A Harris Interactive poll suggests that public awareness of health privacy concerns is on the rise, according to a report in Modern Healthcare.  The poll is described as an “online interactive” survey, however, which raises concerns about sampling validity.  That caveat aside, it’s interesting to note that there appears to be increasing public awareness of health data theft and data security issues - which, as we have written here before, are rampant.  (We’ve been following health privacy concerns for some time now.)

The poll also suggests that data thefts could be undermining public support for Electronic Health Records (EHR), which is another reason to get this problem under control before it escalates any further.

The Modern Healthcare article also reports that Booz Allen Hamilton was awarded a $450,000 grant in order to

…do an “environmental scan” to get its arms around the problem, then convene a meeting to gather ideas on how medical identity theft should be addressed, and then to write up an action plan recommending ways to deal with the problem.

I would’ve liked to have that contract, and I could’ve done it for a lot less.  We haven’t begun to explore the full implications of rampant health data theft - and we shouldn’t, at least in a public forum.

Still, I suspect the real solution to this problem is going to come from an imaginative entrepreneur, not a Federally-funded study.

(via CHCF’s iHealthBeat; image courtesy Medical Informatics Insider)

People who think they know “what business wants” may need to think again - especially when it comes to social issues like health reform. Case in point: A recent study of New York small business owners shows that more than half believe small businesses have an obligation to provide health coverage. What’s more, 51% think they should be required to provide it.

But do they distrust government solutions, preferring to let “the market” solve everything? Apparently not: 72% support the option of joining state-run insurance pools, and a stunning 85% think government should act as a “watchdog” over health insurance companies.

Why? Partly because they know our broken health system stifles innovation. And partly because they know that many American businesses struggle with runaway health costs, or with workers who can’t get treatment for their medical problems. That means they can’t compete on a level playing field, domestically or internationally. And without a level playing field, the free market can’t operate.

Roll over, Newt Gingrich, and tell Ayn Rand the news: Sometimes capitalism can be improved when government and free enterprise work as partners. These entrepreneurs understand that.

Small Business Majority cosponsored the New York survey, whose findings are consistent with an earlier survey the group conducted in California. The California study’s key findings included the following:

1. 80% of those who expressed an opinion felt that employers should pay something to provide healthcare …
2. 75% ranked the availability of affordable healthcare as extremely or very important.
3. 57% regard health care financing as a shared responsibility among individuals, employers and government …
4. 55% were in favor of paying into a statewide pool that would enable their employees to obtain coverage at favorable rates…

“There is a range of political opinion among small business owners,” John Arensmeyer told me. Arensmeyer, the Founder and CEO of Small Business Majority, added: “They tend to be an independent-minded group. But they’re in favor of what works. They see health care as both a moral obligation on their part, and as a problem to be solved.”

The entrepreneurs polled in this study represent the second-most trusted institution in the United States, according to a Gallup poll. Small business is more trusted than organized religion, police, or even doctors. (Congress is at the very bottom - below even HMOs. Man, that’s gotta hurt …)

Arensmeyer explained why innovation’s being stifled by our broken health system. “Somewhere there’s an engineer at a computer firm with a better idea about something,” he said. “She can’t go out and start her new company, though, because she and the people she’d like to recruit all need their health coverage. How can we compete in a global economy this way? It’s crazy.”

Arensmeyer says SBM supports principles of health reform, rather than getting locked into specific models. “”We believe in shared responsibility,” he said. “Everybody needs to be a part of the system for it to work. But it needs to be affordable.”

I mentioned my past concerns with what I felt was an over-reliance on individual mandates in the Clinton/Edwards plans, which could have resulted in onerous burdens for lower-middle-class working families. “In order for a system of shared responsibility to work,” Arensmeyer answered, “it’s got to be affordable for individuals. We think the (now defunct) California bill did as good a job at that as we’ve seen anywhere.”

“The Clinton and Edwards plans didn’t reach the point of specificity,” he added. “The devil’s in the details.” That’s a position I can support, having had the same concerns early on about Massachusetts health reform. (Massachusetts eventually had to concede that 20% of uninsured residents would remain without coverage under their plan.)

Says Arensmeyer, “The Massachusetts experiences reinforces those basic principles: affordability and universality.”

Old paradigms of “left” and “right” are breaking down in social policy. The public’s becoming aware that the “business world” is comprised of different groups with differing and often competing interests.

People picture different things when they hear “small business,” because the entrepreneurial world is diverse. But these encouraging surveys suggest that a wide range of small-business owners, from small-town Main Streets to the Silicon Valley, want comprehensive health reform - with government playing a key role.

If the Free Market can cure all the ills in our health economy, why are we seeing billion-dollar expenditures for non-health items - even as prices soar and buyers rage? It looks like somebody has taken the Invisible Hand off the wheel.

The California Medical Association, which has its own ax to grind, is publicizing state data about HMO expenditures.  (Remember HMOs?  They’re the organizations that were going to improve outcomes while cutting costs.)  According to data from the Department of Managed Health Care, California HMOs spent about $6 billion last year in administrative expenses - including seven-figure salaries for a number of CEOs.

Meanwhile large plans like CalPERS are facing 8% increases, while individual enrollees - the linchpin of consumer-oriented free market policies - are seeing increases in the 10% range.

If the market is really “rational,” as we’re always being told, why aren’t buyers forcing these overhead costs down?

Sen. Sheila Kuehl is quoted as saying that her bill, which mandates that plans spend no less than 85% of premiums on direct health costs, would have resulted in $1.1 billion more being spent on medical care.  I need to read Sen. Kuehl’s bill in detail, but here’s my problem with the principle:  The easiest was to get to that ratio is by increasing premiums, not reducing administrative expenses. Unless the bill prevents that, that’s the likeliest outcome - especially since market forces don’t appear to be doing the trick.

In the abstract sense, I don’t care how much profit HMOs make, if they’re getting the right results.  If they can provide better health care at a lower premium cost, and make a 20% or 30% profit margin - great!  Everybody wins.  The problem is that there’s no indication that they can.

For balance, total California health spending is in the hundreds of billions, so we’re talking about marginal figures.  But marginal or not, you save a billion here and a billion there and pretty soon you’re talking real money.

And a number of the state’s HMOs fall within Sen. Kuehl’s margins, including CIGNA at 94.3 percent, Inland Empire at93.1 percent, and Kaiser at 90.6 percent.  Community-based LA Care clocks in at an impressive 97.1 percent.

But the question remains:  If the market can’t get these escalating costs under control - even with administrative expenses in the $6 billion range - how can it be the stand-alone solution of the future?

Recommended: A touching story by Perri Klass, M.D. in the New England Journal of Medicine about how it feels to carry a doctor’s responsibility. In the case of Dr Klass, a pediatrician, that means weighing a decision that’s probably trivial - but might be a matter of life and death … for a child.

It’s particularly useful for health management execs and health policy wonks like yours truly. It helps to keep the endgame - health, life, death - clearly in focus.

Rep. Henry Waxman lacerated the Pentagon’s workers’ compensation program for civilian workers in Iraq and Afghanistan, saying it was a “flagrant abuse” of taxpayer dollars. He directed his wrath toward AIG and three other carriers not named in this CNN report.

From a business perspective only, and not speaking as an American citizen, if I had been an AIG underwriter I would have priced this program high in the first couple of years. From an underwriting perspective, they were going into a high-risk work zone with a lot of unknowns and no historical data. But according to the report, the carriers had been achieving 40% profits on these civilian employees for over five years. This, in an industry whose revenues declined last year and whose profit margins at home are shaky at best.

It’s fine to rip the carriers for not adjusting their rates to reflect experience. But there number of other questions should be asked, too, like: Who was minding the store? Were these costs a straight pass-through from Blackwater, Halliburton, et al.? That removes the incentive from these companies to push back on pricing. After all, the more irresponsible their purchasing practices, the more money they make.

And what about the government’s own civilian employees? Where were the Procurement Officers who are supposed to act as risk managers in this sort of situation? It seems to me a lot of people dropped the ball on this one, since it went on year after year.

Sounds like this was a classic seller’s market, and yet another story of government mismanagement. The carriers may not have been admirable corporate citizens, to say the least. But, at least in economic terms, they were ‘acting rationally.’ Too bad we can’t say the same thing about the people who were paying them. Our troops in harm’s way deserve better than to have the military budget managed so irresponsibly.

A lot of attention is being given to yesterday’s New York Times piece about doctors and hospitals who apologize, ‘fess up, and correct their mistakes when they make medical errors. For medical professionals who have been trained to “deny and defend,” the whole idea seems counterintuitive. It’s a natural instinct for people to want to hide their mistakes. And as Michael O’Hare points out, it’s also something attorneys have been telling their medical malpractice clients to do for a long time.

I’ve written about the Sorry Works! Coalition before, and they’re mentioned in the Times article. That’s the group that’s dedicated to becoming “the nation’s leading advocacy organization for disclosure, apology (when appropriate), and upfront compensation (when necessary) after adverse medical events.” The Times suggests that there is now a data trail for the medical disclosure movement. Reporter Kevin Sack writes:

Despite some projections that disclosure would prompt a flood of lawsuits, hospitals are reporting decreases in their caseloads and savings in legal costs. Malpractice premiums have declined in some instances, though market forces may be partly responsible.

O’Hare tells an anecdote about working with a hospital whose in-house counsel promoted a similar policy 25 years, with very positive results. That sounds right: During my years inside the insurance industry I saw similar examples of the seemingly counterintuitive. Sometimes ‘fessing up is the best defense.

And there’s a political movement to institutionalize medical disclosure. Sack quotes the director of Sorry Works! as saying that “34 states have enacted laws making apologies for medical errors inadmissible in courteven require that patients be notified of serious unanticipated outcomes.” He observes that Democratic Presidential candidates Clinton and Obama cosponsored a similar resolution in the U.S. Senate, only to see it die in a GOP-controlled committee.

This should be an ideal topic for bipartisan support, given the Republican penchant for criticizing excessive med mal settlements. So why would Republicans kill a bill like this one? I don’t get it.

Join Together, Boston University’s addiction research and advocacy program, reports that lobbying efforts from Mothers Against Drunk Driving (MADD) persuaded the governor of Maryland not to sign a bill that provided favorable financial treatment to “alcopop” drinks. Alcopops are heavily flavored alcoholic beverages that the alcohol industry uses to target young people (they prefer to call them “entry level” drinkers.) The early alcopop brands included “Zima” and “Mike’s Hard Lemonade,” but new products are leveraging the popularity of youth-oriented energy drinks.

MADD might find the insurance industry a useful ally in its efforts to restrict the sale of these drinks. I wonder if anyone’s thought of that yet?

Recent products have been packaged to resemble youth-oriented energy drinks. The Marin Institute prepared the photo shown above to demonstrate how drinks like “Sparks” and “Rockstar 21″ (”party like a rock star”) resemble teen-oriented caffeine beverages like “Monster” (with its “BFC” designation for “big “f**king” can.”) They’re being priced more cheaply than non-alcoholic energy drinks to exploit that market. And, as one teenager reports in the Marin Institute study (warning: pdf), “… my mom found it, but she had no idea and thought they were just energy drinks.”

MADD and other advocacy groups have targeted laws that allow alcopops to be designated as beer rather than alcohol. Beer is typically taxed at a much lower rate than other alcoholic beverages, and can be sold in many places where others can’t. The Marin Institute describes a three-point plan to target kids as a market for alcohol:

1. Create brand confusion with nonalcoholic versions
2. Provide a cheap alternative to mixing energy drinks with alcohol
3. Deploy youth-friendly grassroots and viral marketing

The Maryland bill addressed taxation only, not sale, and the governor agreed only to delay it. The bill was pushed by the alcohol lobby, which is politically well-organized. That’s why a strategic alliance between MADD and the insurance industry might make sense. After all, when teens are injured or killed as a result of alcohol-related accidents, it’s insurance companies who typically pay the bill. Their pockets are deeper than MADD’s, and their political connections are better.

The etiology of alcohol addiction is still unclear, so it can’t be said definitively that ‘alcopops’ contribute to alcoholism rates. But it could certainly be argued that they contribute to increased episodes of drunkenness, and therefore injury and death. It could also be argued that kids with a predisposition to alcoholism might experience an earlier onset of the condition as a result of these drinks and their marketing strategies.

MADD and America’s Health Insurance Plans, plus MADD and the American Insurance Association: Two matches made in heaven? It could cut into teen death and injury, and the health insurance industry might want a little good publicity right now.

It’s only words, but words are all I have to steal your heart away …¹

My wife and I stood at the curb saying goodbye to our friend Maureen last week. The election came up, and Maureen said “I like the candidate that’s going to provide universal coverage.” Here’s the problem: there’s no such candidate this year. Maureen’s been had.

But first, a question: What’s wrong with this sentence, from my friend Joe Paduda’s informative write-up of the World Health Care Congress, referring to the difference between the Clinton and Obama health plans?

“… [Clinton] wants mandated universal coverage and [Obama] does not.”

The italics were a hint: Joe and I agree, as does our mutual friend Bob Laszewski, that the two plans are essentially similar. But their primary difference, which is that the Clinton plan includes mandates for adults, can not accurately be described as “universal coverage.” The Massachusetts experience has demonstrated that conclusively.

Even if a mandate plan were to be passed, millions of today’s uninsured would - by my estimation - remain uninsured. Millions more would benefit, as they would under a non-mandated plan, but we’d have nothing like genuine “universal coverage.” And many working Americans would face new financial pressures, without receiving better health coverage in return.  (My numbers and logic are laid out in a footnote.)

I expressed early and serious concerns about the Massachusetts plan, and there’s no pleasure in reporting that they have proved justified. The plan’s been very effective in providing coverage for those who qualify for full subsidies. But it has been far less effective for lower-income working people. Subsidies don’t reach them, and the difference between plan premiums and the mandated tax penalties they face is still a big-dollar amount for their budgets.

The result? These hard-pressed Americans still don’t have health coverage … and they’ve been hit with more taxes.

The Massachusetts plan is a lot like Clinton’s, in a state with a much less complex uninsured problem that other parts of the country - and it’s been forced to exempt 20% of the uninsured. That’s not “universal coverage,” it’s health mandates - and while it will provide coverage for some, many will fall through the cracks.

Why does this matter? Why am I harping on the choice of words? Because perception drives reality in politics. Maureen thinks her candidate will provide “universal coverage” if elected. Here’s what will really happen if Maureen’s favorite gets the nomination - she’ll be hammered by her opponent in the general election over the enormous added tax burden to lower-income working families. If she wins, her plan will face far greater political opposition because of the mandate provision - which will most likely be dropped as a result. If, against all odds, these obstacles are overcome and a mandate provision is passed,

Based on rough calculations, I agree that Obama’s plan would leave approximately 15 million uninsured. But I estimate that Clinton’s plan would leave 8 million uninsured - and is far less likely to pass in Congress.² (Each plan has its own strengths in the cost-cutting and health oversight areas - and McCain’s isn’t really a “plan.” It’s more of a “wealth-transfer-device” for the already well-to-do … but that’s another topic.)

What about the argument that a mandate plan can’t pass?

Not so, says Paduda. He quotes Obama surrogate Rep. Jim Cooper as saying the mandate provision - which Joe again mischaracterizes as “universal coverage” - will get “zero Republican votes,” which he calls “a completely wrong statement.” Joe cites the mandate-driven Wyden Health Plan, with six Republican co-sponsors, as proof.

But the Wyden plan, which takes employers out of the health insurance game, has a couple of carrots to offset the “mandate” stick. One’s for working people: It requires employers who currently provide coverage to boost salaries to offset for the huge expense savings they’ll get. That puts money back in people’s pockets. The second is for employers: Salaries are rising at a much slower rate than health premiums, and they have more control over them, so this is a financial win - especially for larger corporations.³

I’ve talked to many employers over the years - large and small - who would love to get out of the health benefits business. And I’d argue that the Wyden bill can be pitched as more attractive to lower-income working people. I suspect these differences make the Wyden bill GOP-friendly enough to offset for its universal coverage mandate provisions. (That said, it’s excessive of Rep. Cooper to suggest that a mandate bill would get “zero” Republican votes. There might be handful, but probably not enough to pass …)

So we watched Maureen pull away from the curb, content in her belief that at least one Presidential candidate would bring the country “universal coverage.” Can’t blame her: a lot of smart people think so, too.

Too bad life ain’t so simple …

_____________________

¹What would a wonkish health policy post be without quoting at least one Bee Gees song? Others I could have cited here include “Stayin’ Alive” - and, of course, “Massachusetts.”

²Quick and dirty calculation: Massachusetts, which is demographically less challenging than other parts of the country (fewer illegal immigrants, etc.), was forced to exempt 20 percent of the uninsured from its plan. Planners in more variegated California expected that 30% would have to be exempted. So, even the generous assumption that mandates will do as well nationally as they have in Massachusetts gives us a 20% exemption rate. If we assume 40 million uninsured nationwide, then 20% = 8 million. That ain’t universal. Thus, the difference between an Obama plan that excludes 15 million and a Clinton plan that excludes 8 million is 7 million.

What’s left to consider? First, whether you think a mandate plan can pass Congress. If it can’t, everybody loses. Second, your personal opinion of whether mandates for hard-pressed working families are a) a way to force them to pay their fair share, or b) another regressive tax that places too much burden on those at the lower end of the spectrum.

³Re the Wyden plan, I like the concept. Unfortunately, though, I can see a number of ways that employers could game it. But that’s for another day.

Yesterday we wrote this about the New York Times article on Tier 4 pharmaceuticals:

Defenders of the Tier 4 system will say that health premiums will become unaffordable if these costly treatments … are paid by insurance. There’s some truth to that. But here’s the problem with that argument:  The function of insurance is to protect individuals from expenses they can’t afford. Once you start withdrawing that protection, it’s a misuse of language to describe the product you sell as “health insurance” …if it isn’t really “insurance” anymore, what are they offering?

Yesterday’s post was called “When Is Health Insurance Not Insurance?” The New York Times ran an editorial about Tier 4 drugs today. Here’s an excerpt:

The insurers say that forcing patients to pay more for unusually high-priced drugs allows them to keep down the premiums charged to everyone else. That turns the ordinary notion of insurance on its head. Instead of spreading the risks and costs across a wide pool of people to protect a smaller number of very sick patients from financial ruin, insurers are gouging the sickest patients to keep premiums down for healthier people.

Coincidence? We report, you decide. But if the New York Times wants some more help with their editorial page then, believe me, I have some more suggestions …

Ezra Klein spoke with Robert Zirkelbach of America’s Health Insurance Plans regarding Tier 4 medications. Mr. Zirkelbach’s response hits a few points:

National Conversation

That we need a “national conversation” about “whether drugs that cost ten or a hundred times as much as current treatment options are producing better outcomes.” (Whatever your opinion of Hillary Clinton, I’m not particularly grateful for the insertion of the phrase “national conversation” into the political lexicon. A little less talk, a little more action, as Elvis would say.)

In this case, I would say we don’t need a “conversation” about better outcomes. We need data. It’s a research question, not a political one. If these therapies are better than the alternative, then we need a conversation - but it has to be about our level of willingness to provide insurance that pays for the best available treatment. That’s a debate worth having, and it’s also where we need some of that transparency Jonathan Cohn calls for.

Generic Alternatives

Mr. Zirkelbach says we should encourage “generic versions” of Tier 4 drugs. But, as Ezra points out, they’re not likely to be available.

Comparing New and Current Treatment Options

Lastly, Zirkelbach suggests “we need a national system in this country that compares new drugs with the treatment options currently available in the marketplace.” That’s a good point. Even under single-payer coverage, we would still need to do cost/benefit analyses on very expensive therapies - and not just for pharmaceuticals. The more information that’s made publicly available, and the more education and debate that ensues, the better.

I still say there is a point at which “insurance” becomes a misnomer. What that point may be is somewhat subjective, but in theory it’s this: When the coverage being provided no longer protects individuals from severe financial harm as a result of loss.

And I’d add this thought to the “national conversation”: When plan designs are no longer made to change behavior, but simply to transfer high-cost items back to the insured party, that’s risk transfer and not benefit design. As a result, the insurance concept is being subtly modified - and arguably undermined.