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The Primary Care Conundrum

Jul
29
2008

Ask any health care wonk and they’ll tell you that within the larger health care crisis is a primary care crisis. There is more and more demand for primary care physicians – the person you probably call your “family doctor” – but America’s medical schools are producing fewer of them.

Why? Well in a word, money.

It’s not actually medical school that’s the problem. It’s what happens next. A newly graduated physician, carrying a big chunk of debt used to pay for medical school tuition, gets to chose their residency and, as such, decides what type of doctor to become.

In the U.S. we let medical students choose what to do. Not being dummies, most of them notice that diagnostic radiologists and orthopedic surgeons make three times what primary care doctors make, and choose their career path accordingly. Why the vast difference in compensation? Doing something to a patient – fixing a broken hip, reading an x-ray – has always been better rewarded more than talking to them about their high blood pressure or their son’s excema.

And while the taxpayer has subsidised teaching hospital residency slots to the tune of a more than $100 billion over the last two decades, the government doesn’t limit the number of those slots by specialty type. Most sensible countries do because they know that the more specialists there are the more specialty care gets done. And specialty care is very expensive. Which is the main reason we spend so much more on health care here than in other countries. In 1965, primary care doctors made up 50 percent of physcians; the other half were specialists. Today, about 70 per cent of America’s doctors have become specialists. Most other countries have the reverse ratio.

There were two major attempts to redress the imbalance in the 1990s. First, managed care plans like HMOs started paying primary care physicians a global fee to provide all care to their patients. In some cases this meant that primary care groups started acting as general contractors and ended up reducing the specialty and hospital care their patients received — and keeping more money into the bargain. In some markets, notably southern California, specialists saw their incomes drop dramatically. Politically this resulted in the ‘managed care backlash’. Patients and specialists complained, politicians and judges threatened, and insurers and employers who were paying for the HMOs backed off. Worse the insurers started cutting payments to the primary care groups and many doctors ended up bankrupt — having taken on insurance-type risks that they couldn’t manage: getting paid to treat a group with a range of illnesses and problems and incomes rather than one or two not-so-sick people with fat wallets.

The other attempt to improve the lot of the primary care doctor was the introduction of a physician payment scheme by Medicare called the Resource-based Relative Value Scale (RBRVS). The name underlined the intention. Payments to doctors were meant to be based on the relative value of resources used. So a unit of time spent managing patients and talking to them about exercise for high blood pressure, for instance, would be close in value to a unit of time cutting them open.

Unfortunately, America’s specialty societies hijacked the process and they now control the somewhat secretive RBRVS Update Committee, which advises Medicare on those payments. So specialty care and procedures remain much much better rewarded than primary care. In the nearly three decades after this problem was first recognized, it’s becoming harder and harder to find primary care doctors. It’s going to get worse; last year the number of medical students opting for primary care fell to an all time low.

So what’s the likely outcome? Medicare clearly will take a hack at redressing the imbalance in payments as part of whatever reform happens in 2009. But unless the specialists and the hospitals that live in symbiosis with them are ready to significantly and voluntarily cut their incomes and reallocate that money to primary care, there will not be enough money for primary care to solve the current shortfall. And the U.S. is not seriously going to tackle – let along address – this problem as a matter of public policy until the whole system breaks so severely that more people demand massive reform. Such a time is still at least a decade or so away.

In the meantime, the market will have a go at addressing the primary care shortage. but it won’t do it in ways that primary care doctors will like. You’ll continue to see an expansion in nurse practitioners in retail clinics in supermarkets and drugstores. And more and more people will become frustrated by the lack of availability of primary care docs in their neighborhood and will go online where they’ll find plenty of entrepreneurial companies offering Internet consults. Of course if an online consult is good enough – and it probably is in many if not most cases – why does that doctor need to be in the same town, or even the same country? Or if it’s a diagnosis that requires extensive medical knowledge, why can’t a computer do it as well? Why not indeed? You’ll see all this happening in the next few years as well.

In fact, the result of the primary care crisis may not be inspired reform. it may instead just end up causing globalization and technology outsourcing to come into physicians’ lives. Just like it has to auto workers, steel workers and call center clerks.

Posted by Matt Holt at 5:42 AM | Permalink

The Two Ted Kennedys

Jul
15
2008

Well, lookee there: Congressional Democrats actually won one. That’s right. After 14 years of ignoring core liberal principles – including the last 18 months when they actually had a majority – they took on the Republicans and won.

How did this happen? Well, it’s an election year, and by forcing an issue that Congress has been putting off for years–automatic cuts in Medicare physician payments–Democrats seized the chance to score a few points.

Essentially, the Democrats decided that, instead of agreeing to another fudged compromise to put off the decision to cut payments, they’d set the insurers against the doctors. So they found the money to put off those automatic cuts by taking some away from private Medicare insurers. Now, it was a bit of a surprise that so many House Republicans joined them and drop-kicked the insurers with whom they’ve been aligned for so long, although of course they’re all up for re-election. But once there was a veto-proof majority in the House, the Senate Democrats realized that they could force the issue and score a political win.

First time ’round on the roll-call vote, not enough Senate Republicans voted with the Democrats to create a veto-proof majority. But the Democrats hung tough and sent the Republicans home to the 4th of July festivities as the party that wanted to cut doctors’ fees so rich insurance companies could stay just that.

When the Senate returned seven Republicans, including three up for-re-election this November, caved. And to call attention to the issue, Sen. Ted Kennedy, back from brain tumor surgery, made a dramatic entry on to the Senate floor, where he cast the filibuster-overriding vote. The cuts in Medicare physician payments were suspended and the money will instead to be taken from private Medicare insurers.

The New York Times’ Paul Krugman speculates that this – as well as the expected Congressional over-ride of President Bush’s veto – means that the Democrats have found their spines and may get enough Republicans on their side to pass Obama’s full health care program, should he become President.

But there’s a little problem here, and it’s not Ted Kennedy the Senator, it’s Ted Kennedy the patient.

Kennedy’s illness sparked a lot of vitriolic discussion about whether he would have received emergency surgery if he’d lived in Canada. He didn’t even stay home in Boston, home of five major teaching hospitals, but went to a super-specialist at Duke University in North Carolina. And while rich politicians in any nation will always get the medical care they desire, there is an honest discussion to be had about whether it is appropriate for society to be paying for the type of care Kennedy received.

That conversation often gets railroaded by the crowd who say that health care by government means rationing. Now in fact that’s a laughable accusation in the U.S. as the taxpayer, via Medicare, pays for just about any new treatment that the medical care system can dream up. That’s a major reason why we spend so much on health care in the U.S. But it is unquestionably true that other countries spend less on health care in part because they do fewer more aggressive procedures, including fewer more aggressive procedures on very ill elderly people. Like Kennedy.

This generates two arguments. The first is very controversial. How much is it worth spending to keep an elderly and very sick person alive for a few more months? After all resources spent on the elderly and ill are then not available for other needs. This isn’t just theoretical. Right now we spend $100,000 on a cancer drug that may extend life for three months, when there’s no pre-natal care program for 15% of America’s pregnant women

The second argument is less well known. The types and amount of treatment all patients receive, including the very, very sick, vary tremendously in different parts of the country. More importantly, perhaps, the data is pretty clear that less care results in better outcomes. So potentially we could provide all the effective medical care that’s needed while providing less actual care.

Regardless of your reasoning, providing less care means spending less money. This could and should be good for society overall and may improve health. But it also means that the debate about how to treat patients like Ted Kennedy–and those even older and sicker–and also the debate about what the appropriate level of care is for everyone, translates into an argument about putting less money into the system overall.

Any wonk knows that we need to deal with the problem of un-contained and unjustifiable health care spending growth. But every rational politician knows that significant cuts to the Medicare budget will cause a vigorous reaction from those currently receiving money for providing that “unjustifiable” care. And when that someone is a doctor or a hospital, it’s easy for them to rally support for their cause, as the Republicans found out this week.

Eventually we’ll have to do something about how we agree to finance, and provide, care to the next generation of Ted Kennedys. By then there may not be some greedy evil insurers to play off against the good guys. Instead there’ll be a massive change in what and how Medicare pays the health care system. And then the real hardball will begin.

Posted by Matt Holt at 5:00 AM | Permalink

An Expert Dilemma

Jun
26
2008

I want to ask your help. I have to make a financial decision regarding my health insurance and given the confusion of the system – one I’m supposedly expert in – I need advice.

Now realistically you’re not likely to be much good to me. Why do I say this? Well, the data says you’re dummies.

Last week Trizetto, a private tech company, put out a survey that said as much. While 80% of consumers surveyed were concerned about health care costs, less than a third knew how much their family spent.

It gets worse. Around 60% of Americans, including the vast majority of those under 65, get their insurance from their employer. How much are employers paying each year? Well according to Joe Public, not that much. Most don’t know or think it’s less than $5,000 per family. In reality it’s around $9,000.

But I’m not one of the blissfully ignorant who gets his insurance at the company trough. Well, not quite. And hence my cry for help.

As a solo consultant I buy my insurance in the gong-show that is the individual insurance market. It’s an convoluted process in which you attempt to persuade an insurance company that you are healthy and worthy of their lowest premium rate. About four years ago I succeeded in this endeavor and Healthnet issued me a high deductible policy at the low price of $99 a month. I’m paying nearly $200 a month now because of premium increases, but that’s still way less than I would have paid if HealthNet had decided that I wasn’t a good risk.

Now California, where I live, doesn’t do much to protect individuals entering the insurance market but once you’ve bought an individual policy, the insurer can only increase the rates with everyone in your age group. But if you let the policy lapse and then try to buy another — usually because you went back into the corporate world and then left again — they’ll re-examine your medical history. If anything has gone wrong – surgery, illness, funny blood work – you might see your rates increase by a factor of 4 or 5. More likely, you won’t get insurance at all.

That’s not currently my problem. This is: I got married.

My wife has a job and health care benefits. She put me on her company plan for an extra $50 a month.

This year my individual premium is heading to $250 a month. Now most of you are saying, why is he continuing to pay $250 a month when his wife is paying $50 to cover him on her plan? The obvious thing is to cancel my HealthNet plan.

But what happens if my wife comes to her senses and stops being my wife? If that happens I’d be better off keeping my plan at $3,000 a year because if I have to buy insurance again in a year or two, and they decide I’m not a good risk, it might cost me $12,000 a year!

It gets more complicated. If my wife stops working, we could buy into her company’s plan under something called COBRA for another three years. But if we decide not to do that we might have to re-apply in in the individual market as a family which means being underwritten again – and running the risk of being a bad risk. So, perhaps we wouldn’t be able to buy insurance, and we’d both be in deep trouble!

And like the rest of the dummies in the survey I don’t know how much my wife’s employer plan actually costs. When you pay for COBRA you pay the whole fee: the employer does not chip in. So I need to find out, and work out the possible future costs. And if you figure into that the relative chance of my not being married and therefore not being able to buy into my wife’s plan my $3,000 in “extra” insurance starts to make a kind of odd sense.

But this all begs a question: Why? The current health insurance system has so many complex wrinkles that an alleged expert (me!) is not sure what to do. There aren’t any good choices, and the decision analysis requires PhD-level economic forecasting. Which makes Republican nominee John McCain’s plan to force these decisions on more people, by giving tax incentives for people to drop their employer’s plan, a mite puzzling.

If this keeps going long enough, the political revolt may create a stable universal insurance plan that will cover me. OK now I’m really kidding.

So can someone tell this dummy what to do?

Posted by Matt Holt at 9:36 AM | Permalink

Obama’s Rx for Change

Jun
12
2008

Clinton has quit, Obama has three times McCain’s resources, and the country is fed up with the Republicans’ war, corruption and toadying to corporations. Democrats have won three “safe” Republican house seats in recent months. It’s their election to lose, and assuming that the fences between rivals really are mended, it might be a landslide.

I’ve written previously that I don’t think Obama is serious about pursuing health care reform. But this week in at a Health Care Town Hall held immediately after he clinched the nomination, he repeated that by the end of his first term, there would be universal healthcare.

In an Obama administration, we’ll lower premiums by up to $2,500 for a typical family per year. And we’ll do it by ….covering every single American and making sure that they can take their health care with them if they lose their job…..We’ll do it by the end of my first term as President of the United States……

Coming from someone who had relatively little to say about health care until goaded into it by former rivals John Edwards and Hillary Clinton this counts as a turning up of the rhetoric. So let’s imagine that there is a solid Democratic majority in the House and Senate with a strong Democratic President.

What type of health care reform might actually pass into law?

Obama’s proposed plan is complicated so the plan’s trip through Congress will be tortuous. And some details are still not aligned. Although Obama says most employers would have to provide insurance, he doesn’t mandate that individuals to buy insurance. But then he says we’d get to universal coverage by having people buy insurance, rather than having the government provide it for free.

The Obama theory is that if insurance becomes cheaper, more people will buy it, and those that truly can’t afford it will be subsidized. But that’s not realistic. Ten percent of people account for more than 50 percent of health care costs and the current game in insurance is to avoid covering that 10 percent.

It looks fairly inevitable that the worst excesses of current insurance practices – avoiding people with chronic conditions – will be banned. But the next step, which is spreading that uneven cost of health care across wider populations, means healthy folks who are not paying their “fair share” will have to pay more. That’s necessary if those paying the most – or in reality, currently unable to get insurance – get to pay less. And those who will have to pay more will likely outnumber those getting a better deal right now. So the Obama plan will look like a cost increase to many. This has largely been the experience in the new Massachusetts “universal insurance” plan.

Obama’s way around this is to have the U.S. government subsidize some of the most expensive cases. That’s the source of his $2,500 a family savings. He’ll also allow people to buy into an equivalent of the Medicare system. Both of these safeguard proposals mean big increases in government subsidies that will require more taxes. But this is all likely to be proposed during a recession. The Federal budget is already heading for another record deficit. Add in the opposition from much of the health insurance industry to these reforms (as they will put some of its members out of business), and you can see how hard this will be to pass Congress.

There is one place Obama can go for the money to pay for his plans. The Medicare program continues to run more or less as it did in the 1960s, incenting doctors and hospitals to provide more and more services, at a total cost of some $460 billion in 2008. Remember that Obama says he needs less than $100 billion to cover everybody.

For the past two decades Medicare “reform” has meant paying private plans to take on more of the Medicare population. But more than 80% of Medicare recipients are still in the traditional program, and worse, it’s turned out that it costs Medicare more overall to send a senior into a private plan. So serious reforms of the mainstream Medicare program are going to be necessary.

Any such reforms will have winners and losers. Losers will presumably be those making money providing “too much” acute care now. You can imagine the ability of those “loser” hospitals and doctors to rally political support. So although there be reallocation of funds within Medicare and for the rest of Obama’s plan to work there’ll need also to be an overall reduction in Medicare spending to help pay for the expansion of subsidies to cover more of the uninsured.

So my quick forecast, regardless of who wins in November: We’ll see cuts in Medicare as part of a series of necessary and positive changes in how we pay for health care services. If Obama wins, we’ll also see greater regulation of insurers to prevent the bad behavior we’ve seen in the last few years.

Whether we’ll see real efforts to “cover every single American” is much less likely.

Posted by Matt Holt at 8:22 AM | Permalink

Half a Plan Isn’t Half a Loaf

May
15
2008

Given that he’s the presumptive Republican nominee, it’s time to look at what would happen if Sen. John McCain won the election and the Republicans took Congress and they passed the plan that he’s proposed. Of course, the good news is that what I’m about to describe is purely theoretical. As we stand this fall, Democrats should win back the White House and will pick up enough Senate and House seats to prevent any GOP-backed proposals making it into law.

Nevertheless, this contemplation is spurred on by my recent visit with the Washington Policy Institute, a right wing think-tank in rainy Seattle, not cherry-blossom filled D.C. where McCain’s proposal got serious attention.

His basic idea is to phase out the tax exemption for employer-based health care and replace it with an individual tax credit of $2,500 per individual and $5,000 per family, to buy insurance. In addition, state laws governing health insurance would be overridden – so low cost plans from one state could be sold in another.

The result of this would be that many – if not most employers – would get out of the business of providing health benefits, and people would take the tax credit to the individual insurance market. Where many, if not most, would buy high deductible individual plans. The problem is that these plans don’t insure people who are sick, ever have been sick or know anyone who may ever be sick, and make very big profits by doing so. I’ve ranted about one company, Mega Life and Health which sells dodgy plans to individuals, and has what’s known as a “medical loss ratio” that’s woefully low – around 30% – so only $3 in $10 paid in premiums gets spent on actual care. Another little known segment of the insurance marketplace, plans for college students, have just been exposed in BusinessWeek as having a medical loss ratios as low as 10%! But honestly, this isn’t all that unusual: the idea of keeping costs low by excluding sick people is what makes the insurance market a profitable business.

McCain has advisors who understand this. One, Galen Institute’s Grace-Marie Turner thinks giving sick people access to a combination of subsidies and government provided health plans of last resort can solve this problem. The idea is to help plans take on risker clients – by giving the consumer more money so the plan can charge them a little more – and then having states sponsor plans for those who fall between the cracks.

That may pass the theoretical smell test but in real life we’re talking about increasing taxes on the average to pay specifically for targeted groups that are likely to be poor, sick and expensive. As Sick author Jon Cohn often says, programs for poor people get treated poorly. If rich and poor are not in programs together – Social Security is the leading example – it’s easy for them to be ignored and de-funded. That’s happened with some states’ children’s insurance plans, and existing state-based high risk health insurance pools like those Turner proposes supporting.

The real solution, she says, is a new Federal program with more Federal dollars for people in high-risk groups, channeled through the state plans. The Libertarian sitting next to me called this yet another complicated government program. But the real issue is that it wouldn’t survive long. As soon as state budgets get tight, support for insurance for those on the margins will be cut, and the sickies will be left on the shelf. And since the employer-based market will be decaying even faster – it wouldn’t be tax exempt, remember – there’ll be more sick folks with no insurance.

The problem underlying all of these plans is that the care of sick people costs money. And somehow we have to redistribute money to pay for it. Simply suggesting that it ought to happen isn’t going to make it happen, no matter whether there’s an R or D after the politician’s name. Particularly if there isn’t a real, high demand for a solution. And I don’t think we’re seeing enough of that demand for Congress to come up with a plan that’s more than just window dressing.

So we’re going to spend the next few months going through the exercise of talking about health care reform. But it’s after all the talk, nothing’s going to happen. Which in the case of the McCain program is a good thing. His halfway solution is worse than no change.

Posted by Matt Holt at 3:39 AM | Permalink

Health Care Jungle

May
1
2008

My six weeks of traveling the world on an extended honeymoon is over. With my lovely wife Amanda I’ve been diving on coral reefs, sleeping under the stars with the Bedouin, exploring 3,500 year-old tombs, watching lions tear apart a buffalo, and tracking chimps hanging out in the rain forest.

What better way to return than to enter the jungle of U.S. Presidential politics? So Tuesday, I sat in on two conference calls. One from the McCain camp on their health care proposal, the other from the Campaign for America’s Future, which is promoting Yale professor Jacob Hacker’s plan as the theory behind both Clinton and Obama’s policy intentions. Like the lion and the buffalo, it wasn’t pretty.

McCain’s proxies were Douglas Holtz-Eakin, sensible former director of the Congressional Budget Office, a usually fair-minded group of bean counters, and Carly Fiorina, the former CEO of Hewlett-Packard, apparently on the shortlist for the vice presidency.

The two surrogates offered a taste of what we can expect the Republican version of the health care debate to be as the election moves closer: For Carly it’s either free market choice, or the government telling your family which doctor you can go and see. You’re going to hear “government run heath care care” uttered as a threat – just as if we were all moving to the Gulag. Tomorrow.

After a lot of platitudes about medical homes and transparency and electronic medical records – Holtz-Eakin finally got down to the meat of the campaign’s proposal. McCain aims more or less end the employer-based system that’s currently in place for most Americans by taking away the tax deductibility of health benefits for individuals.

Instead, every family will get a $5,000 tax credit to go buy insurance in the individual market and they will no longer be restricted to buying insurance their own state thus, in theory, creating more competition between insurers. Holtz-Eakin has been sensible enough to get McCain to identify the problem associated with the main thrust of his plan: the consequences of forcing people into the individual insurance market. As many frustrated Americans know, under such a system most healthy people will find a high deductible policy that costs less than $5,000 a year but those with pre-existing conditions – like John McCain (were he not a Federal employee and eligible for Medicare) – would find insurance unobtainable.

There is a rational way out of this fix for those (including me) who want to hasten the end of employer-based health insurance. Establish a regulated national insurance market which forces insurers to take all comers. Massachusetts has made vague efforts towards creating such a market. And Sen. Ron Wyden has proposed something similar. But doing that without killing the insurance market requires the government to force everyone to buy in to the plan. It also means that benefits and options have to be made similar by regulatory fiat, and that a system of risk adjustment between those insurers needs to be in place. Failing that the whole thing collapses because insurers will be left with all the sick people while the healthy ones opt out of the system.

There’s no reason that McCain couldn’t have gone some way down that path – Wyden’s plan has Republican support. But McCain’s answer to the problem is literally, “we’ll study it more”.

Now, this should be sweet hay for the Democrats and the AFL-CIO. And yes, the Campaign for America’s Future’s folks were very persistent in reminding us that 1) McCain wants to take away employer-based health insurance and 2) you’re on your own in the individual market.

Funnily enough, though, they focused on point one – changes to health care tax deductibility ending the employer-based health care benefit. Instead they should explain the obvious about point two – the individual market is run by insurance companies who focus on attracting healthy customer who need fewer services, not on the sick. In the political jungle it should be pretty fair to say that the individual market is run by insurance companies (like some in California that retroactively cancel all sick people’s policies) and that under the McCain plan that’s the only place you’d be able to buy insurance! But I’m sure we’ll hear loads more about that come the Fall, won’t we?

But the lack of pointed Democratic criticism aside, why is straight talking maverick John McCain spouting the free market line drawn by the National Federation of Independent Businesses and the Cato Institute? Isn’t this a great area to be a maverick and deviate from the Bush rhetoric?

I assume that the answer is McCain feels health care is important enough that he has to say something, but he’s more concerned about not upsetting the health care industry. After all, even if he does win the election by some miracle (or the usual Democratic ineptitude) he’s not actually going to do anything about health reform.

But then again, my guess is neither are the Democrats.

Posted by Matt Holt at 1:23 AM | Permalink

Ghost in the Attack Machine

Feb
22
2008

It’s almost full-on election season so I’m getting email from the Republican National Committee suggesting that there are problems with both the Sen. Hillary Clinton and Barrack Obama plans for health reform. Funny that – given my politics – but it gets better.

The RNC thoughtfully sent along a copy of a Wall Street Journal op-ed featuring an appearance by that blast from the health reform past, Betsy McCaughey who these days hangs her hat at the ultra-right wing Hudson Institute. In the 1990′s she was a brief star of the new right after writing, in early 1994, a magazine article in the then-quasi-liberal magazine The New Republic. Called No Exit, it contained a damning account of the Clinton Health Plan and got a fair amount of attention at the time. No Exit was a fair load of old tosh (you really keen health policy archaeologists can unearth the Clinton White House’s full rebuttal to see what I mean). The article’s impact on the demise of the Clinton health plan, which was already in substantial trouble by the time it came out, was in fact greatly overstated, not in the least by McCaughey herself.

Nonetheles, she somewhat improbably rode that wave to the New York Lieutenant Governor’s office under George Pataki, and to marriage to a multi-millionaire. Her relationship with Pataki, the millionaire and, some say, reality all fell apart in quick sequence. But now that health care politics are back so is she.

So what does she say in her new attack piece?

Well more of the same that’s been emanating from similar quarters, and has been smeared all over the WSJ op-ed pages for years. For example here’s McCaughey on:

The growing number of uninsured? The fault of those damn illegal immigrants! McCaughey seems to think there are reams of cancer patients swimming across the Rio Grande, even if a peer reviewed article in Health Affairs this very week shows that the increase in uninsurance has little to do with immigration and much to do with the decrease in insurance provided by employers.

Uninsured children? The fault of their parents who are too dumb, stupid or poor to sign them up for the wealth of public programs just desperate to enroll them. Not mentioned? Several states dis-enrolled “eligible” children from their programs in the last recession. And isn’t it funny that every other country seems to have much cleverer parents when it comes to ensuring their children have health coverage?

Mandates for universal coverage as Clinton’s current plan would impose? An unfair tax on cheap young people who are forced to transfer wealth to rich old people.

Health information technology – a part of Obama’s proposed plan? A pox on the super-efficient medical delivery system.

Regulation of the “politically unpopular” insurance industry? A sure path to collectivist Bolshevism!

In the bizzarro world of Betsy McCaughey and the far right, there are no problems with the American health care system and if there are, that’s entirely because of the system’s socialized nature. And they’ll insist that their version of reform is all about bringing market forces to health care. But that’s just not true.

There’s a basic mathematical concept at work here that just seems to escape these people. Care of a few people costs a lot of money. Somehow we have to figure out how to cross-subsidize the expensive care of those who are ill.

But logic and mathematics aren’t part of McCaughey’s argument. This type of attack is really about is stopping any real health care reform. Why? There are plenty of players in the current health care system who make a very nice living today and do not want to change that. They include insurers, pharmaceutical and device companies, most hospitals, many doctors and virtually anyone involved in the current system. The long-term logical outcome of the reform in the Clinton and Obama plans reduces the over-use of devices, drugs, procedures, and services that’s rampant in the current system. The plans also halt the games insurers play to boost profits.

So when you see these attack pieces – and you’re going to see a lot more – remember what this is about. It’s about maintaing the the appalling status quo in American health care today. And Betsy is no doubt ready for the next round.

Posted by Matt Holt at 1:17 AM | Permalink

Style, Sadly, Trumps Substance

Jan
18
2008

Just when you thought it was safe to switch on the telly, the Democratic presidential candidates had yet another debate. The caucus in Nevada and the primary in South Carolina gave the three front runners an excuse to indulge in a long conversation about whether or not Sen. Barack Obama could find piece of paper on his desk, exactly how many years Sen. Hillary Clinton has had experience or to the minute how long John Edwards has been struggling to get out of that mill town.

And if I hear the word “change” one more time…

None of this has too much to do with the health care problem facing the nation. Or the housing slump, the crisis in Pakistan, global warming, energy independence, or – really – anything that matters very much. It’s quite possible that towards the end of the debate the candidates came to some earth-shattering conclusion about these topics. Unfortunately by that time I’d changed the channel to a rerun of Scrubs.

The problem is twofold. First, the primary process is essentially a contest among politicians who, in general, seem to agree with each other. If you look at their health care plans, the plans for Iraq, or much anything else, there’s not much difference between the main Democratic contenders. For that matter there’s not much difference between the main Republicans. There is of course a difference between the Democrats and the Republicans — although not perhaps as much as there ought to be.

But we’re not seeing the two sides debate on another because that’s not the American way. In fact head to head debate doesn’t even happen in Congress.

This means that we voters spend the vast majority of the political season concentrating on personality differences, essentially irrelevant compared to distinctions which might make a difference to our domestic and foreign policies. This focus on personality – on style, not substance – continues straight on into the presidential race when irrelevancies about the backgrounds of the candidates loom much larger. It may well be that President George W. Bush was technically a deserter from the Air National Guard. His Democratic opponent John Kerry may well have overstated the the risks he took in Vietnam (at the least he managed to piss off a sufficient number of other Vietnam vets that we ended up with the Swiftboat fiasco). But the point is that personal character traits, and supposed strengths and weaknesses, make very little difference to the impact that politicians have once they actually make it into office.

What actually matters is the legislation that gets enacted, and the types of interest groups that will be represented by the members of the Administration. So when George W. Bush appointed some of the most extreme and polarizing figures in American life to run the departments of Justice and Defense one can safely say that it mattered alot. It’s also clear that that the vast majority of those who voted for him had no idea what he was going to do in that regard. And then there’s the sneaking suspicion many of us have that the actual running of the country was carried out by Vice President Dick Cheney – who chose himself for the job. Regardless of how you look at it, the culmination of legislation and administrative action develop by the Administration has nothing to do with the various character traits of the individual running for office.

That’s why the real question about the future of American political life is not about the candidate’s personality, nor about their tears, nor about their self-styled monikers as fighter, change agent, or experienced decision-maker. The real issue is how the next President is going to appoint their team, and pick their fights over the big problems that require legislation, money and force. Getting that done does require them to be a skilled political operator (although it’s better for them to be more ruthless than skilled), but their personal character traits are less important.

Of course in many other countries an election has voters choose between teams not individuals, and the policies that will be put in place by the winner are worked out and known in advance. And the election cycle is (thankfully) much, much shorter. Even after living through seven years of what most Americans seem to think was a bait and switch, we know very little about the substance of what we are going to get in terms of practical change whomever takes over the White House in 2009. We will know how they described themselves “on message” during endless months of campaigning.

In the end the important thing is what they do not how they do it. For example, LBJ got civil rights and Medicare passed into law, but no one considered him full of empathy. Unfortunately, voters seem to value style over substance, which means that in the end we may not know much about the substance we get and it may not be much to our liking.

Posted by Matt Holt at 12:17 AM | Permalink

Just Saying “No”

Jan
9
2008

An American by choice, the last few days have made me nostalgic for British elections, with their clearly defined, disciplined parties, 80-plus percent voter turnout and three-week campaigns. After all there’s barely a ha’penny’s worth difference between the three leading Democratic candidates.

To separate himself from the Democratic front-runners former Sen. John Edwards has spent the last few days laying into insurance company, Cigna, for its failure to immediately approve a liver transplant for California teenager, Nataline Sarkisyan. That action, says Edwards, in concession speech after concession speech, is emblematic not just of the health care system’s break-down but of a failure of the current American political system.

Edwards like most Democrats wants a single payer health system and his plan is the closest of the three front-runners to providing one. But his advocacy of Natalie Sarkisyan’s case raise a question no one else seems to be asking.

First, some background. Natalie’s doctors at UCLA Medical Center had suggested the transplant as essentially the last roll of the dice to save her life. Cigna initially refused to pay for the operation. Their reasoning – and it was quite a rational reason – was that the operation would be futile. To be fair, the surgeons at UCLA disagreed. (But as the Brits like to murmur at these moments, “They would say that wouldn’t they?”)

There was an immediate outcry of the kind we’ve become accustom to as health care policy becomes increasingly political. Ten days later Cigna relented, offering to pay for the transplant itself (if it simply approved the procedure immediately, Natalie’s mother’s employer would have paid). And, of course, UCLA Medical Center, which is after all a government institution, could just have sucked it up and paid for the operation itself, but it didn’t seem to be too keen to do that.

But two things get in the way of this, perhaps commensensical, approach on Cigna’s part. And they’re getting in the way of the current debate.

First, insurers have no credibility. Their bad behavior over the past few years means that no one trusts them at all.

Second, there’s an election to win, and John Edwards decided his campaign will be the voice of the girl’s parents, a fine idea for a politician seeking office. Lousy policy.

One good reason to have a single payer system is to rationally decide what is paid for and what isn’t. Meaning that if Edwards’ ideas about health care are adopted and become law there may well be more people being denied last-chance, possibly life-saving operations than there are now.

All health systems and all societies everywhere somehow ration what’s available to patients. Otherwise we’d all have full time nursing care every time we get a cold. However, compared to other countries the American health system has gotten particularly out of whack by delivering unnecessary, expensive and futile care, especially at the end of life.

To some extent, this state of affairs is the result of the work that trial lawyers – like Edwards – have done on behalf of grieving families like the Sarkisyans. It’s been an effective cudgel but not particularly good medicine. And it’s been going since the early 1990s when another insurer, HealthNet, had a multi-million dollar judgment against it for denying payment for a bone-marrow transplant for a woman with end-stage breast cancer. Ten years, billions of dollars, and thousands of literally agonizing procedures later, the clinical trial results finally arrived. The procedure didn’t work and did more harm than good.

Clearly no one trusts health insurers to make these decisions. But the process that Cigna, (and HealthNet), went through is defensible, and to some extent duplicates what happens in other countries. For single-payer (or any health system) to work and work well, someone somewhere has to say, “This is a justifiable procedure. That’s literally a waste of money that could be better spent somewhere else.” Any rational universal health care system is going to have to confront this problem, even while it solves many others that the current US system causes, such as the financial catastrophe visited on those who are uninsured and get very sick.

So why did Edwards bring up this debatable case? I guess it’s just that he felt that he’d get a quick political score based on a dramatic case that fits into his anti-insurer mantra. But it doesn’t obviate the main issue which is that at some point it’s humane for both the patient and the society for someone to say, “no.”

Posted by Matt Holt at 12:00 PM | Permalink

A Californian Crystal Ball

Jan
3
2008

Pretty much anyone interested in U.S. politics is focused today on what 32 corn farmers in the middle of the country have to say about the 20-some people currently hoping to run the world by becoming President of the United States.

And while health care concerns have figured in many of the conversations the U.S. political press has had – or overheard – with Iowa Caucus voters, it’s been a wild holiday season for California’s health care system. The impact on what type of health care reform legislation will eventually come to national attention is probably just as great.

On Christmas Eve a California appeals court unanimously decided that the way insurers have been practicing in the state for many years is illegal. The case involving retroactive cancellation of policies was one that the nice well-behaved non-profit California Blue Shield had fought in the courts while its aggressive for-profit competitor, Wellpoint’s Blue Cross unit, had settled.

Blue Shield maintained it had the right to retroactively cancel those insurance policies for which it says that policy-holders had lied on their applications. At first the series of stories, which started coming out last year and ended up making an appearance in Michael Moore’s Sicko, seemed cut and dried. People who’d received expensive care were having their insurance canceled for pre-existing conditions that they’d either clearly disclosed on their applications, or couldn’t possibly have been expected to remember. Meanwhile the behavior of the health plans was shown to be particularly cynical, with one, HealthNet, actually paying out bonuses to staff doing “recissions” based on how many expensive policy holders they kicked off their rolls.

However, over time more of the recission stories seemed to be about people who had either been extremely careless in filling out the application or had fudged the truth. But the public opinion battle was clearly lost. Now the state insurance commissioner, Republican (yes you read that right) Steve Poizner, has decided that because insurers have the right to investigate before they issue policies, they have no right to retroactively cancel them, regardless of the circumstances. It appears that the district court is more or less agreeing. Leading one attorney, William Shernoff, who settled for his clients with Blue Cross on the same type of case to say:

“What this court is saying is these cases are going to juries, and that’s going to scare the hell out of the insurance companies,” Shernoff said. “Just one or two punitive damage awards by juries will clean this up, and the appellate court is now going to let that happen.”

Note the word “punitive” in that sentence. Want to place odds on how much sympathy a jury will have with a health insurance company? Didn’t think so.

So it looks like insurance companies’ really bad behavior in the individual market is coming to an end. That, in turn, probably means the end of the current individual market here altogether. Why? Because, under the current system, health care is so expensive for sick people that insurers who don’t exclude them really struggle to provide a inexpensive product for the majority who are not sick. A healthy person in California can buy a high deductible plan for the low hundreds of dollars a month – a plan that might cost a sick person thousands a month – if it’s available.

The banning of recissions could be seen as a first step towards forcing insurers to cover everyone at a “community-rated” price. That means healthy people pay more so that sicker people can be included in the same pool.

Which is just what the bill that passed the Assembly last month and will now become a ballot measure proposes. It bans underwriting – the process of investigating someone’s health history – and forces insurers to take all-comers. This would normally cause insurers to flee the state as their risk pools filled with only sick people. But the California plan includes an individual mandate and forces medium-sized employers to pay into a state fund for those not insured, bringing in a group that may not be insured now because of the cost but which may not – assuming they’re healthy and able to work – pose a substantial risk. Funnily enough, Blue Shield is one of the insurers who thinks this might turn out better for them.

Now we’re a long way from that being a done deal. In fact the California initiative won’t be on the ballot until November, which seems a life time away to those of us facing 11 months of Presidential horse-racing. And more to the point, the always vocal if not particularly logical shock-troops of small business are starting to raise their hackles about health care.

But it’s clear that the intentions that California’s politicians and judges have are similar to those of Democratic Presidential candidates Sen. Hillary Clinton, John Edwards and even Sen. Barack Obama’s plans (although I have severe doubts that Obama cares enough to push for it).

So by all means this week watch what’s happening in Corntown USA. But pay a little attention to how the rumblings in the California health insurance market are starting to spread across the political landscape too.

Posted by Matt Holt at 7:15 AM | Permalink

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