"Just The Facts, Ma'am"

Congresswoman Gwen Moore and Congressman Paul Ryan held a Town Hall Meeting of sorts at The Milwaukee Press Club Friday. I listened to two very different views of reform. Following a round of questions posed by a panel of local media folks, the moderator opened the meeting to questions from the audience. Up popped a woman I have seen at countless health care forums. Her 'question' had to do with the salary being paid to Unitedhealthcare's CEO Stephen Hemsley which she stated was $700 million. (Gasp!)

This lead to a discussion about corporate greed. A $700 million salary sure lends support to those advocating for a government run 'Public Option' to "keep private insurers honest". Trouble is, Mr Hemsley's salary for 2008 was 'only' $1.3 million . Total compensation including contributions to his 401(k) were reported by at least one independent source to be about $3.24 million. (I'll leave it up to others to further check public records; surely the SEC collects salary information for the heads of all publicly traded corporations.)

Related to that, I have heard this same lady - and many others who know better - claim insurers administrative expenses consume about 30 cents of every premium dollar. The real number varies but averages a lot closer to 12%. Shame on those who twist facts to make their case. (Shame on me for not challenging them when I am in the same room!)

Joe Friday is a fun memory from the past; would that his call for "Just the Facts, Ma 'am" was more alive today.

And speaking of 'facts', take a moment to click here to see our national debt growing . . . . . . . without the added cost of a 'Public Option'. When the Congressional Budget Office reports HR-3200 would add massive new amounts to our deficit, how on earth can we call on government to spend even more? The better course is for the government to lead reform but in the private sector.

Debunking 'The Debunker' Part II: Promoting Competition Between Health Insurers Through A Public Option

Following his Saturday radio address which I discussed in my last blog, the President continued his 'pitch' for a government run Public Option by further vilifying insurers monopolistic control of the marketplace. Monday's news coverage focused on how Blue Cross completely dominated certain states to the detriment of consumers, the presumption being that monopolistic control of a market automatically resulted in artificially high premiums. My own experience differs from what I read yesterday.

Our insurance agency focuses on group coverage for small to medium sized businesses. In southeastern Wisconsin four insurers dominate this segment. They are Anthem Blue Cross (12%), Humana (20%), Unitedhealthcare (28%) and WPS Health Insurance Company (13%). The numbers in parentheses represent the respective insurers' market share for just our own client base and fall well below 100%; the remainder of our clients are (partially) self-funding using a variety of Third Party Administrators (TPA's) and stop loss insurers.

Three of the four insurers above are publicly traded insurers while one is a non-profit. To listen to 'The Debunker' one would assume the non-profit insurer would dominate the market. Parenthetically, a couple of mutual insurers do business in Wisconsin but their rates are not competitive. One might then conclude that insurer profits are not the driver of health care premiums. Beyond that, the 23% of my client base that self funds is disproportionately low compared to figures gathered by the Wisconsin Insurance Commissioner. The last time I checked, I think OCI was reporting about 37% of Wisconsin residents are covered under self-funded health plans.

I think you can see there already is robust competition in Wisconsin amongst those who employers hire to pay for health care. In contrast, just a couple of health systems dominate each city/region. Many would argue there is a need for more competition amongst those who deliver health care. It begs the question, if the government offered health care to all Americans through say, an expansion of the VA, wouldn't that foster competition between providers of care? (In fact, the government inhibits competition through laws that have frozen expansions of physician owned and/or for profit hospitals.)

Competition in the health insurance marketplace is important and through its regulatory authority, government plays a critical role. That role should be expanded to promote price transparency and the development of interoperable electronic medical record keeping. Going beyond that - to the proposed Public Option - is a Trojan Horse for a complete government takeover.

Obama's Saturday Radio Address: Debunking The Debunker

I tuned in to the President's Saturday radio address yesterday morning. The topic: the need for "honest debate" in our country's struggle to reform health care. The President accused those opposed to HR3200 - the massive House health reform bill - of using "willful misrepresentations" and "outright distortions". He sighted specific examples such as the idea we would insure illegal immigrants; that, he said, is not a part of any measure he would support. Pardon my confusion Mr. President but if you are so adamantly opposed to insuring illegal immigrants why do you continue to speak of the 47 million Americans who do not have health insurance. According to census bureau figures, that number includes 13 million illegal immigrants. You want "honest debate"? Then be honest! Is it 34 million uninsured or 47 million? Neither number is acceptable but the larger one includes folks who are not "Americans".

Caught in this one "distortion", should we believe you when you say you will not support any reform measure that includes "death panels" or requires payment for abortions? We'll see. What could happen is an omnibus reform bill gets to your desk with many many good provisions but also some that you have 'promised' to oppose. What then, Mr. President?

The real meat of the radio address was devoted to an explanation of how the proposed "Public Option" was so badly needed to promote honest competition within the insurance industry. The 34 million Americans without health insurance presumably would all be able to afford coverage if the government run plan simply charged less premiums. The question Mr. President is, why would the premiums for a public option be lower? Is it because you would reimburse for health care services at rates 50 - 60% lower than private insured plans; the way the government pays for Medicare and Medicaid? So you promise me if I want to keep my private insurance plan I can. "Period." Now Mr. President, be honest. Don't you think over time most people will gravitate toward a government run option if it is 60% cheaper than their private plans?

And "cheaper" is a good word to use in this case because if you pay for care at rates arbitrarily set 50 - 60% lower than it costs providers to deliver care, you will get cheaper care? You promised me Mr. President I can keep my doctor but what if he/she won't accept these lower payment schedules?

Recently I wrote about better ways to promote quality of care and lower costs. You can view that article here. If I were "The Decider" I'd be talking more about how we deliver care than how we pay for it. Unfortunately, "The Debunker" thinks vilifying insurance companies is the route to reform.

The Health Reform Debate: Will The Energy And Interest Still Be There When It Counts?

Congress is in recess and our representatives are back 'in district' taking the pulse of their constituents at the much reported Town Hall listening sessions. People are justifiably upset about some of the details of the House Bill being vetted (HR-3200).

After Labor Day the Senate will try and work out the details of their version of reform. Co-Chaired by Democrat Max Baucus and Republican Charles Grassley, every indication is the Finance Committee Bill will be far more middle of the road. Then of course, the House and Senate bills have to be 'reconciled'. All of this is going to take some time. So the final version may well look entirely different than HR-3200. (We can only hope!)

I worry that all of us will tire of the process. If the final compromise bill is still riddled with government intrusions into this most personal area of our lives, will our interest have waned. That would be a shame.

Central to this debate are certain things I think you should know about reform; click here and ponder the complexity of the issue. When asked, I urge clients and friends to be patient. Don't overplay your hand. Wait until all the cards have been dealt. But be vigilant. Stay interested. It is good to see our citizens so engaged for a change!!

JUST WHAT ARE 'GLOBAL REIMBURSEMENTS'?

I wrote an Op-Ed piece for the Journal Sentinel this week and sent friends/clients a sneak preview. In it I discussed a fundamental re-make of the payment models for health care. I opined we should stop paying a discounted fee for every service and instead develop "global pricing" for "episodes of care". A little more explanation would have helped sell this vision.

The way we pay for care now, docs are actually rewarded for non-compliant patients. The diabetic who fails to take his meds for example, sees his health spiral out of control. Problems develop with vision (in the extreme resulting in blindness), circulation (amputation!), heart failure, etc etc. all requiring more treatment and more income for the doc. The patient that takes his meds, changes his diet and controls his disease obviously doesn't need to see the doc nearly as often. So the doc has the less income but the same overhead. He loses money delivering better outcomes. Isn't that just wrong?

Why not develop a fixed price for each diabetic patient. What will it cost on average to treat them? $2,500 a year? $15,000 a year? I don't know what would be a fair number but whatever it is, that becomes the "global" reimbursement for the diabetic's entire "episode of care". Doesn't this change all the incentives?

Here's another example. You have a strained back. Under the current system you might seek out a physical therapist who recommends twice weekly visits. This goes on and on and on . . . . . and on. Every visit, another payment. What other market gives the seller of services so much control over the buyer? Do you have the knowledge to question whether or not you really need 35 treatments! Heck, if the insurance company is paying the bill, what do you care. Well, if the diagnosis is a strained back, why not just set a fixed fee for treatment. If the PT can get you back to normal in three or four visits, he makes out nicely. If it takes 15 visits, not so well.

Now, couple this change in payment methodology with complete transparency. PT 'A' is charging $1000 for every strained back so PT 'B' figures out a way to charge $850 and with better outcomes. Do you see where this could go?

This isn't nearly as controversial as you might think. Many health systems have pretty much moved to this model already. When payers (government and insurers) better align the incentives, we will see enormous savings. Waste, fraud and abuse are estimated by some to be as high as 50% of our total health care spend. How many more people could be insured if premiums were 40 - 50% lower?!

The question is, when so many agree on the need for this change, why is it taking so long?