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Archive for September, 2008

Do Schwarzenegger Vetoes Signal a Push for Comprehensive Reform in 2009?

Posted by Alan on September 30, 2008

Governor Arnold Schwarzenegger vetoed a host of health care reform bills on Tuesday. Some of them were to be expected. For example, he struck down Senate Bill 840, Senator Sheila Keuhl’s attempt to create a government-run, single payer system in the state. The Governor has been on record as opposing this approach for years and has vetoed the concept in the past. His vetoes of several bills requiring medical plans to include coverage for certain conditions is also consistent with his previously stated opposition to coverage mandates.

But there were lots of surprises on the list, too. Governor Schwarzenegger vetoed legislation that would have made it far more difficult for carriers to insurance companies to rescind an insured once they’ve accepted an application for individual or family coverage (Assembly Bill 1945 by Assemblyman Hector De La Torre. No carrier practice has garnered more negative press — and bigger fines — than rescission. From a political point of view, AB 1945 was a soft ball. Yet Governor Schwarzenegger struck it down.

He vetoed legislation (Senate Bill 1440 by Senator Keuhl) to compel carriers to spend 85 percent of the premium they take in on medical care — even though this concept was contained in the unsuccessful comprehensive health care reform package the Governor was pushing for last year. The same fate befell Senate Bill 973 by Senator Joe Simitian that would have created a statewide public insurer to link together existing regional and county-based health plans even though it too was similar to a portion of the Governor’s own reform plan.

Governor Schwarzenegger’s veto of Assembly Bill 2 by Assemblyman Mervyn Dymally was especially surprising. It would have expanded the ability of the state’s existing high risk pool to help more Californians unable to qualify for coverage in the private marketplace due to pre-existing health conditions.  The program needs significant help to continue to meet its mission. He also vetoed Senate Bill 981 by Senate President Pro Tem Don Perata which would have prohibited “balance billing” by doctors and other care providers.

The Governor had his reasons for keeping these bills from becoming law. His veto message concerning AB 1945 deplored the practice of unfair rescission and listed consumer-protection provisions he would want to see in legislation dealing with the issue. But he noted that AB 1945 was “written by the attorneys that stand to benefit from its provisions” and would lead to unwarranted litigation. Similarly, he preferred a different solution to the problem of balance billing than the approach embodied in SB 981.

Vetoes of this type, over approaches to solving problems, are common. They represent legitimate policy and political differences. The Legislature, for example, considered several bills addressing recission. They could have worked with the Governor’s office to fashion a compromise that he would sign. That didn’t happen. The veto did.

But it’s Governor Schwarzenegger’s rationale for vetoing AB 2, SB 1440, and SB 973 that best illuminates what’s in store for California concerning heatlh care reform. In all three of his veto messages, Governor Schwarzenegger made clear he wants comprehensive health care reform. Piecemeal and incremental changes are unacceptable.

I’ve written previously about why state health care reform efforts usually fail. In my mind, meaningful and comprehensive reform will need to come from Washington. And while enacting such reform has been greatly complicated by the current financial crisis, it still remains near the top of the domestic agendas for both Senator John McCain and Senator Barack Obama.

If the new Congress and the next Administration succeed in enacting dramatic health care reforms, it could preempt laws and regulations at the state level. To me, this suggests the efforts of California’s leaders might best be spent in helping to shape what happens in Washington, DC. Governor Schwarzenegger apparently disagrees.

Governor Schwarzenegger’s vetoes make clear he intends to pursue a California solution. It’s not just what the veto messages say, it’s their political impact that is important. They keep pressure on lawmakers to enact substantial reform. His opponents, for example, will be unable to call for a “time out” on further changes to the system while the new laws are given a chance to work. His allies, while angry at the vetoes, will work all the harder to get their pet reforms enacted.

In some significant ways, the potential for success is greater in 2009 than it was in 2008. Governor Schwarzenegger will be negotiating with a new cast of Legislative Leaders.  He will will be working with a relatively new Legislature, many of whom will have no scars with from his previous effort. Yet, unlike in 2007 when he launched the Year of Health Care Reform, a year in which, for most of it, the Governor offered only general principals, in 2009 he can use his defeated reform legislation, Assembly Bill X1-1, as a detailed starting point.

Certainly, the task won’t be easy. It may even be impossible. The state’s finances are in shambles and health care reform is expensive.

But there’s a legacy to be attended to. Plus, the Governor does not like to lose and the defeat of ABX1-1 was both visible and painful. His vetoes are a clear signal of where he’s headed. Expect 2009 to be the Year of Health Care Reform. Again.


Posted in Arnold Schwarzenegger, California Health Care Reform, Health Care Reform, Healthcare Reform, Politics | Tagged: , , , , , , , , , , , , , , | Comments Off on Do Schwarzenegger Vetoes Signal a Push for Comprehensive Reform in 2009?

One Way to Control Medical Costs

Posted by Alan on September 29, 2008

With the inauguration of a new president next January, the health care reform debate will begin again. It will launch with at least one grand speeches, several huge rallies, and media events too numerous to count. Yet, what will really matter is when the new Administration brings together a broad group to begin hashing out a plan. When they do, I’m hoping a key focus of the negotiations will be on controlling America’s skyrocketing health care costs. As I’ve written about before, it’s the underlying cost of medical care that will determine whether health care reforms succeed.

So when the new President convenes his working group, I’m hoping there’ll be a couple of doctors from Pennsylvania in the room. Specifically, doctors from Geiinger Health Systems. It’s not that they’ve found the magic wand that will miraculously clamp down on runaway health care cost inflation. There is no such thing. What they have done, however, is demonstrated that the appropriate use of technology and the creation of a culture of appropriate care can have significant impact on costs.

As reported by Fast Company magazine, the Geisinger Health System has introduced a program they call ProvenCare. The program is built around a relatively straightforward idea: medical providers should do the job right the first time. If they don’t, they pay to fix it. It’s a way of taking “pay for performance” concepts to an extreme. At Geisinger, they charge a flat fee for procedures like coronary-artery bypass surgery — including all the pre-and post-operative care involved — and they warranty their work. In the event of a preventable complication, Geisinger pays for the costs of making it right.

This shifts the cost incentives with the health system from providing as much care as the patient can survive to providing the right care. The underpinnings of the program centers around technology. For by-pass surgery, they created an online protocol of 40 steps their staff is expected to follow. Doctors receive a bonus based, in part, on meeting all those steps. However, each item on the checklist isn’t mandatory. Physicians are permitted to make exceptions, they merely have to note the reason for any deviations.

Initial results are promising and Geisinger is looking to expand the program — including the warranty — to other procedures. What’s happening in Pennsylvania is not just an interesting story, however. What’s significant, is how it demonstrates the compatibility of reducing medical costs while maintaining medical quality. If the next Administration’s health care reform plan is to work, that’s a story that needs to heard.

Posted in Health Care Reform, Healthcare Reform | Tagged: , , | 3 Comments »

Will National Health Care Reform Be a Victim of Financial Chaos?

Posted by Alan on September 23, 2008

The current financial crisis is a tragedy for those losing their jobs, their homes and their financial security. Secondarily, it represents a failure of public policy that will impact the country for years to come. One of the issues most likely to be dealt a set-back from the bank meltdown is national health care reform.

Whoever is elected president, health care reform high was to be high on their domestic policy agenda. The Democratic nominee, Senator Barack Obama has long made addressing access and affordability a centerpiece of his campaign. While Senator John McCain, the Republican candidate, has been less focused on health care reform, he has repeatedly made clear that he intends to change the status quo. However, recent events have cast a doubt on the underlying principals of their reform packages. Further, those events may have eliminated the resources substantial changes will require.

Senator McCain’s health care reform approach has taken the biggest beating from the financial market turmoil. A self-described “deregulator,” Senator McCain would loosen government oversight of the health care coverage marketplace. For example, he would allow carriers to offer plans in every state so long as they are approved by anystate. This means health insurance companies could shop for the jurisdiction with the weakest regulatory system. The current financial crisis demonstrates the danger of such an approach. Few would argue that it was caused by too much regulation of banks and mortgage companies. Neither party in Congress is likely to support this approach in light of the devastation deregulation of the banking industry helped to create.

Senator Obama’s health care reform plan has also been battered by the mess in the financial markets. He would expand existing government efforts like the State Children’s Health Insurance Program. He would offer health insurance coverage through new government-run health plan. This National Health Insurance Exchanges would be both a participant in the market and a regulator. Yet Fannie Mae and Freddie Mac have underscored the danger of mixing the two roles. The government has a tough enough time regulating markets. To ask it to both umpire the game while also stepping up to the plate would tax the competence of any organization. To ask the government to try this feat is foolhardy,

Then there’s the cost of the candidate’s health care reform plans. Senator McCain claims his reform plan will cost $10 billion; Senator Obama says his will cost $50 billion. Both, no doubt, underestimate the final bill. However, the proposed $700 billion Wall Street rescue plan represents about 5% of the nation’s Gross Domestic Product (GDP) of approximately 13.8 trillion in 2007. It dwarfs the astronomical federal deficit of $482 billion. It is, in other words, a vacumn cleaner that will suck up much of the resources needed to implement any kind of meaningful reform.

Senator Obama recognizes this. According to the Associated Press, Senator Obama said he “remains committed to addressing needs in health care, education and energy.” However, he indicated tax cuts for the middle class will be his top priority, noting they are “particularly important to strengthen an economy sliding into economic recession.

Health care reform was never going to be an easy issue for the next president to tackle. Finding the right role for government and the right level of regulation was always going to be a challenge. Given the new economic landscape and the fall-out from the current financial crisis, fashioning meaningful, comprehensive health care reform will be even more difficult.

What this means is that national health care reform will be delayed. It will also be more contentious and a greater challenge than previously feared.

Posted in Health Care Reform, Healthcare Reform, Politics, Presidential Election | Tagged: , , | 1 Comment »

Health Care Reform and the GOP Platform

Posted by Alan on September 17, 2008

Party platforms are like cotton candy. They’re tasty and sticky (if a bit too sweet) for a brief moment of time and then they’re forgotten. Who can recall a lawmaker proclaiming their support for a measure because it was consistent with her party platform? Nonetheless, in a recent post I noted the Democratic Party platform’s rejection of a single-payer, government-run system.  Which got me thinking about what the Republican Party platform had to say about health care reform.

The answer is: nothing much different than what John McCain has been saying. Entitled “Health Care Reform: Putting Patients First.” the platform begins with a First Principle: Do No Harm. Here, the GOP explicitly states the party “will not replace the current system with the staggering inefficiency, maddening irrationality, and uncontrollable costs of a government monopoly.” No surprise there. It follows with a call for “patient control and portability.” Here’s where the paty calls for lowering the cost of coverage and calls for empowering employees “the option of owning coverage that is not tied to their job.” They call for eliminating the current difference in tax benefits between insureds who buy their coverage on their own or obtain it through an employer.

The rest of the platform is fairly straightforward calls for lowering costs through prevention, transparency, reducing frivolous malpractice lawsuits, leveraging technology, support of medical research and identifying best practices. These are fairly common proposals and unlikely to raise the hackles of many voters. There are, however, two controversial items.

Declaring the family as the basic unit of society, the Republican platform supports “parental rights to consent to medical treatment for their children including mental health treatment, drug treatment, alcohol treatment, and treatment involving pregnancy, contraceptives, and abortion.” I’m not sure what this means in practice. It doesn’t sound like it would prevent carriers from covering treatment for these services to minors, only that the parent could decide not to take advantage of them. Other than in life threatening situations I’m not aware of anyone forcing a parent to take their addicted child in for drug treatment. So it’s unclear to me whether this is simply a family-friendly statement or if it’s attacking a serious problem.

The second controversial item is a call to “Drive Costs Down With Interstate Competition.” This reflects a pillar of Senator John McCain’s health care reform plan. “A state-regulated national market for health insurance means more competition, more choice, and lower costs.  Families – as well as fraternal societies, churches and community groups, and small employers – should be able to purchase policies across state lines.” I’ve expressed surprise that this approach would find favor in the Republican party. Usually the GOP is in the forefront of allowing states to set their own rules. By allowing a health plan filed and approved in one state to be sold in every other state they undermine the ability of every state to create their own approach to health care coverage. This proposal would encourage jurisdiction shopping in which health plans would seek approval for their offerings in the states with the most lenient regulation and loosest rules.

The goal of encouraging competition is a good one. Even the idea of a national platform of health insurance rules has merit. In many respects, however, the GOP approach of “pick a state, any state” is the worst of all worlds. Moving regulation of health insurance products from the states to the federal government would provide uniformity (meaning products would meet minimum standards regardless of where they’re sold), but at the expense of accepting regulators that are more distant from consumers. The current patchwork of state regulation creates 51 silos that makes achieving best practices more difficult and lessens competition, but it keeps decision making closer to consumers. Allowing jurisdiction shopping neuters the ability of consumers to influence regulators while doing little to achieve uniformity in rules and offerings.

While the interstate competition provision is, in my opinion at least, a violation of the principle of “doing no harm,” the rest of the GOP platform is consistent with the no new taxes, keep government out of it philosophy that is at the foundation of Republican policy making. In that regard it’s not a surprising document. Given the insecurity many Americans feel about their continued access to health care, I am surprised that the Republican Platform doesn’t emphasize the desire to reduce the number of uninsured in the country. On the other hand, by elevating portability to the core of their proposal, they are seeking to reassure those now afraid to change — or lose — their jobs and thereby lose their health insurance.

Posted in Health Care Reform, Healthcare Reform, Politics, Presidential Election | Tagged: , | 3 Comments »

McCain and Obama Health Plans More Attitude Than Policy

Posted by Alan on September 16, 2008

Experts are weighing in on the health care reform proposals put forward by presidential candidates Senators John McCain and Barack Obama. That they’re finding them inadequate is not surprising. They are, after all, campaign promises, not legislation. Nonetheless, they offer an important glimpse into how the candidates approach the issue.

Most recently, the Health Affairs blog features an analysis of the McCain plan by professors at the University of Michigan and another on the Obama reform proposals by a authors affiliated with the American enterprise Institute, Project HOPE and a volunteer adviser to the McCain campaign.

The conclusion of each article is that each proposal is inadequate, too expensive (either for consumers or the government), and could do more harm than good. In other words, no surprises. What they fail to note is that the health care reform proposals, as they stand now, are more about attitude than policy. They do a much better job of outlining the preferences and approach of the candidates than they do in creating a workable structure to improve America’s health care system.

Senator McCain focuses on portability of coverage for those who have it; or Obama  on access. Senator McCain’s plan would cost far less than Senator Obama’s, although the Democrat’s plan would bring far more people into the system than the Republican’s.

What they tell us is that Senator McCain prefers solutions that empowers consumers to make their own health care decisions while Senator Obama is comfortable with a more forceful (some would say intrusive) role for the federal government. Interestingly, both are looking to chip away at the current employer-centric American health care system with Senator McCain shifting more toward individual coverage and Senator Obama introducing more government intervention.

There are some surprises in each plan. Senator McCain would allow carriers to seek approval of their plans in one state and sell them in others. Republicans usually support state rights yet this proposal would prevent a state from taking steps to protect their citizen’s interests regarding health care coverage. In fact, it would empower health insurance companies to shop the country for the most lenient regulators and regulations. Meanwhile, Senator Obama has repudiated advocates of his own party who call for a government-run, single payer health care system. This no doubt disappoints many of his most ardent supporters, including many of the unions supporting him, but it does recognize the reality that Americans are uncomfortable turning their health care over to the government.

Either Senator McCain or Senator Obama is going to be President of the United States in four months. Health care reform will be high on their “Things To Do” list. Voters should analyzetheir campaign promises, but need to take consider them in the context of reality. Attitude influences policy, but it’s not the same thing. The health care reform debate will be long and the compromises numerous. Neither candidate will be in a position to impose their reform plan on Congress. That’s a good thing.

Posted in Health Care Reform, Healthcare Reform, Politics, Presidential Election | Tagged: , , | 3 Comments »

Single Payer Losing Ground

Posted by Alan on September 5, 2008

This should be the best of times for advocates of a single payer health care system in America. The environment for radical change has never been better. After years of hammering at problems in the current system, there is general agreement on the need for substantial change. When asked what single issue will most impact their vote for president, a substantial number of voters have consistently cited health care according to the Kaiser Health Tracking Polls. For example, in the August 2008 survey, 16% cited health care as their determinative issue, ranking this concern behind only the Economy (49%), Iraq (25%) and and Gas Prices 18%). Significantly, health care reform is a critical part of the economy and 24% of the respondents said paying for health care and health insurance was a serious problem. 

Meanwhile, legislation to create a single payer system has been introduced in Congress and several states. In California, the Legislature passed a bill to create a state-run health plan:(Senate Bill 840 by Senator Sheila Kuehl. (It currently is awaiting a veto by Governor Arnold Schwarzenegger).

Given all this momentum for radical change, you would think a government-run system would be a major issue in the presidential campaign, yet it’s not. Clearly, Senator John McCain, the Republican nominee is not going to support a single payer system. What’s significant, however, is that Democrats are not advocating this approach either. Neither the Democratic nominee, Senator Barack Obama. nor his chief rival through the primary season, Senator Hillary Clinton, called for a government takeover of America’s health care system. Even the Democratic Party platform rejects a single payer system.

The 2008 Democratic National Platform, Renewing America’s Promise, gives its approach to heath care reform considerable prominence. Here’s some meaningful excerpts from the document:

“Democrats are united around a commitment that every American man, woman and child be guaranteed affordable, comprehensive healthcare.”

Our vision includes: Covering All Americans and Providing Real Choices of Affordable Health Insurance Options.  Families and individuals should have the option of keeping the coverage they have or choosing from a wide array of health insurance plans, including many private health insurance options and a public plan. Coverage should be made affordable for all Americans with subsidies provided through tax credits and other means.”

Shared Responsibility. health care should be a shared responsibility between employers, workers, insurers, providers and government. All Americans should have coverage they can afford; employers should have incentives to provide coverage to their workers; insurers and providers should ensure high quality affordable care; and the government should ensure that health insurance is affordable and provides meaningful coverage. As affordable coverage is made available, individuals should purchase health insurance and take steps to lead healthy lives.”

Meaningful Benefits. Families should have health insurance coverage similar to what Members of Congress enjoy.”

This is not the language of single payer advocates. Yes, the Democrats call for coverage for all Americans that is “similar to what Members of Congress enjoy.” And they want to protect Americans from “the burden of skyrocketing premiums, unaffordable deductibles or benefit limits that leave them at financial risk when they become sick.” So we’re not talking about a “hands-off” approach here.

But we’re also not talking about a single payer system. Advocates of SB 840 claim as one of its chief benefits the elimination of health insurers and HMOs. That’s a long way from the platform’s call for “keeping private health insurance options” available.

There will be robust debate in Washington concerning health care reform. As I’ve written previously, a bipartisan coalition of Senators is waiting for the new president with their own health care reform package. Single Payer advocates are not going away. They will throw their proposals into the mix, but this won’t change the reality: the Democratic nominee and his party’s platform have rejected the single payer approach.

So here’s the question: if single payer advocates can’t win when the political stars are so strongly aligned in their favor, will they ever win?

My take is that the stars are realigning in such a way to make the answer a resounding “no.” Over the next two-to-four years there is a real possibility that Congress and the new president will pass meaningful, comprehensive health care reform. That’s another two-to-four years in which the cracks in existing single payer systems around the world will deepen, broaden and become more apparent. Faced with a new alternative to what will increasingly be seen as a nonviable approach at hand being rolled out, single payer advocates won’t go away, but they won’t be successful either.

Posted in Arnold Schwarzenegger, California Health Care Reform, Health Care Reform, Healthcare Reform, Politics, Presidential Election, Single Payer | Tagged: , , , , , , | 1 Comment »