The Industry Veteran is back and on fine form, picking up the ball on a piece of crossed out editorial about my least favorite American politician, and running it into the realms of whether the Democrats are right (as Jones the Policy Wonk suspects) to take the milquetoast route, and whether marketing to doctors needs to be different than to other clinicians.

"Theocratic fascist?" I love it. Now those are the terms and the tone I expect to see on a blog. If I wanted neuterizing, backpedalling, vague ambiguity and maudlin sentiment ("hope," "we can do better," "a government as good as its people") I’d watch the Democratic convention.

This leads directly to my opening rant. The Democrats apparently believe that aggressive Bush bashing will repel the "persuadable" 20% of the electorate and, for that reason, most of their carefully orchiectomized speeches have been as energizing as 20mg of Valium. Two reasons make me think they’re making a bad mistake.

Let me start by recalling two, well established facts of voting behavior in this country: (1) voting participation varies directly with socio-economic status and; (2) only half of eligible voters go to the polls. This means that non-voting prevails among the lower two-thirds of the economic ladder that constitutes the Democrats’ social base. Election victories by Democrats, therefore, owe more to mobilizing voting among this base than to persuading the half-assed/undecideds. Democratic non-voters need a reason or reasons to vote. Platitudes about a shining city on a hill, restoring opportunity to America or giving us security with peace don’t cut it. A candidate who lacks personal magnetism, together with the lachrymose sentimentality that Democrats have been shoveling out all week, produce responses ranging from indifference to cynicism and distrust, none of which provides lapsed Democrats with an incentive to vote.

My second argument for sharper, more abusive language contradicts the pollsters’ assertion that negative campaigning and personal attacks merely turn off voters. Pharmaceutical research that I have conducted over many years with physicians and consumers leads me to suspect that the Democrats are receiving some bad advice. When asked how they feel about ads and other promotions that slam a competitor’s product, physicians and consumers typically give the socially correct response by saying that they disdain it. Further probing beneath this response indicates a different, more complicated process at work. Both physicians and laymen disparage negative or critical promotions that lack specificity because the course of action suggested by such communication (i.e., buy our product rather than the competitor’s) does not follow logically. As a result, test audiences believe that promotions full of "empty abuse" insult their intelligence. Physicians, for example, want to see the results of published studies, together with tables, charts and a condensed version of the supporting data. Consumers seek their own forms of corroborating evidence, and this varies according to the product, the market segment and several other factors. Given a rationale that effectively informs their selection process, physicians and consumers actually welcome a sharply stated conclusion: the other guy’s product is less effective and more poorly tolerated than ours. In short, go ahead and call John Ashcroft a theocratic fascist after first discussing the draconian features of the Patriot Act. Call George Bush an arrogant dope, a plutocrat and a lying scumbag after first discussing, well, any of his policies. Hey, if a longtime Republican operative such as David Gergen thinks the Democrats wasted a big opportunity by going soft on Bush, I think he may know something.

Second rant. I mentioned in a previous posting that I completed a study earlier this year involving the policies and practices of Big Pharma companies relative to the OIG/PhRMA guidelines for promoting to healthcare professionals. (OIG is the Office of the Inspector General at the Department of Health and Human Services; PhRMA is the Pharmaceutical Research and Manufacturers Association, Big Pharma’s trade lobby.) In response to exposes over the past few years that featured "dine-n-dash" and paid vacations in Aruba, these two organizations each issued guidelines to specify acceptable and prohibited practices for pharmaceutical companies promoting their products to physicians and other professionals. We first assessed the policies and monitoring processes used by the largest pharmaceutical companies for assuring compliance with these guidelines. Then we analyzed their actual promotional practices out in the field. Suffice it to say that while the overall level of bribery and bribery-in-kind has diminished slightly or has become less overt, the levels of compliance vary among the companies and nearly all reflect major disparities between policy and practice.

More recently a client asked us to make a similar assessment among diagnostic device companies. We found that while compliance differences also exist among these competitors, such differences are smaller than among the pharma companies and, more importantly, the general level of bribery and bribery-in-kind is also far lower. This reduced level of baksheesh became evident early in the study, so we spent a good deal of time and effort trying to account for it. While any complex social behavior usually results from multiple factors, there is a principal reason why fewer payoffs, involving lesser amounts, occur in the diagnostics business. Stripped to its essentials, the promotion of diagnostics involves a far smaller number and proportion of office-based physicians who would demand such gratuities. Very often the decision-makers who select/recommend diagnostic products are clinical chemists, diabetes nurse educators, microbiologists and other non-physicians. Some decision-makers are purchasing agents for hospital and other buying groups. Their product selections must provide strict cost justifications that leave little room for the subjective preferences subject to gratuities. Once again, our princes with stethoscopes, these Mafiosi doctori and purveyors of the Hippocratic myth, have dipped their beaks into the underground economy of healthcare to raise the costs and lower the ethical standards.

Here’s Jones the Policy Wonk in reply to my post on healthcare at the convention where I had written. . . . (and yes I am applauding!)

Maybe if the Democrats repeat their fuzzy message enough times, they’ll seize this issue. My question is, why did they decide this is the big issue? And why are they talking about the cost of health insurance which is somewhat alien to most people and not just focusing on the cost of drugs? I guess it just means that if they talk about it and the Republicans don’t, they own the issue.

The Wonk writes: If I’m interpreting your post correctly, you were asking why Dems are talking about healthcare and why, having decided to talk about it, are they all over the map with it?

You’ll be pleased to know I have an answer for you. Hold your applause until the end.

Short answer is that Democrats have a really clear and simple message on healthcare: "We’re paying attention, we know things are getting worse and remember, we’re the guys you’d rather have fixing this." So, although they’re not coherent from a policy standpoint, the speeches clearly express this political message.

Long answer is that convention speeches are not showcases for policy debate, especially for a challenger. For a challenger, the convention should be a carefully choreographed message event, designed to tell voters who the presidential candidate (and the party) is and why the voters should choose this candidate. Conventions are about winning the presidency and generating long enough coattails to win Congress.

((ASIDE: For a challenger, the convention is especially important because it’s one of the few opportunities he has to speak to the American people and have full control his message. Unlike a sitting president, a challenger can’t demand an hour of prime time for a speech. Most of his media coverage is "earned" media–stories in newspapers and sound bites on TV. The problem is, to get on TV, the challenger has to be "newsworthy." Newsworthyness (if this is, in fact, a word) is determined ex post facto–you get in the papers if, after hearing what you’ve said, the media decides it’s newsworthy. So, it’s a sound bite here, a picture there, and at no point is it a full presentation of the case the challenger is trying to make.   Conventional wisdom in the media is that conventions aren’t newsworthy, because, um, there’s no news (seriously, the logic is that circular)–if conventions didn’t exist in the past and someone had one today, nobody would cover it. This is because conventions are just candidates and party leaders bloviating on what they believe and what they would do if elected to office. I think it’s pretty clear that I disagree on the need for coverage–although it’s not exciting most of the time, it is important for both sides to be able to present their case directly to the American people in the manner of their choosing. Clearly, it’s not going to give the voters the whole story, but it is an important part of the decision-making process–when they can talk about anything in the world, what do they choose to talk about? How do they talk about it? What promises do they make?   Candidates, especially challengers, seldom have the opportunity to present their case directly to the people in a manner of their own choosing. It’s important to see what they say when they do have this change. Personally, I want to at some point see what they say when they know people are going to listen and no one is going to interrupt them. END ASIDE))

So, the reason the convention speakers are talking about healthcare so bizarrely is because though it’s an issue Democrats win on, it’s not an issue they can win with. In my humble opinion, that’s because American voters are still divided ideologically over the appropriate role of government in healthcare, and beyond that they are uncertain that even if this is a problem that government should solve, whether it’s a problem that government intervention can solve.

I’m digressing, but this ties into the comments that Abby made in the blog entry you linked. This threshold of whether this is government’s problem to solve still hasn’t been crossed with voters. I agree with you that the tipping point will probably come soon, as the economic problems brought about by out of control healthcare spending make ideological blindness an unaffordable luxury. But there does have to be an ideological shift or, at the very least, a realization that government=bad, private sector=good isn’t conventional wisdom but is in fact an ideology that serves special interests. There are a lot of reasons this hasn’t happened yet, not the least of which is that one major political party has thrown its full weight behind supporting this privatization ideology. But no small part of the problem is that people in favor of real healthcare reform haven’t gotten a 3 sentence argument together, and haven’t gotten it on the lips of every healthcare expert who favors healthcare reform. There’s a lot of muscle behind the current message, and the alternative has not been coherently articulated.

((FARTHER ASIDE: There’s reason to hope that this is changing. I think Abby is right again, that the key to this is to take a page from Lee Iacocca and point out the competitive burden placed on businesses. And on a personal level, we should talk more about the loss of freedom people suffer when they’re stuck in a job to keep their benefits, and how it crushes the spirit of American enterprise—people are scared of getting sick, so they won’t start a small business and follow their dreams. I think the business argument will go over well. For example, in NY State, 1199 floated a pay to play proposal. I was listening in on a conversation between a leading NY State senator (Republican) and 1199’s head lobbyist, and the Senator commented he was shocked that when he floated this proposal to business interests, they were willing to engage on the issue. Now, the bill still didn’t pass, but the fact that it wasn’t met with scorched earth tactics by business interests is a change whose importance cannot be overstated. Policy wonks need to start asking employers if they want to be in the business of providing healthcare or in the business of selling widgets. Because more and more, they’re in the business of running America’s healthcare system. Hmmm, maybe we can win big business by framing this as: "outsource your employee health costs to the feds!"END FARTHER ASIDE))

In the face of this political reality, Kerry has decided that he can’t win with healthcare, but he can score a few points with it. So his strategy on healthcare is not to go deep into it but to bring it up occasionally to remind voters what they already believe–that the situation is getting worse, that George Bush has no solutions to the healthcare crisis and that voters would rather have a Democrat working on this problem than a Republican.

So they’re bringing up health insurance because it’s a current healthcare problem–it’s tricking down to voters as an explanation their company gives for lower raises this year, as a stumbling block for union negotiations, as increased cost-shifting with higher co-pays, and for the recently unemployed as one of the biggest financial burdens they suddenly faced. They’re bringing up HMOs because it was the last healthcare crisis voters faced, and a crisis that Dems were on the right side of. They’re bringing up drug costs to remind seniors that they believe Bush sold out to pharma interests and pushed through a deceitful Medicare drug benefit.

But fundamentally, healthcare at this convention is an "and also"–as in: "John Kerry is a strong and decisive war hero, leading a party unified by true American values, who will unite the world behind a strong America. Oh, and also, he’s better on healthcare." This is why the speakers sound so bizarre to the wonks. It’s pure politics, and policy is way on the back burner.

Intersting report from Abby Vigenon on Uwe Rheinhardt’s new theory on why we haven’t got universal health insurance. You may notice that I show my colors (while keeping my cool I might add!) in the comments section.

I’ve taken my time in responding to guest poster Andy Ribner, MD whose piece published in THCB last week was aggressively in favor of one free market approach to health insurance (Medical Savings Accounts) and highly opposed to another (Managed Competition) while putting almost all the blame for the system’s current failures on the alleged oligopsony of the large insurers. Although the concentration of market share among the top 10 insurers continues to increase nationally, I’m pretty sure that Andy is wrong when he calls this an oligopsony.  In the last 5 or so years, insurers have moved away from their aggressive tactics versus providers (although in fairness Andy is right to point out that hospitals have legally and practically found it easier than physicians to fight back). Instead insurers have turned to one old trick, more accurate risk selection (as in Atena’s recovery), and are developing a new wrinkle on a second–new product creation.   The new product is the Consumer Directed Health Plan (CDHP), which is really another way of wrapping some extra services around a Health Reimbursement Account, or alternatively a Health Savings Account (HSA). There’s been lots of noise about these CDHPs and of course the HSA was opened to everyone in the Medicare Modernization Act (MMA).  The problem with the HSA that no one has successfully explained away to me is how does an employer/insurer go about putting much of the risk pool in the hands of the healthy 80% who aren’t going to use much of the money for care, without at the same time reducing the amount available to the 20% who are going to need it.  HSA advocates just go on about buying catastrophic insurance as though there’s a separate pot of money–but it’s all health care spending. This continues to baffle me.

And I don’t appear to be alone.  HSC is out with another of its prescient studies of 12 major metro areas, and this one looks at the attitudes of employers.  Here’s the quick news release while the actual details are in this issue brief. Essentially the study finds that employers are pretty skeptical of the whole HSA/CDHP movement for two major reasons.  The first is that they don’t see how their overall risk pools are going to save money by doling out actual cash to everyone–in particular they are concerned that giving healthy people $1000 will make them spend it on unnecessary stuff, (or presumably in the case of the HSA rather than the employer controlled HRA, keep it). via Don Mccanes’s PNHP quote of the day, comes word that the journal Health Services Research (Yes I’ve got a degree in that subject but barely ever read the mag anymore!) has an entire August issue on CDHPs. And in that issue are two studies from representatives of two of the guilty parties who’ve been pushing the hype.  One is a benefits consulting group while the other is a health plan. Arnie Milstein from Mercer shows that from their studies of their client base "While enrollment in consumer-directed health plans continues to grow steadily, it remains a tiny fraction of all employer-sponsored coverage".  Mercer seems to believe that tiered coverage (which is akin to the old managed care IPA model of creating exclusionary networks) is doing better.  But they are skeptical of the ability of consumers to choose between different services with the current lack of easily available information.

One key concern was that by providing a spending account to all employees, employer payments might increase for their healthy workers. One employer noted that 70 percent of the firm’s covered employees had health care costs of less than $1,000 a year. Concerned that a spending account would encourage healthy workers to use more services despite being able to rollover unused funds to the next year, this employer expected that a $1,000 spending account would raise costs, not lower them.

  Similarly the employers don’t seem to think that there are any real controls on how the money is spent on the 20% who blow through their deductibles–and of course that’s the group on whom 80% of the money is spent 

Now this is not objective data, it’s a report back on the likelihood of the success of CDHP’s based on the reaction of employers who are opining from their very limited data and guess work.  But the news can’t be good for advocates of the "HSAing" of the system. And the conclusions of the HSC researchers are that CDHPs will struggle to get much traction.  Like many health care "innovations", the hype on the powerpoint exceeds the reality on the ground.

However, it’s worth really pushing this one a little further because

None of that is nearly as damning as a study from Humana of its own employees in a new CDHP it offers. They looked at the claims experience of those who chose to go into the CDHP versus those who didn’t. While demographically the two groups appeared to be the same, the "risk experience" (that’s care utilization in English) of the people who chose the CDHP, in the year prior to their switch, was around 60% of the other groups. In other words the healthier people went into the CDHP. The authors conclusions are that:

The offering of high-deductible or consumer-directed health plan options alongside more traditional options caused risk segmentation within an employer group….Further research is needed to determine whether risk segmentation will worsen in future years for this employer and if so, whether it will cause premiums for more traditional health plans to increase.

In other words the fears of the employers whom the HSC researchers met were justified. If you have a CDHP, too many of your healthy employees will leave the overall pool and take the money, while the sicker ones will stay in the traditional plan. And that means that overall the whole pool will cost more.

So it appears that my skepticism in the face of the HSA and the CDHP seemingly taking over the whole market looks to be correct. Perhaps Andy Ribner should get out the old articles about managed competition?