The Kaiser Family Foundation reviews The New Republic’s Jonathan Cohn’s piece (now directly linked)about the Shadegg bill which would allow the purchase of health insurance across state lines. Here’s their description of Jonathan’s piece pulled verbatim:

A bill (HR 2355) that would allow U.S. residents to purchase health insurance in any state serves as a "vivid example" of Republican efforts to provide U.S residents with more "choice," but "what conservatives in this country never mention is that giving us these new choices also means taking something away — typically, programs that make us more secure," Jonathan Cohn, senior editor at the New Republic, writes in an opinion piece. "At first blush," the legislation, sponsored by Rep. John Shadegg (R-Ariz.), "seems utterly sensible," in part because it would allow residents to "shop for insurance the same way they should for consumer goods," Cohn writes. However, he writes, health insurance "isn’t just another sweater you can return to L.L. Bean if it arrives with holes in it," and residents "won’t have somebody to warn them if they are about to purchase a defective policy." Cohn adds that the bill would "flood consumers with new options, overwhelming the regulators, many of whom already feel undermanned in the fight against scam artists." In addition, the legislation would eliminate state regulations that require health insurers to cover "cancer screening, psychiatric treatment and other services that most Americans rightly deem essential," he writes. According to Cohn, the bill would leave some of the sickest residents with "no choices at all" for health insurance, and state high-risk health coverage pools would prove "woefully inadequate" to address their needs. The "best way to fix" the U.S. health insurance system is to "create one big pool of beneficiaries through some kind of universal health insurance system" that would allow residents to select from "well-regulated private health plans" or from all physicians and hospitals under a system that "bypasses insurance companies altogether," Cohn writes. He concludes, "Those aren’t the kind of choices that conservatives want to give Americans, since they happen to require expanding government. But they’re the kind of choices Americans would appreciate the most" (Cohn, The New Republic, 8/22).

Jon hits at the two problems with these bills. a) Fraud and how state insurance departments are relatively helpless/hopeless now — so just wait till they have to try to figure out what’s being sold locally by the bad guys from Topeka (or wherever), and b) (my main bugbear) how those states who do have some minimal attempt at community rating will find those insurance risk pools utterly destroyed when consumers find that they can bay a bare bones plan, which in the small print is licensed in Nevada (or wherever).

The problem of course which John mentions but doesn’t really drill into is how this would turbo-charge underwriting. Only those who pass muster would be accepted by these plans, and if they figure out that you may be sick or ever met a sick person or a doctor before, then you’ve got no chance. Even in guaranteed issue states (like California) health insurers currently can and do medically underwrite you, making premiums for the exact same benefits for people with pre-existing conditions or a history of prior surgery go up by a factor of maybe six and maybe twenty. See here for more evidence about that.

So effectively in Shadegg’s world the individual and small business market would fall into two camps. One for healthy people with high deductible cheap plans that they never use, and one for the sick and increasingly uninsured. And we’re seeing from new data on California out today from UCLA, that even without Shadegg’s help the number of people with employer-based insurance is falling very fast (leaving it to the taxpayer to pick up the pieces).

The only possible stop to this legislation may come from the rest of the health care industry. A health plan that operated within one state and had a hard time moving may not like this bill (or the AHP alternative for small businesses) very much. Some of those health plans are a certain color, and we’ll see how much clout they have with their state’s senators when this bill gets to that august body later in the year. Meanwhile, you know why my credit card can charge me 35% interest despite the fact that California has a law banning "usury"?  Well that’s because my credit card comes from the banking mecca of South Dakota. Think about the equivalent of that in health insurance.

CODA: Incidentally, this news service from Kaiser Family Foundation and several like it (including California Health Care Foundation’s) is provided by the The Advisory Board Company. Kind of funny that they’re running a left wing piece, from an editor who’s opinions most of the health care system (i.e. their clients) probably disapproves of, when they have probably made the most pure profit off the current health system of any single firm. But don’t start me on my criticism of "The Grand Alliance" again….and anyway, I guess I have the same issue (without the profit or potential ownership headaches that go with a major league baseball team).

THCB regulars will appreciate the running conversation I’ve had over the months with Brian Klepper of the Center for Practical Health Reform about how fast things are getting how bad, (hint: he is more pessimistic than I am, but sees a less cataclysmic outcome) and what the likely end result will be. Brian is particularly concerned that state agencies are the canary in the coal-mine of the health care system, and after the LA Times reported about California state agencies being unable to afford their employees retirement care, he wrote this.

One piece of the HC crisis that has received too little attention is the dilemma of state governments, and the ramifications for the health system as their financial commitment to health care is necessarily constrained.

So it’s now illegal to buy some OTC cold medications in Texas and Oregon because of the fear of methamphetamine abuse. I’ve had to report on this idiocy over at FierceHealthcare without commenting on how stupid it is, but here I can. Luckily for me, the good people at the Drug War Chronicle have done a great piece of reporting on the subject. So where is the wave of meth sweeping the nation and destroying communities? It’s on the cover of Newsweek so it must be true! Well, funnily enough it isn’t happening, and the data shows that the number of schoolkids using meth, people showing up in emergency rooms because of meth, and those reporting in the government’s own household surveys that they’re using meth, is the same that it’s been for 20 years. Here’s another excellent article in Slate debunking the whole epidemic myth.

So what has changed? Well it would be optimistic to think that people have realized the idiocy of the drug war, and the Administration has clearly come up against serious resistance to its stance about persecution of pain doctors and medical marijuana users. What passes for official drug policy in this country now centers on attacking marijuana use — and why wouldn’t it, as there aren’t sufficient numbers of users of any other drug to arrest 750,000 of them each year, and then justify the $30-$60 billion we spend each year on the "War on Drugs".  But unfortunately I doubt that the as misplaced focus on marijuana is the real reason for the outcry about meth. Instead we have to look to the main proponents of the war on drugs — America’s always hungry law enforcement agencies.

Out in the locales the law enforcement agencies of America, always interested in figuring where the next honey pot of funding is coming from, have decided to make a big noise about methamphetamine. That’s why in a recent survey of Sheriff’s departments 60% said Meth was their biggest problem. Of course if use isn’t going up, but arrests and lab busts are, then something else is going on. There are now sufficiently high numbers of smaller home-cooked meth labs that task-forces can be set up to raid them, and plenty of law enforcement types can be deployed to bust them. The end result is that the amateur criminals will leave the market, and it will be turned over to much more vicious drug gangs, probably run out of Mexico — but that gives law enforcement an excuse for even more fundraising.

Of course the fact that the same things now being said about the evils of meth were said about crack in the 1980s, heroin in the 1960s, marijuana in the 1930s, opium in the 1900s and alcohol before that, may suggest that a) the law enforcement solution to these drugs isn’t a solution (and isn’t intended to be a solution!) and b) that we’ve seen this movie before. In some countries, notably Switzerland and Holland, there is controlled dispensing of various hard drugs to addicts. The result has been a drop in crime rates, anti-social behavior, disease, addiction and even unemployment amongst addicts. And those programs are supported by the local police, who for some bizarre reason think that their job is to improve law and order in society, rather than to just get bigger budgets and go on paramilitary raids.

Let’s be real, speed/amphetamine use has been around for ever and most of it comes from big pharma. My father told me that he took speed to stay awake to study for his final exams at Cambridge — I was at a talk about intelligence boosting drugs this week where I heard that 15-20% of college student are taking Ritalin, which is basically speed, to get through their exams.  My dad seemed to do OK, and I suspect that today’s college kids will make it out alright too! (Incidentally, baseball players call playing without taking speed "playing naked" and the US airforce issues speed to its pilots on a regular basis!)

For a minority of users of any drug addiction is a problem (although apparently for tobacco it’s not a minority). But of course treating addiction like a health problem isn’t good for business — when your business is based on arresting people, locking them up, and having the taxpayer fund it.

Hot on the heels of the question raised by Dave Reece yesterday about exactly how bad the shape we’re in is, California insurance commissioner John Garamendi — an unabashed liberal — is out with a summary report detailing the effects of high costs and uninsurance in California. I haven’t read the whole study but it seems to gibe pretty much with what I’ve been saying on THCB for some time.  Here’s the press coverage from the LA Times. But other than putting a variety of sources all in one place and getting the odd article in the press out here, I doubt that there’ll be too much impact from this type of study.

Finally for reasons I cannot fathom, Garamendi’s next move is next year to run for Lt Governor — a position which as far as I can tell has no power in California. In fact the current Lt Governor, Cruz Bustamente, hasn’t even talked to Ahhhnold in the last year.

Richard Reece is the Editor-in-Chief, Physician Practice Options, and he has written a book which mostly consists of interviews with a wide variety of observers and participants from across the health care system. You can order his book Voices of health reform or see an interview with Kaiser’s George Halvorson first before you buy.  But to save me the trouble of writing a review, Richard wrote one himself, or at least interviewed himself to find out what he thought. You may notice if you are a careful THCB reader that he has shared notes with Brian Klepper at the Center for Practical Health Reform. I think you’ll enjoy his auto-review.

Question: Can we talk frankly?

Answer: There’s no other way we can talk. After all, this interview is one-on-one, mano el mano, me-on-me.

Question: Isn’t it highly unorthodox to interview yourself about your own book?

Answer: Of course. But this is a highly unorthodox book. The book consists of interviews with 40 leading health care stakeholders at work across the ideological spectrum. You won’t find this kind of book anywhere else. It calls for an unorthodox review. Anyway, this is an interview book so an interview review makes sense, doesn’t it?

Answer: I’ll ask the questions here. Who are these "leading health care stakeholders at work?"

Answer: Health care leaders who work full-time at their jobs. These leaders include hospital administrators, practicing physicians, consultants, heads of reform think tanks, author critics, single payer system advocates, consumer-driven care enthusiasts, health plan executives, academic pundits, disease management experts, physician innovators, medical directors of large multispecialty clinics, government insiders, a Chamber of Commerce leader, supply chain executives, and presidents, CEOs, or executive directors of the AMA, AAFP, MGMA, and the Blue Cross Blue Shield Association.

Question: Didn’t you bite off more than you could chew?

Answer: Perhaps. But keep in mind health care consumes one of every seven dollars in the American economy and employs one in every 11 Americans. That’s a lot to chew on, and I wanted to cut across the health care leadership landscape.

Question: Who would be interested in your book?

Answer: Leaders I interviewed, their employees, their followers, and those they serve.

Question: But that would include almost everybody in the health system.

Answer: You catch on fast, don’t you?

Question: Did these stakeholders you selected agree on anything?

Answer: Yes, the need for reform and collaboration on such overarching solutions as basic coverage for all, management platforms to monitor the performance of major players, and medical liability reform.

Question: How did you go about the interviewing process?

Answer: I did all interviews by phone, and I invited my subjects to edit the final transcript. These interviews reflect their opinions, not mine. I remained neutral in the interviewing process. In other words, I ground no ideological ax. I sought to engage in straight talk about what these leaders really thought. I waited until the end of the book before I jumped to conclusions.

Question: And what did the stakeholders conclude?

Answer:Well, in general, they thought the system was hurtling towards an economic abyss. We can’t keep spending two to six times the general inflation rate on health care. The typical premium has risen by double-digits each year over the last five years, with a total increase of 60 percent. That’s unsustainable. Health care is pricing itself out of business. Health insurance now covers less than one-half of private American employees. The erosion of private coverage is growing at 2 ½ percent a year, and the number of uninsured and uninsured is mounting. In the end, without paying health care consumers, revenues will dry up for every sector in the system. When the health care ship sinks, all participating in the system will go down with it. .

Question: You’re giving me a sinking feeling. Some stakeholders must have said you were all wet. Did everybody buy into that shipwreck scenario?

Answer: No, especially those doing well, like high tech medical specialists, health plans, the pharmaceutical industry, and supply chain companies.

Question: So who is suffering the most?

Answer: The have-nots, more and more of the middle class, hospitals, and physicians on the front lines – public hospitals, family physicians, general internists, pediatricians, emergency room physicians. Even the seniors are suffering. They’re paying more out of pocket (21 percent), than before Medicare was introduced (19 percent). Safety net hospitals are the canaries in the coal mine. In July, for example, the St. Vincent’s Health System in New York, one of that state’s largest health systems, filed for bankruptcy. And over 65 emergency rooms in the last 10 years in California have closed their doors.

Question: What are prospects for single-payer?

Answer: Everybody, no matter what their political persuasion or their desire for such a solution. says single-payer isn’t in the immediate cards. Much of the reason is political. The Democrats are still gun-shy after the Clinton fiasco of 1994, and the Republicans are betting the farm on consumer-driven market reform. Some of the wishful thinking "progressives" foresee a collapse of the system between 2008 and 2012, after Bush leaves office.

Question: What about consumer-driven care? Is it a flash in the pan?

Answer: Hard to say. But many observers, George Halvorson, head of Kaiser, and hospital CEOs, are profoundly skeptical about the commercial viability, social desirability, and ultimate sustainability of consumer-drive care. Everybody is watching and waiting to see if consumer-drive care floats, or sinks without a trace of change… Some of the CEOs of major national health plans – McGuire of United, Hanway of Cigna, and Rowe of Aetna – say consumer-driven plans will have a bigger impact than managed care and may completely replace HMOs and PPOs. To these CEOs, consumer-driven care is the "next big thing."

Question: What about Medicare? Is it sustainable?

Answer: Not in its present form. It’s already costing $300 billion, and it will jump to $400 billion next year when the Medicare drug bill kicks in. Medicare now has 42 million beneficiaries and eats up 15 percent of the federal budget. By 2020, it will have 60 million beneficiaries and will swallow 25 percent of the budget. The consensus is that Medicare can’t keep rewarding all providers the same, whether the care is good or bad, no matter what the outcomes. Medicare’s movements towards pay-for-performance, quality measurements, and quality rewards are for real and may have a profound effect on reimbursements of hospitals and doctors. The operative word is "may." It "may" also have a Hawthorne effect, with providers adjusting to meet quality indicators, with no drop in cost levels.

Frankly, the medical establishment harbors deep skepticism about the fairness or workability of pay-for-performance. Doctors don’t believe government can separate the good doctors from the bad using quality indicators or patient satisfaction surveys alone.

Question: What about Medicare payments to doctors?

Answer: Everybody I spoke to expressed pessimism about doctors’ abilities to reverse the 26 percent to 30 percent cuts in reimbursement slated to take effect over the next five years. And most interviewees thought pay-for-performance for hospitals and doctors based on meeting quality indicators was the principle federal strategy for containing federal costs.

Question: Did your interviewees think "seamless interoperable computerization" of doctors’ offices would help save the system?

Answer: Most thought a national information infrastructure would take ten years to build. And most said it would take federal intervention and federal financial incentives to small practices to move doctors off the EMR dime and to make a national system workable.

Question: Does your book have flaws?

Answer: You bet. There are always those damnable typos. And not everybody likes reading interviews. They dismiss interviews as mere "Q&A, " mere opinion-swapping. Interviews are too subjective for some tastes. Also the book has no charts and tables and not many references. It’s just talk from an questioner biased towards physicians. This is a doctor-oriented humanistic, rather than a scientific book. But it’s balanced and presents multiple points of view. I believe reform will depend on high touch high tech innovative solutions emanating out of the private sector, not out of government. But for reform to work, government must incorporate these innovations into their programs. Also never forget some major innovations, like the Internet, started with the federal government.

Question: Did anything surprise you while doing these interviews?

Answer: A few things leap to mind.

One, I was surprised how positively and how fast employers, brokers, bankers, and other financial institutions, are viewing and moving on HSA-linked consumer driven plans. The banks see these plans as a golden opportunity to serve as HSA repositories, to use their information infrastructure to process claims, and to introduce debit and smart cards at the point of care. One health plan executive says HSA-plans will capture most of the market in two years. For physicians, the positive aspect of these developments is that doctors will be paid at the point of care with the swipe of a card. Physicians’ offices will be like ATM stations.

Two, I was surprised how big a role American culture plays in shaping our health system. Since our founding 229 years ago, Americans have believed in a relatively weak centralized federal government, in choices and freedom of action, and in equal opportunity, rather than equal results, for its citizens. Americans, for example, want choice and equal opportunities for access to the marvels of high medical technology. These cultural characteristics will dictate the direction and pace of health reform.

Three, I was taken back by the tremendous strides being made in the disease management field. This is an important development. Keep in mind chronic disease afflicts 125 million Americans. Chronic disease progresses mostly outside of physician offices and depends on patients understanding of their disease and their life style and compliance. When monitored closely and intimately in their homes and at their work and educated about their disease, patients respond intelligently and their health and outcomes improve significantly. Readmission rates to hospitals for chronic heart failure, for example, often drop to near zero.

Four, I was surprised how powerful an overall influence Medicare has. It sets the rules for the rest of the system, and other payers and all providers must follow its lead. One person I interviewed called the Medicare "The Sheriff "of the system, and said nobody bucks the man with the badge. Any reform, therefore, will depend on interactions between Medicare and the private sector. Medicare could, for example, could mandate it would only pay doctors with EMR systems. Here is how Andrew Grove, former chairman of the board of the Intel Corporation, explains the extraordinary power of Medicare, "What is needed to cause the industry to act is customer demand. The largest customer – approaching half of total health care spending – is the Medicare system. The entire health care industry would benefit if Medicare mandated the adoption of a Rosetta code (agreed-upon standards for all computer users) for the health care industry before institutions were granted permission to participate in Medicare business (Grove, A,S, Efficiency in the Health Care Industries: A View form the Outside, JAMA, July 27, 2005)

Question: After completing this book, are you optimistic about the future?

Answer: Not totally. Leading stakeholders in their own "health care silos" are reluctant to jump into reform unless their fellow silo dwellers crawl out of the silo and jump with them… You can take leaders to the brink of reform, but you can’t make them leap. They resist being the first lemming over the reform cliff. This attitude is particularly prevalent among health plans, hospitals, and health care associations. Physicians strike me as most eager for reform, perhaps because they see first-hand what’s happening in the clinical trenches.

On the other hand, I’m optimistic because Americans are a very entrepreneurial, innovative, and adaptable people who like solving problems. I think we’ll end up with a uniquely American public-private collaborative with lots of innovation and multiple payers.

Question: Who do you think ought to buy this book?

Answer: Health care stakeholders who want to know what their fellow stakeholders really think and who want to get a sense of what reforms are likely to occur.

Question: Thank you for your penetrating, insightful, and profound comments.

Answer: It was nothing really. The pleasure was all mime.

It’s not exactly major health reform, not universal health insurance, not even anything on the scale of the 2003 Medicare bill, but Congress is starting to put some legislation together on health reform. The new patient safety bill sets up a system for error reporting. It may be voluntary and underfunded, but at least it’s a response to something health care policy wonks know has been a problem for decades. Ditto with the forthcoming legislation on data interoperability. Love it or hate it, the Senate is clearly going to take another run at malpractice, and there’s also "reform" of the laws around state mandates for health insurance in the Associate Health Plan legislation that’s coming out of the House. In addition Nancy Johnson (R-CT) is proposing to mainstream pay for performance as the way Medicare pays physicians. None of this is too significant for the overall health system, although individual laws will have an impact on different players in the system. But the activity signals that Congress realizes that there are fundamental problems in our health care system, even though we are an election or two away from having the real stomach to do anything about it.

So this time it’s the University of Arizona Pain Clinic which is planning to close. Why? It’s main doctor has left and they can’t find anyone to replace him — I wonder why. So what does that mean?

During the past year, the UA Pain Clinic logged more than 5,800 patient procedures and outpatient visits and is estimated to treat 750 chronic-pain patients who require ongoing care, UPH records show.

So a mere 750 patients in chronic pain will be scrambling to find new doctors or face more pain….score another one for the DEA and its medical "ethics".