress and the President can work to enact. Polls show great public support for the idea of reform, but mixed understanding on what reform means. As we see from the evaporating support for reform in Congress, this gap is a serious problem.
We need effective health care reform in America. McAllen isn’t enough to close the deal.
*This blog post was originally published at See First Blog*
