Wisconsin State of the State Address

Governor Jim Doyle did yeoman's work last night delivering somber news about Wisconsin's budget issues which are sure to be exacerbated with the state of the economy and shrinking revenues. No one appointed me as the Siskel & Ebert of political speeches but I just thought he struck the right balanced tone.

My personal interest was in what ways he would address health care. Would he take on big, bold new programs? (Apparently not.) Would he be content with Wisconsin's achievements at covering the uninsured? (Only a couple of states do better.) Would he finally allow state tax deductions of HSA contributions? (Not a peep.)

Beyond the message itself, to get the full value of the State of the State address, one has to watch the audience reactions to the Governor. (You can easily do so at our state's version of C-Span, Wisconsin Eye.) Getting Republicans to applaud (much less stand to) a Democratic Governor's proposals is no easy task but when that does happen, it surely must foreshadow legislation that will quickly pass. Such was the case for the proposal to require health insurers to cover autism treatment. I wish in a free market certain carriers would offer this coverage and have a competitive advantage for doing so but since ample time has been allowed for that to happen, I'm ready to concede there may be a need for this mandate . . . . . . . . even though it will have an effect on premiums. (Fortunately, there are many ways to reduce costs that can more than offset a new mandate; those ideas are also percolating in Washington and Madison.)

All in all, I agree with the Governor that tough times create opportunity. After the first bipartisan standing ovation, it seemed several others more easily followed. Perhaps this was symbolic of the realization (only now?!?!) that the time for divisive rhetoric has ended. At the end of the speech, everyone went off to various receptions. I would have preferred if they had rolled up their sleeves for a long night of work!

Do Retailers Woes Foreshadow Health System Closings?

There was an interesting article at Forbes.com this morning speculating about which giant retailers might follow Circuit City or Linens & Things into bankruptcy or at least dramatically reduce the number of locations. The big names mentioned certainly gave me pause. The article described this contraction as the "inevitable counter punch to the days of fighting hand over fist for market share during an era of loose credit and minuscule interest rates".

When reading that line I couldn't help wonder if the same dynamic is responsible for our local health systems sudden cessation of expansion projects. Did retailers lust for market share also drive health systems to needlessly expand beyond our capacity to sustain them?

Many have argued that building new hospitals drives up health care costs. For them it must logically follow, that as one or more health systems fail, costs will come down. Something tells me it won't be that simple!

"HIGH" DEDUCTIBLES PUT INTO PERSPECTIVE

Health systems (hospitals) feeling the pinch of the new economy are at least in part ascribing their cash flow problems to difficulties collecting from patients insured by the high deductible health plans I often recommend. Allow me to offer some perspective.

In January of 1970 my father died. He had the same kind of brain cancer that Senator Kennedy now has. Dad had two surgeries over four months and was hospitalized most of the time before he succumbed. He was insured by a major medical plan with a $250 deductible and a lifetime limit of $50,000. I remember that so well because we actually worried about paying for his treatment if the cost exceeded his coverage. In the end, it did not.

Now adjust that $250 deductible by the consumer price index over 39 years (or if you really want a shocking calculation use a medical inflation index); to represent the same percentage of out of pocket expense, health plans today should have a deductible of $1500 or more!

What about the quality and cost of treatment for a malignant glioma in 2009 versus 1970. Senator Kennedy has already outlived my Dad but surely with a cost that would (again) be bumping up against the much higher $2-5 million lifetime limits of today's policies.

Health systems (indeed Medicare, Medicaid and we as individuals) face financial peril not because the insurance plans used to finance care have higher deductibles; they (we) are in trouble because we can not afford the underlying cost of delivering care.

Deductibles and coinsurance are actually very old plan design tools used to engage consumers in the cost of their care. Now that such engagement is actually happening, those health systems that deliver quality care at lower costs will survive and prosper despite today's economic conditions.

CAN THIS BE RIGHT: A Physician Office Visit Is Worth Just $26?!

Surely I must have heard this before as people have been talking about low Medicare/Medicaid reimbursement levels for years. Somehow though, when I heard this number the other day it just seemed so ridiculous: primary care physicians are paid just $26 from Medicare for each (1/2 hour) office visit.

What behavior does this low reimbursement produce? Is the doctor motivated to jam more patients into every hour? Does the doctor have time to discuss preventive medicine and lifestyle changes? Is it easier - and more profitable - to instead 'prescribe' other tests, services and drugs that produce additional revenues?

And, if the more profitable revenue streams must come from services performed in a hospital setting, isn't it logical that physicians would align (sell) themselves to larger health systems?

At the root of many of our health care cost problems is a perverse system of government payment levels. Although private insurers pay more for like services, it is not all that much more and still off a model that is fundamentally flawed.

Is there a better example of how government is the problem, not the solution?!?! I'd love to hear more from other physicians about additional ways in which government and insurers incentivize incorrectly. Oh, but that probably won't happen as long as their contracts include 'Gag Clauses'!

MPTV Health Care Report January 2nd: What Surely Must Have Been Left on the Cutting Room Floor

Milwaukee Public Television aired a 27 minute report over the weekend entitled "Critical Condition: The Wisconsin Perspective". Featured were three individuals with serious health conditions. While it appeared all three were coping pretty well with the physical aspects of their illness (two cancers and MS), the focus of the show was the financial impact. I am so blessed to have good health but that is not the case with many friends, family members and clients so I do not want to trivialize how difficult dealing with illness can be. Having acknowledged that, the MPTV production - and so many others like it - repeatedly attributed the cost question to "affordable" health insurance.

For example, one of the featured individuals was working in California when her cancer was diagnosed. It wasn't clear to me her reasons for returning to Wisconsin but she did so without health insurance. Why didn't she have insurance? The report didn't ask that question but instead vilified health insurers for not wanting her as a customer with a 'pre-existing condition'. (Presumably it is also just wrong to deny someone homeowners insurance after the house is on fire.)

Maybe this particular featured patient returned to Wisconsin because our legislators have already provided at least two remedies for the uninsured; guaranteed issue of coverage for all small businesses (defined as having 2 to 50 employees) or our HIRSP Plan which stands for Health Insurance Risk Sharing Pool - again, a guaranteed issue policy for individuals who have been turned down by insurers.

And here is where what must have been left on the MPTV cutting room floor did the greatest disservice. Premiums for small group health insurance and the HIRSP Plan are strictly regulated by the state; they are "unaffordable" not because of insurers administrative costs and profits (combined, only 14% of the total premium) but because of the underlying delivery of health care. Not once in the 27 minute report were the costs of surgery, chemotherapy or miraculous life saving drugs revealed or discussed. Not once.

The cost of health insurance will not be reduced by tinkering with the size of pools or further regulating underwriting guidelines to guarantee access. MPTV should do its next health care feature dissecting the waste fraud and abuse in the delivery of health care, accounting for 86 cents of every premium dollar and where the real savings are to be found.