The Associated press has just reported on a Congressional Budget Office report that said for every 100 children who enroll in SCHIP (State Children’s Health Insurance Program), there is a corresponding reduction in private coverage of between 25 and 50 children.
CBO officials also pointed out that when SCHIP was created, it had been estimated that about 40% of the participants would previously have had private insurance. If those parents were actually at or beneath the federal poverty level, I have no problem with this. Those families could certainly have found an excellent use for the freed money.
If, however, these were children whose parents only became eligible because they lived in a state that raised the income by doubling or tripling the federal poverty level to attract entrants, I don’t think that was ever intended.
Sen. Grassley, R-Iowa was reported to have said, “This report tells us that Congress needs to make sure that whatever it does, it should actually result in more kids having health insurance, rather than simply shifting children from private to public health insurance.”
And, we Wisconsinites have more adults in the SCHIP program than children. If that were the intent, wouldn’t it be better called SAHIP…the State Adult Health Insurance Program?
Yet another perversion of a well-intended program that leads one to ask…”This makes us want government run health care why?”
Friday, May 11, 2007
Thursday, May 10, 2007
Public Policy Forum Discusses Health Reform…
The Public Policy Forum held a panel discussion in Milwaukee on Wednesday, May 9th to discuss health reform in Wisconsin. Three proposals were discussed:
Wisconsin Health Care Partnership Plan which is the single payer plan developed by the Wisconsin AFL-CIO. It would be financed by a flat tax that this group estimates to be $340 per month per employee. Seems like that is a number we heard in the Massachusetts “Connector” plan debate…that has increased several times over the past months. It claims that it will reduce the 27% of every premium dollar going to administer health care insurance today. We seem to have a disagreement on that number, as well; since our information suggests the real cost is closer to 12% as borne out by federal studies.
Fortunately, this plan appears to be DOA from all indications.
The Wisconsin Health Plan which has been developed largely by David Riemer. It tends to use the state employee program model and would be funded by a tax on all employers. Last I heard, the proponents of this plan were talking about maybe a 12% tax, but only when pushed to give an estimate. Our information suggests that this tax would be much closer to 17% at the outset. The plans would be limited to those selected by “a commission” and each person would be required to select coverage from that list. This smacks of too much government control for my tastes. It also will drive businesses out of business and that certainly won’t be good for heath care or anything else.
BadgerCare Plus is the plan espoused by Governor Doyle. It would supposedly expand health insurance coverage to 98% of our state citizens. First, that still leaves 2% that are uninsured and that isn’t a real good solution since it would retain cost-shifting to the insured. We need to be sure everyone is covered. This plan piggybacks on federally-funded programs that are intended for children, would subsidize families with incomes beneath a certain point, etc. Our state already has more adults covered in the children’s health plan than it does children. The poverty level that determines subsidization is already set at twice the federal program’s original intent and there are those who would increase it again. There are as many as 200,000 people in our state that qualify for the various government programs who simply do not enroll. Why will this be different? And, what happens when federal funding begins to be restricted due to the increasing costs of Medicare, Medicaid and Social Security? Will providers’ reimbursements, already too low in this program, be reduced further?
Any successful reform plan must involve the effort of the private market and of government. Government’s role should be that of support, working with the private sector to get control of costs, and using its influence to assure transparency in those costs, transparency in the quality of care and transparency in the outcomes of the providers of that care. The consumer will take care of the rest.
Basic health care plans must be made available. Tax-advantaged programs must be featured. New tax-advantaged programs such as a Health Coverage Account should be made available to help low income people to be able to afford the basic health plans.
That sounds like a sensible solution.
Wisconsin Health Care Partnership Plan which is the single payer plan developed by the Wisconsin AFL-CIO. It would be financed by a flat tax that this group estimates to be $340 per month per employee. Seems like that is a number we heard in the Massachusetts “Connector” plan debate…that has increased several times over the past months. It claims that it will reduce the 27% of every premium dollar going to administer health care insurance today. We seem to have a disagreement on that number, as well; since our information suggests the real cost is closer to 12% as borne out by federal studies.
Fortunately, this plan appears to be DOA from all indications.
The Wisconsin Health Plan which has been developed largely by David Riemer. It tends to use the state employee program model and would be funded by a tax on all employers. Last I heard, the proponents of this plan were talking about maybe a 12% tax, but only when pushed to give an estimate. Our information suggests that this tax would be much closer to 17% at the outset. The plans would be limited to those selected by “a commission” and each person would be required to select coverage from that list. This smacks of too much government control for my tastes. It also will drive businesses out of business and that certainly won’t be good for heath care or anything else.
BadgerCare Plus is the plan espoused by Governor Doyle. It would supposedly expand health insurance coverage to 98% of our state citizens. First, that still leaves 2% that are uninsured and that isn’t a real good solution since it would retain cost-shifting to the insured. We need to be sure everyone is covered. This plan piggybacks on federally-funded programs that are intended for children, would subsidize families with incomes beneath a certain point, etc. Our state already has more adults covered in the children’s health plan than it does children. The poverty level that determines subsidization is already set at twice the federal program’s original intent and there are those who would increase it again. There are as many as 200,000 people in our state that qualify for the various government programs who simply do not enroll. Why will this be different? And, what happens when federal funding begins to be restricted due to the increasing costs of Medicare, Medicaid and Social Security? Will providers’ reimbursements, already too low in this program, be reduced further?
Any successful reform plan must involve the effort of the private market and of government. Government’s role should be that of support, working with the private sector to get control of costs, and using its influence to assure transparency in those costs, transparency in the quality of care and transparency in the outcomes of the providers of that care. The consumer will take care of the rest.
Basic health care plans must be made available. Tax-advantaged programs must be featured. New tax-advantaged programs such as a Health Coverage Account should be made available to help low income people to be able to afford the basic health plans.
That sounds like a sensible solution.
Wednesday, May 9, 2007
Common Sense in Health Care Debate...at least do no harm!
As the debate over health care and the changes needing to be enacted in Wisconsin continues, we need to be ever mindful that wise people in other states have already made their share of mistakes.
Maine thought that "Dirigo" would cover 130,000 citizens in the first year. That was nearly three years ago. There are some 18,000 citizens covered. Dirigo was to be the vehicle that assured universal coverage.
Connecticut's governor proposed a magic cure-all program. The program wasn't proposed with any cost numbers, but those were developed later. It seems that the Connecticut program might accomplish its goal...but the cost would be triple that of Connecticut's state budget annually.
Illinois's governor has proposed a plan. It threatens to tax employers out of business. Even the Reverend Jesse Jackson has seen the light and stated that health care coverage at the cost of employment is not at all a good trade for the citizens of Illinois.
All this reminds me of what I'd always thought was a part of the physician's oath. There is an erroneous attribution to Hippocrates having to do with the phrase, "first, do no harm." He did author a similar plea, but did so in his Epidemics, Bk. I, Sect. XI. One translation reads: "Declare the past, diagnose the present, foretell the future; practice these acts. As to diseases, make a habit of two things — to help, or at least to do no harm." (Emphasis added)
It is imperative that we do no harm as we settle on the set of initiatives required to set our Wisconsin health care community on the right path for the future as we see that today. Let us incorporate the wisdom of Hippocrates in the process.
Maine thought that "Dirigo" would cover 130,000 citizens in the first year. That was nearly three years ago. There are some 18,000 citizens covered. Dirigo was to be the vehicle that assured universal coverage.
Connecticut's governor proposed a magic cure-all program. The program wasn't proposed with any cost numbers, but those were developed later. It seems that the Connecticut program might accomplish its goal...but the cost would be triple that of Connecticut's state budget annually.
Illinois's governor has proposed a plan. It threatens to tax employers out of business. Even the Reverend Jesse Jackson has seen the light and stated that health care coverage at the cost of employment is not at all a good trade for the citizens of Illinois.
All this reminds me of what I'd always thought was a part of the physician's oath. There is an erroneous attribution to Hippocrates having to do with the phrase, "first, do no harm." He did author a similar plea, but did so in his Epidemics, Bk. I, Sect. XI. One translation reads: "Declare the past, diagnose the present, foretell the future; practice these acts. As to diseases, make a habit of two things — to help, or at least to do no harm." (Emphasis added)
It is imperative that we do no harm as we settle on the set of initiatives required to set our Wisconsin health care community on the right path for the future as we see that today. Let us incorporate the wisdom of Hippocrates in the process.
Sunday, May 6, 2007
Mandated Health Care
Wisconsin has added certain required coverage for health insurance policies over the course of many years. There are more than twenty such requirements or “mandates” as they’re known in Wisconsin. There are even more such mandates across all fifty states.
Mandates have the effect of adding to the overall cost of health care. In some cases this happens because such services were not covered earlier or only partially covered. Mandates can and do make access to such care easier without significant personal cost. Health care costs drive health insurance costs, not the other way around as much of our media would have us believe. Mandates increase our health care costs. And that adds to our crisis in health care.
Mandates viewed individually appear to be good things. The following list shows those that are required in Wisconsin (Fact Sheet on Mandated Benefits in Health Insurance Policies, Office of the Commissioner of Insurance, PI-019 [R 01/2007]):
Optometric Service Access, Chiropractic Service Access,
Nurse Practitioner Access, Dental Service Access,
Adopted Child Coverage, Handicapped Child Coverage,
Home Health Care Access, Skilled Nursing Care,
Kidney Disease Coverage, Mammography Examinations,
Newborn Infant Coverage, Grandchild Coverage,
Diabetes Equipment & Supplies, Genetic Testing Restrictions,
HIV Treatment Drug Access Lead Screening (for children under 6),
TMJ Disorders, Breast Reconstruction,
Child Immunizations, Certain Clinical Cancer Trial Costs,
Maternity Coverage (if provided for any insured, it must be available to all),
Nervous and Mental Disorders, Alcoholism, and other Drug Abuse,
Hospital/Ambulatory Surgery Charges & Anesthetics for Certain Dental Care
(Self-funded [ERISA] plans by a city, village, county, or school district plans may be included in these regulations.)
Reviewing these individual mandates, we begin to get a better idea of how they might increase costs. Chiropractic-type services, for example, were covered originally only if delivered by a medical doctor. If we wanted to see a chiropractor, we did and we paid for it from our pockets. Chiropractors lobbied to gain the right to engage in the delivery of these services through health insurance policies and ultimately won that right. Unit costs were reduced somewhat with the new competition, but increased access to these services, coupled with advertising by the newly approved providers, likely more than offset whatever unit cost savings resulted.
The federal law that enabled health maintenance organizations also added the requirements for some of the now-mandated items in the interests of promoting preventative care (such as vision examinations). Labor-management bargaining contributed to the addition of benefits over the years and that led to certain of the mandates. Insurers were complicit since they added more such benefits in the attempt to differentiate themselves. Health care provider-to-consumer advertising also had a significant impact on health care mandates and increased costs.
Some states have begun to permit health policies referred to as “mandate-light” policies to be sold within their borders. These policies contain fewer mandates, or completely eliminate mandates, thus reducing the cost of those policies, and thereby making health insurance more affordable. The total cost for mandates in Wisconsin is estimated at from 20% of premiums to as much as 32% of premiums.
A valid question is: Should Wisconsin permit mandate-light policies to be sold? If that answer is yes, then the question becomes, which mandates should be excluded? The job of deciding which are in and which are out would be difficult. [Almost as difficult as a government run program deciding what to cover and what not to cover.] Self-insured plans in the private sector could provide some benchmarks for what is provided to employees by a majority of the self insured companies.
If mandate-light plans were permitted, would insurers still be willing and able to offer full mandate policies? Would they be able to price those to anticipate the increased costs of claims being spread across a smaller segment of society [adverse selection]? Would the state promulgate new laws requiring both types of policies? If both types were required, the premium cost would almost certainly be higher in the full mandate policies since only those using the services would be likely to enroll in these plans.
Would this adversely affect many patients or few patients? Is the primary impact more likely to be limited to the provider groups due to decreased volume? Would decreased volume lead to higher unit costs by those same providers? Would the elimination of mandates spawn new policies from some of the more specialized insurers (a talking duck comes to mind)?
As with all questions relating to health care, these are difficult to answer. The free market has historically responded to these needs. Critical illness policies, which have been available for years, were introduced before such coverage was popular in the mainstream, and continue to be purchased by those who believe them to be of benefit.
It has been established that fewer small employers believe they can afford to provide health insurance benefits for their employees each year. The latest reports indicate that something in the range of 60% to 62% of small employers now provide access to health insurance benefits.
Would mandate-light health insurance be better than nothing? Would mandate-light be better than a single payer system operated by a government agency or quasi-public entity? Would mandate-light actually be a step toward relying upon insurance for what it was originally intended…catastrophic unforeseeable health care needs?
We have come to expect fully prepaid health care with but small office visit co-pays, at best. Our “entitlement mentality” has caught up with us and we’re all guilty of permitting that to occur. It has also caught up with our employers and with our country. We are only a few years away from the day when health care costs will consume 20% of our gross domestic product.
We need candid, honest debate and we need it now. That will be difficult in the highly charged environment of today, but it is essential. Can we indeed find our way “back to the future” or are we destined to repeat the failures of so many of our world neighbors?
Mandates have the effect of adding to the overall cost of health care. In some cases this happens because such services were not covered earlier or only partially covered. Mandates can and do make access to such care easier without significant personal cost. Health care costs drive health insurance costs, not the other way around as much of our media would have us believe. Mandates increase our health care costs. And that adds to our crisis in health care.
Mandates viewed individually appear to be good things. The following list shows those that are required in Wisconsin (Fact Sheet on Mandated Benefits in Health Insurance Policies, Office of the Commissioner of Insurance, PI-019 [R 01/2007]):
Optometric Service Access, Chiropractic Service Access,
Nurse Practitioner Access, Dental Service Access,
Adopted Child Coverage, Handicapped Child Coverage,
Home Health Care Access, Skilled Nursing Care,
Kidney Disease Coverage, Mammography Examinations,
Newborn Infant Coverage, Grandchild Coverage,
Diabetes Equipment & Supplies, Genetic Testing Restrictions,
HIV Treatment Drug Access Lead Screening (for children under 6),
TMJ Disorders, Breast Reconstruction,
Child Immunizations, Certain Clinical Cancer Trial Costs,
Maternity Coverage (if provided for any insured, it must be available to all),
Nervous and Mental Disorders, Alcoholism, and other Drug Abuse,
Hospital/Ambulatory Surgery Charges & Anesthetics for Certain Dental Care
(Self-funded [ERISA] plans by a city, village, county, or school district plans may be included in these regulations.)
Reviewing these individual mandates, we begin to get a better idea of how they might increase costs. Chiropractic-type services, for example, were covered originally only if delivered by a medical doctor. If we wanted to see a chiropractor, we did and we paid for it from our pockets. Chiropractors lobbied to gain the right to engage in the delivery of these services through health insurance policies and ultimately won that right. Unit costs were reduced somewhat with the new competition, but increased access to these services, coupled with advertising by the newly approved providers, likely more than offset whatever unit cost savings resulted.
The federal law that enabled health maintenance organizations also added the requirements for some of the now-mandated items in the interests of promoting preventative care (such as vision examinations). Labor-management bargaining contributed to the addition of benefits over the years and that led to certain of the mandates. Insurers were complicit since they added more such benefits in the attempt to differentiate themselves. Health care provider-to-consumer advertising also had a significant impact on health care mandates and increased costs.
Some states have begun to permit health policies referred to as “mandate-light” policies to be sold within their borders. These policies contain fewer mandates, or completely eliminate mandates, thus reducing the cost of those policies, and thereby making health insurance more affordable. The total cost for mandates in Wisconsin is estimated at from 20% of premiums to as much as 32% of premiums.
A valid question is: Should Wisconsin permit mandate-light policies to be sold? If that answer is yes, then the question becomes, which mandates should be excluded? The job of deciding which are in and which are out would be difficult. [Almost as difficult as a government run program deciding what to cover and what not to cover.] Self-insured plans in the private sector could provide some benchmarks for what is provided to employees by a majority of the self insured companies.
If mandate-light plans were permitted, would insurers still be willing and able to offer full mandate policies? Would they be able to price those to anticipate the increased costs of claims being spread across a smaller segment of society [adverse selection]? Would the state promulgate new laws requiring both types of policies? If both types were required, the premium cost would almost certainly be higher in the full mandate policies since only those using the services would be likely to enroll in these plans.
Would this adversely affect many patients or few patients? Is the primary impact more likely to be limited to the provider groups due to decreased volume? Would decreased volume lead to higher unit costs by those same providers? Would the elimination of mandates spawn new policies from some of the more specialized insurers (a talking duck comes to mind)?
As with all questions relating to health care, these are difficult to answer. The free market has historically responded to these needs. Critical illness policies, which have been available for years, were introduced before such coverage was popular in the mainstream, and continue to be purchased by those who believe them to be of benefit.
It has been established that fewer small employers believe they can afford to provide health insurance benefits for their employees each year. The latest reports indicate that something in the range of 60% to 62% of small employers now provide access to health insurance benefits.
Would mandate-light health insurance be better than nothing? Would mandate-light be better than a single payer system operated by a government agency or quasi-public entity? Would mandate-light actually be a step toward relying upon insurance for what it was originally intended…catastrophic unforeseeable health care needs?
We have come to expect fully prepaid health care with but small office visit co-pays, at best. Our “entitlement mentality” has caught up with us and we’re all guilty of permitting that to occur. It has also caught up with our employers and with our country. We are only a few years away from the day when health care costs will consume 20% of our gross domestic product.
We need candid, honest debate and we need it now. That will be difficult in the highly charged environment of today, but it is essential. Can we indeed find our way “back to the future” or are we destined to repeat the failures of so many of our world neighbors?
Monday, April 30, 2007
Advanced Healthcare, Aurora & the Future...
I am the patient of an Advanced Healthcare doctor. My first reaction to the early news that Advanced Healthcare and Aurora were negotiating a joint relationship was one of wait and see.
Now, some weeks later, there is the outward indication of a significant change in relationship…a formal announcement by the two parties has been issued.
My initial reaction to the announcement over the week-end that this likelihood seemed nearly a fait accompli was one of concern. I was concerned for me as a patient, for my doctor as a participant, for Community Memorial Hospital as a threatened institution and for the whole healthcare topography in S.E. Wisconsin.
I had an unexpected opportunity over the week-end to experience healthcare first-hand. As the result, I also had the opportunity to talk with a couple of physicians…one a member of Advanced Healthcare and the other a member of another group [but who would be impacted by any issues ultimately surrounding the viability of Community Memorial]. I also had the opportunity to interact with employees of Community Memorial Hospital, although I chose to not engage any of them in this discussion.
The Advanced Healthcare doctor told me that he had mixed emotions as did many of his peers. He also stated an interesting statistic as follows: a handful of years ago, Advanced Healthcare was one of a couple of hundred similarly-sized group practices in the U.S. but today it is the sole group practice of its size left in the U.S. Each of the others has been acquired, has merged or has somehow been absorbed by another entity. He reminded me that even though each physician sees his patients as a sacred trust, the corporate folks understand that healthcare is a business. And businesses must remain competitive in order to survive. If one group of physicians lost its edge, many of its patients would quickly migrate to another practice that had the edge. We patients expect our physicians to be “loyal” to us, but we can move without those same feelings flowing in the other direction.
The non-Advanced Healthcare doctor told me that there were mixed emotions of a very strong nature inside and outside the systems involved. He said little else, I presume because of the highly-charged situation of which he is a part.
I saw no sign that staff members had changed in any way as the result of this news. Some probably had no idea that such news had been issued while others felt they would be okay no matter what. It is, after all, difficult to imagine that a hospital of the size and reputation of Community Memorial with its partnering relationship with Froedert could not survive very ably in almost any situation.
Maybe the other suitor earlier reported will step up to the plate with an offer to Advanced Healthcare that transcends the deal in the current discussion. If so, it could be that my concerns would be for naught; or it could be that I’ll have a whole new set of concerns.
If we simply take a look around us, we’ll see that there has been consolidation of insurers and consolidation of hospital groups. If the physician groups do not scale up in size, they will have lost much of their negotiating leverage with both the insurers and the hospitals. We cannot foretell what such consolidation will mean to the cost of healthcare; it is easy, however, to postulate increased costs given fewer alternatives and more buildings and more expensive equipment and less competition [in the form of fewer competing entities].
Physicians generate the bulk of patient flow for hospitals by their admitting profiles. So these physicians have significant leverage at the moment.
Could our local hospital emerge strong as ever? Certainly it could.
Could it emerge as a weaker entity? Certainly it could.
Could it simply go away as we know it today? If Aurora were to acquire or merge with Advanced Healthcare and then build a northern tier hospital as has been discussed; and, if Medical Associates were to conclude negotiations with ProHealth located in Waukesha and began referring patients in that direction…certainly it could.
Whatever your thoughts, this is an exciting and/or troubling time for we consumers of healthcare in this area.
Now, some weeks later, there is the outward indication of a significant change in relationship…a formal announcement by the two parties has been issued.
My initial reaction to the announcement over the week-end that this likelihood seemed nearly a fait accompli was one of concern. I was concerned for me as a patient, for my doctor as a participant, for Community Memorial Hospital as a threatened institution and for the whole healthcare topography in S.E. Wisconsin.
I had an unexpected opportunity over the week-end to experience healthcare first-hand. As the result, I also had the opportunity to talk with a couple of physicians…one a member of Advanced Healthcare and the other a member of another group [but who would be impacted by any issues ultimately surrounding the viability of Community Memorial]. I also had the opportunity to interact with employees of Community Memorial Hospital, although I chose to not engage any of them in this discussion.
The Advanced Healthcare doctor told me that he had mixed emotions as did many of his peers. He also stated an interesting statistic as follows: a handful of years ago, Advanced Healthcare was one of a couple of hundred similarly-sized group practices in the U.S. but today it is the sole group practice of its size left in the U.S. Each of the others has been acquired, has merged or has somehow been absorbed by another entity. He reminded me that even though each physician sees his patients as a sacred trust, the corporate folks understand that healthcare is a business. And businesses must remain competitive in order to survive. If one group of physicians lost its edge, many of its patients would quickly migrate to another practice that had the edge. We patients expect our physicians to be “loyal” to us, but we can move without those same feelings flowing in the other direction.
The non-Advanced Healthcare doctor told me that there were mixed emotions of a very strong nature inside and outside the systems involved. He said little else, I presume because of the highly-charged situation of which he is a part.
I saw no sign that staff members had changed in any way as the result of this news. Some probably had no idea that such news had been issued while others felt they would be okay no matter what. It is, after all, difficult to imagine that a hospital of the size and reputation of Community Memorial with its partnering relationship with Froedert could not survive very ably in almost any situation.
Maybe the other suitor earlier reported will step up to the plate with an offer to Advanced Healthcare that transcends the deal in the current discussion. If so, it could be that my concerns would be for naught; or it could be that I’ll have a whole new set of concerns.
If we simply take a look around us, we’ll see that there has been consolidation of insurers and consolidation of hospital groups. If the physician groups do not scale up in size, they will have lost much of their negotiating leverage with both the insurers and the hospitals. We cannot foretell what such consolidation will mean to the cost of healthcare; it is easy, however, to postulate increased costs given fewer alternatives and more buildings and more expensive equipment and less competition [in the form of fewer competing entities].
Physicians generate the bulk of patient flow for hospitals by their admitting profiles. So these physicians have significant leverage at the moment.
Could our local hospital emerge strong as ever? Certainly it could.
Could it emerge as a weaker entity? Certainly it could.
Could it simply go away as we know it today? If Aurora were to acquire or merge with Advanced Healthcare and then build a northern tier hospital as has been discussed; and, if Medical Associates were to conclude negotiations with ProHealth located in Waukesha and began referring patients in that direction…certainly it could.
Whatever your thoughts, this is an exciting and/or troubling time for we consumers of healthcare in this area.
Saturday, April 28, 2007
Health Care & Unintended Consequences...or, How We Got Where We Are
Back in the 1970s, our elected officials enacted new legislation to permit an entity called a Health Maintenance Organization to be organized under federal regulations. That same law provided for grants to be used to create these new entities. People streamed to the federal trough and hundreds of health maintenance Organizations were created.
The intended results were the broadening of health care available to the members of these new organizations. The law required the use of a tool called community rating. This tool was intended to make premium rates fair across the total spectrum: young and old, male and female, and healthy and ill.
In addition, the entities could now either employ the health care providers directly, or those health care providers could organize for purposes of negotiating master agreements under which they'd provide required services for advanced payments. This was thought to be a good way to control the use of limited health care services while helping the new organizations remain financially stable.
It was believed that keeping people healthy was better and less expensive than the treatment of acute issues that had lain untreated for a period of time.
There seemed nothing wrong with the hypothesis, however time began to show the deficiencies.
Community rating caused the rates of the healthy and younger to rise since they had to offset the added costs of the ill and older members. The prepayments to the Health Maintenance Organizations were subject to shortfalls if over utilization occurred. We had just created an official way to ration health care. Services were delayed until the next month, and that solved the over utilization problem for the moment.
To this point, the free market had taken care of this issue; if you didn't have the money to pay for the service, you waited until you had the money.
This method of compensating providers came to be known as prepaid health care and began the process of removing the health care consumer from the equation. We consumers began to observe that our only out-of-pocket cost for this new kind of plan was our co-payment. Back then, co-payments were in the range of $5 to $10 per visit. We began to lose track of the real total cost of the health care we consumed. If we had a sniffle, why not see the doctor; after all, it only cost $5 or $10. We gave no real thought to where the rest of money was coming from, because it didn't appear to come from our pockets. That wasn't and isn't true, but it seems so on the surface.
It is important to understand that the Health Maintenance Organizations were not villains; they were simply following the federal edict. HMOs as we began to call them managed to eliminate much of the waste that had existed. They negotiated tough reimbursement agreements with hospitals. Hospitals that had had occupancy rates of 50% to 60% were now forced to close off wings, or to be creative and find other uses for the empty facilities. One of those uses was the birthing center with soft lighting, etc. Even though the mother was only given 48 hours in the hospital, they were going to be softly lit hours!
As HMOs took ever larger share of the market from traditional insurers, the insurance companies reacted and created their own provider networks and negotiated discounted prices from the usual fee for service pricing. As doctors were forced to take less money for each procedure, they could only exist by performing more procedures.
This story could go on for many more paragraphs. Suffice to say, there were many unintended consequences that continue to cause problems to this day:
The intended results were the broadening of health care available to the members of these new organizations. The law required the use of a tool called community rating. This tool was intended to make premium rates fair across the total spectrum: young and old, male and female, and healthy and ill.
In addition, the entities could now either employ the health care providers directly, or those health care providers could organize for purposes of negotiating master agreements under which they'd provide required services for advanced payments. This was thought to be a good way to control the use of limited health care services while helping the new organizations remain financially stable.
It was believed that keeping people healthy was better and less expensive than the treatment of acute issues that had lain untreated for a period of time.
There seemed nothing wrong with the hypothesis, however time began to show the deficiencies.
Community rating caused the rates of the healthy and younger to rise since they had to offset the added costs of the ill and older members. The prepayments to the Health Maintenance Organizations were subject to shortfalls if over utilization occurred. We had just created an official way to ration health care. Services were delayed until the next month, and that solved the over utilization problem for the moment.
To this point, the free market had taken care of this issue; if you didn't have the money to pay for the service, you waited until you had the money.
This method of compensating providers came to be known as prepaid health care and began the process of removing the health care consumer from the equation. We consumers began to observe that our only out-of-pocket cost for this new kind of plan was our co-payment. Back then, co-payments were in the range of $5 to $10 per visit. We began to lose track of the real total cost of the health care we consumed. If we had a sniffle, why not see the doctor; after all, it only cost $5 or $10. We gave no real thought to where the rest of money was coming from, because it didn't appear to come from our pockets. That wasn't and isn't true, but it seems so on the surface.
It is important to understand that the Health Maintenance Organizations were not villains; they were simply following the federal edict. HMOs as we began to call them managed to eliminate much of the waste that had existed. They negotiated tough reimbursement agreements with hospitals. Hospitals that had had occupancy rates of 50% to 60% were now forced to close off wings, or to be creative and find other uses for the empty facilities. One of those uses was the birthing center with soft lighting, etc. Even though the mother was only given 48 hours in the hospital, they were going to be softly lit hours!
As HMOs took ever larger share of the market from traditional insurers, the insurance companies reacted and created their own provider networks and negotiated discounted prices from the usual fee for service pricing. As doctors were forced to take less money for each procedure, they could only exist by performing more procedures.
This story could go on for many more paragraphs. Suffice to say, there were many unintended consequences that continue to cause problems to this day:
- consumers have no concept of the real cost of the services they consume
- health care providers continue to provide more services since that is how they get paid
- health care costs spiral upward at multiples of the cost of other goods and services
- small employers have gotten to the point of ending health care plans to avoid going out of business
- health care now consumes nearly 16% of every dollar generated by our national economy and is headed up
We must restore the consumer to his and her rightful place in the equation. One of the ways to do that is to cause the consumer to want to know the real costs, and to think seriously about seeing the doctor before deciding to do so on a whim. We cause that by having the consumer again be responsible for a larger part of what he or she consumes.
In order for this to happen, we must have truly transparent cost information available. We must have truly transparent quality information available. And, we must have truly transparent outcomes information available. These are roles in which government can legitimately play a part.
We must reward health care providers for being good at what they do. Providers with better outcomes and better pricing should be rewarded with more business. Those not measuring up to their peers should pay the price of full disclosure causing them to clean up their acts. These are roles in which government can legitimately play a part.
Government does not belong in the health care business. There are numerous examples all across the world that vividly point this out. The governments with single payer plans are in trouble. They are running out of money, have alienated their customers [who are also the taxpayers that refuse to pay any more for inferior services], and look longingly to the United States and what they see as the best health care system in the world.
It seems that we're the only people who don't recognize what we have and how we can make it even better.
Friday, April 27, 2007
State Children's Health Insurance Programs: Follow Up
The earlier Blog covering this subject discussed the incremental approach to government run health care and cited the use of the Children's program to cover adults.
Sen. Olympia Snow of Maine (supposedly a Republican but actually a RINO) introduced legislation Thursday to double the funding of this program over the next five years. This flies in the face of the real Republicans who wanted the funding levels reduced to end the improper use of the program using the purse strings.
She was joined in sponsoring this legislation by Sens. Jay Rockefeller (D-W.Va.) and Teddy Kennedy (D-Mass.)
While they were at it, they seized on this opportunity to also increase the coverage afforded under the SCHIP program to include mental and dental health care. This is such a good example of incrementalism, I couldn't help but post an update.
Sen. Olympia Snow of Maine (supposedly a Republican but actually a RINO) introduced legislation Thursday to double the funding of this program over the next five years. This flies in the face of the real Republicans who wanted the funding levels reduced to end the improper use of the program using the purse strings.
She was joined in sponsoring this legislation by Sens. Jay Rockefeller (D-W.Va.) and Teddy Kennedy (D-Mass.)
While they were at it, they seized on this opportunity to also increase the coverage afforded under the SCHIP program to include mental and dental health care. This is such a good example of incrementalism, I couldn't help but post an update.
If There Is Any Doubt About Government-run Healthcare...
We need simply look at the gyrations occurring in Congress as the “great debate” over SCHIP and Medicare Advantage takes place to see exactly where we’ll be if Healthy Wisconsin were to become the law in Badgerland.
SCHIP is being re-engineered to bring in more and more adults and to permit families of four earning over $80,000 per year to join. This is a very obvious expansion of government-run healthcare.
Medicare Advantage funding is being threatened because it represents an incursion of the private sector into the world of government-run healthcare (Medicare) that is a threat to all those whose goal is just that…government-run healthcare.
Doctors in Medicare would be favored by some of money freed up by the reductions in Medicare Advantage while SCHIP would get the rest because there simply isn’t enough money to go around even with huge increases in tobacco taxes. Medicare Advantage could disappear as the direct result of this move. In this instance, oldsters who had selected Medicare Advantage will be forced back into Medicare parts A & B with lesser benefits available to them at higher costs. This subtle form of rationing should give us all pause. Future forms of rationing promise to be far less subtle.
Politicians running healthcare is oxymoronic. They will be unable to resist the temptations of all that power…and you and I will suffer…just as those on Medicare Advantage programs are about to suffer. What will it be next? Will it be mandatory health prevention as suggested by one presidential aspirant? What will happen with all that data that is collected? And then where will it go? Will we ultimately see consciously controlled death rates since death is less expensive than living with and treating a disease? That happens in single payer countries around the world today. What makes us think that it wouldn’t happen here as well?
SCHIP is being re-engineered to bring in more and more adults and to permit families of four earning over $80,000 per year to join. This is a very obvious expansion of government-run healthcare.
Medicare Advantage funding is being threatened because it represents an incursion of the private sector into the world of government-run healthcare (Medicare) that is a threat to all those whose goal is just that…government-run healthcare.
Doctors in Medicare would be favored by some of money freed up by the reductions in Medicare Advantage while SCHIP would get the rest because there simply isn’t enough money to go around even with huge increases in tobacco taxes. Medicare Advantage could disappear as the direct result of this move. In this instance, oldsters who had selected Medicare Advantage will be forced back into Medicare parts A & B with lesser benefits available to them at higher costs. This subtle form of rationing should give us all pause. Future forms of rationing promise to be far less subtle.
Politicians running healthcare is oxymoronic. They will be unable to resist the temptations of all that power…and you and I will suffer…just as those on Medicare Advantage programs are about to suffer. What will it be next? Will it be mandatory health prevention as suggested by one presidential aspirant? What will happen with all that data that is collected? And then where will it go? Will we ultimately see consciously controlled death rates since death is less expensive than living with and treating a disease? That happens in single payer countries around the world today. What makes us think that it wouldn’t happen here as well?
Wednesday, April 25, 2007
Health Care - The Uninsured: Part Two
The group of uninsured people in the U.S. is dynamic, as mentioned in my earlier blog; Wisconsin has an estimated 546,870 people, or about 9.9% of our population, who are uninsured at any one point in time. These numbers rely upon the use of Census information, analysis by the Blue Cross Blue Shield Association and estimates by the Congressional Budget Office.
We established the four major groups:
*people who are eligible for existing government programs but who have failed to enroll
*middle class people who earn $50,000 or more per year and who believe they cannot afford or choose not to buy insurance
*people who are classified as the short-term uninsured [up to two years uninsured, recent college graduates, seasonal workers and those who feel no need for insurance [or “the invincible” as I intimated in my last blog]
*the long-term uninsured who simply have fallen through the cracks and remain uninsured for a time span beyond two years
What is the number of Wisconsin citizens that fall into each category?
First, the group that already qualifies for government programs but has failed to enroll represents an estimated 204,529 people.
Second, the group classified as middle class who either cannot afford to or have chosen not to buy insurance is estimated at 174,998 people.
Third, the short-term uninsured is estimated to contain 68,359 people.
Based on these estimates, then, the long-term uninsured group is comprised of an estimated 98,984 people or about 1.8% of Wisconsin’s population.
Does this mean we still have a serious problem as far as the number of uninsured in Wisconsin and the country? Absolutely we do. Does it mean that we have to turn the present system on its head and move to “universal health care” (the euphemism for Single-Payer coverage)? Absolutely not.
It does mean that we need to bring all those who do not have insurance into the insurance system. It means that costs incurred by those providers who are not paid for services rendered are being shifted to the third party reimbursement system. That simply magnifies the increases in health care costs and, thus, insurance premiums year over year.
It also points up the truth that many do not want to accept: our problem is a health care cost problem and not a health insurance cost problem. Health insurance increases mirror the increased costs of health care, not the other way around.
Insurance by its nature was always intended to help each of us defray the unexpected catastrophic expenses that might befall us. We have come to expect that health insurance will cover everything. Prepaid health care has removed consumers from the equation...to the detriment of the whole system!
It’s as if our auto insurance covered the cost of gasoline and oil changes in addition to collision and comprehensive damage expense. It’s as if our homeowners’ coverage covered the cost of a new garage door opener when it quit working or a new coat of paint every few years.
Reform of our health care delivery system is too important to permit ourselves to be confused by “sleight of hand”. We have to get it right for we’ll most likely not have another opportunity to do so!
We established the four major groups:
*people who are eligible for existing government programs but who have failed to enroll
*middle class people who earn $50,000 or more per year and who believe they cannot afford or choose not to buy insurance
*people who are classified as the short-term uninsured [up to two years uninsured, recent college graduates, seasonal workers and those who feel no need for insurance [or “the invincible” as I intimated in my last blog]
*the long-term uninsured who simply have fallen through the cracks and remain uninsured for a time span beyond two years
What is the number of Wisconsin citizens that fall into each category?
First, the group that already qualifies for government programs but has failed to enroll represents an estimated 204,529 people.
Second, the group classified as middle class who either cannot afford to or have chosen not to buy insurance is estimated at 174,998 people.
Third, the short-term uninsured is estimated to contain 68,359 people.
Based on these estimates, then, the long-term uninsured group is comprised of an estimated 98,984 people or about 1.8% of Wisconsin’s population.
Does this mean we still have a serious problem as far as the number of uninsured in Wisconsin and the country? Absolutely we do. Does it mean that we have to turn the present system on its head and move to “universal health care” (the euphemism for Single-Payer coverage)? Absolutely not.
It does mean that we need to bring all those who do not have insurance into the insurance system. It means that costs incurred by those providers who are not paid for services rendered are being shifted to the third party reimbursement system. That simply magnifies the increases in health care costs and, thus, insurance premiums year over year.
It also points up the truth that many do not want to accept: our problem is a health care cost problem and not a health insurance cost problem. Health insurance increases mirror the increased costs of health care, not the other way around.
Insurance by its nature was always intended to help each of us defray the unexpected catastrophic expenses that might befall us. We have come to expect that health insurance will cover everything. Prepaid health care has removed consumers from the equation...to the detriment of the whole system!
It’s as if our auto insurance covered the cost of gasoline and oil changes in addition to collision and comprehensive damage expense. It’s as if our homeowners’ coverage covered the cost of a new garage door opener when it quit working or a new coat of paint every few years.
Reform of our health care delivery system is too important to permit ourselves to be confused by “sleight of hand”. We have to get it right for we’ll most likely not have another opportunity to do so!
Health Care - The Uninsured
Part of virtually every discussion concerning the state of health care in the U.S. is a reference to the uninsured. Given that, we assume that the group of uninsured must be a very important part of the problem. We need to better understand just what is meant by the ubiquitous “uninsured”. We’ll likely all agree that it is a very serious part of the problem confronting us as a nation.
We hear of the ever-increasing number of uninsured. The former top number for the United States was 46 million…until it became 47 Million. That seemed to occur overnight. I don’t know who is responsible for keeping track of that number, but they sure seem on top of their game! If only our census were as accurate as the press and “special interest groups” [remember the earlier blog about special interest groups?] would have us believe is the estimate of uninsured.
Let’s take a look at what comprises the “uninsured”. First…this is not a static group of people; instead, the number of “uninsured” is an estimate…a snapshot…of the number of folks thought to be without health insurance on any given day of the year.
Please also note that I used the phrase, “without health insurance”. That is a much different phrase than had I said “without access to health care”. Every person in the United States has access to health care…by virtue of Federal law. It is true however that much of that health care is received in Emergency Rooms, and that is a significant part of our nation’s problem. The care is received too late in the wrong setting to be of lasting value to the individual. The care is also delivered in the most expensive possible setting and much of that cost is unreimbursed and therefore is “shifted” to the insurance premiums paid by individuals and employers.
The current number de jour for the uninsured in Wisconsin is 546,870. That number has increased each year but has remained fairly constant so far as it’s comparison to the total population of the state. Using the most recent census numbers for Wisconsin, coupled with an analysis by the Blue Cross Blue Shield Association and the Congressional Budget Office estimates of the make-up of the group called “uninsured”, we see an emerging picture made up of these parts:
*people who are eligible for existing government programs but who have failed to enroll
*middle class people who earn more than $50,000 per year and who believe they cannot afford or choose not to buy insurance
*people who are classified as the short-term uninsured [up to two years without insurance, recent college graduates, seasonal workers and those who are young and therefore invincible]
*the long-term uninsured who simply have fallen between the cracks and remain uninsured for a long time
In Part Two of this blog, we’ll look at the distribution of Wisconsin’s 546,870 uninsured based upon the segments identified above. I think you’ll be surprised; I know I was. And I’ve been more intimately involved in the insurance and health care industries than many.
We hear of the ever-increasing number of uninsured. The former top number for the United States was 46 million…until it became 47 Million. That seemed to occur overnight. I don’t know who is responsible for keeping track of that number, but they sure seem on top of their game! If only our census were as accurate as the press and “special interest groups” [remember the earlier blog about special interest groups?] would have us believe is the estimate of uninsured.
Let’s take a look at what comprises the “uninsured”. First…this is not a static group of people; instead, the number of “uninsured” is an estimate…a snapshot…of the number of folks thought to be without health insurance on any given day of the year.
Please also note that I used the phrase, “without health insurance”. That is a much different phrase than had I said “without access to health care”. Every person in the United States has access to health care…by virtue of Federal law. It is true however that much of that health care is received in Emergency Rooms, and that is a significant part of our nation’s problem. The care is received too late in the wrong setting to be of lasting value to the individual. The care is also delivered in the most expensive possible setting and much of that cost is unreimbursed and therefore is “shifted” to the insurance premiums paid by individuals and employers.
The current number de jour for the uninsured in Wisconsin is 546,870. That number has increased each year but has remained fairly constant so far as it’s comparison to the total population of the state. Using the most recent census numbers for Wisconsin, coupled with an analysis by the Blue Cross Blue Shield Association and the Congressional Budget Office estimates of the make-up of the group called “uninsured”, we see an emerging picture made up of these parts:
*people who are eligible for existing government programs but who have failed to enroll
*middle class people who earn more than $50,000 per year and who believe they cannot afford or choose not to buy insurance
*people who are classified as the short-term uninsured [up to two years without insurance, recent college graduates, seasonal workers and those who are young and therefore invincible]
*the long-term uninsured who simply have fallen between the cracks and remain uninsured for a long time
In Part Two of this blog, we’ll look at the distribution of Wisconsin’s 546,870 uninsured based upon the segments identified above. I think you’ll be surprised; I know I was. And I’ve been more intimately involved in the insurance and health care industries than many.
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