Mar
7

Why BernieCare won’t happen

Sure, there’s lots to like about it – no paperwork, see any doctor you want, no cost for any services, covers nursing home and long term care, dental, vision, you name it.

It will cost a good bit more – at least initially, but over a decade we’d actually spend a couple trillion dollars less than if we stick with the current clustermess. Despite the initial sticker shock, as voters get increasingly scared and frustrated by the crappy “health system” we have today, the balance may well tip towards BernieCare.

Except it won’t, and here’s why.

Infrastructure – There is no current wholly-government infrastructure in place that would be a platform to handle BernieCare. Much of Medicare and Medicaid is administered by private or not-for-profit organizations. It would take years and tens of billions to build that infrastructure. Sure it may well be more cost-effective than using private entities, but I just don’t see us collectively agreeing to spend the sums needed to make it happen.

Impact on employment – BernieCare would essentially eliminate 99% of private insurance. The 540,000 people employed in that business would no longer have a business to employ them. I don’t see Congress voting to vaporize over a half million jobs; and that’s only to start. As things got more automated, many more admin roles would be eliminated.

Big money’s control over politicians – Citizen’s United killed the last faint hopes we could keep dirty dark money out of politics. Fact is, healthcare is by far the biggest political contributor, led by big pharma. Add in device manufacturers, healthplans, physician groups and health systems – all in healthcare collectively pumped about $650 million in cash into political coffers last year alone.

Recall what makes our healthcare so damn expensive is that for-profit entities are heavily involved in healthcare services, devices, drugs, and everything else – BernieCare would crush their profits if not eliminate them altogether.

If you think the healthcare industry contributes a lot now, wait to see what happens if BernieCare gets just a bit of traction.

What does this mean for you?

If we were starting from scratch, BernieCare is by far the best model. We aren’t, so it won’t get off the ground.

That’s not to say some form of MFA/Single Payer isn’t viable. More on that in a future post.


Mar
5

Single Payer – time to get real

So, what would the most expensive version of Single Payer cost? Eliminating all deductibles, copays, coinsurance, premiums for Bernie Sanders’ super-duper Rolls Royce plan would run about $32,000 for a family (a gross simplification to be sure).

There are 22 million jobs in the US healthcare and related industries (that includes mine, one of our daughters, and her husband – they are nurses.) Let’s add all the college and grad school institutions that employ tens of thousands to educate people on healthcare administration, and the support infrastructure  – IT companies, paper form printers, App developers, pundits and commentators, real estate occupied by insurers…you get the idea. The health care industry is at least a fifth of our economy.

The private health insurance industry alone employs 540,000 workers.

If we switched to a true single payer system, millions of administrative jobs would disappear.  Remember what happened to manufacturing in the rust belt? That happened over 30 years; this would affect a much bigger share of the economy over a much shorter time.

The result would be an economic collapse that would surpass the Great Depression and devastate the economy.

Lest you think this is hyperbole, Taiwan employs a grand total of 300 people to administer a single payer healthcare system for a population of 24 million.

Using Taiwan as a basis, we’d only need 4,125 people to administer a universal single payer system.


Mar
4

How much are you really paying for healthcare?

Recent posts have focused on defining Medicare for All/Single Payer and the problem both are intended to solve – healthcare prices in the US are the problem.

Today, we’ll figure out what you really pay for healthcare.

That’s pretty darn important because we’ll need to compare what we pay now to what we’d pay for any MFA or other model.

First, it’s insurance costs, deductibles, and copays. For a family of 4 with one person in poor health, the total is about $7850 this year.

Then there’s the $1400 in state and federal tax payments that go to fund healthcare – you know, that FICA thing, plus state and federal taxes that pay for Medicaid, plus VA funding, Tricare, Indian Health Services, and lots of other programs I don’t know about.

Next, your employer’s insurance and tax costs – which total $13,050 in health insurance premiums and $750 in Medicare payroll taxes.

The total? $23,500 for a family of four.

You may be…surprised to learn $5,700 goes to administrative expenses. All that paperwork, utilization review, billing and reimbursement stuff costs serious money.

What does this mean for you?

US health costs twice as much as in many other countries – that have the same or better outcomes.

What would you do with another $11,750 in cash?


Mar
1

One Call is shrinking

Reports from multiple sources indicate OCCM has just announced a significant “reduction in force” – i.e. a staff layoff. While this is by no means OCCM’s first staff reduction, initial indications are it is not a small one.

Internal sources indicate the Parsippany NJ office is the one most affected. Staff there do scheduling and care management functions, interact with adjusters, case managers, claimants and providers. Unconfirmed reports indicate work is being off-shored to the Philippines; One Call has previously offshored other functions.

I have reached out to OCCM multiple times and once again they are unresponsive.

Sigh. Free consulting advice – Management should stop obsessing on how I know this stuff before it is public and focus on running their business instead. Oh, and get a lot smarter about damage control.

I would hazard a guess that this is the next step in a series of cost saving measures, underway in an apparent effort to reduce expenses and cash outlays. While the offshoring will almost certainly have a positive effect on operating costs, it remains to be seen whether customers, used to talking with domestic service staff, will accept the change.

And therein lies the rub.

In work comp services it is all about customer service. Adjusters and case managers can be demanding – as they have every right to be. They want to talk with people who thoroughly understand their business, know the rules and regulations in their states, are highly trained, have all the necessary information at their fingertips, and have local knowledge.

They don’t want to call one person for billing and another for network details, a third for an update on the patient’s condition, and yet another for prior auth. And they want that person to communicate crisply.

This may all be solved when OCCM’s new Polaris IT application is fully developed and rolled out. Talking to a very large customer earlier this week, I heard the latest news is it will go live for them “this summer.”

Perhaps.

It is possible that adjusters and case managers will find their needs met by the new IT system and a staff half a world away. It is also highly likely those front-end clients will miss the people who worked with them over the years on multiple cases, understood their needs and requirements, and worked to meet them.

I’m reminded of the time I called a hotel chain for a room in Austin TX. The customer service rep, a gentlemen located on another continent, apologized as no rooms were available in their Austin hotel, but proceeded to book me in their Dallas property. He could not seem to grasp that this was not a viable option.

These are tough times for the folks losing their jobs, and I hope they can find good, stable, rewarding and fulfilling jobs soon.


Mar
1

WCRI – Employers’ ideas around work comp

At yesterday’s final session, Publix, Home Depot, and Starbucks work comp leaders had some pretty interesting recommendations around workers comp.

  • Starbucks understands their partners (what they call their workers) don’t do much snail mail, and are much more likely to communicate via smartphones. They’ve done a lot to deliver as many communications and payments to electronic means as possible.
  • Partners tend to trust nurses, so Starbucks uses nurse case managers to help partners deal with the emotional issues as much as the actual medical management (my words, not Ms Olson’s)
  • Publix is working hard to identify the best physicians; as a Florida-centric company, the big grocery chain is often able to direct care – and it does so assiduously. Home Depot also assesses providers.
  • Publix, Starbucks and Home Depot alike have a broad demographic of workers – from kids under 18 to octogenarians. This requires flexible approaches to return to work and a willingness to be creative and thoughtful about accommodations. Sounds obvious – this is a ton of work and very effective.
  • Publix’ Marc Salm is quite concerned about increasing costs due to litigation, which appear to be driven at least in part by “jumper claims” that hit well above six figures within 24 months. To say Marc is passionate about this doesn’t adequately convey how strongly he obviously feels.
  • Noreen Olson of Starbucks noted that she approaches this from a “how do we want this partner to be when this is over” – this is a paraphrase, but the essence is there. She focuses on the ultimate outcome from that individual’s perspective – a view that should be considered at all points of the “claim process.”
  • Home Depot’s Dawn Goree has a similar philosophy – when you pick up the phone, think about how you are going to come across to the person on the other end of the line…trust is critical and it can’t be about dollars and cents.
  • Starbucks does not do “post offer testing” as it has a young workforce and wouldn’t have any employees if it did (Love Ms Olson’s honesty)

What does this mean for you?

A fun, entertaining, and very worthwhile session that reminds us our job is about helping people who’ve been hurt.


Feb
28

WCRI – deductibles and claims!

I showed up late to WCRI’s annual meeting, and thanks to American Airlines missed three great sessions – two dealt with opioids and one was a deep dive into coordinating medical and RTW services. Grrrrr…

Ok, whining is now over.

For those seeking intel on those early sessions – I’ll link to posts on those when I find them.

A session I’ve been looking forward to – nerd bomb alert – is a discussion of the relationship between group health deductibles/copays and coinsurance and claim classification.


This study follows two others that looked at capitated vs non capitated plans and provider reimbursement impacts on claim classification – aka shifting claims to work comp.

So, is there a correlation between higher deductibles and a greater propensity by patients to file work comp claims?

It appears high deductibles are correlated with higher rate of work comp claim filing for patients – especially for patients with soft tissue injuries, but the impact isn’t great. More specifically, the data indicates a 1.4% increase in filing associated with high deductibles – when WCRI looked at claims over an eleven-year period; this is much more likely in states where workers can pick their initial treating provider.

In fact there was little correlation between high deductibles and increased WC claiming in employer-choice states.

However, it appears that much of that increase has occurred more recently, as deductibles have grown significantly. with soft-tissue injuries

The entire research report is here – there’s a fee for non-WCRI members.

The finding is somewhat complicated by earlier research that found a significant percentage of workers that actually had occupational injuries didn’t file them under work comp

There’s no question deductibles have grown by leaps and bounds of late – the average is now over $1500 – and 4 out of 5 plans have deductibles. (deductibles are a lousy idea for lots of good reasons – mostly they don’t work).

So, what does this mean for you?

Two things – we all know WC claims frequency has been declining for decades, but the “increase” in WC filing offset about 20% of that decline.

And, we do NOT know if those claims were actually occupationally-related. It could be that claims are just getting filed more accurately of late.


Feb
27

Medicare for All – the three versions

There is no consensus about what MFA is – and that makes it really easy for supporters and opponents to convince the uninformed it is great or awful.

They do that by picking out whatever they think you’ll love/hate – even if it has nothing to do with MFA. Then, they yell about that at maximum volume in an effort to convince you that the whole thing is terrific/awful.

Before we decide if MFA is worse than the stomach flu or better than a teenager that actually listens to mom and dad, let’s spend two minutes understanding what MFA is.

There are three general “versions”, each coming in multiple variations and with different tweaks. The basic differences are:

  • who is covered
  • what types of healthcare are included
  • is there a role for private insurers
  • what mechanism/payer system is used.

Notably, many of the proposals aren’t exactly precise on where the dollars to pay for all this will come from.

There’s the Bernie Sanders version which is basically – every kind of healthcare service anyone could think of for free for everyone – provided only by the government, with no private insurance allowed. Another even richer version is to be announced today – which is even more generous – and hyper-expensive.

My take – completely unrealistic for several excellent reasons which I’ll get into in a future post.

Then there’s Medicare for some – which would allow older folks to “buy in” to current versions of Medicare, while leaving employer-based insurance alone. A similar proposal, known as the “Public Option” was part of the ACA until the Democrats took it out in an unsuccessful effort to get Republican support for ACA legislation

My take – this makes more sense for multiple reasons; again we’ll dive into this next week.

Some – including your author – have pitched Medicaid for some or all. To me this is more viable as it heavily involves states, wouldn’t affect federal taxes nearly as much as Medicare for All, and uses an already-existing program that is much simpler than Medicare.

What does this mean for you?

A gentle reminder – yes, there are issues with all of these. But what is the alternative? Our current system is a mess and is getting worse by the day. If you object, what’s a better solution?

What does this mean for you?

Change is coming – make darn sure you understand what it means for you.


Feb
26

What is “Medicare for All”?

MFA/M4A uses Medicare as the health insurance mechanism for people younger than 65. Some advocates are pitching “Medicare for Some” wherein folks older than 50 or 55 would be able to “buy-in” to Medicare (which covers everyone over 65 today).

Here are some of the reasons supporters like MFA:

  • Overall healthcare costs would be lower, reducing expenses for employers, individuals, and taxpayers over time.
  • Current beneficiaries really like Medicare – more than insureds like private insurance
  • It relies on an existing system and infrastructure that exist today and are familiar to all stakeholders
  • Administrative expenses are much lower than employer-sponsored and individual insurance
  • Price controls are universal and apply to almost all types of providers
  • Cost increases – on a per-capita basis – are lower than in commercial health insurance
  • Pretty much all doctors and hospitals accept Medicare
  • Commercial insurers are very active in Medicare, offering plans that provide added benefits for little to no additional cost (however there are usually limits on providers patients can use (known as Medicare Advantage plans)
  • Those who like “traditional” Medicare can buy supplemental benefits from private insurers to cover services, deductibles, copays and other costs not covered by Medicare (Medicare Supplement plans)

Opponents cite:

  • It would be wildly expensive and require massive new taxes, with annual cost estimates ranging from $1.4 to $2.8 trillion (although one major opponent concedes total US healthcare costs would be $2 trillion less a decade into MFA)
  • Medicare reimbursement is too low, forcing providers to upcharge other payers to make up for lost revenue. If Medicare is the only insurance carrier, then providers will be in dire financial straits.
  • People covered by employer-funded health insurance are leery of losing those plans.
  • MFA would severely limit or restrict “choice” of health plans and coverage options
  • The notion of “government-run” healthcare scares some, but most don’t even know Medicare IS a “government-run” program.

My take

There’s no question Medicare is less expensive than group/individual health insurance – and costs will increase more slowly. Private insurers are heavily invested in the business, so they can handle the admin piece. Yes, taxes would go up, but employers’ costs would likely drop considerably. Patient hassles would greatly diminish.

Oh, and given what a pain in the butt commercial insurers can be when it comes to out of area coverage, deductibles, annual premium increases, covered v non-covered services and everything else they do to make our lives miserable, I’d be way happier with Medicare for me and my wonderful bride.


Feb
25

What is “Single Payer” healthcare?

You’re going to hear a lot about Single Payer over the next 20 months – mostly from people who a) have an opinion about it and b) don’t even know what “Single Payer” is.

Before you get sucked into that discussion/argument, here’s a primer.

“Single Payer” – by definition – is government-financed and government-managed health insurance.

Beyond that, pretty much every country with Single Payer is unique, each with its own nuances. For example,

  • most don’t have government-employed healthcare providers; in many single payer systems, physicians, therapists, hospitals and other providers are private.
    • The UK is an exception; providers are (mostly) employed by the government
  • many are not government-operated; in many systems private insurers contract with the government to handle administration of health insurance – similar to our Medicare
    • Again the UK is an exception

Typically:

  • the government sets pricing/reimbursement policy and actual prices – similar to our Medicare
  • funding comes from some combination of employee, employer, and other taxes; in some countries, insureds pay some form of premiums – similar to our Medicare
  • it covers everyone
  • there is little to no paperwork for patients/consumers; all that is handled by the administrative agency
  • there are minimal or no deductibles, copays, or co-insurance requirements
  • people can buy into supplemental insurance through private insurers

What does this mean for you?

You are now more knowledgeable than most everyone else about Single Payer.


Feb
22

One Call – the latest.

Workers comp managed care company One Call reportedly “clinched a deal” to rework its debt late Wednesday, a quick recovery from a previous debt offering that was cancelled (thanks to Bloomberg’s Katherine Doherty for her reporting on this.)

While the company has made good progress in completing the transaction, rating agency Standard and Poor’s has opined that the exchanges are “distressed”, and has downgraded One Call to “SD” as a result. If One Call completes the exchanges, S&P has said it will likely raise the company’s rating.

Readers may recall One Call’s interest expense and cash flow challenges were noted in an earlier post which also discussed the core issues faced by the company.

Here’s what One Call is doing to, at least partially, address the debt situation. First, recall that OneCall has about $2 billion in debt outstanding. The company appears to be working to reduce its debt expense – the interest payments that amount to somewhere around $150 million annually.

There are two parts to this debt restructuring. Simply put, One Call is doing two things – in both cases asking current debt holders to swap their existing notes for new ones. In both cases One Call has structured the new debt to allow the company to not pay interest if it chooses.

The mechanism One Call is using isn’t that unusual, it’s known as “PIK toggle” loans; “Payment In Kind toggle” notes allow the issuer to forgo interest payments by giving debt holders more first-lien notes instead of paying the interest due in cash.

Got that?  I know, complicated stuff.

Here are the details.

Part one

According to Bloomberg, after dropping its previous debt exchange effort One Call offered debt holders “sweeter terms” on a revised deal allowing “certain first and second-lien creditors” to exchange their current notes for ones that are all first-lien. This is good for the current second-lien holders involved as they move up in line in case One Call gets into financial difficulty in the future.

Debt holders were asked to trade $258 million in current notes for $235 million in new notes, which implies the current notes are discounted by 9 percent. (We don’t know if the original debt offering had a similar discount.)

This closed, so this part of the effort is complete.

Part Two  

One Call is offering to exchange up to $400 million in current term loans – some of which come due next year, others in 2022 – for new notes that mature in 2024. As of yesterday, about $103 million of debt has been committed to the swap.

Allow me to explain some terms.

    • ·     “first lien” debt is primary; that is, the entities that hold this debt get first dibs on assets in the event the debt issuer gets into financial trouble.
    • ·     “second lien” debt is next in line – a riskier position. If a company defaults, there may not be assets left so this type of debt usually pays a higher interest rate to compensate the debt holder for the greater risk.
    • ·     “notes”, “loans” or “debt” are all terms referring to a transaction where the creditor lends money to a debtor, and gets paid interest by the debtor. Mortgages and car loans are examples.
  • ·     “Payment In Kind toggle” notes allow the issuer to forgo interest payments by giving debt holders more first-lien notes instead of paying the interest due in cash.

In other One Call news, Chief Strategy Officer Pat Rowland departed a couple weeks ago, and a few other folks have left as well. I continue to ping One Call to get their comments; just got a response from One Call that didn’t even bother to answer the key question; why was the initial debt swap cancelled.

If One Call decides to respond meaningfully I’ll update the post. Don’t  hold your breath…

Kudos to One Call and its bankers for moving to enhance its future cash position. This will allow the company to reduce cash payments to debtholders by something north of $20 million. Given the company’s most recent financials this is important indeed.