Here’s a point most of us can agree on. Tackling ballooning health care costs requires more than insurance reform because the charge and cost structure for health services in the U.S. is inconsistent and irrational. The same quality CT scan that costs $500 at one outpatient facility costs $2,000 at a nearby teaching hospital.
Obamacare’s typical high-deductible insurance plans encourage many cost-conscious consumers to shop around for low-ticket items below their deductible — and that is good. However, the bulk of health care spending is attributable to patients who rapidly blow through their deductible, after which they have no incentive to shop for value. Those 5 percent of people — who spend a whopping 50 percent of the nation’s health care dollars — have little incentive to consider price. With the cost of multiple medications, frequent doctors visits, use of specialists and one or more hospitalizations a year, these 5 percent will exceed even the highest deductible in the first few months of each year.
So what might be the single most powerful tool to slow the seemingly intractable yet unsustainable increases in health spending affecting practically every family in America? “Referenced-based” pricing for health services encourages patients — most significantly, those with the highest costs — to act as smart consumers by seeking the most cost-effective care, even after they have exceeded their deductible.
Here’s how it works. Insurance companies or employers set a limit they are willing to pay for a specified service of excellent quality — say, $1,000 for a CT scan — and communicate that reference price clearly to consumers. If patients choose a location where the charge is below the maximum set reimbursement rate, they pay nothing. If they choose a provider where the charge is higher, they pay the difference.
As patient-consumers shop around for the best price and quality services, competition in the market pushes prices down and value up.
It is now becoming clear that the Obama administration will not have Health.care.gov fixed by December 1 so hundreds of thousands, or perhaps millions, of people will be able to smoothly enroll by January 1.
Why do I say that? Look at this from the administration spokesperson’s daily Healthcare.gov progress report on Friday:
Essentially what is happening is people [those working on the fixes] are going through the entire process. As we have fixed certain pieces of functionality, like the account creation process, we’re seeing volume go further down the application. We’re identifying new issues that we need to be in a position to troubleshoot.
Does that sound like the kind of report you would expect if they were on track to fix this in less than three weeks? Their biggest problem is that they admittedly don’t know what they don’t know.
The spokesperson also reiterated the administration intends to have Obamacare’s computer system “functioning smoothly for the vast majority of users” by the end of the month.
It’s time for the Obama administration to get real.
It takes months to properly test a complex data system like this. Two things are obvious:
- When they launched on October 1, very little of the testing had been completed.
- They are now in the midst of that many months long testing and fixing period. It is clear they don’t have a few weeks of work left; they have months of work left.Continue reading…
Since October 1, I have logged on to various websites across the Internet to book three flights, make hotel reservations in four cities, buy a pair of boots, some t-shirts and a set of nifty retro Mason jars.
What I haven’t bought: health insurance through healthcare.gov.
Nor have I tried, even after being able to (finally) create an account and see the prices on specific plans offered here in South Jersey, after weeks of frustration.
Here’s why: Given my family’s initial experience in setting up an account and the horror stories that continue to pour out day by day, we simply have no faith that the system will work if we attempt to sign up. And, given the bungling to date, we are not confident our insurance will be there January 1 – even if we are able to Whac-A-Mole our way through the registration process.
Think about it this way: If you really need to get to Miami, would you attempt to buy a plane ticket on a sketchy site that may or may not sell you a ticket that may or may not be waiting for you for a plane that may or may not be there when you get to the airport on the travel day?
Of course not. Nor are we comfortable relying on healthcare.gov, 1-800 numbers, navigators or parchment to sign up for health insurance through the federal exchange at this point.
The reason that Republicans shut down the federal government, it turns out, was to “restore patient-centered healthcare in America.”
As the lead author of a policy paper entitled, “Will the Affordable Care Act Move Patient-Centeredness to Center Stage?” I admit to a certain guilty thrill when I read this precise demand coming as the climax of a letter sent by 80 hard-right representatives to House Speaker John Boehner (R-OH). You don’t get much more “center stage” than shutting off the federal money spigot, which is what the letter – discussed in a recent article in The New Yorker – threatened unless the ACA was defunded.
Having said that, patient-centeredness was a truly odd choice to occupy a central role in the conservative casus belli that ended up disrupting the entire U.S. economy until the right wing finally caved.
To begin with, the term is a minor piece of jargon likely to draw blank stares from pretty much the entire American public. Even for us health policy mavens, the GOP letter linking James Madison on the redress of grievances to defunding Obamacare to a “restoration” of patient-centeredness required major mental gymnastics.
Then there’s the unintentional linguistic irony. The term “patient-centered medicine” originated after World War II with a psychoanalyst who urged physicians to relate to patients as people with physical and psychological needs, not just a bundle of symptoms. “Patient-centered care” further defined itself as exploring “patients’ needs and concerns as patients themselves define them,” according to a book by the Picker/Commonwealth Program for Patient-Centered Care, which coined the term in 1987. Patient-centered care was adopted as a “goal” by the Institute of Medicine, which added its own definition, in 2001.
But here’s where the irony kicks in. Obamacare opponents assert that the ACA undermines the traditional doctor-patient relationship – although I suspect that being able to pay your doctor because you have health insurance actually improves it quite a bit.
Yet in calling for “patient-centered healthcare” instead of the more common “patient-centered care” or even patient-centered medicine, conservatives unwittingly abandoned doctor-patient language in favor of business-speak.
My sense is that the biggest reason Obamacare is now in trouble is because of the top-secret way in which the administration has handled the rollout. If they had developed the computer system in a transparent way, the marketplace would have told them long ago this would not work.
No one outside the inner circle at the Department of Health and Human Services has any idea what’s really going on behind the Wizard’s curtain. Hasn’t for months. Doesn’t now.
So any technical advice any of us could give would be, to say the least, uninformed.
If I were on the inside, and it were up to me, the first thing I would do is bring in a group of heavyweight information technology experts to tell me just what was really going on. The administration cannot trust the people who have been working on this because they told them to launch this mess on October 1 and almost three weeks in there has been no improvement on the website or in the backroom––they no longer have credibility.
I would ask those experts to very quickly answer three questions:
- Can this thing be fixed on the fly––as the administration appears to be trying to do?
- If it can’t be fixed on the fly––and three weeks into this that sure looks doubtful––then can it be taken down for one or two months with a high degree of confidence it can be brought back up in time to enroll people sooner rather than later?
- If the first two options are not possible, just how long will the computer system have to be shutdown before Obamacare can be launched in a way that there can be confidence it will work smoothly?
Then I would take their advice.
Beholding David H. Howard’s rendering of the crazy-quilt of financial sources that have been tapped by the designers of the Affordable Care Act of 2010 (hereafter ACA ’10) to finance the new entitlements they put in place – a little nuisance tax here, a little nuisance cut in other federal spending there – reminds me once more of the sincere, indeed touching, naiveté with which Democrats tend to go about enacting new entitlements.
It is a totally counterproductive and inelegant approach. To be sure, none of the added taxes or spending cuts in the bill seriously disrupt anyone; but they do spread a little pain all around. Therefore, it seems almost deliberately designed to maximize opposition to it from many quarters.
It also leads to acute embarrassments, such as having to postpone by a year (and perhaps more years) the unseemly penalty imposed on employers with 50 or more employees each working 40 your or more etc etc, even at the appearance of having broken the law – or so we are told.
When will the Democrats ever learn?
And from whom might they learn?
From the Republicans, of course.
Dream back to the good old days – 2003 – when the Bush Administration and the Republican Congress pushed through, with deft parliamentary maneuvering and some arms twisting, H.R. 1 (2003), the Medicare Prescription Drug, Improvement, and Modernization Act – hereafter the MMA ’03.
Today, more than three years after being signed into law, and more than a year after surviving a Supreme Court challenge, the Affordable Care Act, more commonly known as Obamacare, finally begins to fulfill its promise. Most of this country has long since taken sides, despite appalling gaps in popular understanding of what the law means, what it does, and what it doesn’t do.
Let me admit that I’ve never had particularly warm feelings toward President Obama. I think his foreign policy is a mess. The trillions in debt that the U.S. has run up over the past 5 years will hurt my generation and future generations, and if Republicans can be faulted for their fantasy that the federal budget can be balanced exclusively through spending cuts, Obama has sustained the Democratic fairy tale that raising taxes on “millionaires and billionaires” is all that is necessary to pay the skyrocketing bills.
On multiple occasions during my time in government, the President had no qualms about squashing science and scientists for political convenience. He is a perpetual campaigner, preferring theatrical gestures to the backstage grunt work of governing. And for all of his rhetorical gifts when preaching to the choir, he’s been one of the least effective persuaders-in-chief to have held the office.
And so, naturally, I oppose Obamacare. I oppose a government takeover of health care that includes morally repugnant death panels staffed by faceless bureaucrats who will decide whose grandparents live or die and make it impossible for clinicians to provide compassionate end-of-life care. I oppose the provision in Obamacare that says that in order for some of the 50 million uninsured Americans to obtain health insurance, an equal or greater number must forfeit their existing plans or be laid off from their jobs.
I oppose the discarding of personal responsibility for one’s health in Obamacare. I oppose Obamacare’s expansion of the nanny-state that will regulate the most private aspects of people’s lives.
It’s a good thing that Obamacare, constructed on a foundation of health reform scare stories, doesn’t exist and never will.
Instead, the Affordable Care Act (which I support) is based on a similar law in Massachusetts that was signed by a Republican governor and openly supported by the administration of George W. Bush. It achieves the bulk of health insurance expansion by leveling the playing field for self-employed persons and employees of small businesses who, until now, didn’t have a fraction of the premium negotiating power of large corporations that pool risk and provide benefits regardless of health status.
How did it go? Unavoidably, that will be the big question come Tuesday.
But there will be much more to it than that.
A 180-Day Open Enrollment––Not a One-Day Open Enrollment
What happens on the first day, for good or bad, will constitute only a tiny percentage of the open enrollment period. Consumers will likely visit the new websites many times before they make any decisions, and that is exactly as it should be.
Many of the health plans touted as being low-cost plans are going to be very limited access plans. It won’t be easy for consumers to compare one plan’s provider network to the other. In the best of circumstances, consumers will be confused by what is being offered for some time and will have to make a major effort to make sense of it for themselves.
Let’s not forget, they will be buying something that will cost thousands of dollars––their money or the government’s––and that kind of purchase will never be as simple as going to Amazon and buying a book.
I will suggest that if the local press wants to be helpful they will waste less time asking how things went the first day and more time doing stories on the quality of the various health plans in their local communities––particularly over provider access, which will be the only major product differentiator between health insurance companies.
Will There Be Administrative Problems With the Exchanges?
There already are. And, there will be lots more.
During the last 24-hours I have been told that the information technology testing between insurance companies and the federal government, particularly around the government telling insurance companies who they will be covering, continues to be a real mess.
But whatever obvious problems there are at launch, there will likely be more problems and more serious problems behind the scenes in the lead-up to January 1, the initial problems will be worked out in a few days or a few weeks. Operational expectations are now so low for Obamacare’s health insurance exchanges a small disaster will be considered a political victory.
Hospitals tend to be among the largest employers in their communities — which means that any individual decision to lay off staff can have an outsized local impact. And taken together, a dozen recent announcements seem to paint an especially dire picture for hospitals (and their communities) around the nation.
For example, NorthShore in Illinois says it will lay off 1% of its workforce. The staffing cuts “ensure NorthShore remains well positioned to deal with the unprecedented changes brought on by the Affordable Care Act,” according to a memo from the health system’s chief human resources executive.
And California’s John Muir Health is offering staff voluntary buyouts ahead of ACA implementation. “We’re being paid less, and we either stick our head in the sand or make changes for the future so patients can continue to access us for their care,” according to John Muir spokesperson Ben Drew.
When Obamacare was being debated in Congress, its opponents tried to tar it with a deadly label: “the job-killing health law.” So is the ACA finally living down to its sobriquet?
Not exactly. While the recent news makes for provocative headlines, the devil’s in the details — and the financial reports.
A Closer Look at Industry Pressures
It’s clear that something is shifting in the hospital market. After years of employment growth, hospitals’ hiring patterns have largely leveled off. Collectively, organizations shed 9,000 jobs in May — the worst single month for the hospital sector in a decade.
Some of those decisions reflect industry-wide belt-tightening, as Medicare moves to rein in health spending by moving away from fee-for-service reimbursement and penalizing hospitals that perform poorly on certain quality measures.
And uncertainty around ACA implementation is trickling down to hospital staffing decisions, economists told me. Many organizations still aren’t sure how the pending wave of newly insured patients will affect their profit margins, given that many of these individuals may be sicker and will be covered by Medicaid, which reimburses hospitals at lower rates than Medicare and private payers.
It may say something about expectations for the Affordable Care Act that the simplistic “just repeal Obamacare” cries of Congressional Republicans are starting to be supplemented by proposals for its replacement.
The most detailed so far is from the conservative American Enterprise Institute, which has published an unexpectedly non-doctrinaire study authored by Harvard professor Michael Chernew and seven other respected academics.
It’s far from perfect, but it’s worth reading.
Structural details of the AEI proposal, modestly titled “Best of Both Worlds,” aren’t always clear (page 1 lists four “principles,” page 5 lists five “priorities”, and page 16 lists three “major planks”), but it does attempt a bipartisan approach, combining ideas from left and right.
Some of these ideas have been contained in other proposals, such as those of Wyden and Bennett and Fuchs and Emanuel (which may damn the AEI proposal in right-wing eyes), and most recently in a THCB piece by Martin Gaynor. They include the elimination of the employer coverage tax preference, the provision of “premium support” subsidies for most individuals, and the establishment of a national insurance exchange. Together, they are designed to encourage individual choice and responsibility and to maximize competition between insurers, while removing some of the inequities of the present system (and of the ACA).
The AEI proposal assumes that eliminating the employer coverage tax preference will result in most individuals obtaining coverage through a national exchange, with national regulation of insurance plans. Current Medicaid eligibles will be included, with the replacement of acute care Medicaid funding by subsidies for conventional coverage. All individuals will be able to choose between fully-subsidized “basic plans” and more generous partially-subsidized options, typically with substantial deductibles tied to income and health status. Insurers will be encouraged to offer multi-year coverage and, unlike in the ACA, medical underwriting will be allowed. The only government financing will be for premium subsidies, to be funded by the additional income and payroll tax revenues resulting from elimination of the employer tax preference and by redirecting federal and state Medicaid payments.