Oct

Report from the Coventry work comp client meeting

Posted by Joe Paduda on Monday, October 20th, 2008 | Comments

More accurately, here’s a report about the meeting, held this year at the Ritz Carlton in Naples, Florida.
The annual client meeting, which is always held at a very nice place with lots of golf courses, finished up Thursday last. You may be shocked to hear I wasn’t invited; maybe Coventry knows about my aversion to golf…
But a bunch of folks were, and here’s what a few experienced/thought/took away.
The shocker came early, in the kickoff speech delivered by Work Comp boss Jim McGarry. According to several attendees, McGarry led off by apologizing for Coventry’s poor responsiveness, lack of customer focus, and general ‘our way or highway’ attitude. He acknowledged the Coventry work comp’s poor reputation for customer service was well earned, and promised that the company would be working diligently to change its ways.
There’s some actual evidence of Coventry’s commitment – the hiring of Pat Sullivan back in September. Sullivan, a long time and well respected industry veteran, surveyed Coventry’s market position for the company earlier this year and told McGarry et al that Coventry’s image was, well, lousy. (I don’t have inside knowledge of this so am likely not getting the characterization exactly correct.) So, McGarry hired Sullivan to help redo the company’s image.
Meanwhile, the announcement was in large part shocking because outside of the Sullivan hire, no one I spoke with saw any evidence that Coventry was at long last actually attempting to change its ways. One client commented (paraphrasing here) “we sure haven’t seen any evidence of any change.”
It is possible that the ex-Concentra folks are finally making their voices heard. First Health, the other predecessor company that is now under Coventry, was never noted for its customer orientation. After Concentra was merged into Coventry work comp, there was some expectation on the part of a few customers that things would get better. That expectation has not (yet) become reality.
Sources indicated Coventry did not say anything in public about the changes at Aetna Workers Comp Access; (AWCA lost its separate business unit status a few weeks ago in a move that may , or may not, result in improvements or a decline in its workers comp network). In private, a couple heard that AWCA’s representatives were telling everyone that it’s business as normal, no changes, moving forward on all fronts, full commitment from senior management, and other calming words.
There was some discussion about pending regulatory changes in Texas and the potential for revisions to California’s work comp law, with Coventry assuring its clients the company was on top of matters (which it probably is).
And a good bit of golf, sailing and spa-ing as well.
Notably, there was no one from AIG or Travelers in attendance. Seems like AIG is hunkering down and trying to avoid anything that remotely appears to be a boondoggle.
(Note – I contacted Coventry early this morning to get their take on the meeting but did not hear back by press time)

Oct

Joe the Plumber – the real story

Posted by Joe Paduda on Friday, October 17th, 2008 | Comments

In this Alice-in-Wonderland world of election claims, counterclaims, lies, and bigger lies, one of the more bizarre stories is that of Joe the Plumber, a tradesman mentioned no fewer than a dozen times in the last and final Presidential debate.
Louise at Colorado Health Insurance Insidertook a look at Joe’s financial picture, and how Joe’s finances would be affected by the Obama and McCain tax and health care plans.
But first, a little fact checking. Joe’s not a licensed or registered plumber. He’s never been formally trained as a plumber. He can’t work as a plumber except in a few townships in Ohio. Perhaps it would be more accurate to call him ‘Joe the Plumber’s helper’.
Second, court records indicate Joe earned about $40,000 in 2006 (previous citation).
Here’s how the McCain tax and health reform plans would affect Joe (from Louise’s piece). Note that Louise assumes Joe’s company is earning a profit of $280,000 because that’s what Joe said the company ‘makes’. (which, according to D&B, it isn’t).
“if the business is paying premiums for two families, at roughly $12,680 each, that’s $25,360/year that the business is spending on health insurance premiums and deducting as a business expense. So that money is currently not included in the $280,000 profit the business makes. Losing that tax deduction [per the McCain plan which eliminates the employer deduction for health insurance premiums] would mean that the business would be paying 36% tax on the $25,360 that they currently pay for health insurance premiums. That’s $9,129/year in additional taxes.”
versus the Obama plan, which
“would raise taxes on small business profits (not revenue)[emphasis added] that are over $250,000 (a threshold that the vast majority of small businesses don’t even come close to reaching). In this case, that would be $30,000/year in profits being taxed at the higher rate. The tax rate on that $30,000 would go from 36% to 39%. The difference would be an additional $900/year in taxes for the business. The business would still get a tax deduction for the health insurance premiums they pay, so it would continue to make good business sense to offer group health insurance for the employees.
So Obama would increase taxes on the plumbing business by $900/year (if the business is making an annual profit of $280,000).”
But Joe’s company doesn’t make anywhere close to that – in fact annual revenues (not profits) are about $100,000.
The net?
“McCain would let the business keep that $900/year, but he would take away more than $9,000 in tax savings that the business gets by deducting health insurance premiums.”
There’s a bit more to this. If Joe is healthy, he may well qualify for coverage under the McCain plan – he’s 34, single, and works out, so insurance companies will want to take his application. But if he has an pre-existing conditions, chances are very slim he’ll get coverage at a rate he can afford (remember he makes $40,000 or so a year). He would be able to get coverage under the Obama plan, regardless of pre-existing conditions – coverage that would likely be more expensive, but would protect Joe from cancellation and ensure he has comprehensive benefits.
We don’t know if Joe has insurance right now; if not he’s covered if he gets injured on the job through workers compensation. If it’s not occupationally-related and he doesn’t have insurance, he’s going to get charity care (there’s no way Joe can afford a day in the hospital on his income).

Oct

The pre-election health policy debate

Posted by Joe Paduda on Wednesday, October 15th, 2008 | Comments

Editor’s note – this is perhaps the most serious, thought-provoking edition of HWR I’ve had the honor of hosting. There’s a lot of meat here, so don’t expect to multi-task your way through.
These are momentous times. Not only will we be electing a new President, a third of the Senate, and all of Congress in less than three weeks, we’re also facing the biggest economic crisis in modern times. The combination of these two events looks like it will result in a much broader and deeper role for the Federal government in private industry.
Who would have thought taxpayers would be subsidizing loans to automakers, buying up bank stocks, guaranteeing interbank lending, and bailing out huge insurance companies? (If that ‘who’ is you, I would have appreciated a heads’-up before by portfolio cratered…)
The unthinkable is now the inevitable. I can also sense a subtle but nonetheless significant shift in the health policy world, as politicians and pundits absorb the implications of Federal intervention in the capital markets and begin to consider other areas of market failure – such as health care.
The financial crisis and government’s attempt to solve it are driving the health policy discussion in two distinct directions – one argues that there will be no money for reform, thus any reform will be incremental, while the other argues that the financial meltdown is precisely the time to fix health care and access to care.
For anyone thinking that health care is not that big a deal, Bob Vineyard of InsureBlog‘s post $85,000,000,000,000 and Counting . . .is a big bucket of icy cold reality in the form of the looming $85 Trillion (yes, that’s with a “T”) unfunded Medicare liability.
Okay, now that we have your attention, here’s what the best and brightest are thinking.
Lets frame the conversation with a post from the always-thoughtful Maggie Mahar on the question ‘Is health care an “individual right” or a “moral responsibility” that a civilized society understands that its citizens deserve? Maggie prefers the “moral responsibility” frame; in her view we should look at healthcare collectively, individuals should not have to “demand” health care as a “right”.
Maggie isn’t the only blogging wonk thinking about the right v responsibility question. From a health care perspective, the second McCain-Obama debate was interesting for all of about five minutes. But in that short period of time, Tom Brokaw raised an issue that goes to the very heart of the debate: Is health care a right or a responsibility? It drew this post from Merrill Goozner at GoozNews.
Len Nichols of the New America Foundation also weighs in on the debate. Len gleaned a few nuggets from the brief discussion of health care at HEALTH POLITICS: Truthful–and Helpful–Moments in Presidential Debate
The two men who will have a lot to say about what actually happens are named Obama and McCain. Next up is Health Affairs Blog, where several posts wrestle with the differences between the presidential candidates’ health reform plans. Harvard economist David Cutler and Obama advisor calls the McCain plan “out of touch”, while AEI economist Tom Miller and unpaid McCain advisor defends McCain’s plan.
Over on the Huffington Post, MIchael Millenson doesn’t like the McCain reform plan one bit. In his view, McCain’s plan is radical and reckless.
Bill Scher at the Campaign for America’s Future is one wonk pushing hard for major change. He’s no fan of incrementalism (and gently takes me to task for my advocacy of same), calling for us to stop worrying abut short term budget issues and focus on bigger issues.
(Ed. note – yes, most posts appear to favor Obama/take McCain to task. I had to search on my own to find (instead of relying on folks to submit their posts) for those supporting McCain’s positions. After twenty minutes I gave up. If anyone has any solid, well researched posts send them on and I’ll issue an update to this post.)
My take? We can do a lot to help people get coverage, with no impact on the Federal budget or taxes. If the Feds force insurers to stop denying coverage for pre-existing conditions, outlaw medical underwriting, and require community rating and a basic benefits plan, a big part of the problem would be solved. Note several commenters disagree…
Bob Laszewski is having none of this. His post on the disconnect between political reality and wishful thinking is firmly in the ‘lets get real folks health reform is a non-starter’. As a long time industry vet, astute observer of the realities of Washington, and pragmatist of the highest order, Bob’s views merit careful consideration – especially if you disagree…
Those who actually work on the front lines – selling health insurance and servicing their customers, have a reality-based perspective that is vitally important. Louise at Colorado Health Insurance believes “In order for health care reform to work, it has to work for everyone. We need a solution that spreads the cost of health care evenly across the entire population (adjusted for income, just as taxes are) and doesn’t leave large groups (like people with pre-existing conditions) to fend for themselves with no good health insurance options available.”
Continuing our virtual trip out west, Anthony Wright takes issue with those who believe reform must be either state OR federal in his postAn unspoken, untrue consensus….
Andrew’s colleague Beth Capell takes it to those who claim mandated employer coverage is a Job Killer ; and she’s got some good research to back up her assertions that it isn’t.
Christopher Weaver discusses how the media is writing about health care in the election coverage. Weaver’s observes coverage from the national media is scarce and spotty, while local media does a much better job of translating policy into what it means for real folks.
That’s it for policy. But policy is not the only thing on the minds of HWR contributors. Roy Poses MD’s post digs into the accusations that Pfizer Suppressed and Manipulated Clinical Studies of Neurontin. Roy found a rather awkward quote from a Pfizer exec, to wit: “we are not interested in having this paper published at all because it is negative.”
Brain Blogger reports on the latest recommendations on residency hours, with Are Doctors Super Human?.
From the work comp side of the world, Tom Lynch Of Workers’ Comp Insider offers a tried-and-true primer on managing workers comp costs and getting injured employees back to work in Eight steps to controlling workers comp.
Jon Coppelman takes another peek under the covers of the AIG debacle – hint, it’s nothing to examine on a full stomach.
David Williams did an email interview with Mark Bard of Manhattan Research re: the Revolution Health/Waterfront Media merger; David asks some tough questions about how media companies are evolving their web strategies.
David Harlow (no relation to David Williams, at least none I’m aware of) knows a lot about certification of hospitals – a rather arcane but increasingly important issue. David reports on CMS’ decision to allow DNV to break the stranglehold on acute care hospital certication deeming held for decades by the organization formerly known as JCAHO. ( passing a JCAHO survey means that a hospital is “deemed” to be in compliance with Medicare Conditions of Participation (aka Medicare certified) and can forego a government survey; up till now JCAHO has been the only game in town.)
From an attorney to an economist, our next post from Jason Shafrin addresses the issue of medical licensing, specifically whether it improves or harms the quality of medical care
Daniel Goldberg’s contribution provides much-needed perspective on one main component of health reform – the claims for and potential benefits of ‘prevention’. It may not be all its cracked up to be.
Jaan Sidorov digs into CMS’ medical home initiative, providing some much needed insight into what could be a major change in the way Medicare handles some aspects of primary care. This is a BIG DEAL.
We conclude this edition with a post from north of the border. Sam Solomon presents Coalition urges doctors to reject Ontario pay deal, saying, “An argument over a new contract for Ontario physicians is spiraling towards a civil war inside the doctors’ union. Among the issues: disagreement about the extent to which the current economic climate — and government’s projected budgetary struggles — should affect negotiations.”
I’m shot, and you probably are as well. That’s OK, because you now have two weeks to rest up for the next edition of health wonk review.

Oct

Why state reform initiatives won’t work

Posted by Joe Paduda on Tuesday, October 14th, 2008 | Comments

Last week I posted on the perils of evaluating hospitals on the basis of ‘discounts’, noting that some hospitals’ charge to cost ratios are so high that it is relatively easy for them to offer large discounts – it’s the old ‘raise the price by 50% and offer a 30% discount to make them think they’re getting a deal’ technique.
(note – I got a call from and spoke with Tenet’s Chief Managed Care Officer about the post; he’s going to send me material supporting his claim that Tenet (the subject of last week’s post) has reformed its ways. Will post on this if/when I hear more)
Hospitals have adopted this policy in part due to low Medicare and Medicaid reimbursement and the rising number of uninsured (and in part to suck more money out of insurers’ coffers). Hospital execs rationalize their pricing by noting (accurately) that Federal law requires them to treat everyone, regardless of their insurance status, so treat they do. (It’s called EMTALA and is discussed here). Medicaid is a notoriously lousy payer, and Medicare, while better, doesn’t do much to offset the costs of indigent care and underpayments from Medicaid. So, the hospital charges private payers a lot more, a policy known as cost-shifting (and one not only well-documented but acknowledged by many hospital execs).
Part of the reason Tenet jacked up charges ten years ago was to game the Medicare reimbursement system. By inflating charges, more of their patients became ‘outliers’, and therefore Tenet got paid more – even though the patients’ severity wasn’t materially different. Tenet paid a $900 million (!!) fine for this behavior, and by several accounts has been working to clean up its act. The Tenet case shows why it is all but impossible for states to ‘reform’ health care. About a third of all medical care is paid for by the Feds (states contribute to Medicaid, but reimbursement is largely driven by CMS). CMS’ reimbursement methodologies are also widely used by commercial payers, and when the Feds change policies, the impact moves thru the health care community like a tidal wave, swamping some businesses, flooding others, and occasionally lifting others to high ground.
Refusing to pay for never-ever events and off-label use of Actiq, changing hospital DRGs, pharmaceutical pricing methodologies, changes in physician reimbursement – all are recent moves by CMS and related entities that have sent shock waves through group health, individual insurance, workers comp, pharmacy, hospital charge policies, and health plan medical policies. The effect is no different on state-specific reform policies.
Any state initiative will find itself trumped by CMS. And CMS may well be forced to make drastic changes, changes that up until a few weeks ago were unthinkable. We are heading for a deep economic recession/decline/really bad time, one that will force Congress to think the once-unthinkable – make major changes to entitlement programs. As Maggie Mahar pointed out yesterday,
“Make no mistake: we’re heading into a long and deep recession. And it will effect everyone. Both blue collar and white collar unemployment will soar… (Today, speaking at Harvard, Bill Gates predicted that unemployment will hit 9 percent. Whatever you may think about Gates, he is good with numbers.) Not only will people lose their jobs, they will lose their employer based insurance…”
Maggie knows of what she speaks – she covered the financial world for Barron’s for years and wrote a best-selling book about the stock market boom.
What does this mean for you?
We’re in a very deep financial hole, one that will force major changes in health care and health insurance. There’s a decent chance that change will begin with reform of the insurance markets on a Federal level. And don’t be surprised if next on the table is big changes in Medicare and Medicaid reimbursement, changes that will reshape the health care industry in ways unthinkable a month ago.

Oct

Reforming health care without busting the budget

Posted by Joe Paduda on Monday, October 13th, 2008 | Comments

Comprehensive health reform will not happen in the near future. There is no money. There are lots of other priorities – financial stability, huge and growing deficits, energy, wars in two countries, nuclear proliferation and tax policy. There’s just no money, and not much bandwidth. Yet the Democrats will be highly motivated to do something meaningful, pressured by campaign promises and voter demands.
There may well be a solution that enables the Democrats to deliver on their commitment without breaking the bank, while laying the groundwork for more comprehensive reform if and when that’s feasible.
Access can certainly be addressed without additional funds, with support from both parties, and while it will almost certainly incite much wailing and gnashing of teeth within the health insurance industry, they’ll get over it. It would certainly help the several hundred thousand folks who are at risk of losing their employer coverage as the country slides into recession, not to mention those currently unable to obtain meaningful, comprehensive coverage at an affordable price due to a pre-existing condition.
A modest proposal
Congress could pass and the President could sign legislation prohibiting medical underwriting in the individual market, requiring insurers to cover pre-existing conditions, mandating community rating, and establishing a basic benefits plan. There are (at least) three mechanisms available to meet these objectives.
1. The legislation could require states to work with the National Association of Insurance Commissioners to develop model language that would meet these standards. (NAIC does this for lots of insurance types and policies today)
2. The Federal law could set forth minimum standards, while allowing states to require carriers in their jurisdiction to meet higher standards.
3. A new Federal regulatory body could be set up to ensure all insurance carriers comply with the standards set forth in the legislation.
To guard against ‘cheaters’ – the folks who wait till they get sick before signing up for coverage, the law should include a provision allowing insurers to increase rates for those that do not sign up within a time certain after they become ‘eligible’ for coverage. The increase would be pegged to the length of time the individual delayed obtaining coverage (similar to the way Part D works today).
Some will contend that this will drive up premiums for the young and healthy. No argument from me. That’s the way health insurance should work: some subsidize others, with the understanding that when that ‘some’ (or when their kids break bones or they get hurt) someone else will help them out. I don’t know if the increase will be so drastic that it will drive all the young healthies to drop their coverage; my gut says there will be some disenrollment, but it will be modest. I do know that after a period of moaning and groaning, insurers would find themselves competing not on the basis of how well they select risks and decline coverage, but on cost and benefits.
Now wouldn’t that be something?
Politically, it would be pretty tough for any elected representative to come out against the proposal. Who wants to be pilloried for preventing someone from getting coverage just because they lost their job or their employer stopped offering health insurance? Answer – only the most committed of libertarians.
(bad health wonk joke – what’s a libertarian? Someone with a chronic medical condition who hasn’t tried to get insurance in the individual market)
Access would be improved, those who actually need insurance could get coverage (albeit at a price) and everyone would be financially motivated to get coverage.
No, it isn’t perfect. But it is doable.

Oct

Are Tenet hospitals in your network?

Posted by Joe Paduda on Thursday, October 9th, 2008 | Comments

Many benefits professionals and risk managers evaluate networks based, at least to some degree, on the thickness of the directory and the depth of the discount. The logic is – hey, the more hospitals in there, and the better the discounts, the better it is for my employees/claimants and the better it is for my bottom line.
Logical, and likely wrong.
Let’s take Tenet Hospitals as an example.
I recently completed an analysis of several networks for a client, who was initially impressed that one of the networks under consideration featured their national contract with Tenet, a large for-profit health care system with facilities in the southeast, Texas, California, and southeastern Pennsylvania. In total, Tenet has about 56 hospitals (some are in the process of being sold) and about $9 billion in revenues.
They also have one of the highest charge-to-cost ratios of any hospital or health care system in the nation.
A very thorough, albeit dated, report on hospital charge to cost ratios was underwritten by the California Nurses’ Association and published in 2004. Although the data is somewhat old, it is nonetheless revealing. For example:

Of the nation’s hospitals with the highest charges compared to costs, seven of the top ten were Tenet facilities (three were soon to be sold)
Tenet’s charge to cost ratio typically was several times higher than the national average
64 of the top 100 hospitals ranked by charge to cost ratio were Tenet facilities
the top hospital was a Tenet facility with a ratio of 1092%

I’d note again that these data are old and Tenet has sold off some of these facilities. However, data from client medical bill repricing reports indicates high charge to cost ratios are still quite prevalent among Tenet facilities.
There is additional evidence that charging a lot has been a core business practice at Tenet, which has been charging more than other hospitals for identical procedures since at least 2000. According to one report describing an analysis of Tenet charge policies by the SEIU:
“Tenet’s California hospitals charged an average of $73,038 for pacemaker implants, 81 percent more than the $40,452 charged by non-Tenet hospitals, according to state government figures analyzed by the Service Employees International Union. Tracheostomies, at $569,672, were 69 percent higher at Tenet than in the rest of the state, where they average $336, 579. “Tenet is engaged in turbocharging,” said Steve Askin, health care research coordinator for the union in Los Angeles.”
And:
“From 1996 to 2001, Tenet’s average daily inpatient charge in Orange County grew 101 percent, compared with 28 percent for non- Tenet hospitals. Tenet’s charges for outpatient services here rose 119 percent, compared with 43 percent for its competitors, according to the data.
Last year, [2006] eight of the county’s 10 highest-charging hospitals belonged to Tenet. The Orange County hospital at the top of that list was Tenet’s Western Medical Center in Santa Ana. It billed an average of $9,453 a day per patient. That was $2,500 more than the highest non-Tenet hospital — UCI Medical Center — and nearly twice the countywide average.”
Look at Tenet’s website (or, for that matter, any other health care systems) for information about cost and cost-effectiveness . There are very few statements (and even less supporting data) regarding cost effectiveness, efficiency, or competitiveness. Lots of words about quality and patient care and how great their people are (all of which are important, and significant, and appropriate to be considered in evaluating network facilities).
What does this mean for you?
Discounts are not important – net costs are. Do not evaluate networks on the basis of how thick the directory is and how deep the discounts are. Hospitals that charge a lot can ‘discount’ a lot more than hospitals that don’t engage in charge inflation.
This is obviously critically important for group benefits administrators as well as work comp payers. It also is instructive when considering the potential for national health reform. I’ll dig into that tomorrow.

Oct

Obama wins. Now what?

Posted by Joe Paduda on Wednesday, October 8th, 2008 | Comments

Most pollsters have Obama well ahead nationally and in the swing states, with Gallup reporting he has almost reached a double-digit lead.. And after last night’s debate, which Obama ‘won‘ handily more independents look to be behind his campaign (although if you watched the alternate-universe-dwelling wingnuts on Fox, you might not get that impression).
It is looking very good for Obama, and very bad for the Mav (the bettors have it Obama with a 73% chance of winning).
So, the Senator from Illinois wins. What does that mean for health care?
We’ve established that his big reform plan is not going to happen. And I couldn’t really take Obama at his word when he said last night that health reform would be his second priority after energy. Energy’s big, but health care is bigger.
Here’s what I’d expect we’ll see in 2009-2010 from Congress and the new President.
Expect the new political year to begin with incremental fixes to specific programs – The biggie will likely be Medicare physician compensation. With docs scheduled to see their reimbursement drop by around 20% in 2009, the caterwauling will be heard loud and clear inside the Beltway. Don’t look for a major policy change, but rather something to satisfy the physician community and build a little equity for the future. Where will the money come from?
Do not be surprised if CMS is expressly ordered to negotiate prices with big pharma in the near future. The Part D program is a budget buster, big pharma has few political allies (despite big contributions) and reducing the cost of drugs will save CMS budget dollars that can be spent on physicians.
SCHIP may be next out of the blocks. The expansion of coverage for kids is a central piece of Obama’s platform on health reform, and with a Democratic Congress the chances of meaningful expansion of this program are pretty good. And it won’t just be Democrats voting ‘aye’. After the back and forth battles, marked by confusion and consternation from Republicans who felt Pres. Bush threw them under the bus by vetoing a bi-partisan bill to extend SCHIP earlier this year, enough Republicans are likely to cross the aisle to support funding of a somewhat-expanded program.
Also on the table will be reduced funding for Medicare Advantage, a program that has long struck Democrats as a giveaway to big healthplans. Foolishly. the insurance industry worked hard, and effectively, to block reductions in MA this year. As Bob Laszewski notes, with Congress and the White House changing hands, the bill they stopped this year will look great compared to what they’ll get next. Expect MA subsidies to be slashed, in what could, and should, be seen as a shot across the bow of the insurance industry.
The FDA will also be under the microscope. Despite passage of the Food and Drug Administration Amendments Act of 2007, ostensibly fully funding the FDA and giving it the staff needed to do its job, the FDA continues to stumble. With a Democrat running the Administration, expect increasing oversight, much more post-approval monitoring, and much less tolerance for patent-extending gamesmanship.
What does this mean for you?
Obama is a very smart guy who knows enough to not try to do everything at once. Incremental steps mean progress towards reform – and are easier to accomplish, build consensus. momentum and working partnerships.

Oct

Health care – Obama’s best weapon

Posted by Joe Paduda on Tuesday, October 7th, 2008 | Comments

An article in this morning’s Politico.com asks if health care will reappear as a key issue in the election. If it doesn’t it’s because Obama has missed perhaps his best chance to hit Mc Aon where he’s most vulnerable.
Careful – and not-so-careful – readers of the candidates’ platforms will note that McCain’s has two flaws guaranteed to scare most independent voters; the elimination of employer-based health insurance and requirement that families seek coverage through the individual market. This last may well be more of a factor than the policy wonks and economists think, for the simple reason that families are used to getting their insurance issues handled by their employer. Whether it’s a problem with a claim, need for a new insurance card, issue with a precert requirement, or change in coverage status most Americans have turned to their employer for help.
I sold group benefits for several years, a job that meant I spent a good bit of time talking with HR staff about their employees’ questions and issues. The HR staff acted as an advocate for the insured, and the size of the employer’s business relationship with my employer ensured there issues got addressed quickly. And with minimal shouting from the insured.
Insurance is complicated and complex, hard to navigate for even those of us with secret decoder rings. Normal folks don’t want any part of dealing with their health insurer, and in today’s market they don’t have to.
All that would change if a McCain plan passes. Of course it won’t, but that’s not the point. The point is what his plan reveals about McCain. Here’s betting Obama brings these issues to the fore tonight.

Oct

Debate questions for John McCain and Barack Obama

Posted by Joe Paduda on Monday, October 6th, 2008 | Comments

Tomorrow night’s Presidential debate will undoubtedly feature a spirited discussion of the candidates’ views on health reform. I’m not going to be sitting in front of the tube (rather, panel) blogging in real time as I’ll be on a plane. More’s the pity.
Here’s what I’d like to hear and who I’d like to hear it from.
Obama
You’ve consistently argued against mandated universal coverage on the grounds that cost must be controlled first. Yet your plan does little to address cost drivers. What must be done to address costs?
Your plan uses the Federal Employee Plan as the baseline benefit design for all insurers’ offerings. There is some evidence that adding ‘consumerism’ features to plans can reduce inappropriate utilization. How would you modify the basic plan to encourage patients to be more cost-conscious?
Your plan will cost about a hundred billion dollars a year. In today’s economy, how would we pay for that and can we afford it?
Both
Do you view the Massachusetts reforms as positive, and what lessons can we learn from that state?
Lifestyle diseases account for a growing percentage of US health care costs, despite an expensive and ongoing campaign to increase fitness, reduce obesity, improve diet, and eliminate smoking. Is it time for Americans with controllable risk factors to be asked to pay higher premiums for their lifestyle choices?
McCain
You have based your reform plan on the individual market. As a cancer survivor you would find it all but impossible to find an insurer willing to cover you. Many other Americans would find themselves in a similiar situation should your plan pass. How would your plan ensure that the tens of millions of Americans with chronic or pre-existing conditions would be able to afford good insurance?
Your plan relies on high risk pools to provide coverage for those Americans that could not buy insurance from private insurers, yet most state high risk pools are underfunded, won’t cover the high cost care many enrollees need, are closed to new members due to lack of funding, and therefore are marginally helpful. You have suggested your plan would provide ten billion dollars to fund these pools, an amount that is insufficient by any measure. How would you resolve this?
Your plan calls for the elimination of the employer tax deduction for health insurance, a position that most employers firmly reject. How would you convince employers to give up this deduction?
We all know neither of these plans will become law. What we need to better understand is how they think about the hard issues, the details that will bedevil any and all reform initiatives.

Oct

Palin doesn’t understand health insurance

Posted by Joe Paduda on Friday, October 3rd, 2008 | Comments

Last night Gov Palin convincingly demonstrated her total ignorance of the health insurance market. The woman who, according to her, once went without health insurance (fact check please) said once again that eliminating state regulation of health insurers (the real world impact of allowing interstate sale of individual policies) would solve the health insurance crisis.
Not.
Deregulating health insurance would have the opposite effect. Sure, the market would ‘work’; insurers would get licensed in the most insurance-friendly state, the one with the least regulation, the fewest regulations, the lowest requirements for benefits and capital reserves. States with higher standards for insurers – like prohibitions against retroactive cancelation of policies, requirements that insurers have enough cash on hand to pay claims, and an appeals process so physicians and patients can quickly resolve disputes, would find themselves with no insurers to regulate. The free market would force all insurers to offer the cheapest policies, the ones with the lowest benefits. Any insurer that tried to offer richer benefits or covered folks with pre-existing conditions would sign up older and sicker people – you know, the folks who actually need health insurance. And be bankrupt soon after.
Supporters of McCain’s plan claim there would not be problems as insurance companies operate across state lines today. What they don’t tell you is the plans they use as examples are employer-based. Under McCain, these would go away, to be replaced by individual policies. There would be nothing to prevent the cancellation of policies by insurers suddenly deciding they didn’t want to pay bills for cancer treatment, a new pregnancy, or a special-needs child. Nothing, no appeal process, no regulator forcing the insurance company to pay claims or reconsider a policy cancellation.
Palin also said that McCain’s proposed health insurance tax credit would help families buy insurance. What kind of policy would $5000 buy a family? Perhaps a ‘mini-med’ without coverage for hospital stays and a $5000 deductible. Family plans cost more than $12,000 on the employer market; although they are cheaper in the individual market that’s only because the benefits are so much lower; individual plans typically have higher deductibles and copays, no coverage for drugs or pre-existing conditions and onerous pre-certification requirements.
Palin’s lack of understanding of the world of health insurance conflicts with her claim to speak for Joe Sixpack and his bride Hockey Mom. McCain’s plan would leave them with lousy coverage and no recourse, at the mercy of unregulated insurers.

Year: 2008