The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

Posts Tagged ‘Medical Costs’

The Need for Carriers to Explain Their Value

Posted by Alan on September 22, 2010

When an industry is being remade, as is arguably happening with America’s health insurance system over the next four years thanks to the Patient Protection and Affordable Care Act, there comes a time when every participant in the current system needs to step back and ask “What’s my role? What value do I add?” Employers, carriers, brokers, government agencies, all need to examine their place in the system, both as it exists today and as it will exist in the future.

There’s a sometimes heated discussion going on in the comment section of this blog concerning the future of brokers. In the past few posts we’ve seen some argue that the value brokers bring to the table will be ignored and the profession will disappear. There have been equally passionate comments explaining why brokers are likely to do well in the new world of health care coverage. (Readers of this blog know I believe professional health insurance brokers will play an important role in the post-health care reform world). 

In his comment, reader Scott summarized the value of brokers and why the good ones will continue to play an important role in the future. “Agents and Brokers, please stop talking about how hard or easy it will be to buy health insurance once the exchanges come, because that is not what we do, and that is not what we get paid to do. If it was, we would get a one time fee for the sale and then we would disappear and move on to the next person. We get paid to service the group and to provide this service ongoing. If we don’t, we get replaced, by someone who will. That is what we do. I am not worried.”

The debate over the value brokers add to the system and their chances of survival will continue. And brokers will need to work hard at both the state and national level to make sure decision makers understand this value. But they’re not the only players in the system who need to justify their existence. So do health insurance companies.

Ask most insurance executives to list their contribution to America’s health care system and high somewhere in the top two or three will be “we lower the cost of health care in this country.” Then take a look at virtually every rate increase letter sent by carriers in this country. In justifying the premium hike they all cite skyrocketing health care costs. And they’re right. Medical inflation greatly outpaces general inflation. Over the past year the buying power of $1,000 in 2000 requires $1,285 in 2010. Except for medical care, what $1,000 purchased in 2000 now takes $1,500. That’s a 75 percent difference.

But being right doesn’t clarify carriers’ value. Consumers, and the officials they elect are, are confused – and no wonder. If one of the key reasons insurers exist is to manage the cost of health care they’re not doing a very good job of it. (To be fair, medical costs would likely be significantly higher if health plans were not negotiating reductions. Compare the “allowed” charge on virtually any insurer’s explanation of benefit against the providers actual charges and you’ll see a huge discount – often more than 50%. Negotiating these price reductions lowers the cost of health care not just for that particular insured, but for the system as a whole – less the amount of the discount the provider shifts to other payers).

This disconnect between what carriers claim to do and what they lament they cannot do is not the only problem health plans face in justifying their existence. They have also been subjected to a brutal, incessant pounding over the past several years by the press, Congress and state legislatures. Carriers have offered themselves up as easy targets. Their vilification over  rescission practices, patient dumping, outsized executive compensation, insensitivity to their members, denying needed coverage and a host of other practices and misdeeds was to be expected. Combine this bludgeoning of their reputation with ever increasing medical costs and it’s no surprise some question whether insurance companies are necessary at all.

What makes this situation significant is that a poor reputation results in reduced credibility and diminished reputation lessens political clout, something carriers will need in great abundance in dealing with the implementation of health care reform over the next several years.

Brokers have long had to justify their place in the health insurance market. For many years carriers got a free ride on the issue. Yes they suffered the slings and arrows of the press and politicians, but except for single payer advocates their value to the system was generally assumed (if unspoken). The accumulation of attacks, however, coupled with carriers own touting of their role in reducing health care costs while medical costs spiraled out of control, puts this assumption in jeopardy.

As health plans develop their strategies for 2011 (and yes, they’ve started that process) near the top of the list should be asking – and answering – two very important questions: “What’s our role in America’s health care system? And what value do we add?” Then they need to share their answers, forcefully, fully and credibly, with the rest of the class.


Posted in Health Care Reform, Healthcare Reform, Insurance Agents | Tagged: , | 4 Comments »

Health Care is Local

Posted by Alan on August 20, 2009

Former House Speaker Tip O’Neill famously noted that “all politics is local.” And he’s right. He was not talking about the rules of the political game. Those are established by a national constitution and subject to state laws as well as local ones. He meant that the political dynamics of each district are what determines the ideological shading of a district.

Some examples are obvious: compare the voting record of legislators from Massachusetts and Utah. Others are less so: Republican Senator Charles Grassley had been a reasonable voice on health care reform until he remembered he was up for reelection in 2010 and saw how conservative Iowans were responding to unfounded claims of “death panels” and the like; he is now embracing aspects of the silliness.

Health care is local, too. The medical delivery system in Los Angeles looks far different from the one in Cheyenne. Even what’s considered standard treatment varies from community to community. And as Dr. Atul Gawande demonstrated in his New Yorker article, the cost of care varies greatly among localities based on medical provider’s approach to health care.

How the local nature of politics and health care interact underscores the complexity of health care reform. Because health care is local, what’s broken in the current system varies from place-to-place. Because politics and is local, acceptable solutions vary depending on locale. It may just be a coincidence, but it is worth noting that the initial advocate for community-based health insurance co-operatives, Senator Kent Conrad, hails from North Dakota where rural electricity co-operatives are common while many of those claiming only a government-run health plan will do represent urban areas.

Recognizing this dynamic, the the House Energy and Commerce Committee has described HR 3200’s impact on each Congressional District. (My thanks to Dwight Mazzone for bringing these documents to my attention). Reading through these is a glimpse of the richness and variety of America.

For example, in Wyoming (which has one Representative for the entire state) up to 19,000 businesses would be eligible for tax credits to pay for health insurance, 7,400 seniors would benefit from reducing brand name drug costs, much of the $23 million in uncompensated care hospitals and health providers face would be eliminated, and the tax surcharge to pay for reform would impact 3,120 households.

Compare this to the Los Angeles area district represented by Henry Waxman, the Chair of the Energy and Commerce. In California’s 30th District up to 14,300 businesses would be eligible for the subsidy, 5,200 seniors would see lower prescription costs, hospitals and other providers would be relieved of much of the $85 million in uncompensated care they deal with today, while 22,100 households would pay the tax surcharge.

The statistics cited come from legitimate sources, but are presented in order to muster support for HR 3200. Were the same information to be presented by House Republicans it would no doubt have a different spin. Nonetheless, the information is a treasure trove of insight into the local politics and health care that drives the health care reform debate.

These statistics should also give lawmakers demanding a single, one-size-fits-all solution to health care reform pause. As I’ve argued before, state health care reform efforts usually fail. America’s health care system is too large, too interrelated and too complex to be reformed on a state-by-state basis. States lack the tools needed to make meaningful changes work; the national government has those tools. However, the reforms themselves could benefit from local implementation. For instance, instead of creating one, national government-run health plan to compete with private carriers, enabling the creation of local health insurance co-operatives to generate competition where it is needed is more appropriate.

Finding the balance between federal and local management of health care is critical to a well-functioning medical system. It is also good politics.

Posted in Health Care Reform, Health Plans, Politics, State Health Care Reform | Tagged: , , , , , , , | 29 Comments »

Health Care Reform 2009: More Required Reading

Posted by Alan on June 2, 2009

There’s a lot of moving pieces to the health care reform process currently underway in Washington, D.C. Politics, policy, and personal interest are all colliding as lawmakers and President Barack Obama Administration try to fix what everyone is calling America’s broken health care system. To put the debate in context it helps to know what the participants are thinking. To understand what they’re thinking it helps to know what their reading and writing.

Earlier this year I put forward a list of required reading for understanding the health care reform debate. Here’s the second installment of what will be a series of such posts. (Note: a third list of required health care reform reading was added August 2, 2009).

1. The Senate Finance Committee, chaired by Senator Max Baucus, will play a major role in determining the health care reform legislation that is likely to arrive on President Barack Obama’s desk this Autumn. And they are taking this role very seriously. The Committee has produced three policy option documents to facilitate their deliberations. The policy papers don’t describe what the Finance Committee will decide upon, but it does provide insight concerning what they will be deciding upon. The option papers are:

2. The Senate Finance Committee isn’t the only one in the upper house with jurisdiction over health care reform. The Senate Health, Education, Labor and Pensions Committee and its chair, Edward Kennedy, will have a great deal to say about the final legislative package as well. The Committee released an outline of its reform plan yesterday. I have yet to get my hands on that document, although I did find a Senate HELP Committee Briefing Paper dated May 21, 2009.  (When I get a copy of the most current outline I’ll post it here). In addition, as I’ve posted previously, Senator Kennedy recently described his vision for health care reform in some detail. The HELP Committee’s plan stakes out the most liberal, yet still politically realistic, proposals (meaning it doesn’t call for a single payer system). Whether Senator Kennedy expects to get much of what’s laid out in the outline into legislation is unknown. At the very least, by providing an anchor on the left his plan will help him keep the final product from moving what he would consider too far to the middle.

3. As members of Congress begin drafting legislation they will be paying close attention to the impact health care reform will have on the federal budget. The analysts they will turn to for answers work in the Congressional Budget Office.  The CBO recently published guidelines explaining how they will evaluate the budget impact of various proposals in the Budgetary Treatment of Proposals to Change the Nation’s Health Insurance System. An added bonus: the director of the CBO, Douglas Elmendorf, posts frequently to the Congressional Budget Office Director’s Blog, providing additional insight into the agency’s thinking.

4. The Emanuel family has hit the trifecta. Their youngest son is a major Hollywood agent. The middle son is a former Congressman and currently the White House Chief of Staff. Their oldest son is a doctor. Not just any doctor. He is the Chair of the Deparment of Bioethics at the Clinical Center of the National Institutes of Health (that must be one huge business card he’s got). But wait, there’s more. Earlier this year, Dr. Ezekiel Emanuel was named a special adviser to the director of the White House Office of Management and Budget for health policy. In other words, he’s pretty close to health care reform’s ground zero in the Obama White House.  (No slight intended of the Director of the White House Office on Health Reform, Nancy-Ann DeParle, who gets to sit on the actual bulls eye — see #5).  How Dr. Emanuel views reform, consequently, matters. He’s thought long and hard on the subject and, fortunately for inquiring minds, he’s written extensively on the topic, including the book Healthcare, Guaranteed: A Simple, Secure Solution for America. Other writings by Dr. Emanuel include a posting he made to The Huffington Post and another he co-wrote for the New America Foundation.

5. As noted in #4, Nancy-Ann Deparle’s is charged with coordinating President Obama’s health care reform efforts. It’s her job to keep the various players and issues in the debate from spinning out-of-control. Like a traffic cop, it’s up to her to keep things moving toward eventual passage of comprehensive legislation. It’s hard to find much on her personal health care reform positions (if anyone out there has links to her writings on the topic, please let me know).  In an April 2009 briefing for reporters sponsored by the Kaiser Family Foundation, Families USA and the National Federation of Independent Businesses, she did define what she means by a “public health plan.”  You can read a transcript or view a video of her presentation to the press on the Kaiser Family Foundation site

6. Everyone knows the key to health care reform is controlling medical costs. You can have all the market reforms Congress can dream up, but if medical inflation continues to outpace general inflation and wage growth at the rate it has been, it will cripple the economy. Even entrenched stakeholders recongize this reality, which is  how the Advanced Medical Technology Association (AdvaMed), America’s Health Insurance Plans (AHIP), American Hospital Association (AHA), American Medical Association (AMA) , the Pharaceutical Research and Manufacturers of America (PhRMA) , and the Service Employees International Union (SEIU) came to publish their medical cost reduction proposals. The document contains cost cutting committments the organizations have made to President Obama.

7. Perhaps the most talked about article on cost containment making the rounds today is a New Yorker article by Dr. Atul Gawande. It is a terrific read that recounts his investigation into why McAllen, Texas is “the most expensive town in the most expensive country for health care in the world.”  It seems MediCare pays twice as much per person in McAllen than it does 800 miles away in El Paso. Dr. Gawande investigates why, offering insights into the health care system that are too rarely considered.

8. It is generally accepted that 30% of health care spending in the united states is unnecessary. That’s $700 billion we’re talking about that could be spent insuring the uninsured, among other uses. Folks like Peter Orszag, the former director of the CBO and currently director of the White House Office of Management and Budget (which makes him Dr. Emanuel’s boss, for those keeping track) often sites this statistic — and its source: Dartmouth University’s  “Atlas of Health Care.”  They have done numerous and extensive studies on the connection (or lack thereof) between medical spending and health outcomes. Their most recent findings, published February 27, 2009, are described in Health Care Spending, Quality, and Outcomes. It’s subtitle: “More Isn’t Always Better,” pretty well sums up the results.

9. A bonus item: For a 3 minute summary of the health care reform debate, presented in a surprisingly entertaining, clear, and balanced way, take a look at the video at  The video is not an in-depth dive into the issue, but rather an informative overview of the topic. If you’ve got friends, clients or colleagues who are looking for a simple explanation of what the debate is all about, it’s a great place to start. (Full disclosure: the site is run by Humana who clearly has a stake in the outcome of health care reform).

There will be more required reading coming soon. For example, we should hear very soon from the  three House Committees with jurisdiction on health care reform with details on their proposals for change. In the meantime, if you come across any articles, books, postings or the like you think belongs on a list of required health care reform reading for 2009, please send them my way.

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

Chronic Illness and Rx Expenses Show Difficulty of Reform

Posted by Alan on January 26, 2009

There seems to be a growing consensus that meaningful health care reform needs to address the skyrocketing cost of medical care. This doesn’t mean market reforms won’t be central to whatever evolves in Washington, but unlike past efforts, these efforts won’t be the only game in town. Instead what care is delivered, how it’s delivered, and who pays for it will play a leading role in the upcoming drama.

There are some easy ways to restrain health care costs. According to Peter Orszag, then Director of the Congressional Budget Office and now Director of the Office of Management and Budget, 30 percent of medical spending is on “wasteful or low-value services.” Preventing this misspending would save health care system over $600 billion. That’s a meaningful start. Emphasizing preventive care and wellness would also help. So would increasing adoption rates of medical technology. Once you move past this low hanging fruit, however, the issues get more complex and more contentious.

Consider a post today in The American Conscience blog reporting that chronic illness accounts for 75 percent of overall health care spending. According to the post, chronic illness affects 45 percent of the population. Clearly, reducing the incidence and severity of chronic illness will need to be a part of any reform effort. The posting then goes on to recommend eliminating co-pays and co-insurance on prescription drugs. Citing a Journal of Medical Care study, the blog claims $1 spent on prescription drugs for diabetes and cholesterol saves $7.10 and $5.10, respectively, on other medical services. Yet, in part due to the cost sharing required for prescriptions, the incidence of non-adherence to drug regimens is high. And non-adherence, according to a John Hopkins study cited in the post, “increases national health care costs by $100 billion to $300 billion annually.” Consequently, the author calls for reducing or eliminating cost sharing in connection with prescription drugs.

I have no idea if the studies cited in The American Conscience post are valid — the author of the blog doesn’t identify him or herself and the studies sound like what the pharmacy industry would produce. But the underlying point: too many individuals fail to treat their chronic conditions in a cost effective manner, is a legitimate concern. It also highlights the challenge facing lawmakers.

Prescription cost sharing has been shown to cut down on their overuse. According to this blogger, however, it also reduces the legitimate use of medication. How can patients be encouraged to seek lower cost, proactive solutions to their health problems without providing an incentive for anyone with a head cold from stocking up on expensive drugs? Finding that balance is a multi-billion dollar dilemma. But any meaningful reform plan is going to have to try.

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

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 »

A Prescription for Reducing Health Care Costs

Posted by Alan on November 25, 2007

The drumbeat for addressing the high cost of medical care in the United States is growing louder and more insistent. The New York Times weighed in today with an editorial entitled “The High Cost of Health Care.” Unlike most recent comments on the need to control health care costs (including mine, yesterday) the Times offers a laundry list of ideas for addressing the problem.

Not all the ideas are new or startling.  Kaiser Chairman and CEO George Halverson offers some of the same ideas in his recent book, “Health Care Reform Now!, A Prescription for Change.” And some are already a part of the various health care reform bills bouncing around Sacramento.

Further, the Times recognizes that some of it’s suggestions would take years to implement. This doesn’t mean they shouldn’t be tried, but it does mean the time to start is now. All of which makes the Times piece worthy reading. This is especially true for California lawmakers who, if they unable to come up with a comprehensive health care reform package, would do well to consider enacting a package of widely supported cost containment measures as an alternative to accomplishing nothing.

Posted in California Health Care Reform, Health Care Reform, Healthcare Reform | Tagged: | 1 Comment »

CBO to Policy Makers: Focus on Health Care Costs

Posted by Alan on November 19, 2007

Most health care reform rhetoric focuses on health insurance premiums and access to coverage. Too often it fails to address the real danger facing us: ever escalating health care costs.

Earlier this month, the Congressional Budget Office published “The Long-Term Outlook for Health Care Spending.” It’s not a pretty picture. While the report acknowledges that the aging of America’s population impacts health care costs, it warns that the impact of this factor has been greatly overstated — at least over the long term. In the next 75 years, the CBO estimates population aging will increase Medicare and Medicaid spending by roughly two percent as a share of the Gross Domestic Process. Of far greater concern to the CBO is unnecessary medical spending. According to a posting on the Health Affairs Blog, CBO director Peter Orszag estimates that 30 percent of health spending is on “wasteful or low-value services.” Considering this country spends around $2 trillion (that’s with a “t’) on health care, that 30 percent is a $600 billion (with a “b”) savings opportunity.

The CBO is pushing for more evidence based assessments of new technologies and the need to expand research on comparative effectiveness. They key, Mr. Orszag indicated, is to provide new incentives in the system aimed at changing provider and consumer behavior.

None of this will be easy. In January, the Center of Budget and Policy Priorities published a report entitled, The Long-Term Fiscal Outlook is Bleak. It identified health care costs as “the single largest contributor to the long-run budget problem ….” It goes on to say, “… the rate of growth in health care costs is driven largely by medical advances that tend to improve health and lengthen lifespans, but that also increase costs. It is inconceivable that Americans will not want to avail themselves of the medical breakthroughs …. The challenge therefore is to pursue major reforms that eliminate inefficiencies in the health care system and restrain costs in the system to the greatest extent possible without unduly constraining medical progress.” Shouldn’t take more than five, OK, six days. And then on the seventh day we can rest.

Constraining health care costs won’t be easy, but avoiding even the attempt to do something will be disastrous. Or as the Health Affairs Blog reports Mr. Orszag of the CBO putting it, “Don’t expect overnight results. But the time to get started is yesterday.”

There’s an easy place to start in California: look at the cost containment provisions of the various bills introduced in Sacramento. Seize the common ground in these proposals and fashioning a compromise of relative modest costs and pass it quickly.

Will the need for medical cost containment work its way into the rhetoric of the health care reform debate? It already has, but only on the edges. The issue needs, however, to take it’s rightful place — the center of it all.

Posted in California Health Care Reform, Health Care Reform, Healthcare Reform | Tagged: | Comments Off on CBO to Policy Makers: Focus on Health Care Costs

Health Care Reform Lemonade

Posted by Alan on November 11, 2007

They tell me that in golf (I wouldn’t know, believe me), what separates good from fair players is not how far they drive the ball, but how well they recover from a bad shot. Because everyone makes bad shots now and then.

In politics it’s pretty much the same: making lemonade from lemons. In 1992, Governor Bill Clinton was hammered by a host of damaging news stories just before the New Hampshire primary. Instead of winning the state, he came in second.  For some that would be the end of the road. Bill Clinton, however, celebrated the results, proclaiming himself the “Come Back Kid” and no one cared that Senator Paul Tsongas had come in first. 

The Democratic Leadership and Governor Arnold Schwarzenegger may be close to a compromise on health care reform. But as Dan Walters in the Sacramento Bee warns, “If health care … is worth doing, it’s worth doing right. It’s time for those involved to step back, take deep breaths and stop this madcap rush to do something just to say they did something.”

Substantial differences exist between Speaker Fabian Nunez and Senate President Pro Tem Don Perata on one side and the Governor on the other. And they’re playing with fire. If they fail to find the right balance between, to cite one challenge, requiring everyone to obtain health care coverage and a way to make coverage affordable, they could create a mess which will leave the state’s health insurance market in shambles. (And it won’t do much for the careers of some ambitious politicians, either), There are several issues on which a delicate balance must be struck and they’re performing without a net. Taking the time to get it right is of paramount importance.

But what if they can’t? What if, after all the press conferences, proclamations, negotiations, time, money, special session, raised expectations, near misses and pain there’s no deal? What’s the recipe for lemonade in that scenario?

My recommendation is that they pluck three lemons to work with.

1. Constrain Medical Costs
Every health care reform plan on the table includes provisions to control health care costs.  The approaches laid out by Democrats, Republicans and the Post-Partisan Governor overlap and, where they don’t, they often compliment one another. For example, most call for leveraging technology. Most include ways of promoting healthier lifestyles and preventive care. There’s some differences, but not much. It would take a week or two to fashion these ideas into a single, meaningful bill — one that would pass overwhelmingly and cost very little.

2. Capture Federal Medicaid Funds
California has one of the lowest Medicaid reimbursement rates in the country. This is wrong on many levels, but perhaps most significantly because the Federal Government matches a percentage of what the state pays. By underpaying for Medi-Cal (the state’s Medicaid program) California is failing to obtain from Washington what the state is due. This situation is so absurd the California Hospital Association accepted the Governor’s proposal to tax hospitals four percent of their gross revenues so long as the money is first used to fully fund Medicaid reimbursement. For most hospitals in the state the combination of increased reimbursement and federal funds more covers the revenue tax. If comprehensive health care reform is out-of-reach, capturing these federal funds is still possible. And the federal matching funds would help the state reduce the growing deficit.

3. Keep Our Promise to the Uninsured
Expanding affordable health care coverage for all Californians is the goal, but if it’s out-of-reach for now, let’s at least keep our promise to those already eligible for existing state programs. Nearly one million Californians — about 15 percent of the uninsured in the state — are eligible for Medi-Cal and Healthy Families, yet fail to enroll in those programs.  CAHU’s Healthy Solutions reform plan makes several low- and no-cost suggestions on how to improve outreach programs. Better yet, the Governor and Democratic Leadership should propose restoring $66 million in funds cut from the budget this summer, which was to be used for enrolling more children into Healthy Families. Given the state’s budget situation, it is only prudent to identify the source of new spending. I nominate eliminating the tax loophole benefiting out-of-state yacht purchases. I don’t know how much revenue this would generate, but every penny should be devoted to enrolling children already eligible for Healthy Families. Given that direct a trade-off — reducing the cost of boats for rich yacht owners or providing health care coverage to poor children — even the most fiscally conservative legislator would be hard pressed to claim helping out-of-state yachts sellers is a better use of funds. A bi-partisan spending bill would be a sight to behold.

It would be terrific if meaningful, workable, fair and affordable health care reform can come out of Sacramento in 2007. But it may be the only result will be, as Dan Walters described the state’s 1996 electric utility reforms, “a monumental pile of unintended consequences.” Enacting meaningful cost containment, capturing federal funds and keeping existing promises made to the uninsured would be no small accomplishment. Lawmakers could rightly claim a partial victory. It would address serious problems and lay the groundwork for more comprehensive reforms down the road. That’s a lot more than lemonade, that’s sound public policy.

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

Governor’s Health Care Site Misses the Point

Posted by Alan on October 19, 2007

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 ( 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 ( 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:

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.

Posted in Arnold Schwarzenegger, California Health Care Reform, Health Care Reform, Healthcare Reform, Politics | Tagged: , | 5 Comments »

It’s About Controlling Health Care Costs: Learning from Massachusetts

Posted by Alan on October 14, 2007

Massachusetts’ health care reform experiment is nearly 18 months old now. According to an article in the San Jose Mercury News reports some fear “the initiative may buckle under money pressures in coming years.”

The good news is that the program successfully enrolled 200,000 previously uninsured people, virtually all of them in free or heavily subsidized coverage. These tended to be the state’s neediest residents. Those who were ineligible for state help and were uninsured are not flocking into the system, at least not yet.

The problem, according to Alan Sager, a professor of health policy and management at Boston University, is that “We’re covering more people, but it’s not sustainable over the long haul. The law does nothing to control costs.” And there’s the rub.

California may or may not pass comprehensive health care reform soon. The people of California may or may not pass any of several health care reform initiatives which will come to a vote in 2008 to fund these health care reforms. The problem is, that while we call these efforts health care reform, they mostly focus on health insurance reforms. Yes, they include cost containment provisions such as moving to electronic health records, promoting healthier lifestyles and wellness programs, encouraging evidence-based medicine and the like. But the reality is that the population is getting older, new technologies cost more, and consumers expect more from their medical care. In short, the underlying cost of health care is going to continue to increase regardless of what insurance reforms are put in place.

Attacking insurance company practices is good politics — and changes in market behavior are needed. Achieving universal coverage would be a real benefit to millions of Californians. It’s a goal we should move toward as soon as we can devise a workable way to get there. Health insurance reforms are needed (although some of the approaches being advocated are very ill advised). We need to recognize, however, that this approach addresses only a part of the problem, and the easiest part at that. What is most necessary is also much tougher: bringing the rate of health care costs down to something resembling overall inflation. There’s no magic solution for this. It will require tough choices and brave leadership. But as we’re learning from Massachusetts, failure to confront this challenge will undermine whatever so-called health care reform package emerges.

Posted in California Health Care Reform, Health Care Reform, Healthcare Reform, Politics, State Health Care Reform | Tagged: , | 11 Comments »