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Mr. Nixon came to my office looking for help to see his doctor, a doctor who could confirm his cure from a debilitating bout with depression, a doctor who could affirm his fitness to return to his old occupation.  But Mr. Nixon had another problem.  He had no health insurance and he had no money.  We couldn’t help him. Our office offered health insurance to employees, not would-be employees.

Almost a half year later he showed up again to enroll in his health insurance program.  He had his old job back after finally navigating the public welfare system to get the physician certification he needed to return to work.

A different kind of Notch

He couldn’t work because he was sick.  He couldn’t get the treatment he needed because he didn’t have health insurance.  He didn’t have health insurance because he couldn’t work.  He couldn’t work because he was sick.  Am I talking in circles?

For all of its faults, the Affordable Care Act will make it a little bit easier for people like Mr. Nixon to spend less time battling bureaucracies and more time getting cured and consequently more time as a productive, working member of society.

Professor Kessler opines

But Daniel P. Kessler, Senior Fellow at the Hoover Institution and Professor in the Graduate School of Business, Stanford University, thinks otherwise.

In Monday’s Wall Street Journal, Professor Kessler argues that the subsidies available in the Affordable Care Act (ACA) health insurance exchanges will

“introduce far-reaching negative effects on rewards to work and bizarre new inequities into American life.”

To Mr. Kessler’s credit, he calls attention to one of the peculiar incongruities of the ACA, the notch.  To again quote Mr. Kessler:

“A similar family earning $93,699 (400% of poverty) gets a subsidy of $14,799. But a family earning $1 more—$93,700—gets no subsidy”

The “notch” is the dramatic drop in subsidy when one crosses that boundary between subsidy and no subsidy.  Professor Kessler fears this “notch” will be the source of “unfairness” that will “induce sharp reductions in labor supply.”

The problem with Professor Kessler’s analysis is two fold:  his one sided presentation of the facts; and his conclusion.

First the facts

This alleged “unfairness” exists in all kinds of ways under the current system.    Professor Kessler worries that two neighbors with a dollar separating their incomes will have very different levels of government subsidies.

But subsidies exist today in the form of employer support for employment-based insurance.  That these subsidies come from employers, does not make them any less a subsidy.  Yet less than half of private sector employees get their health care coverage from their employers.  So what about the two neighbors who earn identical incomes, one whose health insurance is subsidized by his employer and the other, perhaps a self-employed entrepreneur, who cannot buy health insurance at all because of a pre-existing condition or some other reason.   Where is Professor Kessler’s concern for “fairness” in that situation?

And what is this about a “sharp reductions in labor supply”?  What about the Mr. Nixon’s of the world?  His story is far from unique. I would invite Professor Kessler to spend some time in my chair and lecture the next Mr. Nixon who comes to my office about “fairness.”

And the conclusion?

Professor Kessler suggests that “the only fix is to drastically reduce or eliminate the premium subsidies.”   Does that sound like someone with a clear understanding of what it is like to live on $30,000 or even $90,000 per year?

The notch is indeed a flaw in the law.  It is the product of an assumption that people should pay the “price” of insurance instead of sharing the cost as well as the medical risk.  If everyone pays a flat percentage of all income, there is no “notch” and there is no “unfairness”.

And there is no negative effect on the reward to work, because health insurance would be removed as factor in employment decisions.

Employers who now cannot afford health insurance cannot hire workers who need health insurance.  That concern will disappear in a single payer health care system funded by a flat percentage of all income.

We need a system that allows people to pay when they are working so they have coverage when they can’t.

Photo credit:    walknboston

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Can one have too much health care coverage?

Much of the debate for expanded health care coverage and for a single payer financing and delivery system arises out of concern for people without access to the traditional portals into the health care system: employment, old age, or poverty.

Abundance

But some people can have a whole lot of a good thing and still their medical bills fall through the cracks.

Take Dinah for example.

Consider the ways she had access to health care.

She was employed and had access to employer sponsored health insurance.

She was married and had access to health insurance as a dependent on her husband’s plan.

Her husband died and she became eligible for coverage as a survivor through her husband’s plan.

Her husband also had a retirement from a previous employer and she had access to coverage as a survivor on that plan.

She retired and had access to retiree health insurance from her employer.

She remarried and access to her second husband’s health insurance as a dependent.

She also had Medicare.

And still she could not get her bills paid.

There were mix ups in signing her up for some of those programs and the ones she was enrolled in could not decide which paid first, which was her primary insurance.  She came to us in tears, wanting to discard the insurance she had been paying for because it was “no good,” convinced her only option was to go on Medicaid.

Confusion reigns.

And even when people and systems have it right, confusion reigns.  Each year we get calls from people during Medicare Part D open enrollment?  They are confused and some of the vendors seem to offer extremely misleading and inaccurate information.  Why does it need to be so complicated.

Take Frank for example.

Frank was taking care of his older sister’s affairs.  She was in a nursing home and had access to Medicaid, Medicare Parts A and B and D and her retiree insurance with our plan.  Yet she could not get her prescriptions paid for.  Why?  It seems that the private pharmacy used by the nursing home did not know how to submit claims to any other payer than Medicaid.  That was straightened out.

But Frank made an astute observation.  He said each time he called one of these “pieces of the pie” as he called them, he would get a little bit more information.  He complained that each of the pieces barely understood their own role and no one understood how all of these pieces fit together.  “If they can’t see the whole picture, how do they expect an ordinary person like me to figure this out?”

Or the members who battle workers’ compensation in part to pay the medical bills for their work related injury and also to have income to pay the insurance premiums that pays for the medical bills for their non-work related medical bills.

Single payer is needed not just to provide for the have-nots, but also to bring order into a chaotic system for the haves.

Photo credit:    Stijn

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During the healthcare reform debates, Republicans and others argued that malpractice awards and the litigation surrounding them contributed to the high cost of health care in this country.

Don't wander off the beaten path

I suggest they might be looking in the wrong courtrooms.

Last week I wrote about the new age 26 rules and the costs that don’t get counted towards the already outrageous costs of health care, costs that are born by employers as they split hairs on eligibility rules.

Rather than a simple system of universal eligibility that opens one door to everyone, the United States has built a system of silos that forces Americans to navigate a maze of rules that makes distinctions based on relationships, age, residence, economic status, and other criteria.

Some get lost trying to find the right door.

Some end up in court.

In fact, there are whole industries built around two such silos, and that overhead is not counted towards the cost of health care.  Such expense only makes sense in a through the looking glass world where ideology trumps practicality.

QMCSO

We hear of deadbeat dads (and moms).  But often the child needs, not just financial support, but access to health care.  The effort to obtain financial support from the non-custodial parent is often accompanied by an effort to obtain medical coverage from that parent’s employer.  That results in Qualified Medical Child Support Orders (QMCSO).  Every county in the United States has a bureaucratic apparatus that keeps this system oiled.  It took federal legislation in 1993 to standardized and streamline an even more cumbersome process  so that disputes about medical child support didn’t devolve into disputes about local processes and definitions.

There is a court that adjudicates the dispute between the employee with health care coverage (the non-custodial parent) and the custodial parent.  And then there is a child welfare agency inside the court system or county government that enforces the QMSCO and mediates between employee, employer, custodial parent and child.

There needs to be someone at the employer sponsored health plan who receives, responds and processes these documents.  A small plan may not encounter a QMCSO very often so they may lose an occasional day or day and half as they try to figure out what this strange multi page form means or is asking them to do.  A larger plan sponsor may have a dedicated staff member or even a department.

Who pays for this elaborate dispute resolution process erected soley to determine a child’s eligibility for health care?

Did I hear someone express a concern about government bureaucracy driving up the cost of health care.  I would love someone to challenge me on this, but this cost does not show up in the National Health Expenditures accounting.  It does show up in our tax bills, because it is paid for from local tax dollars – tax dollars that are already stretched thin.

And how does it add value to the health and the health care of the nation’s children?  How do you justify that cost compared to a system of universal eligibility?

Workers’ Compensation

Workers’ compensation was designed to provide an efficient system for responding to workers’ injured on the job.  It was intended to be a no-fault system, but has degenerated into a highly litigious one.

When employers dispute a workers’ compensation claim they are disputing both the wage replacement and the cost of medical care.  Medical care is eating up an increasing percentage of total workers’ compensation cost.

When a workers’ compensation case is denied initially, the claimant may appeal the decision to a higher administrative process and sometimes to a court.  Meanwhile, if the claimant has other insurance, the other insurance will pay related medical expenses.  Most plans have an exclusion for work related injuries.

As an aside, does it even make sense for an employer sponsored program to have an exclusion for work related injuries?  Only in a world that feels the need to have different insurance companies pay for each type of claim.

If the claimant wins their appeal, the payment is made to the claimant and not to the insurance companies who already paid the medical bills.  Every insurance company has an Other Party Liability department whose responsibility it is to track down exactly those situations in which someone else might be paying for medical claims it already paid for.

Does this system contribute to the efficient delivery of health care services?  It is only moving money around.

Who pays that bill?

Age 26 – Things I have learned.

Questions posed on the blog MoneyFunk have taught me some things about the age 26 requirement since my post last week.

• It does not apply to “stand alone” retiree plans
• It does not apply to children who are on Tri-Care, the program offered to the families of soldiers and sailors in the military.
• At least one employer seems to think it does not apply to prescription drug programs.
• Everyone is confused about the effective date.

Some people react to these bureaucratic quirks by suggesting a return to the status quo ante.  I argue that they highlight the illogic of the current system that depends on hair splitting and disaggregation.

We need to move to a single system of simplified eligibility – a simplified mechanism of delivering patients into the health care system. It will make for a more efficient delivery system, more efficient labor markets and more efficient business enterprises.

Photo Credit:  JLMcGee

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Hoops

The recently passed Patient Protection and Affordable Care Act (PPACA) does much to promote long term reform of the way physicians are paid for their services.

But could something be done now to simplify the system for both patients and their doctors?

Many health care policy experts tout the current payment system as a major contributor to distorted incentives within the current health care delivery system

Fee for service reimbursement promotes more procedures, surgeries, images, etc. at the expense of patient listening time.

So the PPACA implemented a number of pilot programs to promote efforts to develop more global approaches to reimbursement.  I have discussed some of these in previous posts.

Payment reform now

But there may be intermediary steps that can be taken now to simplify a system that makes sense to no one; sometimes not even the insurers who administer them.

Example one – payment confusion.

A patient, someone I know well, gets a referral from their doctor for physical therapy.  Since I have had some experience with physical therapy and with health insurance, she asks my opinion.  I advise her to go on line to her insurance carrier’s webs site and check if certain physical therapists are in her network.  She does that and identifies a physical therapists in the network and close to her home.

Again, acting on my advice, she calls in advance to confirm that the practitioner still is contracted with this insurance carrier.  She is reassured and schedules a series of appointments.  Several weeks later she gets an Explanation of Benefits (EOB to the cognoscenti) and the insurer has paid nothing.

Her immediate reaction is to cancel all of her remaining appointments.  I persuade her to contact customer service and she if she can get a better explanation than that offered by her Explanation of Benefits.  She is told that the doctor is an out of network doctor and consequently she is liable both for an out of network deductible and for “balance billing” – charges over and above the amount negotiated and approved by the insurance carrier.

“How can this be?” she says to me.  “I looked the provider up on the carrier’s web site, I called the therapist, I don’t understand.”

We got on the phone together and I was able to learn from the customer service agent that this therapist was, in fact, signed up as an HMO provider, a PPO provider, but not as an “Open Access” provider.  Many carriers have developed “open access” networks that are less restrictive than the traditional HMO networks.

The patient contacted the therapist who was more than willing to clear this administrative oversight.

But why should she?

This was a small physical therapy office with only two full time professionals.  They need to hire a support staff that will keep track of all of these different provider reimbursement agreements for each of the countless insurance carriers that she may or may not encounter.

Each reimbursement arrangement will have its own peculiarities, its own administrative procedures and its own customer service contacts.

For whom does this make sense?  Certainly not the patient and certainly not the provider.  Yet, isn’t that who this system is supposed to serve?

Example two – payment confusion

A patient goes for his annual heart check up with the same practice he has always used.  Only this time, the bill is not paid in full as it has been in the past.

The initial inquiry to customer service yields a response similar to patient one – this is an “out of network” provider and the patient must pay the out of network deductible.  Further probing by me elicits some additional information.  This practice is a “participating” provider, but not a “preferred” provider”.  This is more than a bit confusing, because this member has always had PPO coverage.  PPO means Preferred Provider Organization.  What is going on?

What changed is the patient.  He got older, he retired and he enrolled in Medicare.  He still retained the same insurance.  He is one of the lucky few who have employer sponsored health insurance as a retiree.

But some clause somewhere in those provider reimbursement agreements means that the same insurance paid when he was under 65, but not over 65.

A better approach

It is time we developed a single reimbursement methodology for all providers.

That does mean that all providers get paid the same.

It does mean that each provider is paid the same amount regardless of who he or she treats.  Within that system, there can be different degrees of patient responsibility for different groups.

The system may decide that a provider in a rural area may get paid more or less than a similar doctor in an urban area.  It would endeavor to pay those providers with better performance more than those who could not meet the outcome targets.  There could be many other differentiators but one theme will prevail – doctors will know and understand the system they are getting reimbursed by.  And it will not inconvenience patients.

Doctors can opt out of the system, but they cannot pick and chose insurance carriers.  If they are outside of the system their patients will be 100% responsible for all expenses they incur.  The insurance carriers will have no responsibility.

That is the kind of payment reform that would make a real difference.

Photo Credit: Flickr, The Smithsonian Institute

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There is nothing simple about our health care maze.  Fixing it is not easy.

I prefer to look for the simple.  The complexity will evolve naturally.

Congress prefers to start with the complex and make it more so.

Spreading the medical risk

There  are two major challenges to fixing the customer side of the health care mess – spreading the medical risk and spreading the financial costs.

Spreading medical risk requires that everyone be in the system.  That spreads medical risk evenly between the sick and the healthy.  That can be accomplished by a system of automatic eligibility or a system of required enrollment.

Automatic eligibility describes a single payer system.  All citizens are enrolled by virtue of their citizenship.  To draw from known models, automatic enrollment describes Part A Medicare, Department of Defense medicine, and to a lesser extent, the Veterans Administration.

Funding for those programs is separate from enrollment and may or may not rely on direct participant financing.

A system of mandatory enrollment implies a system of mandatory participant financing.  That is where we bump into the second challenge.

Spreading the financial costs

How do we transfer money from those who have it to those who need it?

This is not a new problem.  Since the creation of Medicare and Medicaid, the federal and state governments have developed a complex and confusing mix of approaches to fund directly or indirectly the recognized social good of delivering health care to those who cannot afford it.  It includes:

• General federal tax revenues
• Specific designated taxes (FICA)
• Tax incentives for employer sponsored health insurance
• Mandates on employer sponsored health insurance
• Federal support of state efforts
• State tax revenues

What’s proposed?

How does the house bill propose to shuffle money from where it is to where it’s needed?

• A 5.4% surtax on Adjusted Gross Incomes (AGI) above $500,000
• A Tax on medical device companies
• An 8% payroll tax on businesses who do not provide health insurance
• Penalty payments on uninsured individuals
• Smaller tax exemption on Flexible Spending accounts

But these don’t quite get the money to where it is needed.  It only makes it available.  Individuals have to apply and have to qualify for what the law call “affordability credits.”

In addition, there are a host of exemptions that will still leave an unacceptable number of uninsured.

In a nutshell, we take money from different pots of private money, we combine it with other pots of public money, assign it to a larger pot of public money that can be remixed with private money and used to buy public or private health care insurance.

A simpler approach

Let me suggest a simpler approach – the germ of which is in the current proposal.

Tax all compensation at 8% – absolutely no exceptions.  The tax should be on all forms of employee and owner compensation, whether it’s wages, bonuses, or compensation to independent contractors.  No exceptions – none. The tax would be directly offset by the employer expense of providing health insurance that meets some minimum standard.  Low wage industries that provide health insurance that exceeds 8% would receive a straight credit for the amount above 8%.

Adjustments would need to be made for small businesses, not just in the level of the tax but also in defining what exactly gets taxed.

A straightforward subsidy

It should be immediately apparent that high wage industries will subsidize low wage industries.  There is no secret to that. It is just more obvious, less convoluted and simpler and less expensive to administer.

This is not un-American

There is a precedent for this way of thinking.  There are companies now that charge their employees a percentage of income.  Some even charge a higher percentage for higher earners.

An even better example is the multi-employer plans.  Almost all multi-employer plans base employer contributions into the benefit trust fund on either compensation or hours worked.

Two employees, one who works 1200 hours and another who works 2400 hours, will both have the same level of benefits. But the money from the first person’s employer will be half of that from the second person’s employer.  There is no complicated bureaucracy to transfer money from the second employee to the first.  It does not matter whether either employee has a family or not.  This design has existed for decades and the participants in those plans like it because they know that there will be years in which they may be the one working 1200 hours.

In order to simplify the process we need to make a change in our fundamental approach to health care financing.  Payments into the system should be based on ability to pay – not on the cost of health care insurance to each individual.

And for those who think this is an atheist plot, I refer them to Acts 4: 34-35.

For the rest, I suggest it simply makes practical sense.

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Art by donna K mcgee

How many health plans have you belonged to?

If you are old enough to read this, you are the exception if you can count them.

Because you weren’t paying attention before adulthood, we will ignore the number of times you changed health plans as a child.

Maybe you are one of those very few employees who has stayed in the same job your entire working career.  Even then, your employer has most likely changed health plans several times during your career.

And then you will retire.

How many health plans may you encounter during your life time?

The plan(s) you were in as a dependent on your parent’s plan.

Your employers’ plans.

In the military?  Add Department of Defense plans and the Veteran’s Administration.

Down on your luck?  Add the state Medicaid program for yourself or your children.

Ever injured on the job?   Add workers’ compensation insurance.

When you turn 65 or become disabled!  Add Medicare and a supplemental Medigap policy.

All those different plans would not matter if health plans only paid bills.

If only it were so simple

Each plan has its own network of physicians and hospitals that agree to accept that plan’s level of reimbursement.

Each plan has its own medical guidelines.

Each plan has its own drug formulary.

Each plan has its own benefit design features that determine what is covered and not covered.

Each plan has its own bureaucratic processes.

Changing plans changes your care relationship

When you change jobs, or when your employer changes health plans the relationship between you and your doctor changes.  Your doctor may not be in the new plan network. You may need to change doctors or pay more out of pocket to stay with your current doctor.

Treatment that was authorized by the former plan may require reauthorization or may not be authorized at all.  Drugs that were covered under the former plan may not be covered under the new plan.

Your doctor’s office now has a different process to get paid.  It may be familiar or an entirely new one.

What a doctor or other medical provider has to deal with

Multiple levels of reimbursement

Different sets of medical guidelines

Different drug formularies

Different sets of covered services

Is it any wonder that that providers are frustrated and may chose to ignore all of them?  The patient is put in the middle.  What the provider and the insurance plan can’t agree on falls onto the lap of the patient.

This isn’t just about different insurance companies and different health plans.   Each employer plan over a certain size has wide latitude in the design of its own plan.  The potential variations are limitless.

Some consequences

Provider information systems must focus their first efforts on getting paid.  An understandable impulse.  A much lower priority is patient medical information.

I have experienced this personally.  Over the last ten years, I have received treatment for my bad knees from an orthopedic practice at a major teaching facility here in Washington DC. After about two years between visits, any trace of my medical history disappears.  But they never lose track of my billing information.

Drug formularies illustrate how the patient is too often caught between health plans and physicians. Each pharmacy benefit manager has its own list of “preferred” drugs.  In one, Lipitor might be a preferred drug.  In another it is a non-preferred drug, compelling the patient to either pay more at the counter or challenge his doctor’s medical judgment.

Supporters of the status quo argue consumer choice.  But is it fair to expect a patient to challenge the very judgment of the professional whose judgment he is relying on?  Not to say that consumers shouldn’t challenge their doctors.  But to expect consumers to leverage the cost management strategies of a health plan is unfair.

When doctors and hospitals and other medical providers have to untangle the maze of conflicting and confusing requirements of the myriad health plans just to get paid, is it any wonder that providers are frustrated?  The patient is put in the middle.  What the provider and the insurance plan can’t agree on falls onto the lap of the patient.

This isn’t just about different insurance companies and different health plans.   Each employer plan over a certain size has wide latitude in the design of its own plan.  The potential variations are limitless.

Consumer choice or a costly mistake?

Drug formularies illustrate how the patient is too often caught between health plans and physicians. Each pharmacy benefit manager has its own list of “preferred” drugs.  In one, Lipitor might be a preferred drug.  In another it is a non-preferred drug, compelling the patient to either pay more at the counter or challenge his doctor’s medical judgment.

Supporters of the status quo, argue consumer choice.  But is it fair to expect a patient to challenge the very judgment of the professional whose judgment he is relying on?  That is not to say that consumers shouldn’t challenge their doctors.  But to expect consumers to leverage the cost management strategies of a health plan is  unfair.

Does it make sense that patients should wander during their lifetimes through different health plans with a maze of differing rules about reimbursement and medical treatment?  How do they begin to understand how best to use the medical system?

Doctors and hospitals and other medical providers have to untangle this maze of conflicting and confusing patient delivery systems just to get paid. Is it any wonder that patient care takes a back seat?

Patient care?  A back seat?  Am I stepping on toes?  I will attempt to tackle this next time.

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Our plan just completed its annual open enrollment.  Members are permitted to change medical or dental plans; to add or remove dependents, and change life insurance options.

Open enrollments highlights certain flaws in our current system.

The logic of an open enrollment is compelling.  The object of any insurance is to spread the cost of any risk over time and over as many people as possible.  Open enrollment helps to spread the risk over time.

The risk of health care is different than other risks that we insure against.

We buy life insurance to insure against death; auto insurance to protect against an automobile accident; homeowners insurance to shield against damage to our home.

Those hazards (the technical term) generally occur without warning.  No one is likely to approach their insurance agent to buy auto insurance because they anticipate an auto accident in the near future.

Illness, on the other hand, can offer some warning.  Someone may experience symptoms and has not seen a doctor.  The doctor may have recommended expensive surgery.  Or maybe it’s just a young couple planning to start a family.

Open enrollment is the only opportunity that insurers have to spread risk over time.  By insisting that people enroll only during a specific time period, the insurer reduces the risk that someone is only enrolling because they know they have an approaching medical expense.

It may seem unfair to the person with an immediate and pressing need.  But to the others in the group who ultimately foot the bill, it makes perfect sense.  It is one reason why a mandate – an employer mandate or an individual mandate – makes sense.

Medicare has its open enrollment rules.  Their annual open enrollment for Medicare Part B is from January through March each year and is not effective until July 1 of that year.

Open enrollment is expensive

Participants have only one opportunity to make changes each year; therefore, communication is very important.  We produce an attractive communication piece to mail to our 10,000 plus participants.  We pay lawyers and consultants to review it, a graphic designer to lay it out, and the printer to print and mail it.

Over time we have used specialized mailings to targeted audiences that may need special attention.

The open enrollment period is a month long.  The carriers have opportunities for member outreach.  Other plans provide even more opportunities for carrier outreach.  The carriers also have communications pieces tailored to the specifics of that group plan.  In addition, they usually have some kind of attention grabbing (they hope) giveaway for the members.  All of this costs money.

We do not have a web site yet for open enrollment but hope to perhaps as soon as 2010.  That too will be an investment.

Yet every year, just days after the close of open enrollment, someone will call our office to make a change.  The rules have a purpose within the logic of our current system.  As unpleasant as it is, we must tell those people to wait until next year.

The choices are illusory

To appreciate what’s wrong with open enrollment, juxtapose it with an “ideal” – once and done enrollment.  For most of us, something similar is the reality.  People stay in one job. They do not frequently change their insurance.

Conservatives often support the status quo with arguments about freedom of choice.  But what is the freedom of choice that open enrollment offers.  The choices have been preselected by the plan sponsor.  The choice is among restricted groups of network providers.

Network providers are not locked into the same contract period that the participant is.  So a member who  chooses a carrier because his or her doctor is in that network, may learn shortly afterwards that the doctor intends to leave the network.  Usually they are dissatisfied with the reimbursement.  Doctors complain about rules, but they act on reimbursement.  Recently we had a doctor leave our IPA model HMO for our staff model HMO.  She announced the move a month after the close of our open enrollment.

The alternative could be health care as an entitlement, health care at birth, health care by virtue of citizenship.  This would eliminate the expense of open enrollment, the confusion of open enrollment, the misguided decisions of open enrollment.

In addition, it would provide opportunities for those who change jobs frequently, the marginally employed, seasonal employees, freelancers and the very small entrepreneurs.

It would open doors instead of closing doors.  It would enable freedom of choice among health care providers instead of among a limited number of limited insurance networks.

It would open enrollment.

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On Friday, I received an e-mail from someone who had just visited with several Capitol Hill staffers on health care reform. He was discouraged with the general response that health care reform was done – there was no room for new ideas.

He was promoting EMBRACE, the plan offered by the Healthcare Professionals for Healthcare Reform

Even more discouraging was the perception that Congress had a busy agenda and they were just eager to get this issue behind them.  In addition, he was disheartened by the lack of provider unity on this topic.

He made the comment in his e-mail, “This isn’t health care reform, it’s insurance reform.”

I beg to differ. It is not insurance reform; it is an insurance industry bailout. It is a status quo bailout.

I have to admit that the report recently released by the Senate Finance Committee, chaired by Senator Max Baucus, (D, MT) Call to Action Health Reform 2009 touches all the right buttons. 

He talks about access.

 The U.S. is the only developed country that does not guarantee health coverage for all its citizens.

He talks about costs.

American families are struggling to keep up with out-of-pocket costs for health care. American businesses are straining to absorb rising health care costs while staying competitive at home and around the world. 

He talks about the value we get for our health care dollars. 

Despite high levels of spending on health care, the U.S. ranks last out of 19 industrialized countries in unnecessary deaths.  America ranks 29th out of 37 countries for infant mortality — tied with Slovakia and Poland, and below Cuba and Hungary.  The United States has almost double the infant mortality rate of France or  Germany.  A recent study by the Institute of Medicine concluded that the current health care system is not progress toward improving quality or containing costs for patients or providers. 

But the solution is woefully inadequate.

And it stems from a fundamental reluctance to come to terms with the source of our problems – a fragmented patient delivery system.

We parcel patients into various patient delivery silos based on income, age, employment status and various other categories. Each of these patient delivery silos comes with its own bureaucracy that specifies the rules for entry. None of these patient delivery silos accepts full financial responsibility for the patients assigned to it. Instead, another set of elaborate rules allows cost shifting back and forth among silos in a complex shell game of shifting financial responsibility.

I have written often enough about the federal government’s proclivity toward small solutions. Small solutions engender large sets of rules to keep their solution small. Mr. Buacus has proposed a plethora of small solutions.

How does Senator Baucus propose to cut through the current maze of health care rules and bureaucracies?

More rules and bureaucracies.

We will have the Health Insurance Exchange.

We will have the Health Coverage Council.

We could have a Health Court.

We will still have Medicare Advantage plans.

We will have changes to the current relatively simple (emphasis on relative) rules on the tax exemption of health care benefits.

I see little in this package that will reverse the very evils that the report claims to decry. The only possible exceptions are some positive approaches to malpractice reform.  

What is “Health Insurance Reform”?

To qualify as real health insurance reform it needs to expand risk pools, not shrink them.  It needs to go much further to improve communications about health insurance by simplifying plans.  It needs to eliminate medical underwriting.  It leaves insurance company regulation in the hands of the individual states.

What about delivery system reform?

Again, Mr. Baucus pays lip service to issues raised by the provider community.

He speaks of:

Strengthening the role of primary care and chronic care management.

Refocusing payment incentives toward quality

Promoting provider collaboration and accountability.

But until the patient delivery systems are reformed, those efforts will be a continuing uphill battle.

I am only aware of two plans that recognize that, both are put forward by provider organizations. The Physicians for a National Health Program advocate a single payer system.

Healthcare Professionals for Healthcare Reform mentioned earlier advocate a concept they have titled EMBRACE. They are allied with the American College of Physicians. Their program combines some of the principles of a single payer system, but concedes a greater role for insurance companies.

I am not a highly paid political consultant. But I predict that if the Baucus plan is implemented it will be a debacle for the Democrats. It will do little to improve access, cost or quality, while adding substantially to the bureaucracies that are the current health care maze and the current problem.

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I have often made the point that a major flaw in the health care  status quo – I balk at using the word “system” – is that no single entity accepts full responsibility.  With very few exceptions, everyone is trying to find someone else to pay the bill or the rest of the bill.

And too often the consumer is the rope in this tug of war.

I received a call from a member.  He wanted to drop his employment based insurance.  Why?  His wife had insurance.  Not an uncommon request in today’s market.  But some questioning revealed that it was a bit more complicated than that.

It seems the member had been admitted for emergency cardiac by-pass surgery.  After the surgery, he was referred to a rehab facility for cardiac rehabilitation.  But the rehab facility refused to admit him until they got clarification on which insurance was primary.

I have determined which insurance is primary.  I think I also understand a possible reason for the confusion.

I can not determine why a provider would deny care – or even suggest that care might be denied – when it was clear that one of the insurance companies would cover the services.

But that’s the way it is when everyone is looking for a way out.

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In my last post, I wrote that health care reform proposals need to focus on the patient side of the health care delivery system by designing systems that eliminate the cumbersome, even tortuous routes that patients must travel to enter that increasingly privileged space – a person with health insurance.

An illustrative example is the Qualified Medical Child Support Order (QMCSO).  QMCSOs apply to those children who live with one parent but the court orders the other parent to provide the health insurance.  The parent who has custody of the child is called, logically, the custodial parent.  The other parent is called, can you guess, the non-custodial parent.

Every child support agency in every county and state in the country has a bureaucracy for the purpose of enforcing and administering QMCSOs.  It does not matter why the parents are not together.  Some are divorces, but some were never married.  For a group of 25,000 Participants, my staff probably spends one to three days per month on issues related to QMCSOs.

Very little of that time is spent processing the paperwork.  Most of it is dealing with custodial parents, non-custodial parents, child support agencies (issuing agencies in bureaucratese), carriers, attorneys and other stakeholders.  In other words, our staff’s time is matched by someone else’s staff time.  I did an extrapolation to the US population.   It assumes our population is a representative sample of the general population.  By my estimate, it is costing the United States economy $100,000,000.

Now by standards of the health economy that is not a lot of money.  For example, to cover the uninsured you would need to add three more zeros to that number by some estimates.  To build a hospital you could easily spend five times that amount.  On the other hand, my estimate is conservative because I am counting only the time I see.  I will not pretend to know how much time is spent by child support agency staffs, lawyers, judges, and other stakeholders in the process.  How much time is lost to work as both sides of this parental equation battle this out away from work.  Dare we pump that number up to a billion dollars?  And let’s not forget the time invested by lobbyists, legislators, and regulators.  A billion dollars may not be far fetched.

If you think, per chance, that I exaggerate this bureaucratic imbroglio visit the Department of Labor (DOL) web site on the subject.  They list the following other stakeholders in the process:

• Employee Benefits Security Administration -
• Office of Child Support Enforcement -
• Centers for Medicare & Medicaid Services –
• National Child Support Enforcement Association –
• The Eastern Regional InterState Child Support Association (ERICSA) and the Western InterState Child Support Enforcement Council (WICSEC)
• Each State has a child support enforcement agency. Sometimes this agency is located in the State attorney general’s office, but it is frequently found as part of the State’s department of social or human services.

And what do we get for this billion dollars – eligibility to enroll a child in a health insurance plan.  It does not include the cost of the actual coverage — only the cost to put the child’s name on the roster of eligible participants in a health plan.  After that come the premium bills.

But wait, even that eligibility is circumscribed.  Eligibility only if the non-custodial parent is eligible for health insurance; and can enroll children in the health insurance program; and meets the withholding limits established by the various states.

But here is the kicker.  There is no requirement that the child, once enrolled, has effective coverage.  More than half our membership is enrolled in HMOs.  A child living with a custodial parent outside the service area of one of the HMOs effectively has no coverage.  The non-custodial parent is not required to switch to a plan that would cover the child where he or she lives.  Given the adversarial nature of these proceedings, it is not surprising that some non-custodial parents will make no effort to change their coverage for the benefit of the out-of-area child.

Fortunately, we find most non-custodial parents are eager to provide the coverage for their child.  We have had situations where the custodial parent will not cooperate with our office in any way for fear that the non-custodial parent will learn more about the child, than the custodial parent is willing to reveal.  And it is these sad and difficult situations that usurp the most staff time.

This is one more example of spending money trying not to spend money on health care, one more example of the game of Old Maids that has become the story of health care financing in the US.

There has to be a better way.  I endorse an eligibility system, what I am calling a patient delivery system, which is not tied to employment or to income.  An eligibility system that is determined by membership in the community – however the political process wants to define that word community.