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Fishing and Finding Beneficial Solutions?


You might have missed the formal announcements but this is Cover the Uninsured Week, when the largest health care research and good works funder, the venerable Robert Wood Johnson Foundation, attempts to remind America about the problems of the uninsured. The nice folks in Princeton, N.J. are roundly ignored, even if they do share a home hospital with “House”.

But in the spirit of helping out–Dr. House, er Hugh Laurie, is yet another Brit–we are today going to look at three highly correlated symptoms,to see if buried within the  concern “uninsured”, there may just be a solution to the major part of our health care crisis wriggling its way out into the public eye.

What three symptoms? First is a renewed realization that employment-based health insurance is dying on the vine. Verizon’s CEO recently gave a speech in which he basically said that he wanted to get out of the health benefits business. At the same time, I cleverly pinched this version of a chart put together by the Commonwealth Fund (and re-jiggered by Peter Lee, who runs the West Coast employer health organization PGBH), which shows something we have all suspected: Those working in all but the highest two income groups are losing access to health insurance very, very quickly.Uninsured by quintile

This data essentially confirms what we already know from the headlines about WalMart, GM, and the Safeway strike. Middle class insecurity over the availability of health benefits is growing rapidly—and rationally. Why is this important? The folks in those middle income groups tend to do things that politicians care about, like vote, in far greater numbers than those who are poorer. Even more recently the Commonwealth Fund folks have come out with data showing that 41% of working age adults earning between $20,000 and $40,000 last year were uninsured for at least part of the time. That number is up from 28% as recently as 2001. As my Spot-on colleague Christopher Brauchli observed last week, health insurance is on the way to becoming a luxury good only available to upper income workers.

Secondly, there’s been a rash of news reports about the distasteful, or perhaps just politically insensitive, behavior of the two largest health insurers. To begin, UnitedHealth Group’s CEO Bill McGuire was shown by The Wall Street Journal to be sitting on $1.6 billion in vested stock options. Even better for him? He was allowed by his board to retrospectively choose the date on which those options were awarded. The date chosen? Just conincidentally that turned out to be the low price for the year in all cases. CalPERS – California’s public employees’ pension fund – and the Minnesotta’s Attorney General’s office are taking notice.

McGuire’s defenders point out that unlike the CEOs of Enron or WorldCom he’s been rewarded for driving up his stockholders’ wealth. But all the same, the options gaming is not exactly a smart move from a guy who doesn’t exactly need the money. Worse, despite having cut the best deal of any insurer in getting access to Medicare Part D clients (via an arrangement with the American Association of Retired Persons) United announced that earnings weren’t going to be quite so good in the future. The stock is down more than 20% since the start of the year, and that is not exactly winning more friends on Wall Street. In addition United, which used to bill itself as the insurer friendly to doctors, was fined for not paying them on time in Arizona, and got into a nasty little spat with doctors in St. Louis by publishing cost and quality rankings about them in what was perceived to be a heavy-handed manner.

It doesn’t end with United. The other giant insurer Wellpoint’s biggest single subsidiary, Blue Cross of California, is involved in a nasty little court case in which it’s being sued for retroactively cancelling policies of customers who made the mistake of actually getting sick. Yesterday’s news is that several of its employees have essentially admitted that they went trawling for bad faith excuses to get out of having to pay for their clients’ care. That this is publicity Wellpoint doesn’t need; in an election year with health uninsurance’s affordability moving up the agenda, it’s even worse.

And then there’s the steady realization that while insurers have been jacking up the premiums to their employer and individual clients, relatively much more of that premium has been sticking with the insurer than being passed onto providers. Average “medical loss ratios”—the share of premiums charged that actually gets spent on care—used to be around 85%, but now are closer to 75%. Much of the difference is just profit. And it’s not just small employers and individuals who are noticing that this lily is being gilded. It’s an election year; I mentioned that, no?

The third phenomenon is the willingness by some people–and not what you’d call traditional reformers but those in the most capitalistic parts of the health care business–to figure out if there’s a third way out of this mess. Is there a way to get to universal health insurance without cutting their own throats in the process?

Jean-Pierre Garnier, CEO of pharmaceutical giant GlaxoSmithKline P.L.C., said yesterday that the government should enact a system of national health insurance as a way to broaden access to treatment and reduce costs….Garnier said a national health insurance system was financially within reach of the United States……it might function like the system recently enacted by the Commonwealth of Massachusetts. There, all people will be required to carry a catastrophic, or bare-bones, health insurance policy starting in July 2007 aimed at covering only the most severe ailments, or face fines and other financial penalties.

Even McGuire is getting into the act. He said last year in a NYT article in late 2004 that he supported universal insurance.

”The key issue is not who is paying, but what you are paying for,” he said. ”I think we should have mandatory insurance. It should be based on the concept of an essential benefit. Guided by medical science, we should decide what is essential and provide it.”

The somewhat surprising salient event in all this was the willing participation of Mitt Romney,a Blue state Republican governor, in passing a universal insurance plan in Massachusetts. Along with the statements of people like McGuire and Garnier, what’s going on in Massachusetts shows that business interests outside health care and the wiser heads within it realize that this is a problem that needs to be fixed. They’re starting to think that they need to reform it in a way they can live with, before it goes into meltdown and “fixes” them.

So can there be a health-system endorsed “soft-landing” into reform where a combination or employer or individual mandates,  greater regulation of insurers, and cross-subsidies from the wealthy and healthy eliminates the uninsured—and the consequent fear of middle class voters that they might join their number—without fundamentally restructuring the health care delivery system? Several very smart people, like Leif Haase and Brian Klepper, have been suggesting that it’s possible.

The alternative of course is to ignore the problem, which will at some point either result in a heavy-handed single payer system, or in America’s health care future looking more like Brazil—fine for the very wealthy, and screw the rest.

Share  Posted by Matt Holt at 6:03 PM | Permalink

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