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POLICY/HEALTH PLANS: Yet more debatable data on CDHPs

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HSC’s John Gabel (kind of a “neutral” in the debate) is out with a new study suggesting something that I think is true. The take up of CDHPs by workers offered them in a choice with other products (HMOs. PPOs) is slow. And that’s because they’re not being appropriately compensated with premium reductions in their take-home pay to off-set the much higher-deductibles.

And of course this goes back to how employees buy their health care in the first place—mostly unconsciously via their employers, not knowing the actual cost of their premiums. If you want a long lecture on why this makes employees poor purchasers of insurance, attend any Alain Enthoven Stanford Business School class.

The likely evolution of all this is that workers will find the deductibles and co-pays for their PPO and HMO products increasing to the level of the HDHPs pretty soon. That’s how employers will “get out” of health care benefits—until the possible day when they all look at each other and say “OK let’s drop them totally and let the government take over.” Which is what they all want, but no one is quite ready to make the first move.

But because the HDHP is becoming an evolution of the PPO product that already exists, the argument will about choice will soon be moot. Karen Ignagni may well say that all (or actually 30%) the new small employer HDHP buyers were uninsured, but it’s pretty obvious that most (70%) of the new HDHP wielding employees were people with PPOs before who are being forced into HDHPs by their employers. And that’s certainly what’s happening with Intel and other larger employers who are “offering” HDHPs.

However this news release is most remarkable for this quote from Ignagni: “Ignagni said the plans are popular in certain niches but that it was too soon to say if they will gain wide acceptance.” She’s actually telling the truth! Mark that one down in your diary.

POLICY/POLITICS/HEALTH PLANS: A Stark future for private health plans in Medicare?

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Here’s the SF Chronicle on Pete Stark’s opinion about Medicare Advantage

Boiled down, Stark’s contention — based on a new Commonwealth Fund foundation study — is that the private firms are being paid 12.4 percent more per patient than government-run Medicare to provide the same level of services. In 2005, Medicare Advantage plans, originally created based on the contention that private industry could provide service for less than the government, were overpaid an average of $922 per enrollee, for a total cost to taxpayers of $5.2 billion.The payments “are not a mistake,” Stark charged. “Republicans are overpaying Medicare HMOs as part of a deliberate effort to shift beneficiaries into private plans. The Republicans’ ultimate goal is the privatization of Medicare, complete with a voucher system that leaves seniors to fend for themselves,” he added.The industry questioned the methodology of the study Stark used to make his charge and said that Medicare Advantage plans actually save money by injecting competition into the Medicare system, which covers about 43 million Americans. Figures from the America’s Health Insurance Plans trade group estimate that Medicare Advantage participants save on average $82 a month, compared to what they would pay in the traditional Medicare program. That comes to total savings of more than $6.8 billion annually, the group estimates.

And like the good politicians they are AHIP just changes the subject (See the release for a typical piece of Karen Ignagni’s tenuous relationship with the truth)..

Err, guys, it’s not whether the enrolled seniors are paying less in deductibles and co-pays that Stark is worried about. He knows that the private plans are cross-subsidizing those beneficiary costs (along with gym memberships et al) from the vast profits they’re making on them. It’s the taxpayer who’s paying more, as way too many GAO reports have shown (and now the somewhat more biased but no less true Commonwealth Fund report shows).

So the key question that the private plans need to be focusing on, especially as they are staring risk adjustment in the face anyway is, can they genuinely save money over the FFS on a non-risk selection basis by improving the efficiency and quality of the care they manage? Currently as the details of the report make clear, the risk adjustment has been hidden by an overall increase in the payments, and by the double inclusion of some other technical payments, such as the indirect amounts Medicare pays for medical education.

But surely that can’t last under any scenario. Logically in the high cost states like New York and Florida, making genuine savings over Medicare FFS—given the huge unnecessary care delivered and reported on by the Dartmouth crowd—must be achievable. Those savings should include decent profits for the private plans. They shouldn’t need extra payments to make it worth their while being in the market. If the private plans cannot prove that pretty damn quick, then they need to be prepared to get out—in a replay of the early 2000s. And Stark may want some of his (our!) money back!

POLICY: For Make Benefit Glorious Nation of California By John Irvine

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The first shots in the fight over California Gov. Arnold Schwarzenegger’s health care reform proposal were fired last week. The Los Angeles Times reported that a team of advisers is working to develop the proposal, which will probably be unveiled during Schwarzenegger’s state of the state address in January. The news had led to a pretty serious hoo ha.  Liberals are worried that the plan will look a lot like the helpful proposal drafted by America’s Health Insurance Plans. Conservatives, on the other hand, are concerned that Schwarzenegger could get carried away in his enthusiasm to appeal to moderate voters and end up producing something that could hurt California’s businesses.

What should we expect? The backgrounds of the advisers who are helping Schwarzenegger produce the plan may give us some hints. As it turns out, three of the four are Democrats. One recently left his position at McKesson government relations. In his piece this week, the California Health care Foundation’s George Lauer described the makeup of the team:

Richard Figueroa, former
legislative director for Insurance Commissioner John Garamendi and
former aide to former Gov. Gray Davis (D).

John
Ramey, former executive director of the Managed Risk Medical Insurance
Board, deputy secretary and assistant secretary of the Health and
Welfare Agency, and chief of staff for the Department of Health
Services. Since 2000, Ramey, a Republican, has been principal and
partner of Ramey, Macomber & Associates a Sacramento firm
specializing in health care and health insurance contracts.

Herb
Schultz, former deputy director of the state Department of Managed
Health Care, most recently vice president of government programs at
McKesson Health Solutions. Schultz also served as acting director of
the California Employment Development Department and acting secretary
and undersecretary for the Labor and Workforce Development Agency.

Daniel Zingale, chief of staff for first lady Maria Shriver and former director of the Department of Managed Health Care.

A lot of people have focused on the possibility that the plan will look a lot like the proposal produced by former Massachusetts Gov. Mitt Romney. The critics say the idea probably wouldn’t replicate well in California for many reasons. (Short explanation: California is a lot bigger than Massachusetts.)  Adopting a variant of the Romney proposal would also be a form of endorsement for Romney, who plans to run for the White House in 2008.

Continue reading…

TECH: HealthCamp

There’s a meeting called HealthCamp about Health2.0 in San Francisco on Saturday. Many of the usual suspects will be there, but I suspect there’s room for lots more. You can add yourself to the list at the wiki.

BLOGS: A great Health Wonk Review

Michael Cannon is hosting Health Wonk Review #21 up at the Cato@Liberty blog. And unlike some HWR hosters (i.e. me) Michael does a great job of not only steering you to the posts, but summarizing them and giving you his views on the legitimacy of the arguments.  And just because he’s wrong most of the time, doesn’t mean that he’s not doing a fabulous job! This is one of the best HWRs yet. (And apparently I’m James Brown!)

And if you’re not reading the Cato blog regularly you’re missing out on among other things a) some of the best argued views from free market advocates on health policy (which I usually disagree with), b) drug policy and human rights (which I’m with all the way), and c) traffic (which will at the least surprise you in a Heinlein fashion, and those ideas comes from those terrible socialists in Europe!)

QUALITY/POLICY/TECH: Quick notes from the road

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Apologies to those who’ve missed me. I’ve been lost in the mid-west taking part in some scenario planning about the big picture future of health care. I can’t give you any details (at least not yet) but it did involve me spending lots of time with a bunch of business association lobbyists who’s views on health care, shall we say, the average THCB reader wouldn’t expect me to share.

In the informal conversations, across the board there was, however, one huge topic of agreement amongst the boomers I met. They wanted themselves and their parents to die at home with palliative care; they felt that current end of life care verges not only on the irrational in terms of resource use, but also on the inhumane. And they think that within a decade, we will be having that conversation and forcing that set of opinions onto our medical providers. Who presumably will be rather more willing to hear us out, rather than insisting on engaging in those heroic measures that, the group felt, todays providers feel they must perform.

One other quick thing. Wednesday, Intel, BP and WalMart announced a PHR initiative, which I believe is being largely led by JD Klienke’s group in Oregon. On that topic I’m giving a talk to HIMSS N.California in San Ramon on Tuesday on the topic of PHRs. Also talking will be Kate Christensen from Kaiser Permanente, and Holly Miller from the Cleveland Clinic. I personally think this should be an interesting opportunity to hear a range of views and understand some developments in major PHR deployments from providers (and of course I’ll be witty and brilliant, just as soon as I’ve put my talk together). But apparently according to at least one other blogger, I’ve misunderstood it all, and really I’m just being a PR flack for the devil worshipers at KP central. I’ll report back as to whether the place still smells of sulphur.

 

POLICY: New York Trans Fat Debate Heats Up

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The Wall Street Journal reports that McDonalds and other
fast food businesses are engaged in a last minute drive to convince health
officials in New York City to “soften” the proposed ban on trans fats in restaurants
in the five boroughs. According to the Journal, McLobbyists have approached city council member Peter Vallone and asked him to sponsor a competing measure
that would give the industry more time to make the switch over to healthier
cooking oils. Quoting from WSJ’er Janet Adamy’s piece:

The city’s board of health is scheduled to vote Tuesday on
whether to force city restaurants, from fast-food outlets to servers of haute
cuisine, to eventually remove all but a trace of artery-clogging trans fat from
the food they cook. It’s not certain yet how the board will vote, but people
following the process say the board appears likely to approve the measure.

A New York City ban would place the most significant
restrictions yet on trans fat in the U.S. since health officials began warning
of its dangers years ago. Restaurant chains will feel pressure to more quickly
replace oils in their outlets across the country, since the companies get the
most efficiency and consistency by cooking with a single recipe. Other cities
probably would follow New York.

          — John Irvine

HOSPITALS: Panel Said to Call for Closing 9 New York Hospitals

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Somehow I think this will be rather difficult! Panel Said to Call for Closing 9 New York Hospitals

Welcome to the governorship, Mr Spitzer!

UPDATE: Anonymous Coward writes in to say: "The Commission’s proposals actually serve as political cover for the all but certain cuts to Medicaid, and this is actually a good thing for Spitzer.  The closing recommendations have to be approved as a whole (or rejected as a whole, unlikely) before he’s even in office.  Also, dealing with cuts through a more rational, analytical framework, actually enables the new governor to stay completely out of the business of closing hospitals, and to scale back on what otherwise would have been more devastating cuts to Medicaid for all hospitals.  The public relations around this are tricky, but the process is already being closely watched (and followed) in other states."

UPDATE 2: You can read the actual report here. (pdf) Check the New York State Commission for Health Care Facilities in the 21st Century web site for additional materials.

ED’s NOTE: Link fixed to NYT piece.

PHYSICIANS: Pity the poor radiologist

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They are “frustrated” by Liability and Lifestyle Issues, only 7% them are truly happy—although 70% would do it all over again if they had the chance (more than most other doctors). And only 25% of them make more than $400K a year and 40% have to struggle by on less than $300K.

But pretty clearly these are the good old days for radiologists. Methinks that if they don’t like it now, the average radiologist may be in for a rude shock in the next decade or two, as technology will make their skills increasingly exportable to other cheaper radiologists abroad and replaceable by computers reading images. Of course, they’ll not be quiet in defending their lucrative turf, and demand for imaging will just keep going up, so their future isn’t quite that of the steel worker in the 1980s.

But this is one place to watch in the coming years.

CONSUMERS/POLICY: Real people really travelling

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Via HISTALK, a really interesting column about people traveling to India for surgery. Essentially the total cost slightly exceeds the co-insurance for those with insurance and of course the cost is remarkably lower for the uninsured. The people featured are those in the 50-65 age group who are pre-Medicare and finding it harder and harder to get health insurance are the obvious candidates.

And of course they are the ones for whom the health insurance crisis is biting home, and the ones who will be the swing voters about this issue. I for one cannot believe that this group of Americans will accept that they all need to travel to India and pay out of pocket, over and above whatever catastrophic coverage they are also buying. So when a politician comes up with a believable universal solution, this type of story will be behind what gets it through the Congress.

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