The Master and I agree on the goals

The Master and I agree on the goals


Writing in his blog in the NY Times, Uwe Reinhardt sets out three overarching goals of health reform

1. Financial barriers should not stand between Americans and preventive or acute health care that they sincerely believe will address concerns over a troubling medical condition, in a timely manner, before that condition grows into a critically serious illness.

2. Having received needed health care, no American family should be so financially devastated by medical bills that it cannot meet routine daily living expenses — for example, make utility or mortgage payments on time or finance the education of the family’s children.

3. The future growth in national health spending should be constrained to fall significantly below currently projected spending growth, which has the United States devoting about 40 percent of its G.D.P. to health care by mid-century.

All other goals are subordinate to these three overarching goals, as are the means to reach them.

Last week I posted a very similar Two rules by which to judge a health reform bill.

Rule 1 A health care reform bill needs to guarantee that no one should find themselves unable to get care simply because they cannot afford it. Neither should anyone find themselves financially compromised (or worse) because they have received care.

Rule 2 A health care reform bill needs to limit the amount of GDP that is going to health care to its current level, with an overall aim of reducing the share of health care going to GDP.

Uwe is a touch more eloquent in his goals 1 and 2 which split apart my Rule 1, and he’s a touch less aggressive in his goal 3, which is my Rule 2. But other than that these are the same.

Unfortunately in his column of the previous week Uwe created a list of 8 (but it could have been 20) completely contradictory statements about the completely “confused state” of what Americans seem to demand from health reform.

And right now the confusion seems to be winning.

Will we get nothing out of reform? I spotted something very sensible from Len Nichols over at New America Foundation’s relatively new “The New Health Dialogue’s Blog”. (Incidentally how long before Len and friends are sued for trademark violation by Health Dialogue? )

Here’s what Len says about the public option, and this is the likely compromise—if the insurance industry is really prepared to take it.

To be clear, I support a public plan operating on a level playing field because it provides Americans who distrust private insurance another choice and establishes a benchmark competitor much needed in some markets that lack any true competition. However, I also believe that properly reformed markets, generous subsidies, and a credible threat of a public plan if premiums are unsatisfactory in the first year could make insurance markets work very well for all Americans. This option is far superior than doing nothing. The debate over a public health insurance plan should not stand in the way of reform.

Which tells you that the major backers of the public option will trade it for the correct set of insurance regulations. So we could get to a real compromise, albeit on comparatively minor reforms, as I’ve said before.

But if the crazies at the Town Halls and the continued inability of the Democrats to explain how what they’re proposing is going to work continues, then I suspect Uwe’s “confused” rules will overcome his laudable overarching goals.

Leave a Reply

32 Comments on "The Master and I agree on the goals"

Sep 29, 2014

I loved up to you’ll obtain carried out proper here. The comic strip is tasteful, your authored material stylish. nevertheless, you command get got an edginess over that you want be handing over the following. unwell for sure come more previously once more since precisely the same just about very steadily within case you shield this increase.

Aug 13, 2009

Ewe Reinhardt writes:
> Financial barriers should not stand between Americans
> and preventive or acute health care that they
> sincerely believe will address concerns over a
> troubling medical condition
Change “sincerely” to “reasonably” and this seems like a good, pluralistic start.

Aug 12, 2009

I have to respectfully disagree with you goals, as I feel they are putting the cart before the horse. Constraining spending and making health care universal should be the products of health care improvement, but not the starting point. People didn’t start off with the idea that phone service had to be cheap and universally available. Gradually, as technology became cheaper and widespread, those 2 things happened all by themselves. Same with TV, computers and any other commodity. WHy should it be any different for health care? The main reason seems to be that people don’t WANT to spend their own money on health care. They don’t feel they should have to spend their own money on a drug that saves or prolongs their life. That is why the costs went out of control. By stating that cost containment is the first (or second) goal, you are mandating a reduction in the quality of care. Imagine if you said “I feel that the cost of a loaf of bread is too high. I will only pay fifty cents.” Imagine that that becaame mandatory all over the US. Well, imagine the quality and size of that loaf of bread that you would get. Imagine the number of bread companies that would go out of business. You may say “Well, I have to contain costs” or “there were too many bread companies anyway” but that doesn’t change the fact you’ll get a smaller, crappier loaf of bread.
An oversimplification? Yes, but, as a physician, I believe it is valid as hell.

Health Plan Veteran
Aug 10, 2009

I’d like to comment on the observation that Association Health Pools (AHP’s) work as well as community rating.
The short answer is that if small employers are free to enter and exit the pool at any time, then AHP’s are not as effective.
Those groups with rating “factors” more favorable than the overall AHP will have significant financial incentives to leave the pool, creating a “death spiral” for the AHP in which it becomes the insurer of last resort over time.
Community rating doesn’t have this issue.

Aug 10, 2009

We have been blogging (on the Down to Earth blog) in recent weeks about the debate in Washington and the nation on the health care crisis and how we aren’t hearing any discussion about addressing the root causes of the crisis, i.e. the underlying unhealthy diets and lifestyle choices (meat and junk food based diets, lack of physical activity, consumption of tobacco, alcohol, illegal drugs, etc.) and the widespread practice of defensive medicine. Another major cause of the bloated medical system’s costs to add to the list is the cost of medical mistakes. (To read the rest of this blog and others regarding the health care crisis, see

Aug 9, 2009

I don’t think they are over-reaching at all Barry. I think they are grapping for what they always wanted but lie to the public to try and sneak it through. Democrats have never cared about healthcare or peoples access to it, that is why every bill they have passed has raised cost and decreased access. They have always wanted nationalized healthcare and to control the money that comes with it. It has always been what they are reashing for, they tell you it is insurance reform, or mandates to protect something but it really is taking complete and total control of the trillions.
jd you and I apparently define success diferently;
“But soaring costs are pushing the system into crisis. The result: As Congress fights over whether America should be more like France, the French government is trying to borrow U.S. tactics.”
“Ironically, France is actually in the midst of shifting to a fee-for-service system for its state-run hospitals.” Quick someone call France and tell them how bad FFS is!
“The problem is that Assurance Maladie has been in the red since 1989. This year the annual shortfall is expected to reach €9.4 billion ($13.5 billion), and €15 billion in 2010, or roughly 10% of its budget.”
Great lets replace our headed to BK systems with one already there.
“British doctors will take the historic step of admitting for the first time that many health treatments will be rationed in the future because the NHS cannot cope with spiralling demand from patients.”
At least a dozen NHS hospital trusts are technically bankrupt, with no chance of meeting a legal obligation to balance their books, a Guardian investigation has revealed.
For Sweden read Lessons from Sweden’s Universal Health System: Tales from the Health-care Crypt by Sven R. Larson, Ph.D., I think the 80% of Americans with insurance and good to great access to top quality care would prefer to stay with what we got then go Swede.,,2117345,00.html
Germany has one of the best health care systems in the world, but experts have said for years that it won’t stay that way unless it is substantially reformed. The system faces a massive budget shortfall, largely due to a financing structure that no longer works in today’s Germany due to rising costs, low birth rates and stubbornly high unemployment.
Even with all their success in their health care system, Taiwan has suffered some misfortunes. The government is not taking in enough money to cover the services it provides, so it is borrowing money from banks.[9] The revenue base is capped so it does not keep pace with the increase in national income. Premiums are regulated by politicians[10] and they are afraid to raise premiums because of voters. The country is slow at adopting technology except for drugs. There is a low doctor-to-population ratio resulting in too many patients depending on too few doctors. Patients visit the doctor more frequently causing doctors to keep visits short to about 2 to 5 minutes per patient
before this post gets to long I think we all get the point, you named a bunch of systems that are just as failed or worse then ours and held them up as models to copy…no thanks our current failure is better then any you listed

Aug 9, 2009

Speaking of MA, saw this immediately after posting my previous comment:

Aug 9, 2009

In answer to the question, “Where has community rating ever worked?” the answer is: England, The Netherlands, Sweden, Germany, France, Canada, Switzerland, Japan, Taiwan, etc.
Premium = medical costs + administrative costs + net income (averaged out over time). “Net income” here refers only to the profit of insurers; the profit of providers, suppliers and other middlemen is baked into the medical and admin costs.
In a universal healthcare system, “premium” can take the form of a premium paid to an insurer, or a dedicated tax (similar to Medicare Part B) or taxes paid out of general funds, but regardless there is a similar basic equation: total payment to provide coverage (premium/tax) = medical costs + administrative costs + net income (if there is any).
Community rating, practically-speaking, is simply a system in which the cost to the individual is distributed across all individuals in the pool, rather than on the basis of the “experience” of that individual. Every single universal health care system I’m aware of has community rating by that definition.
Cost control is not at all prevented by the existence of community rating (or, if you prefer, the removal of experience rating). The only reason it appears to superficial observers to be so is that community rating in the US has only occurred without mandated purchase of benefits (whether as tax or premium) creating actuarial death spirals, AND has occurred in the same general cultural and political environment that has prevented adequate cost control for any major part of the health sector.
Massachusetts in the last three years is the closest we have had to community rating in the right environment to produce cost controls. And only in this year has the mandate had any real bite. Now the cultural environment is changing to force an awareness of the real cost drivers on the provider side and a serious attempt to address them. Whether MA goes to capitated payments or something else, that state will bend its trend. It is working just as I and a few (lonely) others have been saying for years.

Barry Carol
Aug 9, 2009

Nate – I like catastrophic insurance conceptually. I’ve said many times that if health insurance does nothing else, it must cover catastrophic events. I think HDHP’s could work quite well, at least for the upper half of the income distribution. We could devise a means tested approach for helping the bottom 50% of the income distribution acquire a HDHP and cover most of the deductible as well.
Interestingly, in early 1974, the Congress was close to agreement on national health insurance. I think the Democrats proposed a comprehensive plan with a $1,000 deductible and the Republicans wanted a $1,500 deductible. If you indexed that $1,000 for CPI inflation since then, it would be the equivalent of a $5,000 deductible today. Unfortunately, organized labor prevailed upon its friends in Congress to kill the bill because it anticipated a landslide victory in the November, 1974 elections because of the Watergate scandal and would then be able to ram a single payer system through over Nixon’s veto. Instead, Nixon resigned in August, 1974, a severe recession set in and there was suddenly no money for new entitlement programs though the landslide win did occur. In short, organized labor and the Democrats overreached and wound up with nothing. Thirty-five years later, they still have nothing. Yet, Pelosi, Waxman, Kennedy and Obama seem to be overreaching again with their push for a public insurance option. They could probably reach bipartisan agreement on numerous substantive reforms that would make a meaningful positive difference for millions of people if the public option were jettisoned though the weakened state of the economy makes reform more difficult than it would be if it were strong. I don’t know what it is about politicians that make them prone to overreach. When will they ever learn?

Aug 9, 2009

Matthew, please forgive me for feeding the troll. I should have known better. It won’t happen again.

Aug 9, 2009

In Ohio there has been some consolidation in PPOs. I can rent Interplan which is the consolidation of 3 once stand alone PPOs in the State. Cost around $3, has every hospital in the State but 1, discounts of 30% on physicians and 20-35% on hospitals.
THe best discounts are MMO, they charge $5 plus 15% but give 50% physician and 40% hospital discounts. They have almost every hospital in the state.
Anthem and UHC’s discounts are between those two closer to Interplan.
MMO is hard to work with, won’t take all cases. Interplan is easy. Either network providers can send the bills to the PPO who will forward to us. This counters the argument that working with 1000 payors is much harder then working with 1. With EDI its all codes.
Hope not to raise the rath of Matt with my line count but things get interesting when you get into rural areas where there is only one hospital. PPOs use to contract with then for 5% or even 0% discounts just to get them in the directory. In exchange for these discounts employers lost rights to audit claims and dispute charges. The PPO structure in rural areas serves very little purpose.
We need to move away from contracted rates and go back to scheduled reimbursements. Instead of paying for discounts and telling people where to go, plans need to pay $x, a fair amount for quality care, and allow the patient to see any provider they want. If a provider thinks they are worth 120% of fair rate they can justify it to the patient, and pay the difference.

Aug 9, 2009

Over 50% of employer insured are in self funded plans. Because of this there are very strong PPOs across the country I can rent for my clients. In most states the networks I can access are just as good or better then any fully insured carriers. There are exceptions to this, usually in the states with the highest cost. MA I can’t compete with BCBS. CA it is hard to compete outside the major cities.
PPO access runs from as little as $3 PEPM to as much as $10 plus 15% of savings. The networks that keep % of savings are the ones that really drive me nuts. The only way they get away with it is their discounts are that much better then anyone else.
PPO discounts is an area where hospital administrators need taken behind the woodshed and given a serious whoopin. My family use to own a PPO in NV. The county owned hospital in Las Vegas hired some moron that cancelled all the PPO contracts for smaller PPOs to increase revenue. They offered 5% prompt pay discount. We had no choice but to move all of our business to one of the large PPOs they continued to work with. Those PPOs reimbursed 10-20% less then we did. Instead of increasing revenue they lost even more. Providers by giving such lopsided discounts to a few players are taking money out of their own pocket. People would be willing to pay 5-10% more to not work with these carriers but providers are giving them discounts 20-40% lower then others.
ggrrrrr that is a sore subject….it’s only a matter of time, I gots a plan to get them back real good though, they will rue the day they insulted me with prompt pay discounts.
In most states discounts are not an issue. What is an issue is congress made it to risky for small employers to self fund. When COBRA was passed around 1986 it was so poorly written no one knew how to comply, Employers where sued out of business. It took 10-15 years of lawsuits before they knew how to comply and avoid lawsuits.
There is a new law from CMS, after 5 years of telling us not to use or collect members SSN now we are required to collect them and report them to CMS to make sure Medicare doesn’t pay claims for people that have other coverage. Great idea I have no problem with it, it helps them and us. This is where it gets typical governemnt and why public plans are always inefficient. There are already EDI formats to transmit eligibility…but no CMS had to writet their own unique data format that everyone has to program and use with less then a year notice. To make it worse you can only submit people once then send updates and all sorts oc crazy rules on who to send when. The real kicker is if you miss a SSN I get fined $1000 per day. Your report quarterly so that is roughly $92,000 in fines if you accidently miss a SSN. I only make $120-$240 PER YEAR per person. If we make one mistake we are out of business. This is how Congress destroys competition and forces everyone into the major carriers.
Self funding under 5K works great becuase we use the carriers network and don’t have to pay for discounts. Carriers don’t allow it in some states though. In CA the carriers that all work together in the exchange banded together to not allow plans to do this. In NV I can self fund under Anthem high deductible, cross the border into CA illegal.
Community rating has never worked, it drives up cost and drives healthy people out of the system because they are forced to pay more then they should. There is also no motiviation for unhealthy people to control cost or improve health. Higher cost is the best and only effective method to incentivise members to control spending.
Pooling of large claim risk works far better then community rating. AHPs accomplished the same thing as carriers and union taft hartley plans, those all work. If you leave an AHP or MEWA your ability to return is restricted. Most employers aren’t looking for the cheapest insurance year in and year out they are looking for stability.
Where has community rating ever worked?
I would disagree about the no fault of their own, most uninsureables I have meet are that way because of mistakes they have made. In good times they skimped on insurance and savings to buy a bigger house or drive a SUV. People are uninsurable under the current system until they get a job. Large employers, those in Unions, those covered by MEWAs don’t ahve any problem getting back into the systems. The only problem is small group and individual where a certain party as stopped small employers from pooling risk.
There should be a government catostrophic plan for these people. You are only talking about 3-5 million people, it would not be expensive at all. The biggest issue is eligibility and stoping people from gaming the sytsem. After COBRA there should be an expensive but not unaffordable plan. People need to suffer the consiquences of their poor decisions, any system that doesn’t hold people responsible is unsustainable.
great convo hope it continues

Aug 9, 2009

I think the answer to your quiestion Barry is that Nate thinks poor sick people brought it on themselves, and should suffer accordingly.
The fact we have to pay for them any way appears to escape Nate’s notice, as he waxes lyrical about the HMO Act and blames it on Kennedy while letting Nixon off the hook. After all we all agree with Nate that the HMO act was by far the most significant piece of legislation ever passed in the US right?

Barry Carol
Aug 9, 2009

A couple of things.
First, I think if you can do a better job than United or Anthem in serving the small group (<51 lives) market, you deserve to capture as much business as your firm can handle. I think the biggest challenge might be winning provider discounts from list price comparable to what the large carriers are able to negotiate. Providers, for their part, are required to bill everyone at the same (high, list price) rate. To do otherwise would run afoul of price discrimination laws. As you well know, insurers then pay based on whatever discount they were able to negotiate. For my own edification, perhaps you could explain a bit more under what circumstances network access fees are paid, what they entitle the payer to, and how much it usually costs PMPM or PEPM. Helping small employers save costs by self-insuring the first $5K per member or whatever they can afford is a valuable service that they should be willing to pay for within reason.
On the Association Health Plans, as long as some states are community rated but most use underwriting, if people in the community rated states had access to AHP’s in other states, it would completely destroy the market in the community rated state as all the healthy people would leave in favor of cheaper insurance in a state that uses underwriting. Within a given AHP, however, anyone who could later find a better deal elsewhere would leave. Those who depart would typically be the healthiest members which would drive up per member costs for those who remain. The bottom line is that it’s an inherently unstable structure. If we move to community rating or modified community rating, there wouldn’t be any reason for AHP’s.
Finally, I’m not sure I understand how you would propose, under the current underwriting system, people who are uninsurable due to expensive pre-existing conditions, often through no fault of their own, are supposed to access coverage. Most state guarantee funds are woefully inadequate and/or hugely expensive for both the individual and the state, and some states don’t even have one.

Aug 9, 2009

I see no reason to decouple true insurance from employment. It’s an efficient delivery system. We should expand the options of both large and small employers to deliver true insurance so it is more cost effective and stable.
Couple of mistakes there John;
“By law, the monthly premium for Medicare Part B must be sufficient to cover 25 percent of the program’s costs, including the costs of maintaining a reserve against unexpected spending increases. The federal government pays the remaining 75 percent.”
If your only paying for 25% of your care I would expect those premiums to be pretty modest. Further about 1/4 of Medicare beneficiaries don’t even pay premium.
Yes Medicare is single payor and it is a complete failure. I think the number is 34 trillion under funded? Why should we duplicate that failure and expand it?
“But in a global economy it is getting more difficult to compete with foreign outfits without that economic burden.”
Name one foreign economy with nationalized or single payor we can’t compete with. If you where advocating copy what China and India does for insurance then you would have an argument. Saying we can’t compete with Europe and Japan is BS.
“Accusing anyone of hating small business is not only counterproductive but insulting.”
Give me one good reason why Democrats blocked AHP for over a decade and I’ll send a handwritten apology to every democrat in office. Small business would have paid billions less in insurance premiums if not for Democrats. Lets discuss the facts and not your offence to the truth. Why were small businesses denied the savings of co-ops for 15 years and now all of a sudden Democrats propose it like it was their new idea? The only thing that has changed is Republicans introduced the AHP bills and Democrats didn’t have a way to take credit or control them. Claiming you want to make insurance more affordable while blocking bills that would do just that, then introducing your own bill to do the same thing is hypocrisy.
As someone that has seen the effects of managed care I would say you have no idea what you are talking about. Managed care saved hundreds of billions of dollars. Some managed care ideas, like Ted Kennedy’s HMOs, were bad ideas, but others like disease management, discounts, centers of excellence, and nurse lines were tremendous success. I have no idea how someone could claim otherwise.
Actually if you must know I never said I don’t read it I said I stopped correcting it. I stopped correcting it because if you posted a comment on her blog proving her wrong she would delete it. That is one of the things I have TREMENDOUS amounts of respect for Matt in regards to, no matter how many times I correct him:) he never deletes anything. Maggie’s post you linked, like most of hers, are riddled with errors you would expect from someone that never worked in the business and doesn’t understand what they are talking about. I don’t think it serves THCB to post corrections on their blog of things Maggie wrote on hers.
Not sure what bill you are reading but HR 3200 does nothing to increase competition, in fact provisions specifically reduce competition and drive more employers to the large carriers. I would strongly suggest you research exchanges before placing any more faith in their ability to control cost and increase competition. CA and MA are examples of two major failures.
You are way overestimating the effects of State Regulation and why it is as bad as it is. Around half the population is covered by group health plans, only half of that half are in plans subject to state regulation. The only reason that many are even in state plans is because Congress made federally regulated plans so risky and unattractive for small employers. HR 3200 finishes the job and drives all the remaining small groups into fully insured carriers. When Obama says you can keep your insurance this section of reform proves he is a liar. When they outlaw the plan you are in 5 years from now how can you keep it? Small employers don’t have the money or time to get their plans approved by the federal government as required.