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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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  1. 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

  2. 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 them.

  3. 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 technologiesā€”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 little more discussion and info. At least it will get us off the dead-lock we have now. The trick is to abandon dogmatic ideology to get all sides togeher.
    As for reducing litigation when healthcare is taken off the table I still think it would. People usually don’t sue to recoup their costs. The punitive part is there to pay the lawyers and give people a bonus for their trouble. I would be willing to use the punitive part for something else as long as there was a way to pay for the lawyers. In Canada you don’t see near as much litigation. Part is culture part no contingency fees. But contingency gives poor people access to the legal system same as rich. No perfect system.

  4. 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 from sound science. Juries, who are not knowledgeable about these issues, and easily swayed by a good lawyer to be sympathetic toward a plaitiff with a bad outcome, which may or may not be due to malpractice, would be removed from the equation.
    Regarding litigation awards being less if paid by society, I don’t think this is correct, at least not in the U.S. New York City, for example, is sued for all sorts of things like slip and fall incidents and the like. If anything, people seem more willing to sue the city than to sue a private business, and the awards are at least comparable. There have been cases of a bus accident, for example, where people have tried to enter the bus after the accident so they can claim they were on it when the accident occurred! Fraud like this, especially in the cities, goes on all the time.
    TCF’s “best” plan includes long term care insurance which I think is a mistake. People who would have to pay out of pocket now for long term care until they spend down enough to be eligible for Medicaid would just buy the insurance when they needed it. It has adverse selection written all over it.
    You and your wife were wise to execute living wills. I wish there were a more aggressive campaign to get everyone, especially the elderly, to do likewise.

  5. 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 of healthcare which I think needs to be discussed and settled. As to end of life decisions and who gets the money thrown at them and who doesn’t I agree there needs to be ground rules. When a system is paid through the government cost controls are vital. Both my wife and I got living wills after the Terry Schrivo fiasco as I didn’t want the church determining my end of life decisions. I wonder how many “good christians” would defend life support forever if their congregations had to pay for it. I also would like to see some system to cut the lawyers out of malpractice, the system now of high threshold proof only protects the malpractors. Maybe the healthcourt system would be good. But if you look at the system of arbitration (designed to cut out lawyers) then I don’t think it will work fairly. Right now the arbitrators are paid and contracted by business. When you sign a contract you agree to allow the business to pick the arbitrator. So where do you think their decisions fall to the greatest extent? There is another aspect to universal health coverage and litigation. If healthcare is freely available (no not actually free) to everyone then insurance awards would be much less because the medical bills are being paid by society and don’t have to come from the plaintiffs bank account. Right now car insurance requires a minimum amount of medical coverage, usually everyone takes the minimum but the minimum doesn’t cover squat in a serious accident. It’s not fair for the person hit by someone on minimum wage who is just about near bankruptcy anyway and has no assets to sue for. And why should the victim be required to hire a lawyer just to get what they should get anyway. Universal coverage gets the healthcare bills off the legal table.

  6. 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) specialized healthcourts to bring more consistency, objectivity and fairness to adjudicating medical malpractice claims. Even without caps on non-economic damages, this could reduce defensive medicine over time. (2) living wills. My understanding is that only about 30% of Americans have living wills today. This is a simple document which could save a lot of heartache (and money) by precluding unwanted futile care at the end of life. (3) QALY metrics. It would be nice if some of the experts in this field made a rigorous effort to quantify how much of our healthcare resources are currently being spent on end of life care that might not pass a QALY standard if we had one. Related to QALY, since the UK (and perhaps other countries already use these), we could learn from them about not only how they develop and quantify the metrics, but how they communicate to the individual patient and family that care that potentially could be provided will not be under this approach unless the patient is prepared to self-pay.
    It is even conceivable that enough money could be freed up through reduced utilization to provide vouchers for low income people to buy a basic policy. Those who can afford to pay for an affordable policy themselves should do so. It would also be helpful if states kept specific benefit mandates to a minimum.

  7. 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 toward this. But any tax should be visable and dedicated otherwise politicians will use it elsewhere. Again cost control is vital in any plan. But I think Mr. Fronstin says what I believe, that our spineless corrupt political system will wait until the last possible moment of a crisis, when the mob is at the gates, before doing anything. Then they’ll do some stupid knee jerk reaction. And if this administration chooses another war to hold office then that’s where your tax dollars will go. This country seems to feel the need for identity through constant war.

  8. 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.

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