Matthew Holt

A little ain’t enough, or is it?

I've been so buried in the run up to Health 2.0 that I haven’t had a chance to add to the deluge of electrons about the bills in Congress, Obama’s speech, the several hundred amendments to Baucus’ bill in mark-up, etc, etc. And my colleagues on THCB and elsewhere are taking good care of you in the details.

But I thought that I’d quickly respond to today’s WaPo article in which Erza Klein connects two themes that matter, while leaving out two that matter more. The first of the two he identifies is that most Americans don’t see the cost of health care. If we made them all write a check for $13,000 a year, and they’d seen that number go from $8,000 a decade ago and realized that it will be $25,000 in another decade, then the cost problem would be much more real. It would also get associated with the access problem as people realize that as the cost goes up, they (and their employer) can afford less. At the moment those problems are disconnected.

The ignorance here remains palpable. An HR exec I know did an exit
interview last week with an employee who was astonished to find out
that now he was on his own he could buy family health insurance in
California for under $500 a month which was less than his contribution
to the company plan. The concepts of risk pooling, risk selection,
varying benefit levels et al were clearly foreign to him. And of course
had his family had a pre-existing condition that policy might have cost $3,000 a month or more.

Ezra’s second point is that there’s some hope that in the Baucus bill, with the language around pay for performance and bundling, we might bend the curve. But we’re in agreement that this aspect of the bill is well hidden and has yet to be exposed to what the industry wants, and—as Alain Enthoven has already pointed out—what it’s agreed it’s getting.

What Ezra doesn’t mention but what (he knows) really matters are two things.

First, this limited reform leaves the system intact. So the most we can hope for is that the impunities visited on the un and under-insured are taken away. Maggie Mahar’s review of the House 3200 bill shows that health care costs would be capped for individuals and families—albeit at relatively high levels (up to $10,000 per year per family). The specter of medical debt financially crushing families could be relieved if that makes it into a final bill. But the confusion caused between switching between employer based coverage, Medicaid, the individual market, the exchange et al will surely leave many to fall through the cracks. After all conservatives love to tell us that many of the uninsured could sign up for Medicaid now but somehow don’t (hint as to why: it’s damn hard to do so and if they did those programs would be cut!), so we already know that those cracks are huge.

Second, the devil is completely in the details of the insurance regulations. The Medicare Advantage experience has shown us that if we’re lax with regulations mandating both standardization of benefits and very good behavior, the insurers will game the system and do risk selection rather than the hard work of care management and improvement.

So the relatively minor insurance reforms we have in prospect may make a difference to those most vulnerable in the current system. Whether they’re enough to actually do anything about our underlying problems remains doubtful.

Categories: Matthew Holt

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4 replies »

  1. Let me give you just a dash of reality to go with your hyperbole.
    “After all conservatives love to tell us that many of the uninsured could sign up for Medicaid now but somehow don’t (hint as to why: it’s damn hard to do so and if they did those programs would be cut!),”
    You might want to stop towing the party line for a second and consider they don’t need it. Just like 20 year old males don’t need a $500 deductible plan with low co-pays, even less are they willing to pay for it, it is safe to assume the 1/3rd? of poor who don’t sign up for Medicaid are most likely the healthier third that don’t need it.
    65% of insureds have less then $1500 a year in claims. From my own data processing claims I would guess close to 50% don’t have any claims. If your healthy and never need medical care why hassle with signing up for Medicaid? Medicaid also doesn’t have any pre-existing limitations so if you ever do get sick you can just sign up at that time. Further if you have an unexpected accident ir illness ER is required to treat you. I know this common sense explanation makes much more sense then your conservative bashing, I hope I didn’t detract from your propagandizing.
    “the insurers will game the system and do risk selection rather than the hard work of care management and improvement.”
    Can you cite even one study backing this up? Again even rudimentary research on how MA works would disprove this myth. MA offers the standard FFS benefits plus some additional benefits or reduced premium compared to B. How much more standardized do you want it? MA delivers FFS benefits cheaper then FFS adjusted for risk. Further they receive accolades for their case management and investments in managing chronic conditions. You need to read a little less Maggie Mahar and a few more factual accounts. Your recanting liberal urban myths that never where or if they did exist was briefly 10-15 years ago. Have you ever read an MA application, please explain how a carrier can risk select in MA.
    This is one of those cases where the left really needs mocked, since you can’t be bothered to look up and learn basic facts let me help you;
    How Do I Qualify For a Medicare Advantage Plan?
    • You can generally qualify for a Medicare Advantage Plan if you meet these conditions:
    • You live in the service area of the plan you want to join. Contact the plans you’re interested in to find out about the service area.
    • You have Medicare Part A and Part B coverage.
    • You don’t have End-Stage Renal Disease (permanent kidney failure requiring dialysis or a kidney transplant)
    Choose your plan carefully; for the most part you will only be able to change plans once a year. In certain situations, you may be able to switch plans at other times.
    OMG those bastards adversely select against those with end-stage renal disease. Other then that, nope no selection at all.
    Here is Aetna’s eligibility requirement;
    Like Maggie almost any time she discuses healthcare on this your full of it.
    On your other point;
    “MedAssurant offers comprehensive solutions that enable national and regional Medicare Advantage and risk adjusted Medicaid plans to deliver an unparalleled disease management capability with superior benefits to quality of care, clinical outcomes, results transparency, and financial performance.”
    Humana, Members with complex health conditions need personal attention. Medicare Advantage members have access to the following special clinical programs, which are designed to meet each member’s unique needs. Including Transplant Management, Complex Medical case management, Chronic Disease management,
    In 2003, America’s Health Insurance Plans commissioned a study of member health plans that conduct disease management programs. Results of the interviews demonstrate that disease management programs reduce utilization and costs associated with chronic conditions common in the Medicare population. For example: • Commercial and Medicare members enrolled in one health plan’s program for congestive heart failure had total per member, per-month costs that were 33% lower than those for members in the control group. Inpatient admissions and emergency room visits were reduced by 33% in the intervention group. Pharmacy costs were 5% higher in the intervention group.
    Needless to say there are thousands of examples of MA doing he exact care management you claim they don’t.
    Your busy and we understand that, instead of making stuff up though why not just skip posting on it?

  2. I guess, apart from those, who were born into wealth and have never known the need to budget their living expenses, and staunch defenders of free market, who think that poverty is always a matter of choice, most Americans do understand that affordable healthcare is in everybody’s best interests. The trick is to make it affordable for all without piling up too much debt or raising taxes where it may hurt the economy. I am afraid, tackling healthcare costs cannot be put off, because this issue keeps coming back in every discussion and does affect public opinion. It is very important for us to stop taking healthcare for granted and change the way we think of it. I blogged on that in

  3. Agreed, Matthew, and it will most likely remain doubtful for the legislation that passes in 2009. The public on both the Left and Right still doesn’t get how high costs truly are, where they come from (i.e., NOT insurance company profit), or how quickly they will go from too high to ridiculously high. So, the politically active part of the public is not an effective force to pressure congress to act on cost reform this time around. The most they accomplish is get politicians to make noises about punitively sticking it to insurers, or letting the free market run wild, both of which are totally unhelpful. Even the pressure behind the public option is focused almost entirely on the mere existence of the thing. Will anyone be surprised if a public option is created that has costs equivalent to a non-profit Blues plan, but available only to 15% of the population in the individual market?
    So, elected officials are only going to do deep cost reform if they listen to policy wonks and ignore (most) of what the business lobbies want. In that contest, the business lobbies won’t win 100% of the battles, but without the public as an effective source of pressure they’ll win a large majority when it comes to cost control.
    Right now our long-term expected cost trend is on the order of 6-7%, which is a couple of percentage points faster than the economy can support, every year. Best case scenario is that this legislation, after about 3 years, gets costs to increase at the same rate as the economy grows. On the bright side, once government is involved in providing close-to universal health care, perceptions will change. Conservatives will turn on a dime from knee-jerk defenses of our system as the best in the world to condemning it as wasteful use of taxpayer dollars. Michael Steele’s posturing that government should never ration in Medicare will be dropped faster than a nuclear potato.
    Our lazy media will once again follow the right wing noise machine and start the long series of stories on bloated cost structures and over-utilization that they should have been doing all along. Hopefully, the left will not start to give a knee-jerk defense of costs in the misguided belief that they have to do so in order to defend universal health care, and instead eagerly join in restricting rates of pay, aggressively negotiate with pharma, accelerate value-based purchasing, regulate insurers more heavily to further streamline the system and reward quality over quantity, etc. But I stand by what I’ve been saying for a couple years now: the really heavy lifting on cost (and quality) will occur between 2011 and 2015, or even later.

  4. The Medicare Advantage experience has shown us that if we’re lax with regulations mandating both standardization of benefits and very good behavior, the insurers will game the system and do risk selection rather than the hard work of care management and improvement.
    How right you are. My wife and I became new Medicare eligible beneficiaries in April and were faced with a bewildering array of options.
    I was shocked but not surprised to find the official “Medicare and You” book looking like a sales piece for MA with the old “alphabet plans,” quaintly called Medigap policies, barely mentioned. Obviously the premiums for those old policies are higher than for MA, so the sales part was a no-brainer.
    We were unofficially advised by two or three unrelated sources that if someone expected significant medical bills to stick with Medicare, but if you’re in pretty good health Medicare Advantage plans were the way to go.
    Sure enough, we got Medicare plus one of the hard to find supplemental plans for my wife and I selected a MA plan.
    Guess what my premium is? ZERO.
    If I lived twenty miles to the South it would have been more, but for some reason in the county where we live MA costs nothing. Signing up required so many signatures on so many documents I felt as though I were buying real estate. They wanted to be sure that I understood that my medical care was no longer covered by Medicare and that the card I received from CMS was worthless. They sent me my new Medicare Advantage card just in time to use for my first “Medicare” physical exam.
    It is not rocket science to figure out that sunsetting MA will save tons of money right away. And I read somewhere that simply switching CMS from EOB tracking of every claim to a more simple (dare we say “sensible”?) monthly billing system can also save billions without touching the medical details.
    Surely to goodness our representatives can pass something. Almost anything will be an administrative improvement over what we now have.