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Retired Steelworkers and single payer advocates rest after a long day rallying and lobbying for health care on June 25, 2009.

The Senate and House are preparing to reconcile two modestly different approaches to health care reform.  Charges and counter charges continue to swirl around like New Year’s Eve confetti.  Are we on the verge of an historic breakthrough on health care reform?

What lessons have we learned about ourselves and our government?  Let me suggest six.

1.            America matters more to some than Americans.

The target of health care reform is Americans who are in the margins of our workforce.  They earn too much money to qualify for health care programs for the poor – state Medicaid and Children’s Health Insurance Programs (CHIP).  They work for small businesses who cannot or do not provide health insurance coverage.

As a society we have already agreed to provide health care to the poor, the old and those who work full time for profitable companies.  Why is it so difficult to fill the remaining cracks in the system?

Yet opponents of reform frame their arguments as a classic American struggle against big government.  The stories of very real Americans facing death by neglect or medical bankruptcy don’t seem to resonate as much as the conjured images of America challenged by fictional tyrannical death panels and giant government databases.

2.            I got mine – go get your own.

Very few people with health insurance pay anywhere close to the full cost of health insurance.  Less than 10% of adults under 65 obtain their health insurance in the individual market where they have to pay the full price.  73% of those who tried to buy individual insurance gave up either because it was not available to them or it was too expensive, according to a study by the Commonwealth Fund.  For the rest of us, our employer pays the majority share, or the government for those on Medicare and those on Medicaid.

Yet extending the same helping hand to those who may need health insurance to continue to participate in the workforce is tantamount to terrorism or tyranny, according to certain news commentators.  That may be an extreme view, but the noise it generates is dead weight that drags the center of political discourse away from constructive and meaningful reform.

3.            Money talks

Despite the clamor from the right, polls consistently show strong support for health care reform and even for the “controversial” public option.  Recently, I described how opinion pools show strong support for a single payer system.

So why are Democratic politicians having such a hard time getting “on board” with health care reform.  Countless stories have documented the amount of money the health care industry has spent on lobbying members of Congress.  One is reminded of my home town’s favorite son, Simon Cameron, Lincoln’s first Secretary of War, who once said, “An honest politician is one who when bought, stays bought.”  Only when some politicians began to realize that actual voters are behind those poll numbers did the public option begin to show renewed life.

Sadly, the Senate result reinforces the impression that money talks.

4.            Symbols matter

There is not a whole lot of evidence that the public option by itself will make a meaningful dent in the number of uninsured or in medical cost inflation.  But it is a powerful symbol reflecting one’s viewpoint about who should be the intermediary between the patient and the health care system – a government or quasi-governmental organization, or a private health insurance company.  There is clearly little appetite or political will to take on the insurance companies directly with the kind of strong and consistent regulation found in other countries.  The best that Democrats can offer is the threat of weak-kneed competition.

5.            Why do simple when complex is so – complex?

There is much ado about the nearly 2,000 pages of the health care bill.  When Congress tries to fix 1/6 of the American economy, it can’t be easy.  An analogy can be made to taking your tired old clunker to the repair shop.  It is too expensive.  It can’t haul nearly as many people as it was supposed to.  But you love it to death.  Your favorite repairman could hand you a ten-page estimate and tell you it will still be expensive and still won’t carry the all the passengers you would like.  Or he could hand you a one-page invoice for a new car.  HR 676, the “Medicare for All” legislation and beloved of single payer advocates, is 27 pages long.

6.            Who does Congress love most?  Not you and me.

Do you doubt the devotion of Congress to the insurance industry?  If so, the provision in both the House and Senate proposals to require an 85% medical loss ratio should say it all.  The law requires that at least 85% of premium income be used to pay for medical claims of covered participants.  Even the most conservative estimates put Medicare’s loss ration in excess of 90%, some argue in excess of 95%.  If the government can spend premium income more efficiently why let the private insurers in?

What next?

It’s no longer a safe bet that health insurance legislation will succeed (It does not deserve to be called health care legislation).  It is criticized from the right and from the left.

As feeble as it is, it will be a significant achievement given the long record of historical (and hysterical) opposition. Calling it reform will be the challenge of the spin-doctors.  Already there are estimates that it will leave a significant number of people still uninsured.  It doesn’t do enough to manage costs.  And there will undoubtedly be a backlash for a variety of reasons, some of them legitimate.  The question will be, how soon before Congress will have to revisit this issue?

Photo by JL McGee

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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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There is a group of people that has not been engaged in this debate about health care reform.

Yet the debate is about this very group of people – the uninsured.

But when the dust settles, the shouting is over, the ink is dry, and the regulations are in translation, those disengaged uninsured will emerge from their shells.  Like Punxsatawney Phil their heads will rise above their immediate struggles and they will check out the new climate for health care.

Will the sun shine and point the way for a brighter future for so many who have hidden in the burrows of our society?

Or will they see no discernible change and crawl back into an indefinite health insurance winter?

A recent report by the Robert Wood Johnson Foundation and the Urban Institute attempts to answer the question, how will the current reform proposals affect the number of uninsured.

It is full of impressive numbers, but offers insufficient concrete evidence that a “reformed” maze will be any easier to navigate than the current one.

One number is instructive.  Almost 30% of the currently uninsured are eligible for some form of public health insurance programs?  Half of those are children.  Why aren’t they enrolled?

Can we expect expanded access to public programs to generate expanded enrollment, even with an individual mandate?  What are the current obstacles to enrollment?

Who are the uninsured anyway?

Two-thirds are from families where at least one person works.

Only 20% of those have access to employer sponsored health insurance.

Of those with access to either employer sponsored health insurance or other private insurance, one third would pay between 10 and 49% of their income on premiums.  One fourth would pay more than 50% of their income on health insurance.  Another 7% are uninsurable due to their own or a family member’s health status.

One quarter are between the ages of 45 and 64.

Over two thirds (68 %) live in the South(44%)  or West (24%).

So what are the reform proposals?

The proposals by the three key legislative committees, differ only in detail and share a common approach to expanding access to health care.

Expanded access to Medicaid up to some percentage of the federal poverty level.

Subsidies to purchase health insurance for individuals and families up to as high as 400% of the federal poverty level(FPL).

Those with income above the limits would be favorably impacted by reforms to the health insurance markets that include a health insurance exchange

a individual mandate

requirements for guaranteed issue and renewability

Eliminating medical underwriting

A note.  The analysis does not count undocumented immigrants who would not be eligible for expanded access to public programs or to subsidies.

According to the report authors, 39% of currently uninsured would be eligible for an expanded Medicaid program and 38% would be eligible for subsidies.

Almost 60% of those newly eligible for public programs would be childless adults who are particularly disadvantaged under the current system.

Only 19% of those currently uninsured have access to employer sponsored health insurance.  For those eligible for subsidies under the reform proposals, 27% have access to employer sponsored health insurance, but for 45% of that group, the cost of insurance, including employer sponsored health insurance, is between 10 and 45% of family income.

The key passage in the report is describes the administrative processes.

“Understanding and removing the barriers to enrollment for families who are eligible for Medicaid will be critical to covering the eligible but uninsured.  Eligibility  determination processes remain burdensome in many states, especially for parents…Improved outreach strategies, application assistance, simplified eligibility determination processes would help enroll this population with or without reform.”

Imagine a hypothetical 45 year old worker with children who can no longer work at their $60,000 per year job because of an illness.  He or she is already living pay check to paycheck.  She is not eligible for unemployment compensation, because she can not work.  She is concerned about making the next rent or mortgage payment.  What hoops will she have to jump through to maintain coverage?

Will she see the sun shine?  Or will she stay hidden in her health care burrow?

In the answer to that question rests the fate of the Democrats and their leader.

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Insurance reform is OK but we don’t need health care reform.

Conservative opponents of health care reform repeat this refrain in the blogosphere and the news.

Single payer advocates, on the other hand, insist they want  health care reform, not insurance reform.

What is the difference?  Are they mutually exclusive?

Insurance reform

Conservatives and liberals seem to agree on the need to eliminate what it is referred to as medical underwriting by insurance companies – denying health insurance to sick people.  This is called guaranteed issue.  Insurance companies must accept anyone who applies.

Conservatives, however, fall back on their knee jerk ideology when they resist the logical counterpart to guaranteed issue – coverage mandates.

If insurance is voluntary, consumers will weigh their decision to purchase health insurance against other sometimes more immediate economic needs.  If they perceive that the cost of health insurance exceeds the likely return, they are more likely to defer the purchase.  Those who will buy health insurance are those who think they are likely to need it – sick people.

It is a basic principle of insurance that the cost of claims is shared by those who incurred no lost.  Fire damage to a home is paid by those who had no fire.  The cost of an auto accident is absorbed by safe drivers.  So in a voluntary market, why should any entity motivated by that driving force of the free market, self interest, sell insurance only to sick people?

Government has to intervene if health care for sick people is a societal objective.  Our society agrees that health care for the aged and the indigent is a societal objective.  They seem to have a harder time reaching the same conclusion for working age people and their children.

Mandate health insurance

If insurance is to be the mechanism for paying for health care (and that can be debated), then for insurance to achieve its goal of spreading risk, health insurance must be mandated.  This is not a dramatic  departure from current policy.  There are a combination of market forces and mandates that require homeowners insurance, automobile insurance, workers’ compensation insurance.

In the health insurance market, most people are covered in group plans that require certain participation levels – a kind of mandate.  But as the cost of health care escalates and insurance becomes more unaffordable, healthier people who have the option, elect no coverage.  This is an unsustainable death spiral for health insurance.

Therefore, the most minimal health insurance reform is a mandate coupled with guaranteed issue.

Insurance exchange

There also appears to be consensus around the concept of an “insurance exchange”.  This is a mechanism designed to facilitate the exchange of information about available health insurance options – one stop shopping for health insurance.  Consumers could compare the price, benefit design, and networks of competing providers; learn what public subsidies might be available; and offer some mechanism for comparing health insurance plans.

Risk pooling can also help insurance companies.  Currently states describe their mechanism to provide insurance for the “uninsurable” as risk pooling.  But in a market with guaranteed issue, risk pooling becomes a mechanism for equalizing the risk exposure among insurance carriers – technically reinsurance.

Another concept is already in place in the market for Medigap insurance – standard benefit designs.  Standardizing benefit designs would make comparisons among plans simpler.  Non-standard benefit designs would be so designated.

Insurance reform would reform the way consumers access a mechanism to pay for health care.

Health care reform

Health care reform affects the way doctors, hospitals and others deliver care.

Health care reform is focused on the outcomes from the delivery of care; whereas insurance reform is focused on delivering patients and money into the system.

The United States does not rank in the top twenty for life expectancy or infant mortality.  The current system places greater emphasis on expensive acute hospital care than on primary and preventive care.  Health care reform proposals offer delivery models that balance curative and preventive care.  The promise is a more rational and accountable system.  The use words like community based care, medical homes, integrated care.  They place greater emphasis on primary care, preventative care and chronic condition management.

In between insurance reform and delivery system reform is payment reform.  The way to change the delivery of care is to change the way health care is paid for.  The current fee for service reimbursement creates incentives to maximize revenue.  Some argue that detracts from maximizing health care outcomes.

There are those who argue that one is more important than the other; that one can occur without the other.  But changing the delivery of health care is necessary to “bend the long term cost curve”.

But without reform to the system for delivering patients and money to those who deliver health care, health care delivery system reform will not be possible.

But insurance reform is not the only way to reform the patient delivery and financing systems.

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I am upset with President Obama’s handling of health care.

If I was responding to the recent Washington Post –ABC news poll I would respond “strongly disapprove” to the question:

Do you approve or disapprove of the way Obama is handling health care? Do you approve/disapprove strongly or somewhat?

But I am not sure the media analysis of the poll captures my sentiments.  To listen to them you might think Americans don’t want health care reform.  That’s not my view and that does not appear to be supported by the poll results.

The last president barely squeaked into office without a majority of the popular vote and the slimmest of margins in both the House and Senate.  And yet within two years he led the country into a war that almost no one wanted, and that has killed and maimed thousands of American service men and women.  That very same poll shows that 62% of Americans consider the war in Iraq not worth fighting.

President Obama was elected with a huge popular mandate and strong majorities in both the House and Senate.

And he can’t reform a health care system that is killing many more thousands of people each year both by neglect (no insurance) and incompetence (medical errors)?

Don’t be a wimp, Prez.  Make this thing happen!

The very same poll shows that the public trusts the president and the Democrats on health care more than they trust the Republicans.  And that number has barely changed.

But President Obama and the Democrats are headed down the wrong path if they require individuals to purchase health insurance.  How do they expect a worker living paycheck to paycheck, who now needs to figure out how he or she is going to pay rent or mortgage, to find the money or even the inclination to buy health insurance?

It is a loser!  Those voters may not be paying attention now, but you will get their attention very quickly if this idea becomes a reality.

The Commonwealth Fund recently released a report describing the failure of the private insurance market.

Over the last three years, nearly three-quarters of people who tried to buy coverage in this market never actually purchased a plan, either because they could not find one that fit their needs or that they could afford, or because they were turned down due to a preexisting condition. Even people enrolled in employer-based plans are spending larger amounts of their income on health care and curtailing their use of needed services to save money. The findings underscore the need for an expansion of affordable health insurance options, particularly during a time of mounting job losses.

A story on the web site Kaiser Health News describes the dilemma facing Congressman Mike Ross (D-AK).  Does he bow to the interests of his voters or to the insurance and health care interests in his district?

Rep. Mike Ross, who grew up in this tiny town of 3,600, represents residents like 62-year-old Sandy Barham, a restaurant owner with a heart ailment who can’t afford health insurance for herself or her employees.

The haves vs. the have nots

And that in a nutshell is what this debate is about – the haves vs. the have nots.

The Robert Wood Johnson Foundation produces a monthly  Health Care Consumer Confidence Index.  Highlights of the most recent  survey point out:

• Americans believe health reform is an important part of addressing the nation’s economic crisis. More than 8 in 10 people (84.7%) believe that it is important for President Obama to reform the health care system as a step in solving the nation’s economic woes.

• People are worried about being able to afford future care. More than four in 10 of all Americans (43.3%) are worried that they will not be able to pay for their future health care needs in the event of a serious illness. Additionally, nearly four in 10 (39.8%) are worried that they will not be able to afford all of the routine health care services they need (39.8%).

• Americans are afraid of losing their insurance in the coming year. Nearly one in four currently insured adults (23.3%) fear losing their health insurance at some point in the next 12 months.

• Americans are having trouble paying their medical bills. One in four people (25.8%) report having had trouble paying medical bills during the past year.

• People are worried that medical bills will lead to bankruptcy. Nearly a quarter (22.9%) report being worried that they will go bankrupt from not being able to pay their medical bills

In addition:

The June survey also found that minorities and individuals with lower incomes report a lower confidence level in health care. White, non-Hispanic respondents had a confidence level of 105.9, while non-white respondents had an overall confidence level of 86.9. People with incomes in the bottom third of those surveyed had a confidence level of 87.5, compared to a confidence level of 118.0 for those in the top third of incomes.

Democrats like Mike Ross need to answer the question of that old union song, “Which side are you on?”  The president needs to lead the chorus!

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To Chris Farrell

Chris Farrell is Economics Editor for American Public Media’s Market Place which airs on approximately 330 public radio stations including WAMU in Washington, DC.

You almost had a break through moment.  Then you broke down. Your straight story took a nose dive.

On June 19th, your Straight Story opined on health care reform.  Health care needs to be de-coupled from employment, you stated boldly.  Your words were, “sever the link between your job and your health care.”  You went on to say:

It makes no economic sense to me  that if someone loses their job their family loses their health care insurance  and don’t tell me that COBRA covers it, because COBRA is so expensive very few people who lost their job can pay for it even with the new subsidy.  It makes no sense; it is so inefficient; and it is immoral.

But wait a minute.  You also said that by “severing the link between your job and your health care” you could lose your job and still have health insurance.

How does this work?

Do you really have any idea what health care costs in this country? COBRA rates are so expensive because they reflect the actual cost of group health insurance.  Unless you are working for a company with a bunch of old sick people, you are unlikely to buy an individual policy with comparable coverage for less than COBRA rates.  The key word here is comparable.

Please don’t misunderstand me.  I think you make one of the most important points in this current health care debate.  Health care needs to be de-coupled from employment.

But payment should be tied to income.  Otherwise you put it out of reach for too many people.  Not just out of reach for the recently unemployed, but also for young people just trying to enter the job market, and for low wage workers in general.

This is not just a health care issue

It is an economic development and work force development issue.  Health care costs distort our competitive economy. More important, it distorts incentives in the workforce.  How many people with bright creative ideas are reluctant to test them in the market place, because the one market entry barrier they don’t know how to overcome is the cost of health care?

The 18,000 people a day that die for lack of health insurance are not just tragic personal stories, they are tragic economic stories.  They are stories of people who have been denied the opportunity to contribute to the American economy.

Mr. Farrell, I trust your instincts.  But on this one, you need to go back to the drawing board.

Please don’t tell me you are enamored with the idea of competing insurance companies.  On what will you base your decision?  Do they cover lap band surgery, but not cardiac rehab?  They have your primary care doctor in their network, but not your cardiologist.  They have your internist in the network, but they don’t cover cardiac rehab.  Oh, you didn’t notice that language, until after you had your heart attack?

Please Mr. Farrell.  I am not one to criticize the insurance companies.  I work with them every day.  Like you, I fault the connection between health care and employment.  Insurance companies do what those who hire them, like our plan, ask them to do.

We can keep the insurance companies.  I am not sure we should, but they do seem to have a loyal and devoted following in Congress and the White House, even if nowhere else.  But let’s make them play by our rules.  I propose a set of very simple rules. They would apply to both public and private plans.

1.    No medical underwriting, guaranteed issue and guaranteed renewability.

2.    Rates would vary based only on age, location and benefits.

3.    All carriers would pay the same provider the same amount.  Our current system pays providers next to nothing for treating poor people (Medicaid), a bit more for treating old people (Medicare), and a healthy profit for treating employed people.  That makes no sense and should be replaced by a payment system that rewards good outcomes.

4.    There would be very limited set of benefit options, similar to the current Medigap regulations.

I think I just described Medicare, almost.  There’s the solution – Medicare for everyone. And we can even keep the insurance companies.  After all, aren’t they the ones paying Medicare claims now?

On this issue, Mr. Farrell, your story may be straight, but it falls way short of its target.

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I realize writing a letter to the president is like writing to Santa Claus.  Yes, Jim, there really is a Santa Claus; but the elves read the letters.

Short letter.

Dear President Obama:

Taxing benefits is a bad idea!

It is bad politics

It is not just that you thought it was a bad idea during the campaign and now you have flip flopped.  You are allowed to flip flop on some issues.

Far more important, you told us that 95% of Americans would not see a tax increase.  And now you want to tax our benefits.  Did you misspeak?  Were you just plain wrong?  Or misguided?

I realize not everyone has employer provided health care benefits, so it is a little bit like taxing the rich.  Is that how you see it?  Is that how people in Montana see it?  I don’t think those of us with employer provided benefits would think of ourselves as rich.  Lucky perhaps, but not rich!

It’s not that this goes against my interest.  It goes against your interest.  I do not believe that you have an interest in betraying the American people on the issue of taxes.  Aren’t working people upset enough already? I suggest you wave your veto wand and make this curse go away.

It is bad economics

Someone has to pay and you know it is not the employers.  How will depressing worker wages help the economy?

It is bad health policy

I have made the point here frequently that the current system distorts domestic and international competitiveness.  Taxing benefits will aggravate the problem.  It will make benefits and compensation more expensive forcing some employers to abandon or cut back on employer provided health benefits.

So your idea to pay for those without health insurance is to cause more people to be without health insurance.  So you fix that problem by raising the tax on those with insurance causing more employers to give up health insurance.

I imagine a man in a boat who sees water come in at one end and decides the solution is to drill a hole at the other end for the water to leave.

Bad idea!  Unless…but that is a topic for the next post on Wednesday.

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In discussing the nation’s health care system, “broken” is the most common descriptive term.  Almost all stakeholders seem to agree on the adjective.  Not Mr. Tevi Troy, writing recently for the Weekly Standard.

Health Care Reform Can be a Stimulus

I have argued that a major overhaul of health care would be a significant stimulus to the economy by leveling the competitive playing field for both employers and workers – those currently working, those out of work and those working on the margins.  In the long term, it would free up capital, both the monetary kind and the human kind, for more productive investments.

It does not surprise me that Congress might see things differently.  The major health care provisions in the stimulus package that will be approved by the Senate have very little to do with stimulus and everything to do with safety net.  Support for state Medicaid programs and provisions related to COBRA.  There are two small provisions in the package that do attempt to push the reform agenda a tiny fraction of an inch.

There is a provision in both House and Senate versions of the bill for for further development of electronic medical records and there is money for “comparative effectiveness research”.

These are hardly earth shaking provisions, unless you are listening to the likes of Mr. Tevi Troy.  To Mr. Troy and his ilk, these measures are the Ft. Sumter of the liberal war on the US health care system.

What planet to these people live on?

Electronic Medical Records

The Institute of Medicine has demonstrated that tens of thousands people die each year from prescription errors, many of which could be avoided with legible prescriptions.  One sure way to improve that simple process would be a script printed by a computer.  Errors could be avoided if doctors knew what other drugs the patient was taking.  That information can be provided by an electronic medical record.

Yet Mr. Troy and other right wing fear mongers describes the stimulus as a “threat to American health care.”

But as Dr. David Brailer points out in a Health Affairs blog post, the stimulus for electronic medical records will only be successful if it focuses less on the technology and more on the organizational and human impediments to its widespread adoption.

Effectiveness Research

Likewise, the defenders of the broken status quo react even more vociferously to the “comparative effectiveness research” calling it a “federal infrastructure that could be used as a tool for government rationing.”

Again according to the Institute for Medicine, one hundred thousand people a year die from hospital acquired infections.  Only 50% of people receive care in accordance with recognized best medical practice.  And yet research on the effectiveness of medical treatments is a threat?

I used to work for the Pennsylvania Health Care Cost Containment Council (PHC4), a state agency on the leading edge of public reporting on the outcomes of health care.  The PHC4 has demonstrated repeatedly that there are wide unexplained variations in the quality of care and in the practice of care.

The United States pays more for health care than any other country in the world.  And not just a little bit more.  We spend almost fifty percent more than the next most expensive country – Switzerland.  We pay more in taxes for health care than countries with tax supported health care systems and yet almost 90 million people had some period during 2006-2007 when they went without health insurance.  The United States does not rank among the top twenty nations in life expectancy or infant mortality.  This should be an embarrassment.

Investments to improve the delivery of care are long overdue.

Yet if the reactions of the out-of-touch to these modest patches to the status quo are a gauge, we are in for a noisy debate when real reform gets center stage.

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Three reports this week about the costs of health care and health care reform caught my attention.  One said that health care reform will be a sure fire economic stimulus because it will replace jobs lost from the current recession.   Another suggests that a modest upfront investment will produce $530 billion in savings.  The third moans that without a commitment to hard choices, we are doomed to health care spending profligacy.

John Nichols in The Nation describes a report and follow-on campaign by the National Nurses Organizing Committee/California Nurses Association (NNOC/CAN) that attempts to bolster the argument for a Single Payer health care system by describing its impact on jobs and the economy.

A report in Reuters describes a report by DeLoitte that argues that a $220 billion investment in e-prescribing and electronic medical records will produce $530 billion over ten years.

Lastly, Robert Samuelson in the Washington Post reports on findings of a report by the McKinsey Global Institute that provides valuable insights into why US health care costs so much more than it does elsewhere in the world.  Unfortunately,  it was short on constructive “shovel ready” policies. 

So how does one react to such disparate perspectives.  Clearly, each study  support a specific ideological slant and approach to fixing our admittedly broken system.

The first study sponsored by the NNOC/CNA and completed by the Health and Social Economic Policy was disappointing.   It equates a single payer system with more jobs but, in fact, adds fuel to the opponents of single payer who argue that it will cost too much money. 

I generally support a single payer health care system.  But I support it for reasons that are opposite to those outline in this report, authored by Don De Moro.  A single payer health care system is the superior policy option because it can most effectively:

• Eliminate waste in the system
• Focus the system on patient care
• Provide coverage to those on the edges of the current system

It is by providing this secure safety net that a single payer system can provide an effective economic stimulus.

• It will make companies more competitive domestically and internationally by lowering health care costs and leveling the health care burden across all companies.
• It will energize the smallest entrepreneurs by giving them the freedom to test new ideas in the marketplace instead of limiting themselves to jobs with health care benefits.
• Free up capital resources for more productive economic investment.

The study by Deloitte is typical of the cure-all policy.  It focuses on one specific aspect of the current state and argues that if we can just fix this one thing everything else will fall into place.  It might be tax policy, integrated delivery systems,  the health of the population or a health insurance mandate. 

This study focuses on one of the more popular themes and one that many argue is championed by the Obama administration – the information technology infrastructure. As someone who has had some experience in this area, I am extremely skeptical.

Early on I learned a simple precept – automated stupidity is still stupidity.  IT integration has progressed light years since I was involved in an effort to promote a very limited community health information network (CHIN).  But the same integration issues that plague the smallest organizations will convert these visions of a super IT infrastructure into tormenting hallucinations – not to mention an economic boondoggle for IT firms.

Mr. Samuelson offers another strain on the thinking about the economic impact of health care reform.  The choice is either spending more money without any changes to the way we spend it.  Or make hard choices that primarily affect health care consumers – pay more for health care, pay more taxes and have fewer health care choices.

He dismisses the impact of administrative wastes by pointing to the study’s finding that administrative costs account for only 7% of health care costs.  That number seem preposterous to me.  Our plan purchases health care for 25,000 participants.  Seven per cent may be close to what our insurers charge our group – a very large group.  It does not account for the administrative costs of our office,  It does not account for the administrative costs of each of the doctor and hospitals .  And our group is certainly not representative of the larger insurance market.

This study offers some valuable insights in health care spending in the US relative to the rest of the world.  But the 7% number is not one of them.  And good conclusions can not flow from flawed facts.

The three articles reflect the three dominant approaches to health care reform – major overhaul, just fix this; and, it’s too complicated.

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The blogosphere is buzzing with discussions about the promise of health care reform.  For a weekly poster like me, it is impossible to keep up.  As 2009 approaches, and more importantly, as 1.20.09 approaches, I thought I would offer my insights into the topic from the perspective of the administrator of an employer and union sponsored health benefit plan

If there is one thing that unites the comments it is their oppositional posture.  Insurance companies are the most common enemy, but hardly anyone escapes.

So I would like to go on the offensive and tick off a few positives that I would like to see in health care reform.  Please indulge my autocratic use of the term “will”.  

1. Every individual will be required to have health insurance.  We don’t object to requiring drivers to have car insurance, homeowners to have homeowner’s insurance, employers to pay for unemployment insurance, liability, or workers’ compensation insurance.  A basic principal of insurance requires the risk to be spread among as many as possible in order to provide both the greatest protection to the insurers and the lowest possible cost to the insured.  

A mandate negates the need for medical underwriting, that unseemly practice of denying health insurance to those who are already sick.

2. There will be a defined set of benefit plans.  This is not a novel concept.  In order to cut through the misleading marketing around Medicare Supplemental (Medigap) insurance plans, CMS adopted a defined set (12) of permissible Medigap benefit designs. 

A set of clear benefit design options would eliminate underinsurance while permitting certain groups to “buy up.”  What gets included in any prescribed benefit design is the most controversial and consequently under discussed aspect of health care reform.  Every possible interest group comes out of the woodwork to argue its case.  I learned that in 1993 during discussions at the state level about health care reform.  It will take real leadership to settle this issue.

3. There  will be a uniform drug formulary.  This is consistent with a standard set of benefit plan designs.  Today, physicians must grapple with dozens of different drug formularies, if not more.   What is a preferred drug with one plan may not be permitted in another.  Too often the patient is put in the middle of that controversy and forced to pay extra for a drug that a doctor is receiving incentives to prescribe.  

4. There will be payment reform.  Much has been written about the inequities of the current payment system.  It does not provide adequate incentives for primary care; it does not adequately reward or incent quality care; it does not pay for care management; it does not adequately compensate for medical education.  I support and encourage each of these objectives.   

I just want to add one unifying principal to the mix.  There will be one system that will apply for each and every patient.  There won’t be one payment system for older Americans on Medicare and another for younger Americans on state Medicaid plans and still a bunch more for those insured by private health insurers and still yet a different set of rules for the uninsured.

5. Medical education reform will include major financial support by the federal government.    There are two major flaws in the current system of financing medical education.  The first is the unconscionable debt burden that encumbers new medical school graduates and distorts incentives throughout their careers.  The second is the costs incurred by institutional and professional providers to provide supportive apprenticeship (internships and residencies) programs.  There are lots of suggestions by others to improve the content of medical education.  I will leave that topic to them.  

This is not an item that gets priority treatment in reform discussions.  People seem ill inclined to sympathy for people who, they think, make too much money.  That thinking is backwards.  Doctors should start their careers owing their debt to their community, not to their bankers. 

6. There will be a system for a fair redress of medical errors. It should adequately recognize and acknowledge errors; compensate the victim and family fairly; assure that there is no financial gain to the provider; and ensure that systems are in place to prevent errors from recurring.

7. Cost to the individual will be based on ability to pay.  That is most easily understood in the context of a government, tax supported program.  But it could be possible to have private programs with payroll deductions based on income.  That is not an unheard of concept with some employers today.  The challenge will be devising administrative systems to handle those transitions between employment and unemployment as well as those independent contractors who are not payroll employees.  Perhaps some tax on 1099 income.  I’m sure experts on tax policy could devise a workable system.

8. There will be delivery system reform that eliminates the silos that keep providers apart and inhibits the delivery of coordinated care, chronic condition management, follow up and rehabilitative care,  and drug therapy management.   

9. There will be room for experimentation.  There will always be, I hope, providers who push the boundaries of accepted medical practice.  Patients need to understand when their doctor is pushing those boundaries.  At the same time doctors and institutions need to accept that something new is not acceptable just because they say so.  Patients and providers need to be open about the risk and the costs of these experimental treatments.

10. Above all, there will be recognition that the health of the nation is not dependent solely on its health care system.  It depends on good nutrition, opportunities for exercise and outdoor recreation, on the education of its citizenry, on safe working environments, on safe drinking water and sanitation systems, and on clean air.

Over time I will take the opportunity to expand on these topics.  Some may notice that I offer no silver bullets: fix this one thing and all will be right.  It took this country a long time to get into  this mess.  Fixing it will take time, leadership, and concerted effort.