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POLITICS: Sacramento, We Have A Problem

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Up at Spot-on I’m discussing Arnie’s plan — Sacramento, We Have A Problem. As ever, return here to comment.


When looking at the Golden State’s governor, Arnold Schwarzenegger, and
his attempt to fix health care, I am reminded of a movie. Not one of
his, rather the scene in Apollo 13
when the crew on the ground had to figure out some wacky mechanical fix
that would enable the guys out in space to filter their oxygen without
using more than the two amps of power they had available. It seems that
we have a similar situation. The prognosis is grim, but the political
reality is that, like the Apollo crew, we need to use the limited
resources at hand.


Schwarzenegger taken on a big job and, it seems, entering his final
four years as governor – a political career that began on a whim – he
doesn’t much care who he takes on. Given that California is roughly 10%
of the nation, with a higher than 10% share of the nation’s uninsured,
most people were expecting that Schwarzenegger would identify covering
all children as the extent of his health-care ambition. Children are
politically palatable – when it comes to health and medicine. But
Schwarzenegger didn’t stop with the children. Instead he actually
believed all the stuff he was saying about all options being on the
table to cure the system and has acted accordingly.


In an address on Monday he introduced a plan
that actually went further towards universal coverage than the one
State Senator Pro Tem Don Perata introduced late last year.
Schwarzenegger called for full universal coverage, and promised to get
there by a mix of what’s known as pay or play – a mandate that
employers must cover their employees or pay a tax – and an individual
mandate compelling citizens to buy health insurance. The details of the
plan are very complex but understandable. Continue Post …

Reaction to Arnie-geddon in Californian health care

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Meanwhile as you might expect, two of the more sensible editorials about the Schwarzenegger plan have been written by Leif Wellington Haase (Century Foundation) and Jonathan Cohn (New Republic). They’re both somewhat more optimistic than I am that a) something will happen, and that b) the rest of the country will pay attention.

California’s single payer-proponent Sheila Keuhl, as you’d expect, doesn’t think that Arnie’s plan will work. Don McCanne from PNHP has some details on why not

As I said over at Cato, I am rapidly coming to the conclusion that we’ll screw around for a  while and then in a decade or so the whole thing will implode into a bare-bones single payer system. But I hope all this commotion proves me wrong.

UPDATE: If you missed Thursday’s press conference, you can
  watch a webcast of the whole thing
  here. If so inclined, you can also read the full text of the proposal
  here.
  (Achtung! pdf)

SEE ALSO:

SPOT-ON : Fashion and Fads in Health Care Legislation POLICY:     It’s all the illegal Austrian socialist’s faultPOLICY/POLITICS: I love the guy’s moxie

POLICY: Me. A loony libertarian?

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Not exactly but I am up at Cato Unbound with a piece replying to Arnold Kling’s fascinating essay "Insulation v Insurance." Read his first, then read mine. It’s called Abundance Is Insulated from a Crisis–For Now.

In his insightful book and in this interesting essay, Arnold Kling
has made several leaps forward from the pack of “America-first free
marketeers." If you want to see them in action, take a look at the comments page
of any blogger who dares to suggest that spending nearly double what
its economic competitors are spending on health care—primarily because
it is paying its providers more for more or less the same volume of
services—may mean that the U.S. is not getting too good a deal.

It’s
apparent to any serious student of health care that the impact of
medical care on overall raw measures of health is not sufficiently
important that differences in spending here or there makes too much
difference to health. The somewhat pedantic arguments over life
expectancy and infant mortality, and the slightly more real ones over
the appropriate treatment of predominantly elderly people with serious
diseases, are all massively less important than the political and
medical culture in which the health care system exists. So there is
broad agreement, I believe, among most rational observers that the
activities Kling describes as "premium medicine" are far more in the
interests of providers and suppliers (including those middlemen who
mark up the price without taking on much risk) then they are in the
interest of patients&mdash, and certainly of society as a whole. Continue.

BTW before the brickbats start flying; “loony libertarian” is a term of affection. Actually most of the Cato guys are very sensible libertarians whom I agree with on almost all social & civil liberties issues.

QUALITY: All is not well in the DM world

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Last year LifeMasters pulled out of one of the Medical Health Support DM pilots in rural Oklahoma because they found that adhering to the proper standards of care made the cost of care go up for those patients they enrolled, not down.

Now Healthways, the largest DM for-profit company, which has the greatest number of the Medicare Health Support pilots, appears to be seeing some big problems too.

MHS Pilots Based on the receipt of essentially complete first-year data which revealed smaller separation from the control group than reflected in previous reports, the Company’s net per share costs in the MHS pilots for the first fiscal quarter of 2007 totaled $0.10 per diluted share, $0.04 more than previously estimated. For the first 15 months of the pilots, per member per month (PMPM) beneficiary costs, including inflation, have been held flat, which the Company believes reflects meaningful impact resulting from program interventions. To date, however, the control group costs as reflected in the most recent report released by CMS’ third party actuarial firm are also unchanged, and do not reflect anticipated increases provided by CMS nor the results of historical national and regionally-specific trends identified by third-party actuarial analysis of the Standard Analytical File (better known as the Medicare 5% Sample). The Company has brought this issue to CMS’ attention and has received the Agency’s commitment to pursue understanding and resolution of this anomaly in a timely manner.

While the Company has no direct control over the timing of this review by CMS, it will communicate progress toward resolution. Based on the strength of the Company’s performance with the intervention group, particularly as compared to the Medicare 5% Sample data, as well as the questions raised by the unanticipated trend of control group costs, the Company is maintaining its fiscal 2007 guidance related to the MHS pilots until this issue can be resolved to the satisfaction of all parties.

In other words either Medicare has got the data wrong about its control group, or the control group is healthier than average, or (gulp) DM doesn’t save money for the sick Medicare recipients group. And so the DM companies, which have promised CMS that they’re going to pay them 5% savings for the sick group (and make their money on the reduction from there!), are going to be losing money.

Healthways stock is down around 15% over the last week as this news seems to have seeped out. But it’s PE ratio is in the 40s, and the stock price went up more than five fold 2003–6, suggesting that the market is expecting it to continue its quick growth. If MHS is deemed a failure, there may not be any growth. Watch this space.

(Thanks to Fred Goldstein for this tip).

PHYSICIANS: Remember, it’s a FFS world

Remember kids, almost all physicians work in a FFS world. HSC reminds us:

While the proportion of physicians in group practice whose compensation is based in part on quality measures increased from 17.6 percent in 2000-01 to 20.2 percent in 2004-05, far more physicians face financial incentives tied to individual productivity, according to a national study released today by the Center for Studying Health System Change (HSC).

Despite the small but statistically significant increase in quality-related physician compensation, financial incentives tied to physicians’ individual productivity continued to be much more common, consistently affecting about 70 percent of physicians in non-solo practice since 1996-97, the study found. Nevertheless, nearly all physicians with quality incentives also face productivity incentives.

So don’t be surprised about what’s happening.

POLICY/POLITICS: I love the guy’s moxie

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Say what you like about Arnold, but you got to give him credit for being a proper flip-flopper with real moxie. While Bush drowns in his stay-the-course quagmire, Arnold has repudiated basically everything he claimed to care about when he first came into office, and is now running like the unaligned centrist everyone thought they were voting for back in 2003.

Today he called for universal coverage based on a comprehensive pay or play, surrounded by an individual mandate. He even brought back the notion of provider taxes, a beast last seen in the wild in the pre-HillaryCare years, but thought to be extinct having been shot by the AMA and AHA back then.

But my favorite of all is the fact that the pay-or-play employer mandate he’s calling for includes all employers with more than 10 employees. In November 2004, just 26 months ago, he told people to veto Prop 72, which had a pay-or-play system for employers with more than 20 employees. Boy, times and people change, don’t they!

POLICY/POLITICS: It’s all the illegal Austrian socialist’s fault

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It’s all quite amusing. You wouldn’t know it, but there are no problems with health care in California, and what Arnie did yesterday was a display of showing his true feelings—a combination of handouts to illegal aliens and an introduction of European socialism.

At least that’s what you’d think if your only source was reading the Los Angeles Times reader comments about the proposal. Methinks that the FreeRepublic or Michelle Malkin crowd was sent over there….

(BTW I’ll be writing more about the Arnie plan at Spot-on tomorrow, but I wrote most of what I think the result will be there last week)

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