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Positive effects, deep flaws - Health Care Rx Panelists

Positive effects, deep flaws

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The passage of the health insurance legislation has two overriding positive effects: it brings more clarity to the health insurance issue and it demonstrates the President's ability to govern.

The legislation also affirms that Americans should not face financial ruin from being unable to afford health insurance. It also makes good progress on prevention, on increasing the supply of health care professionals, on eliminating the flawed "doughnut hole" in the Medicare prescription drug system, and on beginning to address the long term care crisis. These are the good elements of this legislation.

As health insurance system restructuring, the legislation has deep flaws that must be addressed in subsequent legislation. We cannot guarantee coverage, prevent people from being subject to pre-existing condition exclusions, and prohibit insurers from canceling policies for those who become ill during the policy period without significantly increasing costs for all policyholders unless we cause healthy uninsured people to buy insurance, reduce what we pay health care providers, or levy more taxes on people to pay for increased subsidies.

The penalties for healthy people refusing to buy insurance are far too low and do not take effect for several years. Reducing payments to doctors and hospitals either drives them out of the system or causes them to drop Medicaid patients. Raising taxes on everyone to pay for these increased costs worsens our economic situation.

One situation illustrates my point: in the 8th Ward of Washington D.C., there is a severe shortage of specialists, including one urologist for a large population. Most people have health insurance or Medicaid. After this legislation passes, there will be even more people with insurance, but still a severe physician shortage. We have more work to do before our health care system is viable. Health insurance affordability does not produce health care access.

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This page is a archive of recent entries in the Individual mandate category.

Employer health plans is the previous category.

Health costs is the next category.

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All together now: We need comprehensive reform - Health Care Rx Panelists

All together now: We need comprehensive reform

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Anthem Blue Cross's proposed 39 percent premium increase highlights the stark divide between liberals and conservatives in health reform. Harry Reid, key figures in the Obama administration, and liberal commentators are harshly criticizing Anthem. Conservatives argue that such premium increases are instead the product of government red tape and regulations.

Although Anthem and its parent company WellPoint make convenient poster children for the greediness of the insurance industry, the real lesson from this episode does not concern the real or alleged perfidy of any one firm. Rather, this episode underscores the need for comprehensive reforms if we have any realistic prayer of achieving universal coverage. Anthem is not especially unethical or mean. The company is trying to survive and thrive within an insurance market that is not sustainable, and that makes it too hard to treat people with the decency everyone deserves.

To anyone who follows health policy, there is nothing especially surprising going on here. For what it says and what it does not say, an editorial in today's Wall Street Journal is especially instructive:

Wellpoint's rate hikes are the direct result of the Golden State's insurance regulations--the kind that Democrats want to impose on all 50 states. Under federal Cobra rules, the unemployed are allowed to keep their job-related health benefits for 18 to 36 months. California then goes further and bars Anthem from dropping these customers even after they have exhausted Cobra. California also caps what Anthem can charge these post-Cobra customers.

Most other states direct these customers to high-risk pools that are partly subsidized, but California requires the individual market to absorb the customers and their costs. Even as California insurers have had to keep insuring these typically older and sicker patients, the recession has driven many younger, healthier policy holders to drop their insurance--leaving fewer customers to fund a more expensive insurance pool....

This episode is a preview of the adverse selection that would happen nationwide if Obamacare passes. The Democratic bills would control what insurers could charge and force them to take all comers, regardless of health status. These burdens were supposed to be made tolerable by requiring all Americans to buy insurance or face a penalty. Yet when this "individual mandate" proved to be unpopular, Congress watered it down so that younger customers would be able to pay the penalty knowing they can wait until they're sick to pay the more expensive premiums. The only way an insurer can make up for these higher costs is to raise premiums.

This happens to be a tendentious reading of the Senate and House bills. Both bills include many measures, as well as implicit and explicit subsidies, to encourage young people to become insured. Fully implemented, "Obamacare"--for want of a better term-- will provide 11-figure annual subsidies to low-income Americans and the chronically ill to make sure that everyone has access to coverage and care. These policies, along with the regulatory structure of the insurance exchange, are specifically designed to prevent the adverse selection the Journal conjectures Obamacare will bring.

Not that the Wall Street Journal would applaud if House and Senate Democrats strengthened the individual mandate. Last January 30, here was that same editorial page describing Governor Schwartzenegger's failed health reform efforts:

What the California collapse should discredit in particular is the individual mandate as a policy tool for Republican reformers. This was Mr. Romney's enthusiasm for a time, helped along by the Heritage Foundation. But in order to be enforceable, such a mandate inevitably becomes a government mandate, and a very expensive one at that.

Voters are rightly concerned about health care, but they also don't want to pay higher taxes to finance coverage for everyone. Mr. Schwarzenegger's spectacular failure shows that there's an opening for Republicans to make the case for health-care reform based on choice and tax-equity, not mandates and tax hikes.

That last paragraph highlights what is missing in this morning's Journal editorial:
What would happen to these older and sicker consumers if Anthem were free to drop them or to charge them markedly higher rates for insurance coverage?

Today's editorial claims that premium hikes occurs because California will not allow Anthem to drop unprofitable classes of older and sicker customers, and that California imposes an accompanying cap on premiums. It goes on to claim that "most other states direct these customers to high-risk pools that are partly subsidized." Harvard researcher Katherine Swartz has carefully studied the operation of such high risk pools. The bottom line is unambiguous. These are public policy disasters.

According to the Government Accountability Office, only 200,000 Americans are now covered in such arrangements, while millions of needy people with chronic illnesses go without. Even before the current economic crisis, high-risk pools were simply overwhelmed. Participating patients who have average household incomes of only $41,000 pay higher premiums than private insurers typically charge healthy individuals. Very sick people face painful deductibles, lifetime expenditure caps, and mandatory waiting periods during which they accumulate daunting bills.

It's expensive to care for people who live with chronic illnesses or serious injuries. The Journal suggests that we can't cover our sick or injured, friends, relatives, and neighbors without a strong individual mandate. The Journal suggests that that we shouldn't do that, either. They add that voters (presumably rightly) don't want to pay higher taxes to cover everyone, either.

The logical consequence of these positions is to cast people adrift, perhaps making ourselves feel better by referring them to over-subscribed high-risk pools where they are assigned to the waiting list. Or we--taxpayers, insurers, providers, other participants in the insurance pool--can pony up to ensure that every American has access to needed care.

The longer we deny this reality, the further our market for individual and small-group health coverage will unravel, and the more needless human pain will be inflicted on people who need help.

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Attention you freakin' freeloaders who are pushing a "Public Option."

According to the Wall Street Journal, Anthem-Blue Cross LOST $58 Million in California, this past year, due to changes in COBRA regulations, by King Obummer.

Insurance companies are required to keep certain reserves on hand, pursuant to state law.

Either do your homework or move to where you can play "Freddie the Freeloader" in Canada, Britain, Cuba or Venezuela.

When health insurance is outlawed, only outlaws will have health insurance.

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This page is a archive of recent entries in the Individual mandate category.

Employer health plans is the previous category.

Health costs is the next category.

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Individual mandate means lower costs - Health Care Rx Panelists

Individual mandate means lower costs

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In a financial downturn, the healthy and the unemployed drop their health insurance; the wealthy resort to Health Savings Accounts (HSAs) and only the sick and chronically ill keep their insurance. These are the high users and when they represent a larger and larger percentage of the insured, it is easy to see why premiums soar. Only when everyone is required to have health insurance -- just as car drivers must have car insurance -- will the costs go down. Being insured covers health care costs, but it also assures a certain level of continuity and comprehensiveness that will provide cost savings even for the sick and chronically ill. The system must be universal, not necessarily single payer.

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The costs will come down, yes, but that doesn't help us. Great, the insurance companies not only get lower costs but more customers.

If you want lower costs to the American People, look elsewhere, or combine a mandate with strong mandatory cost controls or a public option.

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This page is a archive of recent entries in the Individual mandate category.

Doctors is the previous category.

Electronic medical records is the next category.

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Missing the Forest for the Trees? - Health Care Rx Panelists

Missing the Forest for the Trees?

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Mandates, whether for individuals or employers, are one of the most critical issues in the reform debate. Republicans fear employer mandates will impose significant financial burdens on companies and put them out of business. Democrats argue that employers have to take responsibility for the health of their workers. Both have a point.

Is it realistic to believe that if employers were not required to contribute funds to employees' health plans, they would reinvest that money into salaries? These days, sadly not. It follows that many businesses, fighting to stay alive in a global downturn, may choose the path of self-preservation and least expense. And if that path leads to a fine, management may very well choose it.

That's probably true in many, if not most, cases. Fortunately, there are a few notable and laudable exceptions in the business community. Starbucks, for example, is a successful American company that provides health benefits to all of its full and part-time employees. They serve as the example that comprehensive employee coverage and success in business aren't mutually exclusive.

On the other hand, if we legislatively compel employers to contribute to workers' health plans and the costs put them out of business, unemployment rises and with it, the ranks of the uninsured. And then we're back at square one because we'll be worse off than we currently are.

Rather than becoming mired in a debate about the means, let's focus on the desired end: How do we ensure that workers have good, reliable and continuous coverage without breaking the backs of America's small businesses?

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This page is a archive of recent entries in the Individual mandate category.

Electronic medical records is the previous category.

Health Care Reform is the next category.

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Expect Hidden Health Taxes - Health Care Rx Panelists

Expect Hidden Health Taxes

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As a nation, we face a binary choice when it comes to covering uninsured Americans: we either want universal health insurance, or we do not.

If we choose to build upon the 50-year-old employer-based health insurance system - which both President Obama and most employers seem keen to do - then employers must play a central role in funding that system.

Employers and the insured already pay a hidden health tax to pay for health care for the uninsured. According to "Hidden Health Tax: Americans Pay a Premium", a study conducted by Families USA with actuarial calculations by Milliman, the average U.S. family and their employers paid an extra $1,017 in health care premiums in 2008 to compensate for the uninsured.

Milliman found that $42.7 billion, representing 37 percent of health care costs for uninsured Americans, were unpaid in 2008. Who was then hit by the "hidden tax" in the form of higher health premiums? That would be employers, who passed a growing portion of these costs onto insured employees.

By directly taxing employers to cover the uninsured, there's more transparency and light brought to a process that's currently hidden, arcane and inequitable.

If private sector employers don't want to pay to achieve universal health care, then a public option is a must-included provision for health reform.

If, at the end of the health reform day, Americans do not believe that there is a moral imperative to achieve universal health insurance coverage, then the uninsured will continue to access the health system the way they do today: in expensive emergency rooms, retail pharmacies at full cost for prescriptions, and doctors' offices when they are treating conditions that could have been prevented more simply and cheaply.

And insured people and employers who pay premiums will continue to pay more and more hidden taxes.

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This page is a archive of recent entries in the Individual mandate category.

Employer health plans is the previous category.

Health costs is the next category.

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Highs and Lows - Health Care Rx Panelists

Highs and Lows

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The President was exceptionally eloquent in his grounding of health-care reform on moral arguments. He did many things very well:

• He made a persuasive case that, while the percentage of Americans completely without insurance coverage is relatively small, the percentage of Americans persistent insecure about health insurance is very high.
• He also made a cogent argument that when health care costs grow fast and crowd out other spending, we lose economic competitiveness.
• He stated his goals with great clarity. While I am disappointed that he did not focus on health improvement and health-care quality, his prioritization was a welcome contrast to his muddled messages over the last several months.
• His outreach to opponents on issues such as medical malpractice and low-cost coverage for the seriously ill were also welcome.

The proposed prohibitions on lifetime and annual coverage limitations, on denials of coverage for pre-existing conditions, and on terminations of coverage after someone becomes ill and the requirements for individuals to buy health insurance made sense, although an unintended consequence of a badly-designed employer mandate could be the destruction of even great employer-based health plans.

His case for the public option was flawed. State government regulation is the cause of lack of insurance competition. A public option does not create fair competition; it either creates unfair competition or it is ineffective. Nevertheless, I appreciated his message that achieving affordable coverage and care were more important than the litmus test of a public option.

He tread on dangerous ground when he spoke about financing. It's easy to talk about spending cuts, but brutally difficult to make them happen. When he speaks about "waste and abuse," he does not mention that one person's waste is another person's livelihood. There is a way to achieve these cuts, but the political challenges are enormous. The lack of specificity on how to pay for his proposals is the most serious issue in the speech.

Only time will tell whether his speech succeeded, but it was well-crafted and well-delivered.

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This page is a archive of recent entries in the Individual mandate category.

Employer health plans is the previous category.

Health costs is the next category.

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Back To School - Health Care Rx Panelists

Back To School

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If you go strictly by the calendar it wouldn't compute, but summer appears to be over in my corner of America. Wisconsin has been enjoying frankly autumnal weather for the past three weeks. The change in the weather combined with the general sense of let-down regarding the health-care reform legislative process have kept me from blogging for awhile. I truly wish I could get behind the House of Representatives on HR 3200, but they missed the mark, and by a wide margin. So now summer vacation is over and it's time to get back to work -- for me as well as congress.

I was very pleased this past Sunday to note that my friend, Serigraph CEO and Milwaukee JournalSentinel columnist John Torinus again did a really good job of highlighting the major deficiencies in HR 3200 in his weekly column. To paraphrase John in a nutshell: HR 3200 fails to address the $30 trillion unfunded liability for Medicare, fails to allow insurance to be purchased across state lines, fails to deliver pricing transparency, fails to deliver bundled pricing for care episodes, fails to mandate quality reporting and fails to stimulate individual responsibility for staying healthy. My biggest gripe is that the bill fails to address what I believe to be the root cause of the huge difference between what the U.S. spends as a percent of its GDP and the rest of the world, namely the incredible inefficiencies promoted by the piecework payment methodology we use. HR 3200 makes no serious provision for promoting patient-centered primary care which we, at QuadMed, have proven delivers higher quality care at lower cost. Nor does the bill provide any impetus to apply lean transformation principles to health care.

So, as I contemplate the topic of how, politically speaking, the Obama White House can get meaningful health-care reform legislation back on track, it is with John Torinus' observations freshest in my mind. I go back to a couple of principles I enumerated early on as an invited panelist for the Post: That health-care reform must be a separate issue from health-care delivery transformation. That our current non-system is un-sustainable and that merely deciding to pay more for the same-old-same-old is probably the worst option we face and shouldn't even be on the table.

So here are my recommendations: First, hit the brakes. I believe that people are as upset by the rush to jam through a more than 1000-page bill as they are about its estimated price tag. I learned a very helpful 'mental construct' when I worked in IT, called, "Good-Fast-Cheap." In essence, when rolling out any new project or system, you could have one or at most two out of the three -- but not all three at once. HR 3200 certainly came at us Fast, but it doesn't look too Good and it is certainly not Cheap.

Second, chunk out reform into multiple bills. To some extent, the Senate Finance Committee signaled last spring that it was contemplating reform as an opera in three acts when they published their three white papers. Determine which aspects of reform should be stand-alone legislation and take out the nice-to-have distractions (to be addressed in future legislation). The recent uproar over advance directives, necessary as they are, is a case in point. Here are my major chunks. Problem: 47 million uninsured. Solution: individual mandates, verified on the tax rolls and publicly supported for the impoverished; employer mandates to play-or-pay, with preferential tax treatment for those employers who deliver superior value for their employees. Problem: Inefficient, fragmented, expensive care. Solution: Patient-centered primary care, which leads to overall better outcomes at lower cost. While we're at it, nuke the toxic Current Procedural Terminology (CPT) piecework payment methodology for chronic care management and replace it with a pleasant mix of capitation, fee-for-service and just a gentle sprinkling of pay-for-performance. Address the deficiencies noted in paragraph 2 above. Insurance reform as a separate bill. Wellness incentives as a separate bill (Sen. Enzi, anyone)? Tort reform must be addressed, but again, as a separate bill.

Third, strive for bipartisan solutions. 'Nuff said.

As the August congressional recess comes to an end, it should be "back to school" time for our elected officials in Washington. Time to put the summer behind, hit the books and focus a little "remedial education" on creating a sustainable model of health-care financing that doesn't bankrupt employers and which doesn't keep shoving under-funded health-care liabilities onto our children to pay for later.

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This page is a archive of recent entries in the Individual mandate category.

Employer health plans is the previous category.

Health costs is the next category.

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Are Member-Owned Cooperatives the Answer? - Health Care Rx Panelists

Are Member-Owned Cooperatives the Answer?

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Whether member-owned cooperatives can create an affordable health insurance option to get more Americans covered depends on a variety of factors, some of which are unrelated to the characteristics of the cooperative:
• Whether the cooperatives are required to take in anyone who applies for coverage, regardless of medical history or status (this feature is called guaranteed issue);
• Whether lower-income insured participants are subsidized in some way to make insurance affordable;
• Whether the cooperatives can define a reasonable benefit package without a lot of political interference that adds expensive, marginally-beneficial coverage mandates; or
• Whether elected officials will allow the cooperative to operate as cost-efficiently as possible, or whether they will try to impose a variety of policies on them unrelated to their core mission, such as the requirement that the cooperatives pay "prevailing wages" or requirements that they get work done via preferred providers of services who are major supporters of particular elected officials.

The other issue specifically relevant to the cooperatives is whether they can attract a broad risk pool, including not only the older, uninsured Americans or low-income uninsured, but also the healthy, young insured. Unless healthy people are part of the insurance pool to subsidize the unhealthy, it will not work. To attract the healthy, young insured, there must be an individual mandate, that is, a requirement that every adult American purchase health insurance. Without a broad individual mandate, the cooperative is unlikely to have an economically-viable broad insurance pool.
I would hope that this cooperative gives well incentives to its members and rewards high-quality care through its payment systems. If it does, it could make a major contribution not only to broadening insurance coverage, but improving the quality of care.

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I'll be bleeped if I'm going to use my 25 year old meager income to subsidize anything but a public option... co-ops aren't going to be able to compete in cost, and I'm not going to pay money in a governmental giveaway of corporatism to the insurance companies that have been bleeding us dry.

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About this Archive

This page is a archive of recent entries in the Individual mandate category.

Employer health plans is the previous category.

Health costs is the next category.

Find recent content on the main index or look in the archives to find all content.

About this Archive

This page is a archive of recent entries in the Individual mandate category.

Health costs is the previous category.

Insurance is the next category.

Find recent content on the main index or look in the archives to find all content.