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Monthly Archives: October 2009

America’s Next Great Pundit?

Okay, it’s official. I just clicked “submit” and entered myself into the Washington Post‘s contest to find “America’s Next Great Pundit.” Will I win? I think the odds are stacked against me–I’m sure a ton of people entered–but I wouldn’t have taken the time to enter if I didn’t at least think I stood a chance…..which conjures up a classic scene from the movie Dumb & Dumber:

Lloyd: What do you think the chances are of a guy like you and a girl like me… ending up together?
Mary: Well, Lloyd, that’s difficult to say. I mean, we don’t really…
Lloyd: Hit me with it! Just give it to me straight! I came a long way just to see you, Mary. The least you can do is level with me. What are my chances?
Mary: Not good.
Lloyd: You mean, not good like one out of a hundred?
Mary: I’d say more like one out of a million.
[pause]
Lloyd: So you’re telling me there’s a chance… *YEAH!*

Anyway, here’s my 400-word submission and my 100-word bio for those who are interested. If you’re a regular reader of the blog, you’ll recognize that my submission is a revised version of a post I wrote some time ago. Hopefully, it’s more developed now.

If You Like The Health Insurance You Have Now…

At every opportunity, President Obama has sought to reassure Americans that “If you like the health insurance you have now, you can keep it.” His strategy is obvious: people who like—or at least don’t dislike—the status quo will resist change, so they must be assured that health “reform” doesn’t mean “change.” The problem with this approach, however, is that it makes people complacent when they ought to be apprehensive.

“But I have insurance,” you say. Okay, but here’s the problem: Yes, health reform is about providing affordable coverage for the 45 million people living in the United States who are uninsured, but it is also about ensuring health security for the rest of us at risk of losing our current coverage, and eliminating the scourge of underinsurance that bankrupts nearly one million Americans annually.

For those of us with health insurance through our job who think we’ve got things under control, the reality is that little stands between us and being uninsured other than an employer who woke up this morning feeling like they could still afford to offer us insurance. Yet costs are rising so quickly that without system-wide price controls, our employers are likely to wake up one day and think, “I can’t run a business like this.” When offering insurance becomes prohibitively expensive, they may scale back benefits—leaving us underinsured—or they may stop offering it altogether. And buying insurance on our own is even more expensive. Just like that, we can say goodbye to our coverage.

Why is it so hard to get this point across? Because we prefer the devil we know to the devil we don’t know. The insured are wary of reform because they know what they stand to lose, but not what they stand to gain. Ironically, many of the town hall protesters who held signs angrily declaring “keep the government’s hands off my health care” are likely to lose their coverage—not because the government will take it from them, but because the current system is unsustainable.

Obama’s message gets it half right. We do need to reassure people who like what they have now that health reform poses no threat to their coverage. At the same time, however, we must give people the other side of the story: Without meaningful health reform, there’s a very real chance that they will lose the coverage that they have now.

Bio

I’m a health policy doctoral student at the University of North Carolina with a political science focus. Years of schooling and hard work—both in and out of Washington—have made me a health care expert, but it is my South Georgia roots that set me apart, enabling me to communicate complex issues to a lay audience. My writing is professional yet conversational, serious yet humorous, like a dialogue with colleagues over pints of beer. America deserves an honest and entertaining pundit who adheres to high intellectual standards and is passionate about making his ideas widely accessible to the public.

 
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Posted by on October 20, 2009 in Blog Updates

 

Narrowing the Primary Care — Specialist Wage Gap

I wrote recently about a study that examined the link between the proportion of primary care physicians in an area and that area’s level of health care spending per capita. The finding was that primary care doctors are typically less expensive to have around than are specialists, which makes sense to most of us, I would assume.

It typically takes more education to become a specialist than a generalist, and specialists get to use fancier technology. We value education in this country, we love the latest high-tech “toys” and we appreciate that specialists went into deep debt for their years and years of education. So we’re okay with paying them more. Lots more. But is it really worth it? That’s the question that a recent article asks in examining legislation in the Senate that would increase reimbursement for primary care physicians and decrease levels for specialists. It’s worth a read–and some serious reflection.

 
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Posted by on October 20, 2009 in Uncategorized

 

The President’s Job? Weighing In

In an Associated Press story hot off the presses we are told that when it comes to arguably the most ambitious public policy goal of the last 50 years–comprehensive health reform–the leader of the free world has a role to play. That’s not surprising. What is surprising is that his role is not to lead the effort, but rather to “weigh in when it’s important to weigh in.” Really?!

Call me naive, but I expect the President of the United States to do more than just throw his two cents in when they pass the plate to collect ideas, especially when the topic is a part of the platform on which he campaigned for the office–and the primary reason that this author voted for him.

It’s quite clear that Obama favors the public option, but he’s now going to take a backseat in the debate while Congress works to reach a compromise. Is that really how one stands up for what they believe is right? It’d be one thing if Obama didn’t claim the public option was a priority. Then we could just agree to disagree. What I take issue with is his championing the idea rhetorically, but not pursuing it tenaciously.

Now, to be fair, maybe this is his version of “speak softly and carry a big stick.” Perhaps Rahm Emanuel is that stick. If so, then there will be a great deal of compromise reached in back room meetings, with serious threat leveling and arm bending. If that’s the case, then my criticisms are leveled prematurely, and it’s best that such ugly politics are kept out of the public eye–lest they tarnish the President’s approval ratings. Then again, if everything the President does is carried out behind the scenes, will he be able to make as strong of a claim to victory should health reform pass? As with most of my other musings, I suppose that only time will tell.

 
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Posted by on October 19, 2009 in Uncategorized

 

Keeping Docs On The Sidelines

Amy Goldstein had a nice piece in Friday’s Washington Post exploring the AMA’s fence-straddling on the health reform issue. Now, before I go any further, it’s important to acknowledge that the AMA doesn’t speak for all–or even most–physicians. There can be little doubt, however, that the AMA speaks more loudly than any other physician group, because it is well-organized, well-financed, and well-known. Why should we care if the nation’s leading physician lobby is wavering on health reform? Because to date they have been largely uninvolved in the debate. If they suddenly enter the fray with gusto, they stand to greatly influence the final outcome of reform.

As has become abundantly clear by this point, health care reform has really been framed as health insurance reform, and the natural “enemy” of that effort has been health insurers–with America’s Health Insurance Plans serving as the most visible target. No doubt, that approach was decided upon for largely political reasons. Specifically, the public tends to hold physicians in high regard, while insurers are more often the object of scorn. Thus, it takes much less effort to convince people that insurance companies need to be made more accountable than it does to convince people that their doctors need to make less money (or some such thing).

Now, I happen to think that health reform–done right–will require two distinct phases. The first is the creation of a revised payment structure and the second is the reformation of the provider-delivery system. I firmly believe that when the political calculations were being made, it became clear that a one-and-done effort at addressing both the payer and provider components of health care wouldn’t be politically feasible. Why? Because the payer and provider groups would unite in their opposition, and history teaches us that such powerful entrenched interests are nigh impossible to overcome. Instead, I believe, the decision was made to employ a divide-and-conquer strategy. That means aiming for one target first, before following up with the second act. Of course, if you were paying attention earlier in this post, it should come as no surprise that insurers were first up on the chopping block.

But the AMA is made up of some pretty smart folks. I think they understand that they are sitting in the on-deck circle; that their livelihood will be coming under fire next. If, that is, part one of reform is successful. As the political strategy becomes more apparent, it seems increasingly likely that the docs are going to become more vocal in the debate. They sat on the sidelines for a while, content to let insurers catch the brunt of the reforms. Now, they may be rethinking that strategy, and planning to come to bat for the insurance companies, if only to save their own skin. Of course, the flip-side of their decision is that, if they oppose reform and it passes anyway, they will have spent whatever political capital they were amassing by sitting this one out so far. Consequently, Congress might bring the hammer down even harder during act two. Whatever the AMA decides to do, you can be certain that the decision wasn’t made lightly.

 
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Posted by on October 19, 2009 in Uncategorized

 

Public Options and Cadillac Plans

With health reform having made it through the five key Congressional committees, it’s becoming increasingly clear that health insurers are on their heels. In fact, despite the widely held view that the AHIP-PWC report has unintentionally backfired and strengthened political support for reform–even including a public option–the insurers followed their first press release with another one. This time, the study came from the Blue Cross Blue Shield Association rather than AHIP, but as Jonathan Cohn reports, the credibility of the study conducted by Oliver Wyman was no better than its predecessor from PriceWaterhouseCoopers.

One of the key elements of reform to which insurers are opposed is the taxing of so-called “Cadillac Plans.” Their reasoning? These plans are big, expensive, moneymakers for the insurers. If they are forced to start paying a 40% excise tax on the value of every dollar above the government’s cap ($8,000 for an individual plan and $21,000 for a family plan) two things will happen. First, they’re going to see their profits from these plans shrink as a direct result of the tax. For every $100 they bring in over the cap, they’ll be required to turn $40 back to the government. Ouch. More important, however, is the incentive this will create for insurers to walk away from offering such high cost plans. Insurers will be led by financial motivations to slaughter their cash cows. If that seems a little ironic, it’s because it is. The excise tax manages to do a brilliant thing: It capitalizes on insurers’ greed to manipulate their behavior in a favorable direction.

Insurers’ other worry? The return of the public option, which they may very well have facilitated by their own actions. Again, why are they concerned about the creation of a robust public option? Here’s a hint: It’s not because they’re concerned for the Average Joe. Insurers are worried about the very real competitive threat a strong public option would pose to their ability to make outrageous profits and offer policies with suboptimal benefits. Of course, there’s still a lot of room for debate over the public option and what form–if any–it will take as reform goes forward. All that’s certain is that the public option–while not the end-all be-all of reform–is one of the things worth fighting for, and if something has to be fought for, that implies that someone else is fighting against it. I think that the events of the last week have made it abundantly clear (if it wasn’t already) that the insurance companies are the opponent here, which begs the question: Have insurers made enough friends to support them in their fight, or are we watching the desperate displays of an industry about to be completely revolutionized against its will?

 
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Posted by on October 16, 2009 in Uncategorized

 

How Insurance Companies Are Like Strippers

The big news this week, other than the outcome of the Senate Finance Committee’s vote on Tuesday, was the release of a report on the “Potential Impact of Health Reform on the Cost of Private Health Insurance Coverage.” The report, released just days before the crucial vote, is the result of a America’s Health Insurance Plans (AHIP) contract with the reputable consulting firm PriceWaterhouseCoopers (PWC).

The commissioned study finds that the provisions of the Senate Finance bill will cause health insurance premiums to increase. There’s just one problem: Even PWC admits that its study makes several unreasonable assumptions that ultimately undermine the credibility of their findings. Why make such flawed assumptions? Well, basically because AHIP paid them to. This is little more than a clever way for a lobbying firm (AHIP) to present its position through the guise of a well-respected consultancy (PWC). It’s credibility laundering, or as Ezra Klein puts it: “The consultancy gets a paycheck, the outside group gets a press release, and everyone goes home happy.”

If you need more confirmation that the PWC analysis is little more than an insurance lobbyist wolf in a sheepish consultant’s clothing, you should take a look at what Jonathan Cohn and Harold Pollack have to say. Pollack’s piece is especially critical of what reports like this do to undermine people’s faith in the academic and scientific communities. An independent analysis (i.e., not blinded by huge piles of money) was conducted by MIT economist Jonathan Gruber, who finds that contrary to PWC’s report, premiums can be expected to decrease for most people as shown here:


It’s easy enough to understand that the health insurance industry is opposed to the health reform bill just passed by the Senate Finance Committee, but the real question is why? Again, Ezra Klein comes through with 4 key points explaining what insurers want:

  1. A stronger individual mandate
  2. Elimination of the excise tax on high-cost health care plans
  3. No Medicare payment cuts
  4. No New Taxes

Translation? Insurance companies want everyone to be covered, but they don’t want to see their profit margins decrease in the process. Real translation? Insurers are all about the money, which brings me to the point of this post, which is how insurance companies are like strippers.

Strippers make gobs of money selling an illusion. They dance around, displaying their bodies to men in exchange for tips. But in order for them to make real money, they have to find a way to make the men believe that they are interested in them. You see, if a stripper pays special attention to a man, he’s likely to give her more money. She knows this of course, and she likes the money. Meanwhile, he lies to himself and is convinced that she’s not doing it for the money.

Insurers are no different. They, too, sell an illusion. They offer people a false sense of security by convincing them that they are adequately insured when in fact, a great many people are under-insured. The insurer makes its money, and when the beneficiary files a claim–like the balding, overweight man who thinks buying a drink for his stripper counts as a date–they quickly find out that the insurer’s actually not at all into them. They just want your money, and they’ll do just about whatever it takes–except actually covering your care–to get it.

We need to wake up and realize this opposition to reform for what it is: greed. Fortunately, there is hope that the insurance industry has just shown its true colors to the public through the PWC report. Many are now convinced that, thanks to the insurers’ salvo, we’re actually closer to the public option than we were before, as Democratic and public opposition to the status quo has the potential to be galvanized around the very transparent and highly self-interested motives of the insurance industry. I certainly hope so.

 
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Posted by on October 15, 2009 in Uncategorized

 

Yesterday’s Senate Finance Vote

When Tuesday began, the chatter was all about Olympia Snowe. Would she or wouldn’t she vote in favor of the Senate Finance Committee’s health reform bill? What would it mean going forward? Then there was the lone spotlight cast on Ron Wyden by none other than Jonathan Cohn, who interviewed him. Wyden wants to make the self-employed and small business insurance exchange available to everyone–something he’s calling “free choice”–but the amendment he introduced was voted down, and Wyden’s none too happy about that, because he thinks it will leave health care costs left to grow unchecked. So there was some speculation that he might vote against the bill.

Then the meeting came and went. Both Snowe and Wyden voted for the bill, and it passed by a margin of 14-9. In particular, Sen. Snowe expressed her views on the bill by saying “Is this bill all that I could want? Far from it. Is it all that it can be? No. But when history calls, history calls. And I happen to think that the consequences of inaction dictate the urgency of Congress to take every opportunity to demonstrate its capacity to solve the monumental issues of our time.” But she also hedged her bets going into the floor vote and, hopefully, a conference committee bill, making it very clear that “My vote today is my vote today. It doesn’t forecast what my vote will be tomorrow.” I’m sure Democrats breathed a huge sigh of relief followed by a collective gulp. We’ll soon see if they continue to work hard to keep her on board. Every indication is that that will require keeping the bill’s CBO score very close to where it is now. (If you really want to get the scoop on the meeting, you should read the transcript of Katharine Seelye’s live blogging session.)

Folks, this is where it gets really interesting. Every major committee in Congress with authority over health care has passed a reform bill. Soon, we’ll see just two bills–one in the House and one in the Senate–and that should clear up a great deal of the confusion surrounding the various details of the plans. I’m looking forward to filling you in on that when it happens. For now, I’m just thrilled that the country has taken one more step in the right direction.

 
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Posted by on October 14, 2009 in Uncategorized

 

Where Reform Goes From Here…

For all of the talk about the various health reform bills, the fact of the matter is that each chamber of Congress will debate and vote on a single bill on the floor. Because I’m incredibly busy lately, and don’t get paid to blog, I refer you to Ezra Klein for the details on how this works.

I’d also like to point out that the new thinking with the state-optional public option is going the way of organ donation. That is, make participation the default, so that states have to actively opt-out of the public option. The thinking is that states are lazy and will be more likely to participate if things are structured this way. Whereas, if effort were required to opt-in, they’d be less likely to do so. Makes sense, and has certainly been demonstrated to work in states whose DMVs have gone this route on organ donation.

 
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Posted by on October 14, 2009 in Uncategorized

 

Wilford Brimley Is The Problem With The Health Care System

If you’ve watched television at all since 1995, you’ve probably seen Wilford Brimley as the spokesperson for Liberty Medical’s diabetes testing supplies. Brimley actually pronounces it like “Dia-Beet-is” or “Di-uh-Beet-us” and that fact alone has gained him a cult following. Brimley tells people that if they, like him, have diabetes, it is important for them to regularly check their blood sugar, and that Liberty Medical will send testing supplies to their home at no cost to them and will bill Medicare on their behalf. What’s wrong with this picture? Well, it pretty much encapsulates everything that’s wrong the health care system: consumers are insulated from the costs of their care, providers are motivated to make a profit, and Wilford Brimley looks like a walrus. In case you haven’t seen the video, take a look:

All you have to do is call the number, and Liberty Medical takes care of the rest. Sound too good to be true? It’s not. Liberty Medical’s making a ton of money off of this. In fact, they make so much money off of it that they’re able to hire Wilford “The Walrus” Brimley and run these ads on television all the time. What you’re witnessing is nothing more than a “Medicare Mill.” People need services, so the supplier of those services markets itself to them aggressively, and may even suggest that there are other things the people need–even if that’s not entirely true. If Medicare will cover it (i.e., if Liberty Medical can get paid) and there’s no cost to you, aren’t you likely to agree to letting them send the stuff to you? After all, it doesn’t cost you anything, so how can you lose?

This is precisely what happens when a third-party payer gets involved in the patient-provider relationship. The patient trusts the provider to provide the goods and services that are in the patient’s best interests. The provider strives to provide the best care to the patient possible, but also makes a living doing it, and therefore seeks–like any business–to maximize profits. To the extent that the insurer insulates the patient from costs and pays the provider, we have the potential for these types of Liberty Medical operations that drive up costs and spending for unnecessary care. Now, that doesn’t mean that we don’t need the risk pooling mechanism of insurance. Rather, it means that we need heavy government regulation of insurers. That’s the only way out of a situation where insurers either “Die-or-beat-us.”

 
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Posted by on October 13, 2009 in Uncategorized

 

A Lesson In Actuarial Value

By now it’s clear to most everyone that health care reform is really health insurance reform. Most of the more substantive changes contained in the major health reform bills in Congress are targeted at health insurers. For example, all of the bills would eliminate insurers’ ability to deny coverage to anyone on the basis of a pre-existing condition. At the same time, the bills require all individuals to purchase health insurance coverage or face a financial penalty.

Many Americans are up in arms over the idea that the government will “force” them to buy insurance. I guess I can sort of see why that would bother some people, but I think that once we take a look at what the government is actually doing when it comes to insurance, perhaps we won’t be so outraged–at least not at the government. Private insurers on the other hand, well…..

The most common way of assessing the level of coverage offered by a health insurance plan is to look at the plans generosity as measured by its actuarial value. Put simply, actuarial value is how much of the costs of care are covered by the insurer out of pooled premiums. The rest (i.e., 100% of costs – actuarial value) is paid for by the consumer. Now, this is not quite the same as coinsurance. We are all familiar with the idea that once we’ve reached our deductible our insurer pays 80% of costs and we pay 20%. But such a plan’s actuarial value is not 80%, because we have to account for all of the out-of-pocket expenses including the deductible. Make sense?

So here’s a chart showing the average actuarial value of employer-based as well as non-group (i.e., individual) insurance plans, along with the range of actuarial values for plans outlined under the various health reform bills in Congress. Remember, a higher actuarial value means that your insurer pays a greater portion of the cost of your care, and consequently that you pay less out-of-pocket. (You’ll need to click it to see a larger version.)


The bottom line? Every bill in Congress would be a substantial improvement to the plans available on the non-group market, and every bill in Congress would have plans that exceed the average actuarial value of current employer-based plans. If you’ve ever looked at your current insurance coverage and thought: “I wish I had better health insurance benefits.” Then maybe you should write your member of Congress and urge them to pass reform this year.

 
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Posted by on October 13, 2009 in Uncategorized

 
 
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