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POLICY: A Conversation with Paul Fronstiin from EBRI

You won’t see this guy, Paul Fronstin from EBRI on the CDHP rah-rah circuit. But like many sober analysts of health care, what he has to say is very important and very sharp. So go read  A Conversation with Paul Fronstin in Managed Care magazine. If you’re too lazy/bored/time-constrained to do that, ponder at least this exchange which I don’t agree with—in that I think he’s not factoring in the outsourcing revolution—but is a pretty provocative viewpoint.

FRONSTIN: In the short term, I don’t see a tremendous erosion of coverage. One thing that people outside of health care tend to forget is the impact of the overall economy on health care. In the late ’90s, the strong economy enabled the managed care backlash. The lower unemployment rate drove employers to enhance benefits and drove small employers to offer benefits. Once unemployment drops below a certain threshold, the economy starts to have an impact on what employers do and don’t do. The likelihood that a small business offered health benefits increased 20 percent between 1998 and 2000, even though small businesses saw almost a 20 percent increase in premiums over those two years. That tells me that employers will do what they have to do to recruit and retain workers if they think it will affect the success of their business. Even if health care costs are increasing rapidly, if employers think cutting back on those benefits will affect their business, they’ll make other tradeoffs but they’ll maintain health benefits.MC: You see indications that we’re heading for another period like the late ’90s?FRONSTIN: Right now, we’re at 4.8 percent unemployment. The economy is certainly moving in the right direction as far as unemployment is concerned. We’re not that far away from that threshold. I don’t know if the threshold is 4.6 percent, 4.4 percent, 4.2 percent or 4 percent, but we’re within a percentage point of it as opposed to being within 3 percentage points. If unemployment continues down that path, employers will postpone abandoning health insurance

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The Medical Blog NetworkBarry CarolPeterGreg Graze Recent comment authors
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CDHCC Spring 2006 Slides & Recent Press Mentions

My presentation atSpring 2006 Consumer Directed Health Care Conference and Expo, which was announced earlierhas been delivered and was met with great enthusiasm.
The slides are attached, so you candownload and see for yourself what cau

Barry Carol
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Barry Carol

Peter, I agree that there is a lot of potential for common ground within this approach, especially since the federal government already uses the premium support model to provide insurance for 9 million people (including retirees). It didn’t address issues I’ve raised previously such as living wills and QALY metrics or the malpractice issue, and I have a problem with offering LTC insurance within the “best” plan. I also think there are some alternatives to financing that might be fairer than their recommendations. Bottom line: I applaud the effort, wish them well, and I communicated my concerns and suggestions to… Read more »

Peter
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Peter

Barry, I read the summary of the TCF plan at their web site. Full version is $4.95. One quote worth showing here is this: “The cost of new medical technologies—drugs, medical devices, and procedures is outrunning our ability to pay for them. This is one big reason insurance premiums have been rising steadily for private and public payers. Some of this care makes people healthier, but at a very high price. For many drugs and therapies, we have no idea whether their impact is large, small, or even counterproductive.” I would be willing to go with this plan with a… Read more »

Barry Carol
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Barry Carol

Peter, my reading of the Century Foundation proposal’s good / better / best approach is that the difference in plans relates to scope of coverage. For services that are covered under all three plans, the provider would be paid the same, though co-pays could vary, and there is no issue with respect to waiting times. There does not appear to be any opportunity to cherry pick. On the litigation, health court judges would be as independent as judges in the current legal system except that they would have specialized knowledge about medical issues and be able to separate junk science… Read more »

Peter
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Peter

Barry, I disagree with your first point about “good/better/best”. If you think lines in the UK are bad (not sure about that) then by allowing providers to virtually cherry pick patients due to ability to pay higher amounts you make the rest of the system much more strained. This has been an on going battle in Canada as the docs want to factionalize the population into those that can pay extra (first served) and those who can’t (just wait a few more weeks). It’s an attempt to get their incomes up, no more. This comes down to a fundamental philosophy… Read more »

Barry Carol
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Barry Carol

I agree that employer provided healthcare is not a good model and, as has been pointed out before, is an accident of history. I think the Century Foundation proposal is on the right track with its premium support model and good / better / best approach which offers some choice beyond the basic policy for those who want and can afford more extensive coverage. That all said, however, I think the liberals would better serve their own cause if they came up with and were prepared to fight for more constructive ideas on how to reduce utilization. For example: (1)… Read more »

Peter
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Peter

Greg, I agree with you 100%. By expecting business to bear the cost there is not equal universal access. But there needs to be a money stream and the tax system may be the fairest way to do it. What might also help is a universal sin tax on those things in the economy that make healthcare nessessary. Business usually likes to offload costs such as pollution, cigarettes or junk food to children to the next generation or someone elses bank account. I would even be willing to look at a small dedicated gas tax so that everyone pays something… Read more »

Greg Graze
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Greg Graze

I’m a liberal Democrat since birth and a firm believer in some kind of system of universal health insurance, but we need to get away from the employment-based model. Access to health care is a societal responsibility and the cost should be borne equitably by the nation as a whole. Employers, especially small businesses, cannot and will not bear the cost of health insurance, and they shouldn’t have to. Employer-based insurance is an old, anachronistic concept. Liberals would be wise to align themselves with business on this issue. We’d make a lot more progress.