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HEALTH PLANS/POLICY: High-deductible health plans and how the employer does the math

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Marketwatch has an article about how you should choose your high-deductible health plan and as you might expect it goes over ground that has been pretty well trod over here at THCB. Basically it suggests that an employee should guess whether they’re going to be healthy or sick over the coming year, factor in the premium contribution they’ll be asked for by their employer, and balance it out accordingly. (No prizes for guess which you should choose if you know you’re going to be one or the other).  But even though the author doesn’t realize it, the really interesting piece is a throwaway at the end about Cigna’s plans for its own employees:

The biggest changes for Cigna Corp.’s 26,000 employees during this year’s open enrollment include a total conversion to high-deductible plans, mandatory health-risk assessments and a 10% break on premiums for nonsmokers, said Catherine Hawkes, director of Cigna’s total health and productivity. The health-benefits company already has 40% of its workers enrolled in high-deductible plans for 2005, most of them in HRAs, she said. But they’ll have the choice of two HRAs and an HSA for 2006. For in-network coverage where the employer has negotiated rates with providers, single HSA plans will have a deductible of $2,000 and families will pay $4,000 up front, Hawkes said. The out of network HSAs will carry deductibles of $3,000 and $6,000 respectively. Cigna also is contributing to workers’ HSAs for the first time in the amount of $200 for single employees and $400 for family plans, she said. And workers will be able to choose from six mutual funds instead of the low-interest-bearing account currently in use. (Bold emphasis added by me)

This explains exactly how things will play out (much, it might be added, to the fears of Eric Novack). The basic problem with HSAs, (as I’ve explained add nauseam–for the math detail dig down in here) is that they allow the individual to pull money out of the risk pool, forcing the pool to find more money for the care of the sick 20% after the healthy 80% have taken their money out. A self-insured employer is a risk pool so there’s no logical incentive for an employer to put money into an HSA that an employee can walk off with.  But there is a logical incentive for them to move employees from low or no deductible plans into high-deducible ones and not fund that deductible.

Imagine if Cigna had 100 employees, and paid $500,000 total for their health care in a fully covered pool. Remember that 20 of them will take up 80% of spending ($400,000 at $20,000 each).  If Cigna  switches to a HDHP and put $2000 cash into each of their HSAs, by the time it came to find the $360,000 required for the sick 20 (the $400,000 minus the $40,000 in their HSAs), it would notice that it had already put $200,000 into the HSAs leaving a hole of $60,000. But if instead it started paying for its employees only when they spent more than $2000, they would now be spending $360,000 on health care for its sick 20 employees (the employees needing to come up with the first $2000 each) and nothing for the rest of them. So Cigna could even afford to throw a couple of hundred bucks into every employee’s HSA because it would all of a sudden be saving itself 25%, over what it cost it before. That’s why the HDHP is proving so popular among employers, because it gives them the ability to reduce their costs while claiming that they are "empowering" their employees.

No, of course reality isn’t quite like this, and Cigna’s employees are probably getting breaks on premium co-shares, and maybe even bigger pay rises that go along with this, and overall it’s a trend rather than an immediate shift. But that is what is going on here, and it’s not dissimilar to the Walmart/Costco situation, where Walmart pays fewer benefits and makes more money. So it’s just more evidence that the abdication of employer-based health insurance is well underway, and being led by health plans who are looking for the next big thing to sell to their dumb employer clients.

This rightly has sensible advocates of market reform like Brian Klepper and Pat Salber very worried. In their opinion piece in Modern Healthcare they note that we are essentially replacing employer-based health insurance with nothing. And that has big consequences for a health care delivery system which depends on third party payment to make up the numbers.

And I guess if Cigna et al eventually finish off employer-based health care by getting their clients out of the business of providing health benefits–well that wouldn’t be a great loss. After all it would mean the plans went out of business too! But I guess that’s slightly longer range thinking than the average health insurer’s management team is used to.

INTERNATIONAL: Monday morning world view

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If you thought America was strange consider the plight of my birthplace and its former Empire. For a start the Royal Family is so broke it’s having to send its first-born son out to work for a Hong Kong bank, no less. Meanwhile, at least one junior doctor (resident to you Yanks) thinks that doctors in the UK get paid too much. Finally a great soccer player, George Weah, (who starred for AC Milan in their hey day in the 1990s and played briefly for Chelsea and Manchester City) has decided to go back to his home country of Liberia and take over as President…

On a less light note, the earthquake in Pakistan and India is very, very serious, as are the mudslides in Guatemala. Here is a link to a page with several charities working in relief.

UPDATE: I got Liberia and Cameroon mixed up. Liberia was of course founded by free African-American slaves.

PHARMA/QUALITY/PHYSICIANS: Rational sense on opioid use for cancer sufferers, with reference to Kinsey and rationalism.

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A very important THCB reader — one that I have to be nice to if I want to feature in the will, and you might guess that I’m a couple of wickets down already — has forwarded me this BMJ article on opioid use for cancer patients.

Last night I saw the movie Kinsey, which told the story of how Kinsey’s research on human sexuality in the 1940s and 1950s created great advancement in human understanding, and helped remove the weight of hundreds of years of damaging religious bigotry — yup into the 1930s married couples were taught that any non-missionary position sex (including using the mouth or the fingers) was wrong and unnatural. There’s a harrowing scene were his father eventually tells him that he was fitted with a strap to prevent masturbation. I thought of this in the context of opioids, because apart from certain lunatics on the Christian right, rational people agree that the behaviors imposed by society on sexual "deviants" — homosexuality was a jailable offense as recently as the 1950s –were both morally wrong and harmful to individuals and society as a whole. We needed science (and I know there’s a lot of criticism of Kinsey, M&J and Hite’s methods, but they approached the issue from a scientific not a moralistic perspective) to show us the truth in a rational dispassionate way.

The war on pain doctors and patients is being fought by a similar band of lunatic puritans as attacked (and still attack) Kinsey.  Only these moralistic jihadists have the full force of the Justice Department behind them and are clearly bending every commonsense understanding of justice and ethics to imprison and destroy anyone who holds a different, more humane view.

Of course the main problem here is that the puritan jihadists have equated opioid use for pain as some kind of great moral failing. Well the scientific view is succinctly and excellently put by a leading British physician:

Concerns about morphine: Morphine has long been feared by the general public and the medical profession. Underlying this fear is the mistaken belief that the potential for misuse of opioids is linked with their use as analgesics. Unfortunately, concerns about addiction, respiratory depression, and excessive sedation cause healthcare professionals to avoid using opioids or to use them in suboptimal doses. Clinical experience has shown that these fears are largely unfounded and that addiction is not likely if morphine is used to manage pain responsive to opioids in doses titrated to the degree of pain. Withdrawal symptoms indicate physical dependence and should not be confused with psychological dependence (addiction).

It’s mainstream educated work like this that needs to be broadcast widely, and all physicians and other scientists need to continue to trumpet this loudly. Don’t forget that the puritan jihadists want to take us back to their equivalent of Sharia law, and the real fight among civilizations is not between Christians and Muslims, it’s between the rationalists and the zealots. And if you think I’m overstating it let me  use this quote from the Guardian of a smattering of leading anti-Kinsey campaigners (yup, they really exist)

The religious right still fear and despise Kinsey and all his works. Check out some of the (apparently coordinated) responses to the new movie. "Kinsey’s proper place is with Nazi doctor Josef Mengele," says Robert Knight of Concerned Women for America, inadvertently showing us what he thinks of the Holocaust. Robert Peters of Morality in Media: "That’s part of Kinsey’s legacy: Aids, abortion, the high divorce rate, pornography." Focus on the Family’s film critic (they have a film critic?), Tom Neven, calls the movie "rank propaganda for the sexual revolution and the homosexual agenda". And Judith Reisman, who has waged a decades-long war against Kinsey’s memory, refers to "a legacy of massive venereal disease, broken hearts and broken souls".

And is it a Jihad?  Well the lunatics certainly think so:

A recent newsletter of the abstinence-education group Why know? compared the publication of “The Kinsey Report,” in 1948, to the attacks of September 11th, and labeled Kinseyism “fifty years of cultural terrorism.”

BLOGS: World Mental Health Day

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Psychologist Deb Serani informs me that it’s World Mental Health Day.  Go to her blog to see more, and no snide remarks about which of our nation’s leaders this is aimed at!

BLOGS/PHYSICIANS: Enoch Choi in New Orleans

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oDr. Enoch Choi, a medblogger (and OT but BTW a liberal evangelical Christian just so you know there is one!) has packed up his black bag and spent the week in New Orleans following his medical calling.  Go read his blog and scroll down to the October 1 entry — then read up. Doesn’t take too long as he’s posting via his Treo and he’s mighty mighty busy. It’s an amazing read.

It’s very clear that the return to New Orleans is fraught with similar perils to the evacuation. Plaudits to Enoch to heading out and putting his God-given talents to work in a crisis. They still need doctors desperately down there.

UPDATE:  Enoch writes direct (promoted from the comments). Please consider donating once more to the organizations that are sending committed volunteers like him onto the very front lines.

thanks for the props, Matthew. i’ve come to new orleans with City Team ministries and serving under the local authority of Pastors Resource Council PRC Compassion, invited by the local churches in St. Bernard. Menlo Park Presbyterian Church MPPC paid all of our flights, expenses, medicines and supplies.

Any of those organizations would be able to immediately deploy your donations to people we’re seeing every day. Yesterday, one of our nurses gave us $1000 from their Kansas Church… Their entire disposable cash. We spent it today on natural tears, sunblock, nasal saline, sudafed, lozenges, cough syrup, hydrocortisone. We gave it away in 2 hours. There’s immesurable need here, and whatever you give to MPPC would be immediately consumed by that need by our medical team.

to give to MPPC:

to give to City Team:

to give to PRC Compassion:

This is so different than giving to Red Cross, what you give to them will be spent on the next disaster. The Red Cross doesn’t have physicians down here. I don’t see any other medical teams down here other than ours. There are plenty of individual physicians that have come down, and they’re very important, but as an organized group, we’re it.

POLICY/POLITICS: Linking Katrina, Medicare Part D and bird Flu

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Here’s my FierceHealthcare editorial today:

FierceHealthcare has been following two stories all year that both had big moments this week. One is the avian flu that’s been popping up in Asia and may end up being as deadly as the 1918 epidemic. The other is the new Medicare Part D roll-out. For Medicare Part D, the complex mix of plans being offered to seniors will test their ability to understand the options on hand — anyone who’s bought insurance in the individual market knows that’s not easy — and will also challenge the Federal government’s ability to run and police a complex program with many different private and public agencies taking part. Given the nation’s recent experience with a similar challenge on the Gulf Coast, we can be forgiven for looking at the Medicare roll-out as the next great test of government, and hope that it shows improvement. Especially if we have a real crisis in the near future if avian flu becomes the pandemic we all fear.

QUALITY: DM has been counting it wrong but Al Lewis sets it straight

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Over the last year or so the DM listserv has been buzzing with the concept put about from Al Lewis, Ariel Linden, and Ian Duncan that to this point ROI for disease management programs has been calculated wrongly. But in an interview with Managed Care magazine Al explains how to get it right, and also predicts that this will help DM finally take off.

My cynicism has been detailed — and refuted — before in THCB, but at some point getting DM right will make sense. My fears of course revolve around problem that the the incentive for a insurer to get rid of a sick member is much greater than the incentive for them to manage that member well, and it’s a damn site easier to do the former.

PHYSICIANS/POLICY: Malpractice explained

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Susan Sheridan, whom I wrote about last month, is even more famous. She and her son Cal who has kernicterus syndrome are the hook for a piece in The New Republic by Robert Berenson. (You may only be able to get to the first page…) It largely tells the truth about malpractice, but just to reiterate, my reading of the data is that:

1) The tort system only picks up about half of malpractice2) The medical system barely ever apologizes (Susan never got an apology), but when it does law suits are much less likely3) Too much of the money goes to lawyers and expert witnesses, and lawyers and Democrats don’t want to change that, but as they don’t hold power–so what.4) Doctors, whose Republican allies now do hold power, are only interested in reducing caps on damages, which may reduce their rates a bit but does nothing to help severely injured victims of malpractice and more importantly nothing much to reduce medical costs for the rest of us. (I live in California where we have the MICRA caps and my insurance premiums ain’t going down — sufficient proof to me that the Republican talking points about this are bunk).5) Defensive medicine makes the system and the doctors more money and until they stop getting paid for it, the whole "8-10% savings" concept is a myth6) Special courts, non-binding arbitration, apologies, openness, and a near-miss reporting system are all good ideas and are the eventual solution, but the AMA won’t back them, and their Republican allies won’t either. Why not? For them tort reform has nothing to do with patients, and not much to do with doctors, but much, much more to do with stopping what are mostly legitimate lawsuits against malfeasant corporations — and it’s much better if that all gets mixed up with an evil lawyer suing Marcus Welby MD in their PR campaign.

So unless there is some real concession from organized medicine, we’ll keep what we’ve got and it doesn’t work.  The "good" news is that it’s only a minor issue compared to the complete morass of the rest of the health care system.

(Hat-tip to Brian Klepper for the article)

HOSPITALS: Sutter and Kaiser getting pissy, and fiddling while Rome burns

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Just to follow up on the recent "SEIU hates Sutter but loves Kaiser" piece, this morning I was up at CPMC as a patient, having a doctor looking at my bum knee in the medical office building next door. (And no, I didn’t cross a picket line as the doctor I was seeing was in a medical group that’s not owned by Sutter, at least I think it’s not and it wasn’t being picketed). The pickets were out in force with a SEIU RV parked outside.

Meanwhile, on the issue of giving free care to the uninsured (or not, as the case seems to be) Sutter is now pointing out that it thinks it gives lots of charity care because it "writes off" some $40m a year in discounts that it gives Medicaid and Medicare off its charges. After you pick yourself up from rolling on the floor laughing about that one, there is the slightly more serious issue that they raise which is that everyone else does it (or actually, doesn’t do it). "Everyone else", in this case, of course means Kaiser.

This is an old and perhaps even valid meme, in that Len Schaeffer brought it up years ago when he noted that Kaiser gives very little charity care at its hospitals, which he too converted into the concept that Blue Cross was paying for the "extra" charity care delivered at non-Kaiser hospitals, because of some mystic cross-subsidy from the care that Kaiser wasn’t giving.

So what’s the solution?  Well of course it’s to form a committee, provided that Blue Shield’s Foundation comes up with $75,000 to pay the committee. Yup that’ll solve the uninsurance problem overnight.

However, if I was in Sutter’s position, I might just be trying to get my head a little lower out of the firing range and not just using the "Officer, everyone else was speeding too" excuse.

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