By Steve Schulte of
Health Advocate Solutions
If you pay some close attention both to casual conversations around you as well as to any polling, the confidence in the ultimate success of pending healthcare reform is mixed. In fact, many pundits (not just on Fox News...) and a few polls are showing that concern about a mixed economic recovery has pushed aside the sense of urgency for healthcare reform form many people.
There are lot of reasons for this growing suspicion. Concern about job stagnation and the growing deficit (which the Congressional Budget Office has demonstrated will be eased over 10 years by a strong healthcare reform measure); distrust of the Congress; concern about the influence of powerful lobbyists; even some fading in the luster of President Obama's star.
But most likely something else is a major cause of the uncertainty. That is: the dizzying complexity of healthcare reform (given our fractured, inefficient and inquitable system now). This, combined with the sheer enormity of the reform bills themselves (which few have read)is stirring great anxiety about the final outcome.
There may be good reason for this, too.
Over the past several weeks--and continuing throughout the process---there have been many mixed signals from Congressional reform proponents as well as major players. Partly this is due to the meandering and lurching political process. But it is also due in part to disinformation campaigns and the attempts to address key interests (not our typical consumer....) that will ultimately be affected by any outcome that results from the current deliberations.
Let's take a look at a few concerns in this regard and consider them one at a time.
Costs will only continue to increase---perhaps will even accelerate---after reform passes. Actually that depends. One of the key goals for reform stated by President Obama was that reform be "budget neutral". As cited here, the CBO has suggested that the final reform package being considered by the Senate might reduce the overall deficit by as much as $80 billion over 10 years.
But the actual opportunities to actually save money through reform are much more complex. Take for example part of the touted $300-400 billion that would come from savings in Medicare "efficiencies". Approximately one quarter of that would come from cutting current subsidies (about 17% per individual premium) from Advantage plans. These are plans that were devised under Part C in the mid-90's to urge seniors to shift to managed care plans.
So, today, Advantage plans (usually PPO or HMO plans)marketed by Blue Cross, Blue Shield, Kaiser Permanente, Aetna---and so on, are all subsidized by the federal government. These are also the same companies that are concerned about competing with a "public option", but never mind! The point is that uninformed seniors and agitated health plans and insurers will fight very hard against this reform that would both cut cost and help pay for overall reform.
Next, why not tax high-premium plans? These are the so-called "Cadillac plans". Doing so would accomplish two things. Again, it would raise needed revenue to pay for reform (and thus help to keep Obama's promise about revenue-neutrality), but it would also act as a brake on higher premiums and extravagant benefits. By the way, what is being defined is "Cadillac" is a premium that would cost more than $8,500 per year for an individual. Does your premium cost that? The term has nothing directly to do with the actual benefits provided by the plan.
This last point is controverial in and of itself. But I refer to expensive and unnecessary cosmetic surgery, extreme cardiac procedures that will likely prove ineffective and countless other measures that go way beyond what most of us would consider to be important benefits. I also mean lots of emotionally based but unnecessary---even harmful---interventions given to people who are in a terminal state and nearing the end of life.
Remember that what is at stake here is healthcare for everyone: primary and secondary care, prescription medications, some dental and home care, behavioral health, pre- and postnatal care, and so on. To balance the difference between "Cadillac plans" and care for everyone some argue that there will be "rationing". But, as everyone knows, "rationing" already exists for those who cannot afford care. It just depends on who is defining the term.
Expect, once again, very powerful interests to oppose the tax I am endorsing here. Some unions for one, since they have negotiated substantial benefit packages in lieu of pay increases in some cases. But also large insurers. The bigger the premium, the larger the profit. The concept is pretty simple. Unfortunately, many Democractic lawmakers are indebted to---perhaps committed to---unions. Not a bad thing in general. But here this works against truly effective reform.
One last example. It appears that, while insurers will have to cover everyone, the Congress has determined to give these companies time to do that. Why? Because the companies do not want to have to conform to this principle till everyone has to have coverage. Since it will take both the federal and state governments time to get everyone covered---and to enforce this provision---the insurers get more time to comply with the new sanctions on them. So, such provisions may not be in effect until as late as 2014.
Once again, the consumer loses. Many people will not actually realize a key promise of reform for several years. Why? Because insurers, not the consumer, are being accommodated. At the very least this is gross government inefficiency in terms of getting reform implemented. At best it is more coddling of "the market" which has already failed to deliver for millions of Americans.
Note: both Reid and Pelosi need a certain tally of votes to get final legislation passed. As the discussion here shows, how they do that will help determine whether the outcome will "work".
I urge you to write your legislators NOW and be heard on these important issues during the next few critical weeks.
To respond to this blog, email steve6schul@yahoo.com
Monday, November 30, 2009
Tuesday, November 10, 2009
6 Current Myths We---And the Congress---Must Confront Now
By Steve Schulte of
Health Advocate Solutions
In the disorienting mixture of headiness and distraction that naturally follows the House's historic passage of healthcare reform over the weekend, it's important to get perspective---fast. That is why former President Bill Clinton is going to speak with Democratic senators.
Without some perspective, clarity and new urgency it's not at all clear that healthcare reform will pass the Senate this year. Or, if it does, that it will be---in the quaint phrasing of that politician of an earlier time–John Nance Garner–worth a bucket of warm spit.
This country needs far-reaching reform. Polls show us demanding such reform by wide margins. But, under the surface, there is also anxiety about cost and the rising deficit, distrust of government, derision of politicians. And, more disturbingly, there are orchestrated and highly financed efforts that are working tirelessly to make sure that any reform is either stopped outright or arrives stillborn. This fight is epic and no-holds barred.
What's at stake is the first time in 40 years (since Medicare passed after strenuous political maneurvering---sound familiar?) that a similar major healthcare overhaul has been within sight. The passage of Part D (medication coverage) and Part C (urging seniors to choose managed care plans) do not count. They were minor skirmishes that resulted in victories for major healthcare industries. They were no "people's victories".
But for effective and far-reaching healthcare reform to pass some key myths must be confronted. Each of these myths obscures the goal---making quality, affordable healthcare accessible for all (or nearly all) Americans. These myths arise from the American psyche of distrust in government. They also arise, fullblown, from the anxieties of status quo healthcare players who sense the landscape may be shifting. In any case, these myths need to be confronted directly and overcome. Then healthcare reform may be able, finally, to emerge.
Myth #1: Reform must be incremental. What is being considered now is too big, too costly. Well, this one is ideological. Yes, there is a huge deficit looming. We need to deal with that. But why must healthcare access and reform be sacrificed for this battle? Why not military contracting? Why not tax relief for wealthy Americans? Why not giant farm subsidies? The list goes on. Just one example serves here. At the beginning of THIS century we could have spent $800 billion on healthcare reform. Instead, we chose tax relief for the wealthiest Americans. That battle still rages.
Myth #2: A strong government option will be inefficient and it will drive private insurers from the "free" market. To get a handle on this one needs to remember two things: the government is ALREADY in healthcare. CMS (which runs Medicare and Medicaid) covers about 92 million citizens who get their healthcare through Medicare and Medicaid. That does not count the Veterans Administration and its huge healthcare empire.
Some grumbling, sure. But when was the last time you heard someone wanting to turn in their Medicare benefits? Or turn down Medicare? Second,do you really believe private insurers are lining up to cover single mothers, people with severe pre-existing conditions, the frail elderly? That's why the government needs to get involved here. Now. To set standards and to ensure the "weak and needy" get covered as well. The market will NOT do that alone or without motivation.
Myth #3: Medicare will suffer under reform because, in order to fund the new legislation, billions will have to be drained from Medicare thus draining current coverage. Nonsense. Reform will cost somewhere near $1 trillion over ten years. BUT only about a third of that will come from Medicare. How? Interesting question. Right now (because of Part C...) managed care companies---who market Medicare Advantage plans---are subsidized by the federal government to entice them to ensure elderly Americans. Each individual plan is subsidized to about 15% of the total annual premium. Why is this necessary or fair? Can't these companies compete? If we cut only this portion that would scoop up at least $100 billion to help pay for reform. The rest of the Medicare savings would come from new efficiencies in delivery and hospitalization. Why, to take one example, does it cost more to treat a Medicare patient in Los Angeles than in Hawaii? (Don't say "the weather"...)
Myth #4: Private insurers and hospitals don't have the margin needed to cover the uninsured and those with pre-existing conditions. They will go broke. Really? And yet they are getting--by mandate---up to 50 million new customers? Sounds pretty phony. Further, insurance companies set premiums in part by what is called a loss-ratio. That tells them how much of their total premium they might have to pay out for care in any given year. An 85% loss ratio, for example, would allow a full 15% of total premium dollars to be used for marketing (expensive...), salaries, administration and so on. VERY FEW private insures have an 85% loss ratio. Many are from 65% and up. They are not only NOT in trouble. They are highly profitable, ineffiecient and unethical. Let the government set a target loss ratio and have them learn to compete. Some of US have managed to survive so far without adequate coverage....
Myth #5: This is moving too fast; it would be better to wait, figure this out, take smaller bites. To us humans change always feels slightly giddy. Unnerving. Disorienting. Political change is not that different. (A black president???)But change always happens fast. It's always rude and sudden, sometimes it upends our sense of equilibrium. Once we have adjusted we do just fine.
In addition, healthcare reform can't be done incrementally. Everyone must be in or there will not be the best economic efficiencies. Everyone must be able to get coverage or the insurers will continue to "cherry pick" the healthiest to cover. One big, simultanious effort is needed to reform this broken, inefficient, unfair system.
Enough studies. Enough committees. We may not have all the answers, we no doubt will have to make changes and adjustments down the road. But we DO know what's needed. Let's move on that and trust our best instincts. And, yes, do what' right. We know how to do that, too.
Myth #6: The President and the Congress need to make major concessions to conservative Democrats and Republicans so "we can get something". That's "the change we can believe in"? Remember, the Democrats helped to elect many of those conservatives. And, truth be told, is this about the next election or the next majority or about the welfare of American citizens?
Sorry for the strong rhetoric, but ask yourself: will this opportunity, if lost, come back again in 10 years? 15? 20? One more thing. To get these votes we have to set back abortion rights for perhaps 15 years? Whether for or against abortion, are you in favor of it being available only to the well-off and tony? Take us back to the Fifties?
Lastly: do you really think that Lieberman, Nelson (NE), Cantor, Boehner, McConnell, Bailey-Hutchinson...and on and on will vote for ANY significant reform? Remember,this is not just about policy and sick old people and the deficit. It's about ideology. About business as usual. About privilege.
So how badly do YOU want reform? Let you elected representatives hear from you today.
To respond to this blog, email steve6schul@yahoo.com
Health Advocate Solutions
In the disorienting mixture of headiness and distraction that naturally follows the House's historic passage of healthcare reform over the weekend, it's important to get perspective---fast. That is why former President Bill Clinton is going to speak with Democratic senators.
Without some perspective, clarity and new urgency it's not at all clear that healthcare reform will pass the Senate this year. Or, if it does, that it will be---in the quaint phrasing of that politician of an earlier time–John Nance Garner–worth a bucket of warm spit.
This country needs far-reaching reform. Polls show us demanding such reform by wide margins. But, under the surface, there is also anxiety about cost and the rising deficit, distrust of government, derision of politicians. And, more disturbingly, there are orchestrated and highly financed efforts that are working tirelessly to make sure that any reform is either stopped outright or arrives stillborn. This fight is epic and no-holds barred.
What's at stake is the first time in 40 years (since Medicare passed after strenuous political maneurvering---sound familiar?) that a similar major healthcare overhaul has been within sight. The passage of Part D (medication coverage) and Part C (urging seniors to choose managed care plans) do not count. They were minor skirmishes that resulted in victories for major healthcare industries. They were no "people's victories".
But for effective and far-reaching healthcare reform to pass some key myths must be confronted. Each of these myths obscures the goal---making quality, affordable healthcare accessible for all (or nearly all) Americans. These myths arise from the American psyche of distrust in government. They also arise, fullblown, from the anxieties of status quo healthcare players who sense the landscape may be shifting. In any case, these myths need to be confronted directly and overcome. Then healthcare reform may be able, finally, to emerge.
Myth #1: Reform must be incremental. What is being considered now is too big, too costly. Well, this one is ideological. Yes, there is a huge deficit looming. We need to deal with that. But why must healthcare access and reform be sacrificed for this battle? Why not military contracting? Why not tax relief for wealthy Americans? Why not giant farm subsidies? The list goes on. Just one example serves here. At the beginning of THIS century we could have spent $800 billion on healthcare reform. Instead, we chose tax relief for the wealthiest Americans. That battle still rages.
Myth #2: A strong government option will be inefficient and it will drive private insurers from the "free" market. To get a handle on this one needs to remember two things: the government is ALREADY in healthcare. CMS (which runs Medicare and Medicaid) covers about 92 million citizens who get their healthcare through Medicare and Medicaid. That does not count the Veterans Administration and its huge healthcare empire.
Some grumbling, sure. But when was the last time you heard someone wanting to turn in their Medicare benefits? Or turn down Medicare? Second,do you really believe private insurers are lining up to cover single mothers, people with severe pre-existing conditions, the frail elderly? That's why the government needs to get involved here. Now. To set standards and to ensure the "weak and needy" get covered as well. The market will NOT do that alone or without motivation.
Myth #3: Medicare will suffer under reform because, in order to fund the new legislation, billions will have to be drained from Medicare thus draining current coverage. Nonsense. Reform will cost somewhere near $1 trillion over ten years. BUT only about a third of that will come from Medicare. How? Interesting question. Right now (because of Part C...) managed care companies---who market Medicare Advantage plans---are subsidized by the federal government to entice them to ensure elderly Americans. Each individual plan is subsidized to about 15% of the total annual premium. Why is this necessary or fair? Can't these companies compete? If we cut only this portion that would scoop up at least $100 billion to help pay for reform. The rest of the Medicare savings would come from new efficiencies in delivery and hospitalization. Why, to take one example, does it cost more to treat a Medicare patient in Los Angeles than in Hawaii? (Don't say "the weather"...)
Myth #4: Private insurers and hospitals don't have the margin needed to cover the uninsured and those with pre-existing conditions. They will go broke. Really? And yet they are getting--by mandate---up to 50 million new customers? Sounds pretty phony. Further, insurance companies set premiums in part by what is called a loss-ratio. That tells them how much of their total premium they might have to pay out for care in any given year. An 85% loss ratio, for example, would allow a full 15% of total premium dollars to be used for marketing (expensive...), salaries, administration and so on. VERY FEW private insures have an 85% loss ratio. Many are from 65% and up. They are not only NOT in trouble. They are highly profitable, ineffiecient and unethical. Let the government set a target loss ratio and have them learn to compete. Some of US have managed to survive so far without adequate coverage....
Myth #5: This is moving too fast; it would be better to wait, figure this out, take smaller bites. To us humans change always feels slightly giddy. Unnerving. Disorienting. Political change is not that different. (A black president???)But change always happens fast. It's always rude and sudden, sometimes it upends our sense of equilibrium. Once we have adjusted we do just fine.
In addition, healthcare reform can't be done incrementally. Everyone must be in or there will not be the best economic efficiencies. Everyone must be able to get coverage or the insurers will continue to "cherry pick" the healthiest to cover. One big, simultanious effort is needed to reform this broken, inefficient, unfair system.
Enough studies. Enough committees. We may not have all the answers, we no doubt will have to make changes and adjustments down the road. But we DO know what's needed. Let's move on that and trust our best instincts. And, yes, do what' right. We know how to do that, too.
Myth #6: The President and the Congress need to make major concessions to conservative Democrats and Republicans so "we can get something". That's "the change we can believe in"? Remember, the Democrats helped to elect many of those conservatives. And, truth be told, is this about the next election or the next majority or about the welfare of American citizens?
Sorry for the strong rhetoric, but ask yourself: will this opportunity, if lost, come back again in 10 years? 15? 20? One more thing. To get these votes we have to set back abortion rights for perhaps 15 years? Whether for or against abortion, are you in favor of it being available only to the well-off and tony? Take us back to the Fifties?
Lastly: do you really think that Lieberman, Nelson (NE), Cantor, Boehner, McConnell, Bailey-Hutchinson...and on and on will vote for ANY significant reform? Remember,this is not just about policy and sick old people and the deficit. It's about ideology. About business as usual. About privilege.
So how badly do YOU want reform? Let you elected representatives hear from you today.
To respond to this blog, email steve6schul@yahoo.com
Sunday, November 1, 2009
Many Versions of the Public Option---and Why It Matters Which One
By Steve Schulte of
Health Advocate Solutions
If you feel confused at this point about the health reform debate---as well as what a "public option" means you are not alone. This issue is confusing on a good day.
As the debate seems to be moving us ever closer to reform we are right to ask: what kind of reform?
It seems right now that there is general legislative agreement on key insurance reform issues. For example, coverage will be mandatory with some tax relief for those individuals with lower incomes and for certain lower-capitalized small businesses. Insurers will be expected to cover everyone----with pre-existing conditions or not. These things will be done through a variety of mechanisms: federal insurance regulation, coordination with the states, expansion of Medicaid (for example, to include some able-bodied adults, especially parents)and, as indicated, through use of the tax code.
The big debates center around: cost, whether healthcare inflation can be contained over time---and whether there is to be a public option.
The cost issue entertains a consensus of sorts: the final bill must be somewhat less than $1 trillion dollars over the next 10 years. Everyone seems to agree on this. It would also be great if the federal deficit gets lower over the 10 years ahead. That seems to be possible right now.
The second big issue---public option or not?---is much more complicated and its outcome harder to predict. What seems to be moving ahead in order to get enough votes for final passage is a govenment model (public option) that would set basic coverage standards and that would then have CMS (the agency that runs Medicare and Medicaid) negotiate prices with insurers, doctors, hospitals, manufacturers, etc. States would have the chance to opt out of offering this model after two years or so.
In contrast to this variation of the public option the so-called "robust" public option would do all of the above except that it would have insurers base their offerings on the prices set by CMS every year. (This works pretty well for Medicare right now by the way. Lots of company contracts follow this route.)But this model is opposed, not surprisingly, by insurers and their supporters in Congress. These all say that the robust public option would drive them out of business.
Given how small is the percentage of the population that would probably choose the public model this is extremely unlikely. Market reform might be the result. But isn't that what we want?
There are other "public option" models. For example, stick with the first model listed, the currently popular-with-legislators one, and don't let the states opt out. Or, let them opt in later. We now have at least four public option models on our table.
As I wrote previously, Wyden of Oregon has an interesting concept. He is for the public option. However, rather than limiting it to about 10-12% of the uninsured as is envisioned at this point, Wyden wants it offered all over the country. To everyone. Even if their employer contributes to only, say, two choices. Now that would most likely open up competition.
Finally, there is an idea that some Republican lawmakers prefer. It says that insurers should be able to do business anywhere in the country and that anyone, anywhere, should be able to buy their product. This could also blast open competition. But standards are different in every state so it would seem a public option is still needed to guide what a plan must contain and how it can be marketed.
Leaving aside the public option debate, how about cost control? Well, criticism that the current proposals don't go far enough seem correct. Wyden's model would clearly force cost constraints---as well as service differeniation--among the players. So would allowing CMS to set pricing. And, of course, the President already let the pharmaceutical companies off the hook when he declared that the federal government would not negitiate pricing with them. Mistake?
Unfortunately the issues here are very complex. We might want to see a bill written in 10 pages rather that nearly 2,000, but we are probably naive.
However, much is still at stake. As the train leaves the station it will be interesting---and it will matter---in which direction it finally gets going. Will we get the healthcare reform we expect and deserve?
To respond to this blog, email steve6schul@yahoo.com
Health Advocate Solutions
If you feel confused at this point about the health reform debate---as well as what a "public option" means you are not alone. This issue is confusing on a good day.
As the debate seems to be moving us ever closer to reform we are right to ask: what kind of reform?
It seems right now that there is general legislative agreement on key insurance reform issues. For example, coverage will be mandatory with some tax relief for those individuals with lower incomes and for certain lower-capitalized small businesses. Insurers will be expected to cover everyone----with pre-existing conditions or not. These things will be done through a variety of mechanisms: federal insurance regulation, coordination with the states, expansion of Medicaid (for example, to include some able-bodied adults, especially parents)and, as indicated, through use of the tax code.
The big debates center around: cost, whether healthcare inflation can be contained over time---and whether there is to be a public option.
The cost issue entertains a consensus of sorts: the final bill must be somewhat less than $1 trillion dollars over the next 10 years. Everyone seems to agree on this. It would also be great if the federal deficit gets lower over the 10 years ahead. That seems to be possible right now.
The second big issue---public option or not?---is much more complicated and its outcome harder to predict. What seems to be moving ahead in order to get enough votes for final passage is a govenment model (public option) that would set basic coverage standards and that would then have CMS (the agency that runs Medicare and Medicaid) negotiate prices with insurers, doctors, hospitals, manufacturers, etc. States would have the chance to opt out of offering this model after two years or so.
In contrast to this variation of the public option the so-called "robust" public option would do all of the above except that it would have insurers base their offerings on the prices set by CMS every year. (This works pretty well for Medicare right now by the way. Lots of company contracts follow this route.)But this model is opposed, not surprisingly, by insurers and their supporters in Congress. These all say that the robust public option would drive them out of business.
Given how small is the percentage of the population that would probably choose the public model this is extremely unlikely. Market reform might be the result. But isn't that what we want?
There are other "public option" models. For example, stick with the first model listed, the currently popular-with-legislators one, and don't let the states opt out. Or, let them opt in later. We now have at least four public option models on our table.
As I wrote previously, Wyden of Oregon has an interesting concept. He is for the public option. However, rather than limiting it to about 10-12% of the uninsured as is envisioned at this point, Wyden wants it offered all over the country. To everyone. Even if their employer contributes to only, say, two choices. Now that would most likely open up competition.
Finally, there is an idea that some Republican lawmakers prefer. It says that insurers should be able to do business anywhere in the country and that anyone, anywhere, should be able to buy their product. This could also blast open competition. But standards are different in every state so it would seem a public option is still needed to guide what a plan must contain and how it can be marketed.
Leaving aside the public option debate, how about cost control? Well, criticism that the current proposals don't go far enough seem correct. Wyden's model would clearly force cost constraints---as well as service differeniation--among the players. So would allowing CMS to set pricing. And, of course, the President already let the pharmaceutical companies off the hook when he declared that the federal government would not negitiate pricing with them. Mistake?
Unfortunately the issues here are very complex. We might want to see a bill written in 10 pages rather that nearly 2,000, but we are probably naive.
However, much is still at stake. As the train leaves the station it will be interesting---and it will matter---in which direction it finally gets going. Will we get the healthcare reform we expect and deserve?
To respond to this blog, email steve6schul@yahoo.com
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