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Month: November 2005

POLICY: Single payer advocate debate wing-nut

• 14

So in the Fresno Bee  a single payer advocate has a sensible piece on why California should adopt single payer. I don’t agree — I think we should have a multiple-payer system, with lots of single-payer look alike provisions, but at least it’s a sensible argument.

Opposing this view, the Bee has a piece from a complete nutjob. He seems to believe that there’s something terribly wrong with the US Mail (when there isn’t) and that all our health care problems can be solved by sending all illegal immigrants home. Yup he really has that as his number one solution. Who exactly will harvest the fruit & crops that supply Fresno and the central valley with all its income is not explained.

But the most interesting thing is the wingnut’s name.  It’s "Michael Der Manouel Jr".  Is there any possible slight chance that someone with the name "Der Manouel" is not either an American Indian or straight off the Mayflower?  If so, does he have proof that his family are legal immigrants? Sure sounds like a wetback to me. Perhaps sending him back "home" (along with the rest of his "conservative" brethren) might just be the solution to the health care crisis.

POLICY/BLOGS: More slack crap from Medpundit exposes the big conservative morality lie

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Late last month the NY Times had a pretty horrendous article about a family that was losing its house because it couldn’t pay for all the co-pays and co-insurance for its sick son’s care. I’ve just got round to catching up on my reading and I’m pretty shocked. You might think that someone who’d taken the Hippocratic oath might decide not to pile in on this, but you’d have mistaken the ever blackening stone that Syd at Medpundit seems to have in place of a heart these days.

She decides that the problem is that the family ran up credit card debt. And one of her readers jumps in to!

Sounds like the real problem here might be the credit cards.I get one or two notices of bankruptcy a year concerning my patients. They always list the debt that is to be forgiven along with the creditors, and it’s overwhelmingly credit card debt – the major cards and the local retailers that have their own credit cards. That’s probably true for the general population as well – which is why the Times couldn’t find a better example of people with health insurance going broke because of medical expenses alone. UPDATE: A reader does the math: The $5,000 a year quoted comes out to: $416.67 a month, $13.69 a day, 7% of the household’s income. One mistake people do make in managing their financial affairs is that they fail to readjust their living standards downward to account for unexpected regular expenses (e.g., sell the house and car and downgrade).Or are we so rich now that the idea is that not only should an illness not bankrupt but that you shouldn’t have to skip trips to the mall?

The only problem is that Syd and her reader failed to read the bloody article! Here’s what it said and it is quickly apparent that the expenses connected to the kid’s illness massively exceed their max-out of pocket and the $5000 number, almost certainly because many of these expenses are somehow excluded from their insurance coverage.

Then the bills started coming in. After a week in the hospital, the couple’s share came to $1,100 – not catastrophic, but more than their small savings. They enrolled in a 90-day payment plan with the hospital and struggled to make the monthly installments of nearly $400, hoping that they did not hit any other expenses.

But Zachery, who was eventually found to have an immune system disorder, kept getting sick, and the expense of his treatment – fees for tests, hospitalizations, medicine – kept mounting, eventually costing the family $12,000 to $20,000 a year.

So the cost is not the $5,000 a year. That’s just the co-pay on ONE of his drugs. The rest is between $12 and $20K a year, and the poor bloody father is out working 90 hours a week to make just 68K a year (which for those of you counting at home is under $30K for a regular working week). So somewhere between 17% and 30% of the family’s PRE-tax income was going to these costs. That’s way more than any young family is going to have to spare, unless perhaps they have a high-earning physician bringing home the bacon. So either the Times didn’t do any fact checking (and God knows they have a sorry legacy on checking them when it helps conservative loonies and their issues), or this family was financially destroyed by medical bills despite having some insurance coverage. And "some" is the appropriate word here:

As the family went from one doctor to the next, without a diagnosis of the root problem, the insurance company often questioned the expenses. Why did Zachery need four doctor visits or five rounds of antibiotics for an ailment that most children shook off in a couple of days? Mrs. Dorsett spent days on the phone, often in voice-mail loops, and often long-distance, pleading her case.

"Like when they refused to pay for antibiotics when he had pneumonia" last year, she said. "The antibiotics cost $373, and we didn’t have it. But we couldn’t just not give it to him. I knew the review board would come around eventually, but he needed the medicine right away. Finally the doctor gave us samples."

She managed the expenses, like many people, by constantly applying for new credit cards, rolling the debt from the old cards into the new ones, which usually came with low introductory interest rates. In a good year, they would have the rolling charges on their credit cards down to $5,000 or $6,000, but the charges always went up again.

And how does Syd’s reader really think they should do it?  Their solution: Stop going to the Mall! Of course Syd’s "reader" didn’t get to page two where it showed that they family buys its clothes at yard sales. And don’t bother bringing your plastic into Syd’s office for your co-pay. Syd apparently doesn’t know that you can use credit cards to pay medical bills, and that they charge outrageous interest rates, and that that is likely to be where the debt came from.

"Not only are the bills higher, but the way we pay for care has changed," said Elizabeth Warren, a professor at Harvard Law School and one of the study’s authors. "My mother always carried a bill with the doctor, but every dollar she paid went to principal. Today, the doctor takes a credit card, and a family might be paying that off at extraordinary interest rates. So people may recover physically from major medical injury, but may not recover financially."

So yup we have a nation of over spenders, but I don;t think this family fits the pattern. But the bullshit morality aimed at people with medical problems like this by our conservative brethren is just astounding. And I remind you that this does not go on to anything like this extent in other industrialized countries because they have come to the reasonable position that being sick should not be a financial death sentence.

POLICY: A tax proposal for fairness, but it’ll never make it, WITH UPDATE

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Finally a tax proposal I approve of (even though it would hurt me personally). There’s a commission that wants to lower the limit on mortgage tax deductions.  But of course every elected official in California and New York is freaking out about it.

There has to be a way that this iniquitous tax break (and the one on health benefits) can be removed fairly so that those with the highest incomes don’t get most of the benefit. My proposal would be

1) Abolish all tax relief on second homes (currently you can get a deduction for mortgage payments on a second home with a mortgage of up to $1million)

2) Limit the deduction immediately to the interest on a mortgage that’s equivalent to the median house price in the CSMA (large metro area), so that the number would be bigger in San Francisco and New York, and smaller in Kansas, but then reduce that amount by 5% each year, phasing this out over 15-20 years. (Rather than gong straight to a "modest" house price and sticking with that ongoing)

That would immediately take away the advantage for the high income earners and restore some sanity to the housing market, as well as encouraging people to pay down their mortgages rather than borrow more against their homes for yet more consumer spending.  But it wouldn’t be such a radical move that it would kill the housing market overnight and send us into a recession.

But the panel has come out with average costs that clearly ignore the realities on the ground in more expensive states — The new cap would be linked to Federal Housing Administration mortgage limits set county by county each year based on the cost of a "modest” home. Those limits range from $172,632 in low-cost states to $312,895 in the most expensive counties, such as Santa Clara. Around here the median house price is closer to $750,000.

The trick is getting this number to stall so that housing becomes more affordable, the tax iniquity is not just reduced but eliminated altogether, but that it’s one in a way that doesn’t penalize people in more expensive states and wreck the whole plan.

Still it’s amazing to see that this Administration has anything to do with a plan which doesn’t give extra benefits to the very rich.

And of course health benefit tax deductibility is next, as this Managed Care magazine article discusses. Note the extremely sensible comments from Alain Enthoven and Uwe Reinhardt at the end of the article.

UPDATE–An interesting wrinkle suggested by Uwe. If employers had to put the amount they spend on health insurance on the employees’ W2 would they put the average they spend, or what they actually spend per employee?  Anyone who’s bought health insurance knows that a typical small company is quoted the amount per employee, so a 50 yr old person with a family costs a whole lot more than a 20-something single. Of course most employees don’t realize that. But to take this to its logical extreme for self-insured companies,  "premium" costs per se don’t exist. Instead costs are exactly equal to the actual costs of care for each employee. So should their employees see the total amount spent on their care, and then be taxed on that?  If you have a $100,000 hospital stay, should you pay tax on that money? More interesting conundrums to be worked out here too.

PHARMA: What next for DTC regulation? by James Gardner

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Those of you following along at home know that big Pharma is trying to get ahead of a suddenly hostile Congress (including Bill Frist turning on them) on the subject of DTC advertising. This week they’re holding hearings on direct-to-consumer promotion of regulated medical products. Joining us from Washington DC as a guest blogger, ********@*****************ve.com“>James Gardner of One to One Interactive shares his observations on today’s hearings. James is an authority on Internet marketing and how the channel should most effectively be used by pharmaceutical and device marketers. As well as sharing his observations, he’ll also be addressing the panel and advocating for the interactive channel to be regulated differently than traditional TV, radio, and print. His agency’s past and current clients include GlaxoSmithKline, Pfizer, Roche, Boston Scientific, Schering/Berlex, and Digene.

Hello, welcome, and a big “thank you” to Matthew for allowing me to share my observations from today’s FDA hearings on direct-to-consumer (DTC) promotion of regulated pharmaceuticals and medical devices. I’m in Washington for the day to address the hearings with a point-of-view on the internet’s role in DTC promotion, but I’m excited to also provide some color commentary.

As some of you surely know, the FDA announced its intention in mid-September to hold a series of public meetings on a range of issues related to DTC marketing. The FDA’s goal, quite clearly, is to develop a new regulatory paradigm for pharmaceutical and device marketers. While the FDA has been down this path before, the political and business environment today seems more conducive than ever to having real change actually happen. In that sense, these hearings could be an important regulatory milestone.

My personal expectation, shared by many (but not all), is that we’ll see several things emerge from this process:

  • Blanket restrictions on several currently popular promotional tactics
  • Significantly clearer guidelines articulated about still-permissible tactics, and
  • Much stiffer consequences for those failing to comply with the letter and spirit of the new rules.

I don’t see an outright ban on DTC promotions happening, although some will certainly advocate for that approach. Indeed, with the DTC promotion envelope continually and aggressively being pushed by adventurous marketers, one could plausibly argue that wholesale change is both inevitable and desirable.

That said, I think cooler heads will prevail and the FDA will choose a path of lesser resistance by instead adopting many of the voluntary guidelines articulated this summer by PhRMA, the industry’s trade group. Most of their proposals were quite sensible and all would serve as a good starting point for the FDA to regain control of the DTC promotion agenda, if nothing else. A pragmatist always, I see some positive change as being better than no change at all.

For those of you new to the world of FDA hearings, here’s what you’re missing:

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There’s a large podium across the front where the first group of FDA panel members are sitting. Below them, on the audience’s left, are additional panel members. Also below them, but to the audience’s right, sit the 3-4 speakers in each “wave” awaiting their turn to address the group. Speakers use a podium on the audience’s right, projecting slides on two very large television screens. If you look closely, you’ll also see that we’re using the National Transportation and Safety Board’s auditorium – hence, their “shield” on the wall behind the podium.

Speakers have 12 minutes to make their case. When their time ends, the moderator thanks them graciously for participating and helps field questions from his colleagues and, time permitting, the audience. Questions from the FDA panel to speakers are obviously allowed, but questions to the panel in return are generally frowned upon.

Kudos to the FDA — it’s all quite well organized. We’re keeping to the agenda and making good progress.

Tomorrow: Thoughts and reactions to Patrick Kelly from Pfizer and speakers from the ASHP, AARP, and other organizations. I’ll also post my presentation with the hope of stimulating some discussion!

POLICY: The uninsured, health care costs, and the insurance industry’s vacuous response

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It won’t surprise regular readers at THCB but there are a lot of uninsured people in this country, and the problem is getting worse. Why?  Well some bright wonks (John Holahan and Allison Cook at the generally liberal Urban Institute) have some answers and a closer look at the uninsured in a special for Health Affairs. (And of course only liberals care about this stuff–I’m happy to say that unequivocally, and not even all of them do!). They’ve mined the CPS for the 2000-2004 period and have come up with these conclusions (which I quote from freely as many of you can’t get Health Affairs for free–something else that should be changed if any Foundations are listening). Here’s what they found:

(1) The number of uninsured Americans rose by 6.0 million between 2000 and 2004 (the U.S. population increased by 10.0 million). The increase in uninsurance occurred primarily because of the decline in employer coverage, which fell both because a large number of Americans were not working and because coverage declined among workers. The latter no doubt reflects increases in health insurance premiums, which rose much faster (12.2 percent per year) than wages (2.9 percent per year) during this period. The percentage of small and midsize businesses (3–199 workers) offering health benefits also declined, from 68 percent in 2000 to 63 percent in 2004). Employers seem to have tried to shift the cost of health insurance to workers, and it is likely that a growing share of workers chose not to accept employers’ offers.The change in coverage was affected also by the shift in employment from industries that historically have had high rates of coverage to industries that have not, as well as from large firms to small firms and self-employment. Employer coverage rates fell in all types of industries and firms, but the declines were particularly great in low-coverage industries and in small firms. The fact that employer coverage rates fell among workers, not just among those who lost their jobs, suggests that rates of coverage could continue to decline, even as the economy improves.(2) About two-thirds of the increase in uninsurance was among people below 200 percent of poverty. This is due to increases in both the size of the low-income population and the uninsurance rate of that group. Importantly, however, middle- and higher-income Americans were also clearly affected. The remaining one-third of the growth in uninsurance (2.0 million) occurred among those above 200 percent of poverty, even though this group only grew by 900,000. Thus, the lack of health insurance coverage is clearly beginning to affect middle- and higher-income Americans.(3) Much of the increase in the uninsurance occurred among young adults, whites, and the native-born. About 50 percent of the uninsurance growth was among those ages 19–34; about 55 percent among whites; and about 73 percent among native-born citizens. Thus, rising uninsurance is clearly not a problem affecting primarily racial and ethnic minorities and noncitizens. Further, more than half of the increase in the uninsured occurred in the South, where uninsurance rates were already the highest in the country.(4) Children actually gained health insurance coverage. The expansions of coverage in Medicaid and SCHIP that occurred in the late 1990s meant that children’s coverage was maintained, even with the loss of employer coverage. The expansion of public programs increased enrollment substantially. The result was actually a slight decline in uninsurance among children. Adults’ experiences were in sharp contrast, primarily because adults experienced the same declines in employer coverage but did not have the same access to public coverage. Also, people ages 55–64 actually saw improvements in both income and health insurance coverage. Without the gains seen for this group, the overall picture of rising uninsurance would have been much worse.The decline in employer coverage is likely to continue. Increases in health care costs, and thus health insurance premiums, are likely to continue to grow faster than workers’ earnings. The decline in employer coverage will be further exacerbated if the shift from working in large and midsize firms to small firms and self-employment and from high- to low-coverage industries continues

So to recap, the problem of uninsurance (which is a problem for everyone but mostly of course for those uninsured) is largely borne by a) the working poor (less than 200% of poverty)  — although its increasingly making its way up the income ladder, b) the young, and c) whites, d) southerners, and e) anyone likely to work for a small firm rather than a big one. What’s driving this is the higher cost of health care and the fact that employers are opting out of offering (affordable) benefits. Meanwhile public programs (i.e. Medicaid) are only picking up kids. Given the preponderance of lower income whites in the South who vote Republican, I’d be very interested in these numbers if I was a Democrat looking for new voters.

Of course as I’ve said many times on THCB, the presence of the uninsured is a safety valve allowing the participants in our health system to ratchet up costs as much as they can, because those who can’t pay can be jettisoned into the uninsured pool. No one is responsible for the global cost for the whole system, because if they were they’d bring it down for everyone, not just those uninsured, and the total dollars going into it would be less. (At least that’s how it’s done in every other country).

But the scale at which that jettisoning is going on (due to those cost increases) is even worrying those who make their living selling insurance. Here’s what the CEO of Independence Blue Cross (the Blues in Philly) had to say about the fact that premium for his PPO product is up 65% in the past 5 years and now costs $17,000 for a family:

One day soon, if the cost of health care continues to escalate, employers and families won’t be able to afford the solid coverage of Personal Choice,"

So what is he going to do about that? Well there is the odd nod to pay for performance and disease management, but no one will be surprised to hear that like his competitors, CHDPs and better technology are the cures for Independence.

"First," he said, "we must better respond to the emerging trends in health-care consumerism." IBC efforts in this area already include rolling out a variety of consumer-directed health plan options and launching its Connections Health Management program, which helps subscribers better manage chronic illnesses. <snip> Frick also wants to see the company expanding its use of technology to drive down administrative costs and improve customer service.

Now, as an actual health plan customer I’m in now way objecting to health insurers bring their customer service into the 1990s, but suggesting that this is going to cure the underlying cost of health care is rubbish. Meanwhile over at The New Republic, non-Volvo driving liberal Jonathan Cohn has a great article explaining why (again not news for THCB readers) that consumer driven plans are in general worse for poor and sick people. But don’t bother telling that to the insurance industry. it’s decided that CDHP is all it can sell, and it’s the only idea it’s got.

So I was interested in the response when in the middle of a mostly vacuous interview (PDF transcript here) Jack Rowe at Aetna last month was asked by a single payer advocate whether we should have an insurance industry at all.

BERNIE FEDDERLY [misspelled?]: And the one thing you would do to bring down a healthcare cost would simply be to go to a national healthcare plan – a single payor plan, which would eliminate those costs. The best thing we could do is probably get Aetna out of the healthcare field. How do you take on that?

JACK ROWE MD I think we disagree. I think Aetna’s part of the solution. It’s not part of the problem and I think there are lots of ways that private health insurers can improve the quality and access of care and help control the costs. I don’t think it’s proven that having a national system would help correct the healthcare cost problems. The costs, most economists agree, are driven up–not by health insurers, whose operating margins are, as you probably know, are well less than 10 percent on average but by demographic changes and technological advances. Neither of which are under our control. Those are a couple of other ways we disagree but I’m sure there are others.

Frankly if I was getting $18 million a year I’d have a better defense of my position than that, given that I’ve admitted that you could get 10% savings right off the top by nationalizing me, and given no reasons for not doing it. Especially when my business strategy (for all the BS in his talk about Aetna promoting racially sensitive health care) was to boot about half the people on my insurance rolls off them (no prizes for guessing whether they were the healthier half or not) and thereby add to the uninsurance and cost problems of the nation and its taxpayers because of it. Rowe’s lesser paid colleague Frick over at Independence at least has a bit more humility.

"I’ll be the first person to tell you we don’t have all the answers," Frick told DVHC members. "And I’ll be the first to tell you we don’t always get it right the first time, but we stick with it until we do."

Of course doing something that you know is not going to work expecting that it will is pretty close to the text book version of insanity. And his conclusion sounds frighteningly like that.

If health insurers gave a rat’s arse about the problems of the uninsured or health care costs, they would have a come-to-Jesus moment, get together and plot out a way that the uninsurance problem and the cost problem could be solved with them still remaining in the mix. That’s kinda of where they were forced to in the Clinton plan, and it still seems a better long-term option to me. As it is, they seem to be determined to take the short-term cash, and help the system break down to a point where a future government will be forced to take them out and replace them with a government-run plan. But there’ll be a whole lot more pain, suffering, and anguish before then.

QUALITY/POLICY: Vince Kuraitis on Medicare DM

On Friday, November 4th, 10:00 AM – 10:45 AM Pacific (1:00 PM – 1:45 PM Eastern), Vince Kuraitis, Principal. Better Health Technologies and a leading Disease Management guru will be doing an audioconference of this presentation as part of Managed Care OnLine’s (MCOLs) Managing Health Care Costs Web Summit. I’ve seen an advance copy of his presentation and if you are interested in figuring out what  the heck is going on within the Medicare DM experiment that was called CCIP and is now called something else, I suggest that you sign up.

(If you don’t work for a corporation that can pay the freight but are still desperate to see it, Vince might be able to help, so email  me).

BLOGS: Typepad apparently sucks

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Typepad apparently has decided to start being unable to handle its traffic, or something. Anyway it just started eating posts, including a long one I just wrote. I hit save. It gave me an error message and a blank slate, I may have time to rewrite it, but with these web-base tools, if it’s gone, it’s probably gone (unlike say Word which tries to recover stuff).

So I may have to follow my post, but moving blog hosts is a total pain.  Anyone got any ideas? (I bet Typepad wishes it had eaten this one!)

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