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Is Wal-Mart Leading the Charge on Health Reform?

Jul 6, 2009• 28

By RAHUL PARIKH

Last Wednesday’s headline in the Wall Street Journal may have surprised you. It read: “Wal-Mart Backs Drive to Make Companies Pay for Health Coverage.” The article discussed Wal-Mart’s open support for an employer mandate requiring all but small businesses to provide care for its workers, a stance that other retailers have opposed for obvious reasons.

I’ve been following the story of Wal-Mart and health care reform for the past several years. While some see this move as the company’s way of trying to level the playing field between it and other retailers, it nevertheless has taken several actions over the past decade to make health care more accessible and affordable.

Wal-Mart’s transformation began in 2006, when then CEO Lee Scott shook hands with Andy Stern, the head of the Service Employees International Union. In the past, such a handshake would have been unimaginable. Wal-Mart had earned a reputation for failing to provide its workers with health care, and the SEIU was one its strongest critics.

That changed with rising health care costs. Wal-Mart, like labor, recognized the need to provide affordable health care. The Scott/Stern handshake was a call for affordable care for all Americans by 2012.

This handshake can be seen as a bookend to another handshake decades ago, described by Malcolm Gladwell in a 2006 New Yorker piece. This first handshake was, like this one, between two powerful men representing labor and industry:

“The president of General Motors at the time was Charles E. Wilson, known as Engine Charlie. Wilson was one of the highest-paid corporate executives in America, earning $586,100 (and paying, incidentally, $430,350 in taxes). He was in contract talks with Walter Reuther, the national president of the U.A.W. The two men had already agreed on a cost-of-living allowance. Now Wilson went one step further, and, for the first time, offered every G.M. employee health-care benefits”

Thus, American health care: –employer based, brokered by private insurers, and provided by doctors on a fee-for-service basis. The kind of care that has created the fragmented market that most of are a part of today. The kind that has left 48 million Americans uninsured and millions more underinsured and just one illness away from bankruptcy. The kind of health care that led Wal-Mart the SEIU and the Center for American Progress to write a letter to the White House today in support of change.

As reported in the Journal, Wal-Mart has taken sincere steps to provide health care to its employees. Today, as a result of cutting the time of eligibility in half and increasing choices of plans, 52% of Wal-Mart U.S. employees are covered by the company. That’s compared to 45% of the rest of the retail industry.

Wal-Mart hasn’t just stepped up to increase coverage for its employees–in 2005, it became the first company to offer $5 generic prescriptions–a breakthrough price for people who previously needed to decide between taking their meds or eating dinner.

Wal-Mart has also been in the lead in opening walk-in clinics in its stores. Although the recession seems to have slowed the initial enthusiasm for retail medicine, the idea, in principle, has the potential to offer convenience at a very affordable price for people who have minor ailments like sore throats.

Finally, Wal-Mart has also recently started offering an electronic medical record to doctors. While it remains to be seen whether it will sell, you have to give credit to the big box retailer for taking the initiative.

Whether you like or loath Wal-Mart (and all of us seem to fall into one or the other category), its efforts to shape up American health care shouldn’t go unnoticed. In fact, I would dare “real” health care groups, like the American Medical Association, to show that they can match Wal-Mart’s initiative and drive to improve health care. So far, all we’ve seen from the AMA in the past few weeks has been a lot of lip service trying to assure us that they’re on the side of reform while behind closed doors, the Association’s members are still fighting about its future. And remember, the AMA represents at best 20-30% of doctors in this country, which is one reason why the New York Times’ Nicholas Kristof urged “President Obama, don’t listen to the A.M.A. on this issue. Instead, for starters, call your doctor!”

Sunday reading-Jon Cohn on French & Dutch health care

Jul 5, 2009• 21

By Matthew Holt

Jon Cohn has a long article in the Boston Globe about how the French and Dutch get health care about right at half the American cost with none of that unpleasant Canadian or Britishness that FoxNews loves to complain about. Given that (if we get reform even vaguely right) we’ll look more like Holland or Germany that Canada, it's your essential Sunday reading.

Of course Jon is slightly too nice as ever. One minor point about access to specialty care—it may take longer there than here, slightly. But in the same Commonwealth study Cohn quotes, waiting times for elective surgery were shorter in Germany than they are in the US. And of course no one there gets bankrupted by the cost of medical care.

Broad Agreement that Worker’s Comp Program for War Zone Workers Needs Fixing

Jul 4, 2009• 6

By T. CHRISTIAN MILLER

Brink-contractor-475px-latimes

Congressional hearings generally follow a script. Lawmakers publicly
vent their outrage, administration officials offer plausible defenses,
and the outcome is inconclusive. But this month's airing of complaints
about the government's system for taking care of civilian workers
injured or killed while on the job in Iraq and Afghanistan was notable
for its unanimity.

Republicans and Democrats, Obama administration officials, private
insurance companies and injured contractors all agreed that there are
serious flaws in the Defense Base Act, [1]
a 70-year-old law that requires federal contractors to purchase special
workers' compensation insurance for employees working in war zones.

The Labor Department, which oversees the system, acknowledged that
it had failed to consistently provide for the needs of the injured.
Insurance carriers complained that tight deadlines and paperwork
requirements were outmoded for the complexities of a war zone. Injured
civilians recounted long, painful battles to get prosthetic legs,
prescription eyeglasses and other basic medical needs.

Careful What You Wish For

Jul 4, 2009• 25

By THE INCIDENTAL ECONOMIST

On the left are those who would like health reform to include a strong public plan, one that could negotiate large provider discounts, driving down the cost of medical care. On the right are those who think health insurance should be provided only privately. I’m neither left nor right. I consider myself a realist and an empiricist.

A reasonable reading of the political tea leaves suggests that health insurance for the non-elderly will remain largely a private affair. (See the Debating the Public Option in The American Prospect by Paul Starr, Robert Reich, and Robert Kuttner.) Therefore, I’d like the private insurance market to work well. I’m also very familiar with the Medicare experience (and its problems) with both public and private provision of insurance.

So is Kerry Weems, the former acting administrator of the Centers for Medicare and Medicaid Services (CMS), the agency that oversees Medicare and Medicaid. Weems was interviewed recently by John Iglehart, the founding editor of Health Affairs, a respected journal of health policy (Doing More With Less: A Conversation With Kerry Weems, Health Affairs, 18 June 2009). Based on his experience managing Medicare and Medicaid, Weems had some interesting things to say, some of which I summarize below.

In general he paints an ugly picture of a public plan. If you’re hoping health reform includes a strong public plan you should be careful what you wish for, and you should read the interview to see what problems a public plan might have. This is not to say a public plan is better or worse than private plans. It is just to say that one should expect that a public plan will likely experience certain types of problems. Now on to the summary of the Weems-Iglehart interview.

On Congress. Congress has not treated CMS well because funding it is not as sexy as funding other agencies overseen by the same appropriation subcommittees: the National Institutes of Health and the Centers for Disease Control and Prevention. A consequence is that CMS has insufficient resources to fight waste, fraud, and abuse. For example, according to Weems,

“CMS’ annual expenditures [are]…more than the economies of all but twelve nations, and CMS carries out its responsibilities with a staff of 4,600 people. Social Security is of comparable budget size and handles its dollars with about 66,000 people…”

On Medicare Advantage. Weems feels that private plans under Medicare advantage can offer “better care at lower or the same costs” as traditional fee-for-service Medicare.

On Payment Errors. Medicaid has a payment error rate of 24 percent, meaning that the payments paid to providers are either incorrect or unverifiable 24 percent of the time.

On Waste, Fraud, and Abuse. Investigations of waste, fraud, and abuse under Medicare and Medicaid have yielded a return of $17 for every $1 spent. However, far too little is spent in the fight. Therefore, a considerable amount of waste, fraud, and abuse exist under Medicare and Medicaid. (See the recent stories on fraud in Miami, Detroit, and Denver.)

On a Public Plan under Health Reform. Weems thinks a public plan is “a bad idea because the government has a difficult time selecting only those providers who deliver high-quality care. There is a risk that a lot of resources will be wasted on poor care.

On Political Pressure. CMS administrators get a lot of pressure from Congress to treat certain providers more favorably than they might deserve. Such political meddling is a handicap in properly administering a public insurance plan.

On Physician Payments. The American Medical Association (AMA) has considerable influence on physician payments through its Resource Based Relative Value Scale (RBRVS) Update Committee (RUC). Weems thinks the resulting payments have “contributed to the poor state of primary care in the United States.” (Weems’ anti-RUC statements sparked a blogosphere debate (hat tip: Kate Steadman of Kaiser Health News). Rebecca Patchin, Chair of the Board of Trustees for the American Medical Association wrote on the Health Affairs blog that CMS is under no obligation to follow the RUC’s recommendations and she cites examples where it has not done so. On the Health Care Renewal blog, physician and Brown University professor Roy Poses asks “why does CMS rely exclusively on the RUC to update the RBRVS system, apparently making the RUC de facto a government agency, yet without any accountability to CMS, or the government at large?”)

On balance, it is clear that Weems is not impressed with the public provision of health insurance under Medicare and Medicaid. Some of the sources of problems could in principle be remedied. However, if Congress were to implement a public plan under health reform there is no assurance it would not suffer from at least some of the problems that plague traditional Medicare and Medicaid. I think the most challenging are political pressures, including rent seeking on the part of providers, and a potential inability for a public entity to selectively contract based on quality.

The Incidental Economist holds a joint appointment at a major research
university and a federal government agency. In his current position,
he studies economic issues pertaining to U.S. health care policy with a
focus on Medicare. His writings can be found at www.theincidentaleconomist.com

HELP! This is Unbelievable

Jul 4, 2009• 36

By ROGER COLLIER

Key members of the Senate Health, Education, Labor, and Pensions Committee announced on Thursday what they claimed were dramatically improved cost and coverage estimates for the latest version of their health care reform bill.

Headed by Democratic Senator Christopher Dodd, HELP members (in a Muzak-marred conference call with reporters) stated that the revised bill would cost only $611 billion over ten years, a figure apparently computed by the CBO, and that with a further expansion of Medicaid would provide coverage for 97 percent of Americans.

Key features of the bill provided during the conference call included a public plan option, subsidies for lower-income individuals buying insurance through an exchange mechanism, and a play-or-pay employer mandate.

Sounds good? We’ll have to wait for details, but two big problems are already apparent.

The first BIG problem is that the ten-year cost estimate of $611 billion excludes the cost of Medicaid expansion. With Senator Dodd’s admission that the HELP Committee expects this to provide coverage for 7 percent of Americans (the difference between the 97 percent coverage with Medicaid expansion and 90 percent without it), the total cost balloons to far more than a trillion dollars. A rough calculation of Medicaid costs for 20 million Americans at present funding levels gives a total of $80 billion a year – or $800 billion just for Medicaid expansion, presumably to be shared with state governments already on the verge of bankruptcy.

Even assuming that Senator Dodd misspoke, and the at he intended his percentages to apply only to under-65 Americans, the ten-year estimate for Medicaid expansion is still over $700 billion—with no provision for medical inflation. And, given the financial condition of most states, most of this cost would have to be borne by the federal government.

The second BIG problem is the absurdly modest levy—$750 for businesses with more than 25 workers and $375 for businesses with fewer than 25—to be imposed on employers not providing employee coverage. It’s hard to believe, in the middle of a deepening recession, that many employers will not choose to pay the $375 or $750 levy rather than buy insurance at $3,000 or more (just for the employee, with no family coverage), with additional government subsidies needed to bridge the funding gap.

The CBO has apparently assumed in its estimates that there will not be a big change in the extent of employer-sponsored coverage over the ten-year period, but this seems unrealistic. While we have not seen a “rush to the exits” in Massachusetts so far, the longer-term experience of Hawaii may be more meaningful. Immediately after Hawaii passed its mandated coverage law, the uninsured rate was below 5 percent, but as a series of recessions hit Hawaii’s economy, the rate increased to 8 percent in 1998, and close to 10 percent today. Only the truly naïve can believe that numerous US employers won’t either choose the far cheaper levy option or—as in Hawaii—find other ways of ducking the employer mandate.

Roger Collier was formerly CEO of a national health care consulting firm. His experience includes the design and implementation of innovative health care programs for HMOs, health insurers, and state and federal agencies. He is editor of Health Care REFORM UPDATE [reformupdate.blogspot.com].

Creative thinking about the CER agenda

Jul 3, 2009• 6

By JOSHUA SEIDMAN

This week the Institute of Medicine (IOM) released its list of the top 100 topics that should be addressed in comparative effectiveness research (CER) now — thanks to $1.1 billion in the American Recovery & Reinvestment Act
— that the federal government actually has the resources to do
substantial CER. IOM has prioritized the list by creating four
quartiles, noting that the first quartile is the highest priority
group, etc.

In order for the federal government to make good use of the huge pot of CER money, there are at least five things that they need to do to ensure its value and actually change care delivery.
I’m all for trying to find out whether me-too drugs add any significant
value. However, the greatest opportunities for implementing delivery
system change that improves care effectiveness and efficiency relate to
innovations in how care is organized and delivered, and how insights
are communicated to the broad range of health care actors — most
notably consumers.

That’s why I was heartened by the IOM’s top 100 list — though
certainly I’d move a few up a quartile or two. The list has many
projects that fit my priorities, including a strong emphasis on CER to
reduce health disparities.

Drug Suspected in Michael Jackson Death Subject of Recall

Jul 3, 2009• 5

By SHERI FINK

Results of Michael Jackson’s toxicology tests have not yet been released, but suspicions have centered on the powerful anesthetic and sedative drug propofol, also known by the brand name Diprivan. It was reportedly found in Jackson’s house, and a nurse who worked with him said he begged for propofol to help him sleep.

Now, some lots of propofol are being recalled for contamination.

Last night, the Centers for Disease Control and the Food and Drug
Administration advised clinicians immediately to stop using propofol
from two lots found to be tainted with elevated levels of endotoxin, a
toxin made by bacteria. Regulators said Teva Pharmaceuticals, the
manufacturer, had begun a voluntary recall of the lots.

Commentology

Jul 2, 2009• 9

Futurist Jeff Goldsmith’s analysis of issues that could cause problems for any health reform effort that eventually emerges from the foodfight in Washington this summer provoked a wide range of reader replies. (“No Country For Old Men“) Goldsmith wrote in response:

“The fun part of this blog is how much you learn about an issue when you post something. Several learning points: 1) How big a deal this is. $1.6 trillion sounds like a lot of money, but over ten years, it’s less than 1% of the cumulative GDP over those ten years (which I grew to $16.8 trillion from its present $14t in 2019). In other words, it’s peanuts. Cumulative health spending over this time looks like over $40 trillion, so even $600 billion in Medicare cuts looks like peanuts. These are small numbers made to look big because of the ten years. Plus ten year numbers are BS anyway because you never get a linear increase over that type of time span. $1.6 trillion actually sounds like Dr. Evil’s ransom demands in Austin Powers. . .”

THCB Reader Margalit offered this response to Dr. Rick Weinhaus’s open letter to former Harvard professor Dr. David Blumenthal, the man charged with masterminding the Obama administration’s ambitious health IT push (“An Open Letter to Dr. David Blumenthal“), urging the administration to rethink support for the current EMR certification process …

“Maybe Dr. Blumenthal should come up with two separate “certification” suggestions similar to the auto industry.

1) A minimal set of standard security and safety items. Nothing too fancy and complicated. Something like car emissions and inspection that products have to pass every year in order to “stay on the road”. Once the criteria are set, the inspection and certification body should be distributed, just like the inspection centers for cars, and multiple private bodies should be able to apply for the status of “Certification Center”.

2) This should be in the form of funding a Consumer Reports like entity, that is completely and totally unbiased, for evaluating EMRs and other health care applications. The Healthcare Consumer Reports should have very strict regulations regarding who it can receive funding from. Maybe the folks at the real Consumer Reports would like to take this one on. I would be inclined to trust them more than anything else that comes to my mind right now.”

Reader Candida also chimed in on the thread on usability prompted by Weinhaus’s proposed EMR design (“The EHR TimeBar: A New Visual Interface Design“), but posed a slightly more provocative question.

“The HIT and CPOE devices out there are an ergonomic failures and that alone renders them unsafe and not efficacious. But that is not the only defect harbored in these CCHIT “cerified” devices that causes injury and death to patients. There are many that are worse and they are covered up. The magnitude of patient injury and endagerment is hidden. The fact is that these are medical devices and as such, none have been assessed for safety and efficacy. CCHIT leadership, when asked about what it does if they get a report that a “cerified” device malfunctions in the after market and results in death, stated that they do not consider after market surveillance in their domain. One can take this a step further. How is it that medical devices are being sold without FDA approval?”

Dr. Evan Dossia wrote in to challenge critics who blame rising malpractice rates on physician attitudes and – in some cases – their ties to the insurance industry, in the thread on Dr. Rahul Parikh’s post looking at how the American American Medical Association is viewed one hundred and fifty years after the organization’s founding. (“How Relevant is the American Medical Association?“),

“Physicians began to be abandoned by big name insurance companies in the mid-1970’s so instead of “going bare” we started our own companies. As we continued to have ups and downs in the malpractice insurance market, more physician oriented companies appeared. Doctors now prefer companies started by other doctors and run by other doctors because these companies fight for their share holders rather than settle with plantiffs attorneys in order to avoid court room battles.”

Fellow reader Tcoyote agreed with industry analyst Robert Laszewki’s criticism of the rumored exemption that the Obama administration may give to labor unions, exempting them from any tax on health benefits for a period of five years. (“Unions May Get a Pass on Health Benefits Tax.”)

“Of course, this is politics, and the Democrats must throw the unions, whom they are stiffing on the “Employee Free Choice Act”, some kind of bone to get health reform financed. True enough, unionized workers’ after tax income isn’t protected by collective bargaining, but if unions knew it could fall by 5-7% because of a benefits tax, they would have asked for more in wages to cover the cost. I completely agree with the Chrysler/GM analogy. Those gold plated benefits are a major reason why our manufacturing sector is in trouble …”

Sarah Greene of the Group Health Center for Health Studies had this to say in response to Weinhaus’s take on a new and more usable electronic medical record design …

“It’s curious to me that human-computer interaction does not seem to have much traction in the EHR world, and yet in the consumer-centered Personal Health Record community, it is a guiding principle. While some might wonder if this suggests that doctors are super-human compared with patients (grin), it strikes me that the EHR developers of the world could take their cues from patient-focused efforts such as Project Health Design (www.projecthealthdesign.org)”

Biggest and best month ever on THCB

Jul 2, 2009• 6

By Matthew Holt

By the time most of you read this, I’ll be heading to England to tell those Limeys how to do healthcare right the American way….or something like that, and then off to China. I’ll be back in Freedonia in about 10 days

But I’d be remiss if I didn’t mention the stellar month we’ve had at THCB. Apart from last October when the election and Google brought lots of people to THCB (particularly to one excellent article by Bob Laszewski on Obama’s health plan) this has been by far our most heavily trafficked month. We’ll end up somewhere around 85,000 visits and 135,000 page views. And the quality of the writing in posts from Jeff Goldsmith, David Kibbe and Brian Klepper, Roger Collier, Michael Millenson, Susannah Fox and many many more, has been excellent. In addition we’ve had lots of controversy notably in Daniel Gilden’s fascinating piece on McAllen and Grand Junction that’s been read and commented on by lots of very very astute people. Then there’s been the campaigns like HealthDataRights.org, and lots of fun back and forth in many many comments.

So many thanks to THCB editor-in-chief John Irvine & associate editor Ian Kibbe for keeping the wheels turning, to all our contributors, to our sponsors/advertisers who enable us to keep the lights on, and of course to all of you for coming and reading and having your say! — Matthew Holt / THCB Publisher

Preventing Extortion

Jul 2, 2009• 5

By JACK CHURCHILL

The debate about a public health insurance option mirrors the debate
about public power in the 1920’s and 30’s. The arguments then were very
similar to the arguments we hear today.

The principal issue then was whether the federal government should
enter the public power business by investing taxpayers’ money to build
the Tennessee Valley Authority and to harness the Columbia and other
rivers for electrical energy, or whether the sites should be transferred to the
private sector. A second issue was who should build transmission lines
and set wholesale prices when the Federal government built dams.

The answer to the second question was first enunciated on the Senate
floor in the fight over the Wilson Dam in 1920 by Senator John Sharp
Williams of Tennessee. He said, “The government should have somewhere a
producer of these things that should furnish a productive element to
stop and check private profiteering.” Thus was born the yardstick
federal policy which later found its way into TVA legislation through
the efforts of Nebraska’s Senator George Norris. In a 1932 campaign
speech in Portland, Oregon, Franklin Roosevelt referred to his TVA and
other regional proposals as “yardsticks to prevent extortion against
the public.”