Matthew Holt

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.

32 replies »

  1. 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.

  2. 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.

  3. 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.

  4. 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.

  5. 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

  6. 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

  7. 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.

  8. 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?

  9. PPOs
    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.

  10. Barry,
    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

  11. 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?

  12. Nate,
    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.

  13. 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.

  14. I have had clients we used 20+ different PPOs for. Unlike a large carrier that usually only has one network I go into each area and find the strongest network available. In cases where there are competing hospital systems we’ll use both PPOs and let the members decide which one they want to be in. small and flexible has it’s advantages. With technology today large size really doesn’t have any natural advantages, just the ones Democrats give them to keep them on top.

  15. Peter,
    Your making the tyical lefty argument, if you are against the socialist reform proposed by Democrats you want to keep the status quo. This is not what people are proposing. I want reform that would actually work, not bankrupt the nation, and doesn’t turn the control of our HC systems over to politicians. The problems we have today are the direct result of 43 years of failed government reform. I ask you, How many more decades you want to keep doing reform wrong?
    Your point about protecting our own is also narrow sighted and doesn’t even begin to recognise what we have in place now and how it works. I have no interest in protecting mine, I have every intention and desire to take every piece of business Anthem, UHC, and other large carriers have. I would be much more succesful if Democrats weren’t protecting them. There is not a monolithic cabal of evil insurance companies. There are the mega carriers the democrats protect and the small ones trying to take them down. What is good for the large carriers usually puts the small carriers and the rest of us at a disadvantage. What you need to ask is why Congress keeps favoring the handful of large carriers.
    Barry I can put together PPOs for clients just as good if not better then any national or local carrier. This hasn’t been an issue in 15+ years. The question is why do we waste so many millions on PPO? If the mob did what providers do it would be called extortion. Why do I have to pay an access, “proection”, fee so providers won’t overbill me?Wouldn’t that money be better spent by splitting it betweent he provider and payor?
    With size you get complacency. Do you think Anthem is going to sit down with any of my 10-40 employee cients and help them figure out how to control cost? Small payors that compete will do just that, in order to take an account from Anthem or UHC I need to offer better and more affordable service then they do, that is how you control cost, not by stuffing everyone in 4 carriers.

  16. Nate, I can’t speak for all Democrats and I learned years ago not go near the word “hypocrisy” lest it bite me. But as an individual I have specific opinions about many subjects.
    I am in a small minority advocating uncoupling employment from health insurance altogether. With employee-sponsored group insurance firmly embedded in the American economy, embraced by management and organized labor alike, I see no chance it will ever be separated in my lifetime.
    Prior to the Thirties it never existed but with the advent of Blue Cross (hospital expenses only) and Blue Shield (charges for professional services) group insurance became part of the fabric of the economy.
    When Medicare came in the Sixties it developed into two parts. Part A (hospital expenses) and Part B (professional charges). Sound familiar? It should because the Blues were the grandparents. Part A is paid for with a payroll tax, and Part B has a premium (rather modest I might add) sucked out almost involuntarily from the beneficiary’s Social Security check. My, my! What do we have here? Is this a single payer system???? Surely not! Not in America! That’s Socialism!
    And I didn’t even get to the VA and Armed Forces medical services. So much for hypocrisy.
    Life has been good over the years, but the last few decades have seen a kind of “benefits creep” by which workers enjoy ever better insurance packages if they happen to work for the right big companies. But in a global economy it is getting more difficult to compete with foreign outfits without that economic burden. The joke was that General Motors was a health care system that also sold cars. Starbucks pays more for health insurance than for coffee. You see the challenge.
    I discovered an excellent proposal for a remedy in, of all places, George Bush’s agenda. It never saw the light of day, but buried way back in the stacks was a proposal to remove the advantages for group health insurance. This would have the effect of pushing the premiums in the direction of employees, over time giving them the whole ball of wax.
    That idea was consistent, incidentally, with pushing employee retirement plans in the same direction: away from the company and toward the employee, as in various IRA, Roth, 401-k and similar tax-advantaged arrangements. The concept is described in detail in an AIE paper from 2005 I came across recently.
    Accusing anyone of hating small business is not only counterproductive but insulting. Anyone wanting to bring about meaningful improvements is advised to avoid such rhetorical flourishes. It is in the same vein as calling someone a hypocrite.
    As for managed care, I think as Monday-morning quarterbacks we can all see it to have been a spectacular failure no matter who advanced OR WENT ALONG WITH the notion.
    I can understand why someone with your point of view would no longer be able to read Maggie Mahar. I have the same challenge with Fox News and talk radio, but I force myself to stay in the loop just to stay informed. I suppose in this case the best way to avoid the content was to criticize the source.
    ►”Insurance companies are too big, have to large of market share, and don’t suffer competition. This all happened by government design. I could rattle off pages of regulation that serve no public good but drastically increases cost and limits our ability to compete with insurance companies.”◄
    SPOT ON!
    We have found common ground. And as I read it H.R.3200 may be big, but it is split into two parts. DIVISION A addresses that very problem head on. The proposed changes in insurance rules will for the first time federalize a crazy system wherein every state was its own little country, making whatever insurance regulations fit the politics of the landscape. Here in Georgia our former state insurance commissioner is now starting a run for governor. Hopefully, should it survive, the notion of “exchanges” will make a dent in that problem. As you know almost all small states and rural areas are essentially little insurance monopolies, with the country divided up like various profit centers of organized crime were divided in The Godfather.
    If the rest of the bill has to crash and burn for another day, let’s try as friendly rivals to protect this part from further destruction. Portability, ending recision because of costs, eliminating denial for pre-existing conditions, and all the rest are worth a helluva lot.

  17. Barry, good points all.
    It has happened, albeit on a relatively small scale. Single payer management of care, fees, and utilization won’t come from the insurers because of competative pressures. The management of care and payment must be removed from insurers in order to gain the cost control advantages we seek.
    To anyone suggesting we keep the status quo I only ask, “So how are we doing?” The answer is obvious.
    I think that most, but not all, of the writers in this blog come from the insurance, insurance consulting, or medical community and bring their biases with them. We all wish to protect what we have. I don’t think, however, that this kind of thinking is going to solve our health care problem, inadequate coverage and out of control medical costs. As someone writing as an outsider, a patient only, I have nothing to protect.
    It is time for the medical community to butch up and take a stand. Get the control of medical care away from the insurance industry and set up a quasi public non profit agency to ensure appropriate care, reasonable fees, and the elimination of waste.

  18. Peter Nesbitt,
    Most insurance company CEO’s will tell you that, for better or worse, that Medicare drives coverage and payment policy for everyone else. Insurers believe, correctly I think, that they don’t have the moral authority to refuse to cover anything that Medicare will pay for. If Medicare, through MedPAC or a similar group, moves first to narrow coverage based on cost-effectiveness, however, the insurers will be happy to follow. Indeed, they have been asking for this for some time. I don’t see how the equivalent of a medical TPA could negotiate payment rates with providers on behalf of insurers on a national basis or even for a large geographic region. It might be able to do it on a small scale. If it could be done more broadly, why hasn’t it happened?
    For providers, at least in theory, it should be easier to deal with a few or a handful of payers than many payers. The problem has been that a single insurer may have as many as 10 or more different plans all with different payment rates for the same procedure performed by the same provider. This is nuts and needs to be simplified. I can understand one (lower) payment rate for a narrow network (HMO) provider who expects additional volume in exchange for the lower payment and a higher rate for the broad network provider. Beyond that, if an insurer has ten different plans that all cover heart bypass surgery or a hip replacement, it should pay a narrow network or a broad network rate to a given provider, not ten different rates.
    I think the trend toward increased consolidation in the health insurance industry will continue. Part of the reason is the growing importance of technology and scale. If we move toward paying providers based on performance and tracking how much healthcare utilization each provider drives, the insurance industry will become even more technology intensive. It will take significant capital to develop and support that infrastructure, especially for a national platform or a few large regional platforms. If two or three insurers plus Medicare and Medicaid come to control over 90% of the market in most counties, I think competition will still be adequate. This will be especially true if we’ve moved to community or modified community rating, guaranteed issue and mandatory participation subject to financial hardship exemptions.

  19. I’m a Brazilian citizen, born in Brazil and have been living here since then, so the health reform won’t affect me in any way.
    Even so there is something I’d like to share with you.
    Here we have a large experience on government “taking care” of us and that’s exactly why I can tell: YOU DON’T WANT IT!
    Bureaucrats aren’t competent enough to deal with health issues and to be fair they shouldn’t be. If you are under fire you’ll want a soldier or a lawyer to take care of the problem? Some people are trained to act, others to postpone and bureaucrats are PhD on the latter.

  20. John why are Democrats such hypocrites and why do they hate small business so much? You seem to forget it is the Democrats who want to force everyone into a handful of federally regulated super carriers; see Ted Kennedy and his love of HMOs. We don’t need insurance reform we need Democrats to stop regulating everyone else out of the business.
    15 years ago we tried to pass legislation that would allow small employers to group together like unions do to cut the cost of insurance and make the pricing more stable, Dems stopped it EVERY year. Now they are proposing co-ops which are the exact same thing except they have control over them.
    Insurance companies are too big, have to large of market share, and don’t suffer competition. This all happened by government design. I could rattle off pages of regulation that serve no public good but drastically increases cost and limits our ability to compete with insurance companies.
    I don’t bother fact checking Maggie any more so I’ll skip that part of your comment.
    I care where the money comes from and my clients care where the money comes from because it is their money. The government on the other hand doesn’t care where it comes from as long as they get it.
    Your point about Medicare and SS is right, they where designed with catastrophic flaws that anyone with minimal education should have seen. Both where contingent on perpetual growth and that rate of growth never declining. How clueless does a politician need to be to think our growth would never slow or regress? That is why government can’t be trust with programs like this.

  21. Bob Laszewski ( points out that there are two reforms needed. The first is insurance reform and the second is “health care reform” which I would call medical care reform. It’s impossible to discuss health care reform without understanding and observing the distinction between the two. President Obama seems to be addressing insurance reform and only giving a wave to reform in medical care. He may be a genius in this approach in that it could allow him to divide to conquer. If he can get the universal coverage he desires, then he can take on the cost bugaboo.
    I vote for the genius of President Obama. While there is no evidence that the administration actually understands the predicates for our health care cost problems, I pretty sure they will figure it out.
    The public plan is simply insurance reform, not medical care reform. I find myself agreeing with Nate that there is no medical cost benefit to a public plan. But then perhaps it is intended only to expand insurance coverage, not control medical costs.
    Barry, you need to apply Bob’s distinction regarding the type of reform. A single payer plan does not necessarily imply a single insurer. In my view, single payer refers to exactly what it says. Health care providers are paid by a single payer. That moves single payer from insurance reform to medical care reform. In order to address the problems in the cost of medical care, provider behavior, fees, over-utilization, and malpractice we need a medical care solution. I think you are close to seeing the solution but you don’t quite have the mechanism yet. Take the elements you mention “payment reform”, “cost effectiveness research”, and ask yourself how to implement these in a consistent national health care program. How will you implement payment reform uniformly? How do you get research and apply the results nationally across all health plans? My suggestion is that you look at an independent agency staffed by the medical community who sets forth basic rules for care and utilization using best practices, lean medical care guidelines, and evidence-based protocols developed from the research. This agency could negotiate medical payments and fees with providers. In order to be effective, the agency could also pay the providers while in turn being paid by the insurers.

  22. Bev – You’re right. It is unfortunate that the controversy surrounding the public option is obscuring much of the rest of the healthcare and health insurance reform debate. Lots of people, including me, support most of the other proposed reforms including: (1) community or modified community rating, (2) guaranteed issue coupled with mandatory participation, (3) subsidies to help lower income people buy insurance assuming robust income verification requirements and stiff penalties for hiding income to qualify for a subsidy, (4) employer pay or play with an exemption for very small businesses, (5) comparative effectiveness and cost-effectiveness research which should be incorporated into determining coverage and payment policy, and (6) payment reform, led by MedPAC or a similar group of experts modeled after the Federal Reserve Board and as insulated from the political process as possible, that would reward value instead of volume.
    Personally, I would also like to see tort reform that would protect doctors from lawsuits based on a failure to diagnose a disease or condition a long as they followed evidence based protocols. Other medical disputes should be resolved by special health courts instead of juries. More aggressive efforts to encourage people, especially the elderly, to execute living wills or advance medical directives to indicate what care they want and don’t want at the end of life would also be helpful.

  23. Nate, according to a Business Week article the public option is essentially off the table and the insurance big shots are standing down. Enough elected representatives have been bought an paid for that they are apparently comfortable moving on to other matters.
    That may turn out to be inaccurate, but Business Week isn’t the National Inquirer.
    Maggie Mahar put up a snapshot of the arrangement you will love:
    “Insurers are more enthusiastic about reform than most in the healthcare industry. This is hardly surprising. Universal coverage—with a mandate that everyone buy insurance–will bring them as many as 47 million new customers, government subsidies in hand.
    “What’s not to like?”
    Who cares where the money comes from as long as it keeps flowing, right? Never mind if those Medicaid beneficiaries are paying private insurance premiums with tax dollars.
    And THIS arrangement is supposed to be cost effective and lead to lower costs and a reduction in health care inflation? This is a level playing field?
    Gimme a break. Looks to me like the field is tilted to drain even more tax dollars into insurance coffers than are already flowing. Remember, the Medicare tax revenue stream, like that of Social Security, comes not from some big annuity distribution laid up years ago. It comes from payroll taxes levied on today’s working population.
    I guess when the turnip dries up it will stop bleeding altogether and we’ll be forced to find a better way.

  24. Correction to my previous comment: I meant Brian Klepper, not David Kibbe. Seven more years and my Alzheimer’s will be paid for by the taxpayers……

  25. It is unfortunate that the entire health care discussion has been subverted to for-and-against the public plan, rather than the true systemic reforms so badly needed. It is my judgment that, because of this subversion, any meaningful bill will fail; and we will be right back at square one for another decade or more. (An outcome once predicted by Kibbe and others well before the election). This is a tragedy for all of us, no matter one’s political views.

  26. I completely agree with Nate on the public plan. I think the private companies could compete quite satisfactorily on a true level playing field basis including negotiated, not dictated, prices paid to providers, maintenance of reserves, covering all costs, including those performed for the plan by other government agencies, out of premium revenue with no help from general federal revenue, and allowing providers to decline to participate while still accepting Medicare patients if they want to. The bottom line, however, is that government simply cannot be trusted to sustain level playing field competition even if it were there at the start. Its past record, as Nate points out, is all you need to know. If unfair and non-level playing field competition evolved and the insurers were ultimately driven out of business, the public would soon regret the absence of insurance choices beyond the liberal dream of the government’s single payer. I don’t think providers will be happy with their dictated payment rates either. A single payer system would also likely result in a slowing of innovation but that’s a whole separate discussion.

  27. This second comment fairly sparkles with ignorance, underscoring better than anything I might add the urgent need for decisive action on the president’s part. There are not enough individual voices to overcome the avalanche of wrong information that has been dumped on the country by the various special interests.
    The tragedy is that many people truly believe such nonsense. The rage is not fake. It derives from fear that something terrible might happen if we fail to make it stop. Rage and indignation are justified, but should be directed at those who make reasonable discussions impossible.

  28. Uwe sounds like a politician. It’s easy to want an outcome if you ignore all the messy details required to get there.
    #2 how much of a mortgage and education does he allow for? As current ills show, many Americans bought homes well above their means leaving no capacity to pay even minor healthcare bills. You can’t design a sustainable system that only requires contribution when the benefit exceeds the cost.
    Can anyone that supports a public plan that competes on a level playing field please explain how that is guaranteed? Medicare by law was to reimburse providers a fair rate, when that law become a problem they just took that part out. The same thing will happen with any public plan, it will only be a matter of time until congress taxes private insurance to fund the public plan till they drive all of the private plans out of business. We have seen this with Medicare, VA, and Medicaid, why would anyone honestly expect this public plan to be any different?

  29. I am against the “public option” because it kills babies and old people; by that I mean the way it will be administered is not what we really want it to be. The only thing really wrong with health care now is the size of the premiums. There need to be some regulations imposed and an individual should be able to cross state lines in order to buy better insurance. An individual does not have to accept insurance from his employer, he is FREE to choose his own. If we look to the government to give us insurance as the bill is written from the house, they will be able to say who gets care and who doesn’t. Ya’ll need to wake up. You might be young now but just wait until one of your parents or yourself gets a catastrophy(?) illness to see how long it takes to get help or if you even get help.

  30. The only person in a position to calm the waters and lead this discussion in a constructive direction is the president himself. This is what I put together this morning:
    Dear Mr. President:
    Your vision of health care and insurance reform, a centerpiece of not only your campaign platform but of the other candidates as well, has gone into the Congressional sausage grinder and is being torn to pieces. You and the other candidates didn’t talk a lot about the idea during the campaign except in the most general of terms. It was an accepted reality that health care reform would be on the to-do list of any new president.
    All the smart people know that the system we now have is unaffordably expensive, inequitable and filled with loopholes and old agreements with special interests that if not corrected will lead to an economic train wreck no one wants to imagine. Even the loudest voices yelling their opposition to H.R.3200 know that what we have been doing isn’t working and is in serious need of repair.
    The last few weeks have seen a level of fear and frustration spread among us faster than a flu pandemic. A natural fear of the unknown and a well-founded mistrust of elected representatives are being exploited by well-funded efforts on the part of many groups, each fighting in its own way for status quo.
    Left unchecked fear of this unknown leads to anger, rage and the mob behavior we are now witnessing. This frustration is real. The anger is not counterfeit. And the cause cannot be explained simply by pointing a finger at any one group. It is the consequence of many different interests converging in a perfect storm, a tipping point resulting in public conflict that has not been seen for many years.
    Mr. President we need your leadership now more than at any moment since you were elected. This is not the time to delegate. This is a time for you to take the stage — the bully pulpit, if you will — and call upon your considerable gifts, not to calm, not to stop worrying, not to cool our passions, but to redirect this energy in a different direction.
    Fear is the emotion of the day. We fear the unknown. We fear that what might happen may be even worse than what we know. With good reason we do not trust our elected representatives. And at some level we really know that powerful interests are exploiting a critical moment in our national development. It is easier to live with the evil we know than perhaps confront one we have not yet met.
    Rage is good. Anger is justified. Frustration is in order. But as the president, you must now find a way to aim this negative energy in a positive direction. It is now time to reveal and explain the many conflicting developments that have brought us to a political impasse. We need you to put on your teaching hat and become our Professor in Chief.
    You have about four weeks to conduct a seminar of unprecedented size. We need a syllabus, a schedule and a goal. It needs to be in writing and it needs to be simple enough that even the most illiterate among us can understand. We need feedback and interaction, one of your strongest attributes. This piece of the seminar must be delegated. Others will have to discover what is most critical. This is not the only item on your desk. But make no mistake about it. You are the one who must drive home the hard truths we now must face and explain how conflicting interests — all with the best of good intentions — cannot be reconciled without making compromises.
    Conflict resolution is one of the most important parts of your job description. And fortunately for us, it is an outstanding gift in your skill set.
    We are waiting for your next move. We don’t want empty words that sound like “Ya’ll need too calm down.” We want to hear you say “I know you’re mad as hell and won’t take it any more. I know you are scared of what might happen. I know some of you think I have a hidden agenda and want to turn our country into a top-heavy bureaucratic monster that will eat you all for breakfast.”
    You must accept and validate this public rage and find a way to redirect it toward the real villains in our midst, the well-funded organized groups now spending millions of dollars on a war of television commercials, viral emails, social networks, scripted rage at public meetings and old-fashioned gossip that distort the realities of the status quo and what will surely come to pass if we fail to take action.
    We don’t need to “kill the bill” as so many are chanting. We need to fix the bill. And of all who can redirect public outrrage in a more constructive direction it is you, Mr. Pressident, who is best qualified.
    This is not the playoffs. We are only part way through the game. This is “time out” an the ball has bounced in your direction. It came prematurely from the Legislative Branch to the Executive Branch and if you don’t do something with it others will. Our two best competing teams in the House, Democrats and Republicans, have only succeded in making us afraid and angry. The playoff is the next game which happens in the Senate. It’s not supposed to happen this way but the results of the playoff depends a lot on what you do with this out of bounds ball over the next four weeks.
    We are waiting for your next move.
    Concerned American
    The ticking clock is a wasting asset. This is a mammoth undertaking so the president’s window of opportunity may be less than a week. I hope someone whispers in his ear in time to make a difference.