Posts Tagged ‘Health Policy’

Getting Health Reform Right: A Q&A With Jacob Hacker

February 2, 2009

Wanted: a framework for comprehensive health reform that provides near-universal coverage, reduces costs, and fosters continued improvement in medical care. Oh – and the plan must be politically achievable. Jacob Hacker thinks he’s designed a plan that fits this bill, and after a Q&A with him I’ve come to think he could be right.

Health reform hasn’t received this much attention since 1994. Obama’s approach has been to lay out overall goals and let Congress work out the details, a strategy that insiders say makes reform more likely.  But Republicans are going to be cautious about handing Obama any policy victories, as we’ve seen from the House stimulus vote, and they’ll probably stick to the free-market line when it comes to health reform.  Initiatives are likely to be criticized from the left, too, if they don’t dramatically reduce the number of uninsured. But the assessment has already been made in Washington that single-payer (“Medicare-For-All”) coverage is not politically achievable.

That’s where Jacob Hacker comes in. Hacker is a Professor of Political Science at UC Berkeley.  He’s a leading health policy theorist and political commentator whose book The Great Risk Shift:  The New Economic Insecurity and the Decline of the American Dream is the best overview yet on the decline of the post-World War II social contract between workers and employers.

Professor Hacker’s proposal, Health Care for America, is based on two simple principles:  First, that both the employer-based private system and publicly-funded Medicare are essentially working for their members.  Second, that every uninsured American (or legal resident) should be able to buy into a Medicare-like public program at affordable rates, with need-based subsidies.  In theory, the Hacker plan increases coverage while lowering costs in several ways:  by bringing more people into a system whose costs are rising more slowly; by helping the government increase the scope and effectiveness of its design changes; by encouraging private plans to keep costs low: and by increasing the public system’s leverage and reach.

The plan has been well-received across the center/left spectrum, even receiving a friendly review from Don McCanne, MD, a Senior Fellow with single-payer advocacy group Physicians for a National Health Program (PHNP). But I had a number of questions, so Prof. Hacker was kind enough to agree to an email Q&A.  He was able to address many of my concerns – including economic fairness (some other plans place unreasonable burdens on uninsured working families) and the risk of dislocation within the health economy.

Health Care for America’s public/private mix is an attractive option for several reasons:

  • It minimizes the risk of creating more problems gaining access to doctors who will accept the public plan (although the this problem has sometimes been over-stated).
  • It emphasizes employer mandates rather than placing the burdens on individuals first – and it limits out-of-pocket costs.
  • It leaves private plan options in place, which minimizes the backlash that would result if people lost freedom of choice.  (As Prof. Hacker noted, “some people buy cars that Consumer Reports says are less reliable .. because they like how they look and drive … and more seriously, the private plans will be able to do things like selectively contract with small numbers of providers … some people will value these innovations.”)
  • It emphasizes “medical homes” – the idea that people should have a doctor somewhere who knows them and understands their overall health needs.
  • It gives private insurers the chance to compete with the public system.  If they control costs more effectively – or provide more attractive benefits – they can still win people away from the public plan.

That last point remains a subject of continued controversy.  Newt Gingrich once predicted that Medicare would “wither on the vine” when private-sector alternatives became available. (Prof. Hacker caught my offhanded reference to this quote in our Q&A – although I’ve always suspected Gingrich’s line was a subtle parody of Engels and “the withering away of the state.”) But, pace Gingrich, we’ve now seen that private Medicare Advantage plans are significantly more expensive than the government program. Not a lot of withering going on there.  But, interestingly, the Hacker plan provides the same sort of competition Gingrich envisioned – but for all age brackets, not just the one already receiving publicly-funded care.

Free-market health advocates still insist that the private sector can do a better job.  It’s true that private Medicare plans had no incentive to innovate, since they were heavily subsidized by the last administration. So, shouldn’t conservatives support this plan? If the private sector really is a source of greater innovation than government, what better way to prove it than in direct competition? (Or, as Prof. Hacker rather drily observes, “Perhaps they will discover inner wellsprings of cost-consciousness we didn’t know they had.”)

Health Care for America is designed as a framework for more detailed discussion. There are issues to explore and details to flesh out. But Congress and the President need a global outline around which to frame the ongoing policy debate. The Hacker plan fills that need. And, as PHNP fellow and single-payer advocate Don McCanne observed, “It is just possible that (Hacker) may have crossed the threshold of political feasibility.”

If that’s true – and I suspect it is – then Health Care for America may become the framework for genuine reform.

(The Q&A with Prof. Hacker is below)

Read the rest of this entry »


Decoding the Ideology Behind A Health Care Study

July 28, 2008

Caveat lector.

Healthcare IT News reports (via the California HealthCare Foundation’s iHealthBeat) on a think-tank study that slams the Federal government’s health IT initiatives. That’s odd. Washington’s health IT projects  seem to me to be among their better accomplishments of the last eight years. (Not perfect by a long shot, and too “consumer health” driven, but on the right track.)

We always need to read between the lines. In this cases, phrases like this one from the study’s presenters caught my attention: “… the federal government is woefully incapable of changing or eliminating outdated rules and regulations. So we will be stuck for all time with whatever they come up with today.”

That seemed like pretty harsh language, not to mention a rigid perspective, for a “research study.”  (As opposed to say, a blog post.)  After all, while we’re not shy around here about noting the limits of government capability (and have the nasty comments to prove it), the Internet wouldn’t exist if not for government funding. And we pride ourselves on not injecting political biases into our own research.

So I did a little Googling on the think tank in question, the “Heartland Institute,” and here’s what I found:

Their self-stated mission is to “discover, develop, and promote free-market solutions to social and economic problems.” They believe that “activists use junk science to stampede the public into fearing chemicals in the air, food, and water, and the possible consequences of poorly understood phenomena such as climate change.” They say our environment is so much better now that “air pollution is no longer a significant threat to public health.”

You heard me right.  Childhood asthma’s up 75%, and the Schwarzenegger Administration’s Air Resources Board reports that “over 90 percent of Californians breathe unhealthy levels of one or more air pollutants during some part of the year.”  But for these guys it’s “What Me Worry?”

SourceWatch states that Heartland is closely tied to the tobacco industry, received funding from ExxonMobil, and took in more than $2 million in revenue than it spent in 2005. It has also received funding from a number of far-right foundations, says SourceWatch.

That’s the baggage that the Heartland Institute brings to its study.  But if government’s so hapless when it comes to technology, why do primary care doctors in North America lag behind their counterparts in Europe – you know, the ones who labor under socialist oppression – when it comes to the use of health IT?

The health economy is complex in this country, and it rarely lends itself to black-and-white solutions based on ideology and self-interest. As I was saying, caveat lector – which means let the reader beware.1

(1That is, if I remember my Latin correctly, which is hardly a sure thing.)

A Billion Here, A Billion There: California HMO Figures Are a Challenge for Free-Market Health Advocates

June 24, 2008

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 Reading

May 28, 2008

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.

Separate And Unequal: Healthcare in the United States

April 8, 2008

The nation commemorated the 40th anniversary of Martin Luther King’s death last week. Here’s a quote from him that didn’t get much play in the testimonials: “Of all the forms of inequality, injustice in health care is the most shocking and inhumane.” Two recent studies highlights the lack of progress we’ve made in four decades, and proposals from John McCain and the Florida State Senate show how little resonance Dr. King’s words have in some corners of public life.

Studies by the Robert Wood Johnson Foundation and the Harvard School of Public Health provide more documentation for something many Americans know from personal experience: The United States is a nation living under medical apartheid. The South Florida Times summarized the studies’ findings as follows:

“… elderly black and Hispanic patients often received substandard care for common but serious conditions like heart attacks, congestive heart failure and pneumonia. Researchers say their data suggests that the nation’s healthcare system is racially and ethnically segregated, not just for the elderly, but across the board.”

Lead researcher, Dr. Ashish K. Jha, said:

“When we see ongoing segregation in housing and education [in America,] it may not be surprising that we’re seeing very different administration of care in hospitals that serve blacks and Hispanics versus hospitals that mostly serve whites. But we’re not talking about [failures of] high tech medicine. This is basic stuff, like failing to administer aspirin or beta blockers to patients suffering a heart attack; treatments that we’ve known about for 20 years.’’

These studies are consistent with earlier findings that, at all levels of incomes, black Americans die years earlier than whites. The infant mortality rate for African American babies is 2.5 times greater than it is for non-Hispanic whites, according to data from the National Center for Health Statistics, giving us the worst infant mortality rate of any industrialized nation on Earth, except Latvia. It should be noted that these recent studies demonstrate that Hispanics in this country also experience extreme disparities in medical care.

Are you OK with that? Then how about this? Lack of health insurance results in the deaths of 18,000 Americans each year, according to studies compiled by the National Academies’ Institute of Medicine. That equates to 49 or 50 deaths every day.

How are politicians responded to this ongoing health crisis among “the least of us”? The Florida State Senate is proposing to cut $803 million in health care financing for the low-income residents, the poor, and senior citizens – a figure the Orlando Sentinel calls “staggering.” Disabled Floridians and recent transplant recipients would be among those losing medical coverage. “This is a death sentence for a lot of people,” said a bone-marrow transplant patient. He’s right.

For his part, according to the Boston Globe, John McCain is still “working out the details” of his health plan. He’s already done enough. Although some friendly reporters are emphasizing his willingness to offer tax credits, rather than just tax deductions (as his GOP predecessors have done), his plan is the same prescription for disaster that Bush’s and Giuliani’s have been. Like them, he proposes to end tax benefits for employers providing health insurance, which would effectively scrap the current employer-funded system.

McCain would replace the employer system with a tax benefit that would fall far short of covering the added costs of health insurance, especially since the bargaining clout of employers would be scrapped for a free-for-all system of individual buyers without expertise or buying power. The result would be a plan that creates substantially higher out-of-pocket costs for working Americans without extending insurance to those currently uncovered.

McCain attempts to make his plan more politically palatable than his predecessors’ by speaking in vague terms about “high risk pools” and subsidies. But, except for the inclusion of tax credits as well as deductions, he has yet to differentiate his proposal from theirs in any concrete way. His refusal to place any requirements on insurance companies, together with his abandonment of the employer-based insurance system, would create enormous financial hardship for working people who suffer from cancer and other pre-existing conditions.

What about the poor and unemployed? It’s true that some might benefit from a tax credit – but the $5,000-per-family figure McCain mentioned wouldn’t cover premiums for very many lower-income people. And they’re unlikely to be able to afford the difference between $5,000 and the actual cost of insurance, which would likely be thousands of dollars per year. The net result? Continued lack of coverage for those currently doing without medical care.

Obama and Clinton supporters are free to continue their blood feud over which has the better health plan. I’ve argued that Obama’s is more politically feasible and, in the end, more progressive. Some colleagues in the health policy world disagree. But we all agree that Sen. Clinton’s plan would also be a vast improvement over McCain’s. And the actions of the Florida State Senate are unconscionable.

To be clear, we’re talking about two distinct policy issues here – the problem of the uninsured, and the ethnic and racial divide in American healthcare. But these two issues are closely related, and both cut to the heart of what it means to be a just society in the 21st century.

The Impact of Reform on California Workers’ Comp Costs

November 28, 2007

The Workers’ Compensation Insurance Rating Bureau has released its results on 2006 workers’ compensation costs in California. Reform has saved a great deal of money, as predicted. What’s interesting is where it’s saved money.

Estimated ultimate total loss per indemnity claim is down from the $48,000 range in 2000-02 to $39,851. But most of that savings comes from the indemnity side. Ultimate indemnity’s down from the $20-22,000 range to $13,640. But ultimate medical isn’t down at all. It was $25,567 in 2001, and $26,309 in 2002. But after a u-shaped dip, it was back to $26,211 in 2006.

Hospital payments were down more than 17% from 2005 to 2006. Pharmacy and physician payments dropped slightly in the same one-year period. Total medical was flat for the two years, so cost drivers for this high ultimate medical costs lies elsewhere. (Where isn’t obvious from the available data.)

There is much higher usage of medical networks, from 33% in 2002 to 62% in 2005. That was expected, too. What the report doesn’t state is whether networks themselves had any impact on utilization, or whether their effect was primarily limited to reducing the unit cost of services provided.

Indemnity claims frequency is way down from the last decade, but there’s no reason to assume that the change is driven by reforms. (At least, to my knowledge.)

Physical therapy utilization dropped 66 percent, and chiropractic utilization 82 percent, but both these were the expected result of reforms. The number of medical visits per claim dropped, although the percentage changed based on fee schedule and diagnostic variations. Overall, the number of visits per claim dropped by 9%, whereas visits per claim were increasing at a significant clip before reforms.

It’s reasonable to assume that this reduction in the number of visits also reduced case durations, and therefore had a ‘shadow effect’ that drove indemnity costs down as well.

What’s next? Pushback from the California Applicants’ Attorney Association, for one. Their arguments, especially against reductions in permanent disability costs, may get a sympathetic hearing now that results are so much better for the insurance industry.

What hasn’t changed? Loss adjustment expenses haven’t gone down. That means it still costs the insurance company just as much to administer a claim as it did before. That’s the least surprising result of all.

Democratic Debate Reaction: Health Mandates Are a Bug, Not a Feature

November 16, 2007

Hillary Clinton and John Edwards may have attacked one another last night, but they’re in agreement about the health care mandate issue – and that’s unfortunate. Most Democratic health reform plans include mandated coverage, and that’s a mistake on both policy and political grounds (although the Edwards plan offsets that somewhat with some interesting use of public insurance).

The Las Vegas Democratic debate was long on play-acting, short on substance. Meaningful exchanges about policy were hard to come by, and only three come to mind: Clinton vs. Obama on Social Security, Clinton vs. Obama on health mandates, and Clinton vs. everybody on her Iran vote.

Re health mandates, Obama may well be on the right track. When Clinton boasts, as she did last night, that her plan provides universal healthcare, what she’s not saying is that it does that by punishing people who don’t pay usurious prices to private companies in order to obtain coverage. Obama had the right response, althouch he expressed it in a passionless and somewhat detached way.

The New York Times is correct when it says that “many experts agree that that without a mandate, some people would not get coverage.” In addition, a voluntary enrollment plan will suffer from “adverse selection”: The sick will be more likely to enroll than the healthy, which will make the plan financially unstable.

But I disagree with many of my fellow “health wonks” on mandates. I’ve said they’re the wrong solution. They address the “selection” problem, but only partially. Compliance will continue to be a problem under the “mandate” approach unless fairly Draconian enforcement rules are put in place. (That’s what Obama was alluding to with his “garnishing wages” comment, which many viewers may not have understood.)

Secondly, mandates could become a political disaster. They could turn a Democratic political positive – public frustration with healthcare – into a negative. It’s easy to picture the Republican candidate talking about “nanny state” rules that “invade your privacy and seize your wages.”

No health plan will succeed if it forces Americans to overpay for insurance, on the hope that selection issues and other initiatives bring prices down in the future. It makes more sense to provide every American with a basic government-funded health plan. From there, policy options might include trading plan credits for enrollment in a private plan, or the purchase of supplemental private insurance.

But mandating that Americans buy insurance from private companies is a political and policy mistake. It’s true that mandates are the conventional wisdom today – but then, so was the wisdom of Massachusetts’ mandate-driven health reform initiative. We disagreed then, and said that the “Massachusetts miracle” would have serious problems. It now appears that – sadly – we were right (see here and here and here).

It remains to be seen whether mandates are a “feature” or a “bug” in the Democratic platform.

Health Privacy Creates Policy and Technology Challenges

November 14, 2007


Last summer the Wall Street Journal ran a piece about inaccurate data on medical records, which is a common problem. That led WSJ blogger Jacob Goldstein to observe that, when it comes to obtaining health coverage, medical records are the new “credit score.”

He’s absolutely right – although you can argue that, as reporters say, he “buried the lede.” Most people don’t even realize that insurance companies ever see their personal medical records. That’s a significant story. In fact, most people have no idea who sees their medical information or where it goes. I’m not aware of any comprehensive study on the collection and distribution of medical information.

I do recall seeing a research paper on insurance information in the 1980’s that said that the typical medical bill is handled by 25 different people before it is paid or denied. (No citation available, though I’ve tried to track it down – so consider it apocryphal if you must.)

Policy Need #1: Public awareness, debate, and accountability for the sharing of medical information in the claims administration process.

The digitization of medical information is the new “bipartisan” issue of the 21st Century, uniting politicians from Hillary Clinton and John Edwards to Newt Gingrich. And there are compelling reasons for it, whatever shape health care reform eventually takes. But there are risks.

There have been many security breaches of health data involving hundreds of thousands of patients and their medical records, as we’ve discussed before. (The total number of people involved in any type of data breach over a three-year period? 159 million.)

Technology Need #1: A health security coding system for providers and payers that really works. A number of people are working on it, and there’s a university study group tackling the issue, but nobody’s cracked the code yet in a way that these various markets can embrace.

Then there’s the growing area of health data mining. This can be a very good thing, encouraging both research and better services for individuals. Yet the political state of the art lags behind the technology, which keeps developing. Esther Dyson has an attractive solution: informed consent. Answer those online questionnaires and search for medical information all night if you like, she suggests, but insist that your digital content providers allow you to control what is and isn’t shared.

Policy Need #2: Extend informed consent to health technologies of the future, too, such as telemedicine. It’s an elegant, simple solution to a growing problem – a solution that arose in the private sector. But it doesn’t cover all possibilities. That’s why the American Medical Informatics Association offered some suggested guidelines for the secondary uses of medical data that includes public debate and consensus; a health data taxonomy; and a redirection of the debate away from the ownership of data and toward the the topics of access, use, and control.

We’ll have even bigger problems in the future, including the collection and use of genome data. Dyson understands the implications of genomic information on the insurance industry better than the Economist does, but neither addresses the possibility of genomic data being used for, say, pre-employment examinations.

Would Abraham Lincoln ever have become President if the country knew in advance that he had a tendency toward severe depression? And if he hadn’t been, would the country have been better off?

Technology Need #2: A genomic “reader” that is sophisticated enough to categorize an individual’s enhanced abilities as well as their vulnerability to disease.

Policy Need #3: A national debate on the proper uses of genomic data.

So, when do we begin the public discussion of health data and privacy? And who’s going to meet those tech challenges and reap the economic rewards that will follow?

(Image of secure public health data center licensed under Creative Commons from HMS, Inc.)