Vermont Leading the Way in Health Care Reform

The Assembly Health Committee is holding a hearing on Governor Arnold Schwarzenegger’s health care reform package tomorrow, October 31st (yes, on Halloween, go figure). I’ll be there testifying on behalf of the California Association of Health Underwriters and the California chapter of the National Association of Insurance and Financial Advisors. I’ve got my formal statement ready, but now I’m wondering. Perhaps I should just read an opinion piece from today’s San Francisco Chronicle by Spyros Andreopoulos, director emeritus of the Office of Communication and Public Affairs at Stanford University Medical Center. Mr. Andreopoulos makes the point that the focus of reform should be on constraining health care costs. Nothing new there.

However, Mr. Andreopoulos goes on to cite three causes of skyrocketing medical costs:

“– 75 percent of health-care spending is associated with chronically ill patients – those with predictable and long-standing medical problems, according to “Chronic Disease Overview,” published in Nov. 18, 2005 by the Centers for Disease Control and Prevention.

— Chronically ill patients only receive 56 percent of the clinically recommended preventive care, according to an article in the June 26, 2003, issues of the New England Journal of Medicine. Nearly two-thirds of the rise in health care spending is associated with rising rates of patients treated for largely chronic diseases.”

— Nearly 30 percent of the growth of health spending is associated with the doubling of obesity over the past 20 years – a chief contributor to chronic illness, according to an article in the Oct. 20, 2004 issues of Health Affairs.”

He then describes what’s required to address these cost drivers and points out how Vermont effectively addressed them in developing its health care reform plan. Notably, Vermont’s reforms were passed by a Democrat-controlled Legislature and signed into law by a Republican Governor. Apparently there’s more to the place than fall foliage, maple syrup and ice cream with weird names from two guys named Ben and Jerry. There’s a lot of common sense, too. Lawmakers there reached agreement on their reform package by first negotiating reforms aimed at tackling health care costs.Then it focused on how to assure access to care. Which makes sense. Requiring consumers to pay for health care coverage (whether through premiums or taxes) is a lot easier — and more fair — once they’re convinced the coverage will be affordable. Without that assurance the result will be what’s happening in California: competing plans focused on coverage being sniped at from every direction by every stakeholder.

As Mr. Andreopoulos puts it, California lawmakers “must take Vermont’s example and redefine the discussion to the issue of rising costs as the first priority. The focus must be how to cut costs and streamline the system, and what will the end product look like, and most important persuading Californians that health insurance will be affordable.” If he’s available, I’m more than happy to give up my time at tomorrow’s hearing for Mr. Andreopoulos to make his point to the Committee.

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Failing to Address Health Care Costs Just Puts Off the Big Accounting

Bill Robinson, a health insurance agent in the Palm Springs area, sent me an interesting article last week. The article reiterates a key, but too often overlooked, truth about health care reform. Until lawmakers tackle the rising cost of health care, all the debate over health care coverage will eventually amount to little.

Take even the most extreme reform: a single payer system. Supporters claim that eliminating health insurance companies, agents and the rest of the private health care sector will provide enough money to support a government-run system providing everyone with virtually unlimited health care. They’re wrong, but for now, let’s give them the benefit of the doubt. What is likely to happen in, say, 10 years? Consider that cost of $1,000 worth of medical care in January 1997 cost over $1,470 in December 2006 according to Tom’s Inflation Calculator and it’s clear even single-payer advocates are going to have to come up with a boffo second act. A one time saving just doesn’t cut it.

Which brings us to the article Bill sent from Financial Week, “Cost of health-care system bugs employers”. The article points out the motivation for business executives to be fully engaged with health care reform. Of the $1.9 trillion in total health care spending in 2005, $694 million was spent on private health insurance premiums. Employers paid for $462 million of this, fully two-thirds. It’s a bottom-line issue for employers of substantial proportions.

Which is why folks like Andrew Mekelburg, Verizon Communications’ vice president of federal government relations complains that the presidential candidates are focusing on health care coverage, not health care costs. “Until you fix the system we’re all going to pay more,” complains Mr. Mekelburg. He notes that the health care system lags other areas of the economy in leveraging technology to increase efficiency and improve results.

Many of those interviewed in the article agree that achieving universal coverage is important. But as Helen Daring, president of the National Business Group on Health, puts it, “It’s ironic: the main reason people do not have coverage is because they can’t afford it….Politicians say, ‘we’ll get the coverage in first, and we’ll worry about the costs later,’ but you’ll never be able to do the cost part later.”

And that’s the crux of the matter. The reforms being debated in Sacramento and elsewhere are important. Some are necessary. Yet most miss the point that it’s constraining the cost of the underlying care that drives everything. Worse, some of the solutions being put forward could make things worse. Consider the pay-or-play approach of Assembly Bill 8, the approach favored by the Legislative Leadership. Ted Nussbaum, a consultant on health care coverage to large companies, offers this warning. “They have to prescribe the amount we spend. ‘You spend X% of your payroll on health care.’ … And when you set the amount it takes out the incentives for employers to come up with more cost-effective care. … [A mandate] leaves no room for innovation and flexibility and creativity.”

This is common sense. If the government creates the floor for spending on a specific item, why would anyone fight to make the cost of the item less expensive?

The debate today turns on who gets coverage and who pays for it. This debate needs to expand to include a discussion on how much we all pay. Until that happens no reforms, not even the most radical, are going to do more than put off the big accounting that is coming. And the longer we wait, the tougher corralling cost will be.

California Health Care Reform: Not Enough Corners to Go Around

Is it just me or, when it comes to health care reform in California, is everyone staking out uncomfortable positions? Because it looks to me we may be running out of corners for people to back themselves into.

For example, some labor unions and consumer groups are attacking Governor Arnold Schwarzenegger for proposing a health care reform package which requires individuals to purchase coverage from, among other sources, private insurers. Yet most of the leading Democratic presidential candidates are calling for the same thing. How will this approach suddenly become acceptable when it’s advocated by Hillary Clinton?

Several business organizations, medical associations, and carriers endorsed the Governor’s plan in principle back in September. To them, the key phrase is “in principle.” The reality is, however, once you’ve posed alongside the Governor for the cameras the details need to be pretty onerous to withdraw your support. Yet, there’s a decent possibility (although certainly not a certainty, to overuse a certain phrase) that, with the plan under attack from the left, the Governor will compromise in ways that could be pretty darn onerous to some of these folks. Onerous enough to walk away from the post powerful public official in the state? And what will they do with those pictures hanging on their wall if it comes down to this?

Meanwhile, Assembly Speaker Fabian Nunez and Senate President Pro Temp Don Perata have committed to both pushing the agenda of their supporters (most notably their union allies) and to producing a comprehensive reform package that can be signed into law — preferably before the February vote on the term limits initiative. If they move too far toward the Governor’s position they’ll fail to satisfy their supporters. Yet  if they don’t move a fair distance toward the Governor’s position nothing will pass. There are Auntie Anne’s pretzel’s twisted into more comfortable positions than these guys.

The Republican Leadership isn’t exempt from the rush to the corners. Their principles prevent them from supporting new spending. Bringing any significant number of the uninsured into the health care coverage system — which most people consider to be one of the main goals of health care reform — will require new spending. This means Republican lawmakers have boxed themselves out of negotiations altogether.

Even Governor Schwarzenegger has managed to find a corner of his own. He declared 2007 the year of health care reform way back in 2006. He has consistently declared California’s health care system as broken. Consistently as in weekly for nearly a year. Consistently as in changing the title of his health care reform site from “Stay Healthy California” to “Fixing Our Broken Health Care System.” Now that he’s convinced Californians the system is broken, he needs to show he can fix it. He’s said the key to this is personal responsibility (requiring individuals to buy coverage) and shared pain (meaning everyone pays for reforms, not just business). Considering these keys are the primary points of contention with Democrats it’s going to be interesting to see how he fixes health care without walking away from his principles.

Of course there’s ways out of all these corners. The simpliest method is to declare failure the “other guys” fault and then sponsor a ballot initiative to achieve your vision of reform. This is basic stuff, taught by both parties in Politics 101. By the time you reach this level of politics, spinning out of tight political spots is just another day at the office.

So I’m not predicting folks will stay backed into their corners. I just find it fascinating that virtually every actor in the health care reform drama seems to be occupying one.

The First Alan Katz Health Care Reform Blog Unscientific Survey

In the previous blog I asked readers to offer report rumors or offer guesses concerning the fate of health care reform in California. After all, the demonstrators are making noise and the negotiators are keeping quiet. So it’s not like there’s a lot to report.

So it occurred to me a more formal survey of readers opinions would be kind of fun. Enter SurveyMonkey.com (which, along with its cousin, PollMonkey.com are very useful sites). And thus the first Alan Katz Health Care Reform Blog Survey was born. It’s a short one and should take less than two minutes to complete. As this is an experiment (meaning I’m using SurveyMonkey’s free service) only the first 100 responses will be counted. So be a charter member of this totally unscientific focus group. I’ll report the results soon.

Click here to take the survey. 

Thanks.

Rumor Time for Health Care Reform. Submit Yours Today!!

There’s a point in every political saga where rumors take over. The reason is simple: no one knows how it’s going to turn out. But like teenagers on a first date, most reporters and politicians are terrified of prolonged silence. So they read tea leaves, consult their horoscopes and offer opinions to one another. True, these are just guesses, but when one is repeated often enough, it becomes a rumor. And then instead of tea leave readings, folks can share rumors, which is so much more satisfying. They have an apparent heft.

Well, this is where we’re at in our current drama. California’s special session on health care reform continues. Staffers from the Governor’s office and their counterparts from the offices of the Legislative leadership continue to negotiate. The unions and their allies are outside demonstrating and anyone whose anyone is threatening/planning/thinking about qualifying an initiative for a 2008 ballot. In fact not having an initiative in the works is nearly as big a social blunder as not having a rumor to share. If you want to be one of the cool kids in the high school quad you better have both close at hand.

Meanwhile, back at the ranch, many lawmakers of both parties and lots of political pundits have declared health care reform dead for 2007. At the same time, there’s plenty of legislators and Sacramento observers who claim a deal is right around the corner. If you count early December as right around the proverbial corner.

I stand by my earlier post that the parties are close enough that something will emerge this year, but I have no more basis for this prediction than anyone else. Remember, this is the stage where no one knows how its going to turn out. For the record, I have no initiative — and I was never one of the cool kids.

Chasing down every rumor would be fun, he lied, but why should I be so selfish? So instead I’m inviting you my greatly appreciated readers to report the latest story you’ve heard on the fate of health care reform. Or to start one. Or to simply give your opinion on whether a health care reform bill gets signed into law this year. Feel free to post your hearsay anonymously if you like (WordPress asks for your email but no one sees it but me and I won’t tell — or use a fake one if you prefer). Please list your rumor/opinion/guess as a comment to this post and we’ll see what trends develop. If you’re the first to post something that actually comes true, you’ll win, well, let’s see … you’ll win, ummm, well nothing less than the satisfaction of knowing you got it right. Ain’t that grand?

And to all of you caught up in the fires raging through California this evening, my sympathies and best wishes. Acts of nature certainly put the folly of humans in perspective.

Canadian Waiting Lists Getting Longer Dispite More Money

As part of my irregular perusal of Canadian media, I came across an interesting article by George Jonas in the National Post. The article reports on a Frasier Institute study showing Canadians waited on average 18.3 weeks for non-emergency surgery in 2006, about half a week longer than in 2005. This despite the provinces  spending more tax dollars to reduce unacceptable waiting times.

Mr. Jonas can’t understand Canadians’ tolerance of this, although he notes it “gives new meaning to the word ‘patient.'” He has no problem, or hesitation, in describing the predictable result of this situation, what he calls a three-tier medical system. The first tier is the traditional provincial health plan available to everyone, the “second tier is called the ‘inside track’ and the the third, the United States. Anyone who thinks that wealthy or well-connected Canadians stand meekly in line and wait 18.3 weeks to see a specialist doesn’t live on this planet. The well-connected jump the queue, while the rich hop on a plan … and get themselves looked after in Cleveland, Austin, Phoenix or Rochester.”

Mr. Jonas laments Canada’s lack of private health insurance. “No one can guarantee health, but people should be able to buy therapy. Making therapy a government monopoly, and then doling it out on whatever basis — first-come-first served, lottery, status, connections or some murky bureaucratic set of priorities — combines iniquity with inefficiency.”

Recent events in the debate over changes to California’s health care system will embolden single-payer advocates to push their legislative package, Senate Bill 840 (Kuehl) even harder. They’ll be out in force at the Assembly Health Committees hearing on the Governor’s bill currently scheduled for October 31st. Maybe someone will ask them about the three tier Canadian version of their proposal. I doubt it, but one can always hope. 

In the meantime it’s kind of fun to read both Californian and Canadian newspapers. In the former, liberals are seeking Canadian-style health care reforms; in the latter conservatives are seeking private coverage such as available in the California. Perhaps we could bring them together in one room, sell tickets and finance health care reform with the proceeds.

OK, perhaps not, but it would be entertaining. And maybe even enlightening.

Governor’s Health Care Site Misses the Point

OK. We all know that when politicians and political parties take surveys on their web sites or through direct mail they really aren’t doing sophisticated research. They ask leading questions of the “do you support laws which make your life better or do you want laws that will make your life a living hell” variety. There’s no reason we should hold Governor Arnold Schwarzenegger to a higher standard, but there’s something about this example that ticked me off. And hey, it’s my blog, so ….

Rumor had it the Governor was going to formally respond to the unions today so I was checking out his official web site (http://gov.ca.gov for those of you playing along at home). I then clicked on the “HEALTHCARE” link in the bottom left of the page, which takes one to the Administration’s health care reform site (http://www.fixourhealthcare.ca.gov). Scrolling down a bit I came to the Governor’s “Quick Poll.” Since it may not be there for long (hopefully), here is what I saw:

QUICK POLL:
Most Responsible for Increasing Health Care Costs:

• Employers not offering workers insurance
• Too many uninsured people costing taxpayers money
• Insurance that is expensive and hard to get
• Out-of-pocket expenses that are high
• Medications are costly

Isn’t there something missing here? OK, isn’t there a whole lot missing here? Why is there no mention about what everyone knows is really driving increased health care costs and health insurance premiums? Things like an aging population, new technologies, and increased consumer expectations concerning what the health care system should deliver? A choice of “Medications are costly” heads in that direction, but doesn’t get anywhere near to this point. 

Gee, Governor Schwarzenegger, maybe the reason employers don’t offer workers insurance, too many people are uninsured, insurance is too expensive and out-of-pocket expenses are high is that the cost of health care is rising far faster than wages or general inflation? Health care is so expensive that when the government pays the bill (think MediCal) they refuse to pay the going rate. Which means hospitals and doctors need to increase what they charge those with private insurance to make up the difference. Now that’s a hidden tax and my guess is it outweighs the cost of uncompensated care.

The Administration knows this. So why offer a survey that is insulting, misleading and a waste of Internet bandwidth?

The answer is: because they can. And it’s what happens when politics trumps policy. The Governor himself probably never saw this poll — and certainly won’t be seeing the results of it. Whichever staff person added it should very quickly and quietly remove it. A blank space on the web site would be an improvement.

Is this making a big deal out of something inconsequential? Yep. But hey, I feel better now.

The New Health Care Reform Dance: Noisy Action. Quiet Talks.

A lot of folks are saying the chances of health care reform in 2007 are gone. The unions and several consumer groups have declared war on Governor Arnold Schwarzenegger’s plan. They’re holding demonstrations and prayer vigils claiming the Administration’s proposal is too hard on the middle class and too easy on corporate California. The rhetoric is getting nasty. The demands more strident. It’s over.

Or is it? It seems to me that this could also be taken as a tactic to clarify — and strengthen — their bargaining position. At the same time it sends a message to their constituents (most of whom support a single-payer system) that they’re holding out for “real” reforms.

Anchoring an extreme position so others can appear more reasonable while extracting more from the other side is the negotiating equivalent of the “good copy, bad cop” interrogation routine. So one interpretation of what the unions and their consumer group allies is doing is giving their negotiators, Assembly Speaker Fabian Nunez and Senate President Pro Temp Don Perata, some help in the smoke filled tent. (Incidentally, this isn’t much different than what the Governor did back in August when he promised to veto the Democrat’s health care reform plan, Assembly Bill 8. Of course, in that case Governor Schwarzenegger was playing both the good cop and the bad cop).

The other reason the chances of health care reform remain alive is that on the two key issues which have emerged, the two sides aren’t all that far apart.

Eligibility for Premium Subsidies: The Governor would provide premium assistance to California residents in households earning up to 350 percent of the Federal Poverty Level ($35,735 for an individual; $72,275 for a family of four). There have been several statements from the other side, but it appears they want to set eligibility for these subsidies at something closer to 500 percent of the FPL ($51,050 for an individual; $103,250 for a household of four). Would a compromise at 400 percent make everyone happy? No, but it would probably allow each to declare a partial victory, which is what compromises are supposed to do.

Payroll Tax: The Governor wants businesses to pay four percent of their Social Security payroll to support the health care reform package; the union-led coalition wants a 7.5 percent tax. Would either side kill health care reform over a 5.5 percent tax? I doubt it. The Governor would still be delivering a ‘discount” to the business community and the Democrats can always seek an increase later.

There’s other issues to be worked out, but these two items are currently the center of attention. When it comes to reaching a compromise, my take is that the Governor has the stronger hand so he’ll have to give less. The Democrats have a greater need for a win on health care reform this year. Speaker Nunez and Senator Perata are pushing an initiative on the February ballot to modify term limits in a way that would enable them to remain in their leadership positions longer. With the budget debacle fresh in their minds they need something to convince voters keeping the current crop of lawmakers around longer is a good idea. Health care reform might be just the message they need.

None of this is to disparage the sincerity of the Democrats, the unions and their allies. I have no doubt they firmly believe the changes they’re calling for are good and necessary. Yet sincerity and good politics are not mutually exclusive. And noisy activity does not mean quiet talks can’t, and aren’t, continuing.

I should note, by the way, that others have a similar take on what may be happening. For example, Bill Ainsworth of the San Diego Union-Tribune made many of these same points in his blog yesterday. Today, Anthnoy York of the Capitol Weekly blog notes that “A day after blasting Gov. Arnold Schwarzenegger as the greatest obstacle to health-care reform, the head of the California Labor Federation appeared to back away from what many interpreted as the informal end of health care negotiations.”

Follow-up on Health Care Reform Chances

 As I wrote yesterday, the chances of California passing health care reform this year is dimming. Yet the consumer groups and unions joining together to attack Governor Schwarzenegger’s plan are creating an awkward situation for themselves: the front runners for the Democratic presidential nomination have proposals remarkably similar to that proposed by California’s Governor.

My thanks to reader David who, in his comment on that past, cited a San Francisco Chronicle article which reached the same conclusion. It’s worth reading this article and I mention it here to make it easier to find.

The article draws comparisons between Senator Hillary Clinton’s and Governor Schwarzenegger’s health care reform proposal, then quotes Barbara O’Connor, professor of political communication at California State University at Sacramento, as saying, “‘I think they are more similar than they are not – and I’m disappointed it’s been cast as a partisan debate. That means we won’t get a solution. I think it’s becoming not a conflict resolution but a conflict-creating strategy.’ She said it appears that ‘clearly the goal is to define the governor as soft on industry, and it’s not going to resolve the conflict – and so health care will not get out.'”

If that’s the result it would be unfortunate. Health care reform is a tough issue. It requires thoughtful debate and the less partisan passion at the table, the better. Unfortunately, that doesn’t seem to be the direction we’re heading in.

Chances for Meaningful Health Care Reform Dim as Positions Harden

Unions and others have decided it’s their way or the highway when it comes to health care reform. According to the Los Angeles Times, these interest groups are mounting a full-on campaign to defeat Governor Arnold Schwarzenegger’s health care reform package. Their campaign will include prayer vigils, television ads and demonstrations at the Governor’s public appearances. Joining the California Federation of Labor will be organizations like Health Access, Consumers Union and It’s Our Healthcare! Their main argument is that the Administration’s plan gouges the middle-class by requiring every resident to obtain health care coverage, but failing to provide sufficient subsidies to enough residents. For example, while the Governor would offer tax credits to households with annual income of 350 percent of the Federal Poverty Level (about $72,000); the coalition wants this eligibility level to at least 400 percent of the FPL (a bit more than $82,600) — which is a bit lower than the $103,000 target union officials mentioned last week. They also maintain California’s businesses pay too little of the funding toward the state’s health care system under the Governor’s plan.

So the gloves are now off and rationale debate is about to flee the scene (demonstrations and prayer vigils rarely lend themselves to civil, reasoned discussions). Passing health care reform during the current special legislative session was a tough assignment to begin with. Given Labor’s influence with the Democratic majority, this turn of events virtually eliminates any chance of responsible health care reform any time soon.

Reform is not impossible, however. Governor Schwarzenegger can be one of the most skillful politicians Sacramento has seen in decades (he can also be one of the most clumsy politicians Sacramento has seen in decades, but during the health care reform debate his most artful political persona has been on display). Speaker Fabian Nunez and Speaker Pro Tem Don Perata are no political slouches either. Plus, they would like to see health care reform enacted to help justify the changes to term limits they are seeking on the February 2008 ballot.

Even the Labor coalition has incentives to reach a compromise. They are looking at putting a health care reform initiative on the ballot in 2008 (presumably it would look a lot like Assembly Bill 8, which the Legislature passed and the Governor vetoed). The Governor is threatening to sponsor a competing initiative of his own. Meanwhile business groups and advocates of a government-run single payer system are also considering initiatives. When multiple ballot measures on one topic are put before the voters, historically it’s been easier to defeat all of them than to get any one of them passed (although there are exceptions). So if Labor and their allies aren’t careful they could wind up with no health care reform passing at all and starting over from square one in 2009. That would be squandering not only two years, but all the momentum behind the current reform efforts. And it would be bad news for all those who effective reform could help much sooner if a responsible compromise could be reached.

I was talking to someone today (who prefers to remain anonymous) who pointed out another dynamic in this situation that could make Labor’s position uncomfortable. The unions are supporting employer-centric reforms like AB 8. Governor Schwarzenegger supports an individual-centric approach. Senators Hillary Clinton and Barack Obama, Governor Bill Richardson are among the Democratic presidential candidates whose health care reform proposals mirror, to some degree, Governor Schwarzenegger’s approach. So all the rhetoric this coalition is aiming at Republican Governor Schwarzenegger may apply just as strongly to Democratic presidential candidate <fill in the blank> come 2008. And the unions will be strong supporters of that nominee. 

Politics is politics. Attacking an opponent while praising an ally who has the same position is not uncommon. For all but professional contortionists, however, it’s not a lot of fun either. But that will be then and this is now. For now, positions are hardening and the hope for meaningful health care reform any time soon is growing faint.