AHIP starts smoking astroturf

Let’s say you ran a lobbying organization that may (or may not) be staring into a political storm. And say that you’d just lost a battle with opponents within the health care industry that you thought you’d won in 2003.

Now, say you “believe” that the 47 million people — who are uninsured in part (but to be fair, only in part) due to your members’ greed, political choices and incompetence over the years — represent a market for your members.

Say your organization had some members who could possibly adapt to a new world, where tightly regulated organizations were contracted under strict terms to provide care to the whole population in a social insurance scheme — with appropriate risk-adjustment and other mechanisms in place to promote the care management you say your members do so well.

And say then it had other members, who are mere sharks and who would go out of business the minute they were banned from cherry-picking only the best customers and selling them quasi-fraudulent products.

Say then, that even those members whose CEOs may have claimed they could adapt to a different kind of world, are being exposed as behaving very, very badly in the current environment. In fact they’re being sued by the second biggest City in the nation and are in violation of what the state insurance commissioner (who is an elected Republican) flat out states is the law, even while they fight in court for the right to behave badly.

Say that eventually, as in today, Thursday, Congress is noticing
enough of the bad behavior of those members, even though it’s mostly
been in far off California, that it’s holding hearings about it for the first time.

Given all that’s going on you probably have two choices:

1. You could get all your members to sign a code of conduct in which
they promise to never, ever do the really bad things they’ve been doing
again, stop fighting the current regulators in their respective states about it,
and promise to use their lobbying power to promote a social insurance
system that looks like the one in the Netherlands. Bear in mind that according to the leading commentator on health care in the country Uwe Reinhardt that in the Netherlands:

"The system is so tightly regulated and so many transfers are
made among people to make sure everyone can afford the insurance and
everyone has access to the same care that it’s really just a social
insurance system in disguise. It’s not even vaguely close to the U.S.


2. You create an astroturf campaign
to go out and talk to the great unwashed which will come back and
generate political “support” for the plan you’ve already created which
essentially means that you get to do what you’re already doing, but you
get paid more by the taxpayer to do it.

Bear in mind, that you get paid $1.3 million a year to make this decision (as well as to be beaten up in public by Oprah & Michael Moore).

Bear in mind Choice 1 involves your members who could survive in a scenario of real reform
tossing the low-lifes under the bus. This is something they just refused to do
in the recent battle you lost, when they had chance to make a
compromise and keep more money in Medicare Advantage by doing so. And of course that may mean that their
super-profits of the last few years are over. (And judging by some of
their stock prices, Wall Street thinks that’s already happening.)

So what would you do?

OK, you don’t need to guess.

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8 replies »

  1. Once upon a time, the fledgling Group Health Association (GHAA aka AHIP’s predessor) huddled together in their modestly attended annual meetings to listen to medical directors, MGMA forged clinic administrators, and their prescient consultants, tell tales about the soon to be won respect for their members place in the healthcare delivery and financing space, and the leadership roles they’d play as the inevitable movement towards integration would unfold.
    SuperMed-like empires would soon rise, Mulliken, Bristol Park, Harriman Jones, Burbank Medical Clinic, Reese Stealy, Scripps, just to drop a few southern California names, with or without their hospital partners. It was fun, close and admittedly collegial as we envisioned the anticipated “group cultures’ rise to relevance during the paradigm shift we all felt.
    Fast forward to today, and that crop resembles precious little, if any, of its original genius or motivation.
    It is a dinosaur that has outlived both it relevance and social utility.

  2. James,
    You say we might have to pay 20% of our income in taxes just for healthcare in a UHC system. That’s only true if we continue to fail to control costs. In the short term, that is almost certainly what will happen. However, two points in response:
    1. We already effectively pay that money (16% of GDP) in the form of premiums, out-of-pocket payments and lost income due to employer benefit expenses. Even in reasonable worst-case projections, UHC will not be much more expensive than the system we have now. But it will make the total costs more visible as a lump sum tax payment.
    2. Making all healthcare costs visible through a dedicated tax would be an excellent and perhaps necessary step in getting costs under control. Right now, those who feel the pinch of health care costs the most are also the least powerful voices in Washington. Once the middle class sees the total costs more clearly in their tax statement, there will be more impetus for cost reforms. Also, once these costs are labeled “taxes” rather than “premiums” conservatives and libertarians will howl about the very same waste that they now defend or ignore. This will become a powerful impetus for change. They will not be able to undo universal coverage.
    My crystal ball does not extend to knowing whether the cost reforms that emerge from that process would be good ones that simultaneously improve health outcomes….they could be messy compromises in which the most powerful provider lobby wins at the expense of others and costs are saved without any gain in quality. But that uncertainty is what we have to live with, and try to come out on the right side of things.
    But to those who think we can get reforms of the delivery of health care that make a major impact on costs before we get UHC, or who even think we can do both at the same time…I say not bloody likely.
    In order to get UHC, you need to get providers to ally themselves with the public (left and center). They will not do that if you take away 25% of their revenue. You need to first get UHC in place and take away some of the headaches in the system (from the provider point of view, eliminate the accounts receivable problem). Then, you ally insurers with the public (ideally left, center and right) and against providers to get the costs down.
    Of course, if this actually is your game plan as a policy maker, you have to sort of keep quiet about it or else providers won’t get behind your UHC plan, or will have a head start in stopping the second phase of reform.

  3. Matt,
    As you know (if you’ve been keeping track, and no reason you should be), I think that a model in which well-regulated non-profit insurers compete in a risk-adjusted universal health care system–such as the Netherlands or Germany–is fully workable in the US and is in fact the best we’re going to get.
    As you say, such a system would be a major disruption for a large majority of health insurers in the US. For the for-profits, it would be a fundamental change. They would expect big payouts to turn into non-profits (buy all the stock at a 20% premium) or will fight it fiercely. Even for most of the non-profits, it would change how they compete with one another and how they think of themselves. If you look at CIGNA’s new ad campaign, this is direction the industry needs to move in a big way in order to fit in the universal health care world (and here I mean the idealized model CIGNA is presenting…I have no idea how well they will pull it off).
    That said, there are very few companies that will go immediately out of business because their business depends on selling benefit-poor policies to people who don’t understand the raw deal they are getting. You mention MEGA, but they and companies like them are small fry and have next to no influence with AHIP. More relevant is that the big national players have all gotten involved in CDHP and limited benefit plans to some extent, and these lines of business could well be threatened or extinguished by universal health care. But if a high-deductible policy from United is replaced by a richer-benefit policy because it is mandated as part of a universal health care system….that’s more revenue for United, not less. A more comprehensive policy also gives United more to do, a bigger role to play in the system, and non-profits tend to be very much in favor of such things.
    Despite the demonic reputation the insurance industry has, pretty much no one gets their jollies from underinsuring people (I exclude fringe characters in the individual market).
    The resistance we are likely to see from insurers will come from (a) run-of-the-mill fear of change and a desire to stick with business models they know rather than those they don’t know; (b) resistance of the for-profits because their investor owners don’t want to lose their investment value; (c) resistance to more intensive regulation–also run-of-the-mill, every industry pushes back when it comes to attempts to regulate it.
    To address (a) requires extensive education and some coherent means of transition; addressing (b) requires buying out the owners of the for-profits; addressing (c) requires making regulations that are not punitive and are clearly directed at making the market work better in producing better health outcomes, with better access, at lower cost. You don’t need to eliminate the resistance on these matters, you only need to lessen it enough that reform can happen.

  4. Yes, the German and other European health care systems are, in many respects, very good systems. However, there are drawbacks also. Are you willing to pay up to 20% of your income in taxes for health care alone. Are our doctors willing to be told how much they can earn, etc. Attacking the insurance industry is tremendously entertaining but it also springs from political expediences. No one wants to attack the real cause of high insurance prices: the cost of medical care. Yes, there are some insurers who abuse the system. Insurance companies have stockholders, investors and policyholders who expect the highest possible return on their investments just as in any other business. The demand to make decisions based on their affect on the profit margin is as great for an insurance company as for an automibile manufacturer. In that light, some insurers make ethically questionable decisions and should be called to task when they do. However,the major component of an insurance premium doesn’t come from salaries, ROI, golden parachutes or any other perks. The major component of an insurance premium is claims cost and the cost of funding federally and state mandated claims reserves. The higher the cost of providing care, the higher the cost of insurance. We should demand that the insurance industry is run ethically. However, don’t let the carnival in Washington distract us from the real issue; how are we going to manage the cost of health care. Bring the cost of care under control and the cost of insurance will follow.

  5. I have a feeling this effort is doomed. The revulsion for the for-profit insurance industry is so deep that the chance anyone will listen to what they have to say is pretty slim, no matter how they try to disguise it.
    I’m really more worried about what we face from groups like HCAN, who start by saying all the right things about the insurers, but then tell us that the solution is to get more people insured.
    I would wholeheartedly agree that we have a lot to learn from the European systems, in several of which highly regulated, often non-profit insurers function like a sinlge payer system without actually being one. But I strongly suspect that the evil business practices we know so well are so deeply ingrained in the US insurers that they are not capable of making the transition to playing a socially responsible role.

  6. Wonderful post.
    And a reminder that we should all be wary
    of “reformers” who believe that it’s
    best to tell people what they want to
    hear–rather than what they need to know.
    What Americans need to know is that
    a)health care reform won’t be cheap;
    it will be expensive.
    b)a major way to cover that expense is to
    acknowledge that, today, a third of our
    health care dollars are wasted on
    unnecessary, ineffective treatments.
    We can, and must, cut back on the waste.
    c)This will make some people very unhappy–
    athis includes the lobbyists represnting
    those who are making a fortune on the waste
    as well as patients who feel that they should
    be able to have any treatment they see advertised
    on TV or read about on line–even if there is
    no medical evidence that it is appropriate
    for them.
    Moreover,you need to realize that unproven treatments are Hazardous to Your Health. More Care is
    Not Better Care.
    Bottom Line– if a reform group tells you that everyone can have everything they want, at no cost, they are LYING. If they tell you that reform can come easily and Quickly they are Not Telling You the Truth.
    Too many refomers use focus groups to find out what the public wants to hear (or at least that part of the public that has the time to go to focus groups) and then parrots that message back to you. This is a marketing technique. It’s also the technique that conservatives have used for years. (We can bring an end to terrorism–and make you safe–by invading Iraq.)
    P.S. — Many Europeans point to Swedens health care system as the best in the world. They’ve held costs level (as a % of GDP) for years, despite having one of the oldest popoulations in Europe. And outcomes are v. good. We have something to learn from many of the European systems.

  7. Great post and fantastic analysis! I just blogged about the California case. No matter what AHIP is lobbying for, I think we need some sort of counter lobby to suggest that what the American people truly want (and need) is Option #1!
    PS – Germany’s social insurance system is another good model we should be looking at!

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