I’d been meaning to get to the Center for Studying Health System Change‘s annual Wall Street comes to Washington meeting for several years – finally made it and it has been well worth the trip from Conn.
There were two sessions, one devoted to health plans and the other to providers. I’ll be reading thru my notes today and tomorrow to come up with a couple unified-theme posts. For today, we’ll focus on what health plans are doing to prepare for health reform.
Panelists opined that there are two issues health plans have to address – dealing with the newly-insured and preparing for the possibility that the employer will not be the locus of control for health insurance purchasing. Christine Arnold noted that Cigna, Humana, and Coventry recently entered the individual market, with Aetna expanding its role while also acquiring Schaller Anderson, a veteran of the Medicaid world. UHC has been in the individual business for a while (post purchase of Golden Rule) and also has significant experience in the Medicaid and special needs populations (high cost, high risk Medicaid folks).
The individual market expansion is a hedge against McCain’s plan becoming the law of the land. As I’ve noted, McCain wants to discard the employer-based health system and rely on the market to cover individuals (while doing nothing to prevent medical underwriting or exclusion of pre-existing conditions). As Arnold noted, the individual market won’t cover many more folks unless there is a requirement for guaranteed issue and a significant penalty for those who refuse to enroll (otherwise they’ll just wait till they get sick, then sign up).
For those who question whether an individual program will work, Bob Laszewski noted that the Feds already have experience with a large scale, community-rated guarantee issue voluntary benefit plan – Part D. In terms of enrollment, the plan has been extra-ordinarily successful (despite my prognostications to the contrary). In terms of financial rewards, the numbers are good for those sponsors that excluded many of the most popular drugs, and pretty dismal for the two biggest players – Humana and UHC. These companies cover all of the most popular drugs, so seniors interested in a drug plan found the plans that covered their drugs and then checked prices.
And promptly used their cards and that’s why UHC and Humana are getting killed by Part D.
So what’s the lesson here? Health plans need to understand the individual market, but they also need to remember that benefit design drives adverse selection, which drives higher loss costs. While selling individual policies may seem like good preparation for a possible McCain-type plan, examining the results of Part D may be more instructive.

There are few issues that do more to crystalize the balance between personal freedom and personal responsibility than motorcycle helmet laws.
Twenty states require motorcyclists to wear helmets, which means thirty do not. Opponents of helmet laws see it is a personal choice and often claim wearing a helmet increases visibility and situational awareness. Could be.
Proponents of mandatory helmet laws note that fatality rates appear to be higher in states without helmet laws; common sense indicates that falling off a bike onto one’s head without a helmet is likely to cause a more serious head injury than if one was wearing a helmet.
And there is an ongoing back and forth debate on the merits of statistical analyses and the results thereof, a debate that leads nowhere and gets folks all wrapped up in numbers, thereby obscuring the real issue – ultimately wearing a helmet is a personal decision, until you get a traumatic brain injury, whereupon it becomes a societal issue.
Here’s an idea.
Those who want to ride without a helmet have to buy insurance that reflects that decision. That insurance must provide comprehensive coverage for medical care for associated with the covered individual, including long term custodial care, with a really high limit – say $10 million, that is indexed to the medical CPI to account for inflation. Upon showing proof of coverage, they get a special license plate. Insurance companies take the risk, society does not get harmed due to the adverse consequence of a personal decision, and those who want to ride with their hair blowing in the wind are free to do so.
Oh, and they should be required to be organ donors as well.

GOP Senators better wear their cheap suits while marching in Independence Day parades this weekend, as it is tough to get tomato stains out of nice wool.
As Bob Laszewski pointed out, Republicans were boxed into a very tight corner by their Democratic colleagues after GOP Senators blocked a bill that would have prevented a drastic cut in physician fees. The maneuvering was ugly, as the Dems apparently backing out of an earlier deal that would have restored the cuts. Once the bill was overwhelmingly passed by the House, Senate Democrats were presented with a very big cudgel they could use to smack their Republican colleagues around. And with Congress heading out for the 4th of July recess, they have done so – publicly, loudly, and repeatedly.
Republican Senators now find themselves defending their vote to reduce physician fees by 10% (that’s not exactly what happened, but close enough for politics) while refusing to reduce payments to big insurers. Payments that most view as far too generous.
Politically, the picture could not be better for Democrats. Republicans will be vilified for their vote to cut payments to Dr. Welby, everyone’s kindly neighborhood physician while continuing to pay huge sums to big, faceless, bureaucratic insurers located far away staffed by nasty clerks who delight in forcing new moms to leave the hospital mere moments after giving birth.
And in an election year too.
There is a good bit of substance to the argument against continuing the massive subsidies for Medicare Advantage (MA) and Private Fee for Service plans (PFFS). These payments were supposed to be temporary, used to motivate health plans to set up alternative Medicare programs, to make it worth their while to get started. Now that many of these plans have been up and running for several years, they should be able to survive on their own.
And as far back as 2005, health plans in these programs were doing just fine. In an example of exquisite timing a GAO audit revealed health plans in the program made over a billion dollars more than they expected; $1.14 billion in extra profit.
Yet healthplans are fiercely lobbying to hold onto the subsidies, and their GOP allies are marching in lockstep – right off a cliff.
Health plans, and their Republican allies, now look like they won’t pull their heads out of the public feedbag, even when it is obvious they are getting fat on taxpayer-funded subsidies.
Politically, both the GOP and health plans are being stupid. There’s no other word for it. Not only is this politically suicidal, the longer term implications are obvious. Health reform is coming, and private health plans will want to play a major role. They will claim that the market is the solution (a point I have also been making).
Yet these free-market companies continue to argue they can’t compete with the government-run Medicare program without massive subsidies.

Opponents of universal care often cite awful stories of Canadians and Brits hurt, killed, or dead of neglect or bad care. And there’s no doubt that people in Canada and Britain are the victims of poor medical care.
There is certainly some truth to the stories of bad Canadian and British medicine. It is also true that raising this issue doesn’t help make the case against universal health insurance.
News flash – American patients often suffer pain, injury, or death from bad medicine. Here are a few examples. California hospitals recently disclosed hundreds of medical errors, “including wrong-organ surgeries, administration of incorrect drugs and neglect of serious medical conditions. This is a small percentage when weighed against the 4 million hospital admissions that occur in California each year, but still serious…” (quote from FierceHealthcare citation).
In Pennsylvania, wrong-site surgeries happen often – very often.
Nationally, between 48,000 and 98,000 Americans die each year due to medical errors. More people are killed by bad medicine than die in auto accidents or succumb to breast cancer.
A report on medical errors in the US blamed the system. Our system, one that does not offer universal coverage. According to the Institute of Medicine‘s 2000 report; “most of the medical errors are systems related and not attributable to individual negligence or misconduct. The key to reducing medical errors is to focus on improving the systems of delivering care and not to blame individuals. Health care professionals are simply human and, like everyone else, they make mistakes. But research has shown that system improvements can reduce the error rates and improve the quality of health care.”
(I’d note that the IOM is a universally respected, highly regarded organization, unlike the agenda-driven think tanks typically cited by opponents of universal coverage).
Let’s not forget the people without health insurance who die as a result of poor access to health care – late diagnosis of cancer, poor preventive care, and untreated hypertension, cardiovascular disease, asthma and diabetes.
And in the “did they even think about this before they wrote it” category comes this gem from biggovhealth.com; “Since 1997, the U.S. has made further improvements to the quality and accessibility of our health care, including the creation of Medicare Part D.”
Uhh, folks, Part D is a government-run drug program that has resulted in many seniors getting access to pharmaceuticals, thereby potentially improving their health. Kind of like what universal coverage aims to do.
Contrasting the IOM’s estimate that there are 18,000 excess deaths in America among uninsured adults to the anecdotal examples of poor care in Canada and Britain provides a much clearer picture of the ‘dangers’ of universal medicine. A picture of kids getting health screens, diabetics getting insulin, asthmatics receiving education and primary care, expectant mothers getting pre-natal care, and high-risk women getting mammograms.

Now that’s a scary world.