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Tuesday, December 29, 2009

Bank of America's Website: Making the Health Care Industry look good by comparison

I had no idea that refinancing my mortgage would have given me such a source of blog material. I would like to think that my previous posts explored business models and lessons learned around the financial services industry rather than complaining about daily inconveniences. However, this post will be different. I am going to happily just complain about daily inconveniences in a way that provides all the insight of a post about hating the morning commute or feeling ill after eating too much Taco Bell.

The bank that owns my house is now Bank of America. Previously, I had such feudal relationships with Countrywide and Wells Fargo and enjoyed the web sites of my lords. With Wells Fargo, I set up automatic re-occurring payments, could find my payment history and tax information easily, and it was very easy to navigate. I actually had happy thoughts about wonders of technology when I gave them most of my pay check every other pay period.

Bank of America, by comparison, makes your average health insurance or hospital website look slick and brilliant by comparison. What makes this ironic is that health care companies often view financial services as an industry that has solved some of the issues that health care still struggles with. Financial service have an excellent understanding of their cost structure, are good at handling sensitive personal data, can effectively explain complicated concepts and services, and are good at working with individual customers on a retail level. These are still goals for the health care industry.

Here's how Bank of America's website has failed to meet those goals and spurned me to openly mock them:

1. I have had to call them 4 times to explain how to do something on their website: Since the most basic business case of any website is that it will reduce customer service calls, this should be a big problem. I had to call them to:
1. Set up a password
2. Figure out how to verify my bank account which involved clicking on "Account Details", then "Manage Account", then "Services", then "Verify. How is anyone expected to figure that out on their own?
3. Figure out how to pay my bill. It turns out their menu bars on the top are for people with regular accounts and the main page is for my specific mortgage.
4. My absolute favorite was calling them to go paperless and not get bills mailed to me. The "Go paperless" button is just an FAQ. The customer service rep had to do it for me and could not tell me how to do it on the web. I almost expected to have to send a letter in the mail to request that Bank of America stop sending me mail.

2. I still have to call them 2 more times: Some things that I would like to do are 1) set up reocurring payments and 2) have bills emailed to me. However, it's easier to set up calendar reminders on my email so I'll just do that instead.

3. Their privacy features are draconian: Protecting financial data is a good thing so I should have no complaints. Only problem is that when I call and verify my account number, zip code, enter my options, and a customer service rep gets one the line, I get logged off due to inactivity. Therefore, the rep has to wait for me to log back in and ask my question. Bank of America could 1) not log me off so quickly, 2) answer their phones quicker, or 3) improve their website so I don't have to call customer service to explain things to me.

I also don't know the answer to most of their security questions like the name of my best friend's pet since he had 12 reptiles growing up.

For a final score card, Bank of America can't explain simple concepts on their website and renders their website almost inoperable with their privacy rules. You cannot easily pay a bill on a website even though one would think that a bank would want to make it as easy as possible for a customer to part with their money.

I'm suddenly feeling better about the health care industries chances of implementing health care reform.

Thursday, December 24, 2009

2010 Health Care Predictions

For those of who belong to religions where we think Jesus was just a really good carpenter, we have a lot of free time on Christmas Eve. Thus, this is a perfect time for my planned post on 2010 mostly health care predictions.

A year ago, I boldly predicted there would be a lot of talk about change but not much done. For the most part, I was right as we have not finalized the latest health care bills yet. However, I was wrong about no changes to the Medicare Advantage program. A reduction of payments resulted in benefit reductions, 25% average increase in premiums, and approximately 20% of plans exiting the market. Scrutiny increased significantly signaling that future insurance marketing will become even more highly regulated. When reform is fully implemented, it's likely all health plans will have the same templates for all documents explaining benefit plans. That's not a bad thing except for the fact that Medicare considers 33 pages to be a reasonable length for a benefit "summary". If that's a summary, you can imagine what the full book looks like. Health care reform may result in deforestation.

For 2010 predictions, I will continue to shoot down the middle:

1. Seniors finally realize what is happening to Medicare Advantage but don't riot: There will likely be additional cuts to revenue that Medicare Advantage pays health plans which will result in an average increase of $30 per month for seniors. The Republicans repeatedly raised this point to try and foment a senior rebellion but the Democrats countered by claiming that the only cuts would be to health plans' profits.

As Medicare beneficiaries realize the true impact, they will rise up and announce that they are still happy with the Medicare program. They don't need gold plated health plans and understand they are not immune to the health care increases.

2. No one else riots over the passage of health care reform either: Although opinion polls on the health care bills place it on the same satisfaction level as the latest straight to DVD version of American Pie (Does Eugene Levy need the money that badly?), Democrats will not be punished in the mid-term 2010 elections. As the incumbent party, they will lose some seats.

However, the public will better understand the benefits that they got from the health care bill and forgive its shortcomings. I also realized that the Republicans won't get punished for spending most of the debate playing Sudoku. Republicans always oppose new social benefit programs just like they did with Medicare in 1965. I think that it's part of the oath that they take when they join the party.

3. Health Insurance Reform Passes! In other bold predictions, we still don't resolve the question of whether people to drink Miller Lite because it tastes great or is less filling. Congress will produce one bill that passes. It's major provisions will start earlier, in 2013, to realize benefits sooner. There will be no Public Option plan.

4. The Health Care Construction Boom is over: Architects bemoan the loss of one of their more lucrative lines of business. The restrictions on health insurance will reduce the amount of money in health care. There is now only enough to money to pay for the Boomers hospital stays in the existing supply of beds. The next boom will be in technology that keeps patients out of hospitals and doctor's offices since space and supply won't increase.

5. State start working on their own health care reform: We saw the federal government's best effort with health care reform. While admirable, it's kind of like the best effort of whoever is playing quarterback for the Chicago Bears. It fell short. The states will stop waiting for the federal government for solutions and start designing their own. This will make health care even more local and regional which will hurt national plans. However, it will represent the best chance for true heath. care. reform.

6. We finally learn how to pronounce 2010: People who call it Oh-10 will be viewed in the same light as those who think global warming is caused by polar bear farts. Aught 10 is too awkward. Ten will work just fine.

Tuesday, December 22, 2009

Health Care Reform: What happens next

When all is said and done with the likely passage of the health care bill, more was said than done. Everyone probably watched one of their favorite parts disappear. Whether you really wanted a public option plan, were really hoping for some serious efforts to reduce Medicare spending, or really wanted a death panel to go after grandpa and perhaps your strange uncle, it's not happening.

What will happen is that in 2013 or 2014, it will be a law for everyone to have health insurance. Insurance companies will no longer deny anyone, not provide care for a pre-existing condition, or not give you whatever plan you want. Basically, that's it and it's a good thing. People should not be denied access to health care based on their employment status. Insurance companies actually don't like having to build up elaborate systems to deny people and would prefer that everyone join the party (and pay their premium to join that party).

There will be a period of adjustment as we come to terms with this notion of the individual mandate or the idea that we all have to carry health insurance just like we need auto insurance. This adjustment will come with the realization that there is a direct connection between everyone buying insurance and the affordability of insurance. The young, beautiful, and healthy need to pay now in order to have insurance when they are old, sick, and need cosmetic surgery (which will not be taxed by the way. Instead indoor tanning salons will be taxed to help pay for this. No, I couldn't make this stuff up if I tried). Just like we get a taxes for Medicare taken out of our pay check in order to enjoy it when we're older.

For those who were fans of the Public Option plan, you all know that I think you are wrong. However, the Public Plan really died in the House bill when it required negotiation with health care providers instead of jamming Medicare rates down their throats. With that clause, the Congressional Budget Office analysis ruled that the Public Plan will cost more then the average private insurance plan. As a result, policy wonks breathed a sigh of relief over their fears of accidentally writing about the "Pubic" Plan since spell check will never catch that.

The idea of 55 year olds being able to buy into Medicare would have never worked. Medicare would cost $800/month and it would not cover routine doctor visits nor would have an out of pocket maximum which would limit the most you would ever have to pay (a common feature of private insurance plans). The only Boomers who would pay that are those who cannot get other insurance, would use thousands of dollars of services per month, and the result would be skyrocketing premiums. That is called the insurance death cycle (not to be confused with death panels).

For those who still worried about costs and how we'll pay for this, that question will be answered in 5 years when the bills start to come. Health care policy has always addressed access first and cost second. Massachusetts is looking at cost control as we speak with global payments and Accountable Care Organizations. Medicare has produced the DRG system and other changes in the past to address the solvency of the program and will do so again. Cost containment will be part 2 of health care reform.

Now that the debate is wrapping up, enjoy the holiday season, sit back, relax and play the Have sex with, Marry, or Throw Off the Cliff game with Joe Lieberman, Ben Nelson, and Sarah Palin (My answer is Palin, Lieberman, Nelson). We'll have an individual mandate and no one will be denied health insurance. Disaster didn't happen and a government bureaucrat won't ever get between you and your doctor. Unless, of course, you're talking about an abortion with your doctor and in that case all three branches of government will be lined up outside of your uterus.

Sunday, December 20, 2009

What Generation Y Wants with Health Insurance

Last week, I attended 2 focuses groups that asked Generation Y their thoughts about health insurance. We all had some theories about what this generation wanted. I was right about one of my theories but otherwise was completely surprised by their opinions and knowledge of insurance. About as surprised as I was when the punk rock attired participant said that he was most interested in the tax savings associated with a Health Savings Account (HSA).

As I had previously posted, I had a theory that Generation Y believed that health insurance costs hundreds of dollars. If they knew that they could get fairly comprehensive plans (albeit with deductibles of $5000), for less than $125, I thought that they would be interested. It turns out that I was right. For those who were employed, they said that they could find the money to spend $125 per month for insurance that they thought was a good value.

However, they typically weren't quite ready to make that purchase due to self-admitted laziness or attitude that health insurance isn't completely important yet. For the most part, they were willing to gamble with being uninsured.

What surprised me the most was 1) Generation Y pretty much has the same interests in health insurance as other generations, 2) they have deep privacy concerns and a healthy skepticism of using the internet for health care services and information, 3) they are very savvy potential purchases of health care.

1. When it comes to health care, we're all pink on the inside: Even Senator Max Baucus assumed that Generation Y just wanted coverage for emergencies or catastrophes when he designed a "Young Invincible Plan" in his initial bill. However, the participants didn't feel like it was worth buying insurance if they couldn't use it. They wanted comprehensive coverage for doctor office visits and prescription drugs. They wanted the kind of coverage that they had with their parents' plans.

2. Privacy trumps all: We had some assumptions that a more on-line, interactive experience via the internet would be extremely attractive. Turns out, that they are just as concerned about privacy and having their health information on-line as any other generation. They were just as skeptical about the advice that they would get and who was behind the experts on various websites.

The recent Facebook privacy changes were cited as a driving force for this concern. As a side note, I could visualize Facebook's downfall during this session. While I never thought that people would stop using Facebook, privacy was the bedrock behind their exponential growth. If that foundation crumbles, so could Facebook.

3. They may not have bought health insurance but they know how to shop for it: When we have previously showed insurance plans to older participants, it has taken them a while to understand how it all works. The Generation Y participants, for the most part, were very easily able to understand how much services would cost them and what kind of value they would get for their money. Some of them were as good as the average actuary with their calculations.

If and when Generation Y starts buying health insurance at the same rate as the rest of the population (or is required to start buying it), it looks like they will understand the health insurance market as well as anyone.

Monday, December 14, 2009

Mt Hood rescues, Locator Units (MLU's), do you need a rope, and how tough is it to climb

Unfortunately, there has been a winter climbing accident on Mt Hood. Two climbers are still missing on the west side of the mountain near Reid Glacier and one was found dead. It's always heart wrenching to hear these stories. No matter how many times that I climb Hood (3 times), I am still drawn to it and plan to climb it this winter. I always hope that my training, conditioning, and safety measures will get me down safely. After that, everything else is out of my hands.

Whenever there are these highly publicized accidents, 2 questions emerge in the media which are:
1. Why aren't all climbers required to carry Mt Hood Locator Units (MLU's) or other tracking devices?
2. Should climbers have to pay for their own rescues?

Portland Mountain Rescue, a volunteer organization of highly trained rescuers and educators, answered both questions very well in their press release. However, I will elaborate on the first question since I think that it's a hard one for the public to understand and climbers have a hard time explaining it.

There are limits: MLU's are little boxes worn on a strap that is carried outside someone's jacket or backpack. They only work on Mt Hood where sensors are set up, the climber has to activate the signal, and this signal is only detected if someone is actively looking for it. It's not like a bat signal that goes out in the sky when there is danger. If a group is taken by surprise by an avalanche or the person who is carrying the MLU falls and is knocked unconscious, the signal will not be able to be activated.

It is not the most important piece of equipment: The other limits to MLU's is that it doesn't create an instant rescue. A climber needs warm clothes, food, or a bivy sack to survive cold conditions. Even better, the climber should have rope, pickets for creating anchors, maps, compasses, or first aid gear so they can avoid the need for a rescue or possibly move themselves out of harm's way. Or even better yet, climbers should review weather and snow conditions to they know if they should be climbing in the first place.

It's the most intensive measure:
In summary, focusing on MLU's for the primary tool for mountain rescues is like focusing on pace makers or cholesterol lowering drugs as the primary tool for preventing heart attacks. It's the equivalent of ignoring diet, exercise, education, monitoring or other preventive measures. It's like someone ordering a Hardee's Thick Burger, large fries with mayonnaise, and a Diet Coke. The Diet Coke doesn't cancel out the other mistakes. The MLU is held up as a silver bullet of mountain rescue when it's really about the planning, conditioning, and proper equipment. Focusing on MLU's is really misplaced focus. Yes, they are helpful but not as helpful as the other things that I mentioned. I think that I have run out of analogies to use and encourage reading the Portland Mountain Rescue site for other examples.

Is Mount Hood tough to climb and do you need a rope? I get a fair amount of google traffic with these questions and I have yet to completely provide my opinion. Quite simply, yes it's tough to climb and you do need a rope and pickets (also called protection). I have only climbed the south side which is the easiest side and the chutes have become quite steep. Going up and down the chutes involves snow climbing so some loose snow or foothold could easily result in a slip. If someone slips, they risk a fast slide off a short ridge. Unless someone is very experienced or comfortable, I wouldn't climb it without a rope team and pickets. Pickets are 2 foot long metal bars with a carabiner clip attached. A climber drives them into the snow and clips the rope through the carabiner. A rope team without a picket or protection mainly allows the whole team to potentially fall if one member falls.

Caveats abound and I gear this advice for a fairly new climber who is researching. Someone looking for specific route information or climbing routes other than the south side have already stopped reading. Someone who is wondering about a less tough climb should check out Mt St Helens. Someone who was really wondering how tough my hood was, has already put a cap in this blog's @ss.

Saturday, December 12, 2009

What is still unanswered by the Personal Branding Movement

I learned about the notion of creating your personal brand on-line through web surfing and mainly perusing Brazen Careerist where apparently helping someone develop a personal brand can be a profession. The way that it works is one should develop a niche area of expertise and make comments, write blog posts, tweet, or other things to indicate your expertise in a certain area. The issues one faces is focusing on 2-3 key messages that reinforce that brand and resisting being a little wild on the internet by posting pictures involving jello and farm equipment with the accompanying explanation.

One reward of developing a strong personal brand is that employers will find you on the internet. Another is that when you do apply for a job, your future employer will find all of this wonderful content that shows what a strong contributor you are in the field of farm equipment and fruit flavored instant desserts.

As you can guess from the picture at the beginning of the post, I am skeptical about the notion of on-line personal branding. I think that it's really funny to bring up cows when every anyone talks about branding. By the fact that I blog under a pen name and I do not stay in one established niche shows that I don't follow personal branding 101. While my focus is on health care and MBA admissions, I indulge myself by dabbling in posts on climbing, knitting, social media, and colonoscopy and animal husbandry jokes.

The main reason for my skepticism is the one question that on-line personal branding has yet to answer. Hiring managers or recruiters can realistically spend one minute screening a candidate. Why would they spend any additional time perusing anyone's on-line brand? The real value to a recruiter or hiring manager is speed to learn specific skills or background for a specific job. Linked In works very well in that regards. Perusing the empire of a candidate's thoughts through multiple websites does not.

A recruiter will probably do a quick Google search or use the Bing. However, keep in mind that's part of the one minute spent on an application and is likely more a rule out function. The goal is to try and find out if you can write more than 2 sentences without dropping the f bomb or if you are an active contributor to Farm Animals Gone Wild (which returns 342,000 search results if anyone is interested). The search is mainly used to find a reason to exclude.

If someone indicates that their blog or website on a resume, it will get looked at. However, I felt that a partner at a public relations firm summed up the role it plays in a hiring process nicely when he said, "I looked at her blog, saw that she could put 2 sentences together and had no major typos. That showed me that she knew how to write." As you can tell, there was not a lot of time spent reading a post on the careful deconstruction of the value of Twitter.

In later rounds, someone might get asked for a portfolio, especially in certain fields. It's probably expected that portfolio will be on-line. However, a brand and a portfolio are two different things that shouldn't be confused.

Otherwise, I see this one minutes time frame as a question that branders have yet to address in all of their How-to-brand posts. What would you say in response all you career personal brand advocates and coaches?

Tuesday, December 8, 2009

The Public Plan: Know when to hold 'em and know when to fold 'em

The latest version of the Public Plan (or Public Option), which involves the government starting a health insurance plan to compete with other insurance companies, involved getting 5 liberal and 5 moderate senators in a room for a game of Truth or Dare and other drinking games. Not really, it was just the latest version of the Public Plan which involves the government contracting with insurance companies for predetermined plans like bidding for the Federal Employees Health Insurance, Healthy Kids, or Medicare Advantage. As a result, the Public Plan has now come full circle and now resembles other current government health plans. The government has contracted many plans through a competitive bidding process as its free market solution. One interesting note about the bidding process, is that with the Federal Employees Health Insurance, participating plans are required to offer best price or any price discounts that they give to comparable groups to the government. That's one of the key ways that the agency that manages this plan can claim victory for keeping prices so low.\

This is potentially the end to the biggest distraction to achieving health insurance reform besides abortion. The Public Plan has gone from Medicare Part E (for Everyone) to Cooperatives to Robust Plans to a simple government contracting process, like the same way they decide food service in the Pentagon dining hall.

While the Public Plan almost derailed health insurance reform, I see two successful outcomes. First, I think that Congress is finally realizing that the only way that the Public Plan could be a lower cost option was by paying providers 80% of market rates. In that regards, they gained a better understanding of true cost drivers.

Second, the Public Plan was a great bargaining tool for the Obama administration to gain concessions and support from the health care stakeholders. Providers of health care feared the lower reimbursement and insurance companies feared that it would cause providers to require higher reimbursement from them. Obama bluffed everyone with this hand.

The ones who lost the most with the demise of the Public Plan were those who really wanted a single payer system and saw this as the best vehicle. Their position was otherwise not addressed in health insurance reform. More time was spent talking about death panels than a viable single payer system. Given how marginalized their position was, I hope that they can parlay their lack of attention into a vice presidency spot for Dennis Kucinich or another one of their leaders.

With the looming end of the Public Plan, I think that it's time to remember the lyrics of Kenny Roger's karaoke classic, The Gambler which is "You've got to know when to hold 'em, know when to throw 'em, know when to walk away, and know when to run." I think that the Obama administration played the Public Plan hand as long as they needed to get concessions and then folded. The rest of the Democratic party needs to do the same and know when to walk away.

Saturday, December 5, 2009

What my Mortgage Refinance experience will teach us about Health Care Reform

Both of my dedicated readers (Hi Mom and Dad) may remember my experience refinancing our house and the lack-of-value-chain that the participants created. One link that I forgot to mention was the assessment process. Previously, the assessed value of the house always seemed to be exactly what the lender needed to justify the loan. Now, there is a third party system that schedules the assessments and keeps the lender at arm's length. This system was created per regulations by some entity to address abuses.

Apparently, it doesn't work that well. My lender complained about it and I wound up having two assessors call me to schedule times and some confusion was created. Further confusion was created when one of the third parties that scheduled the assessment told me that they hadn't been paid yet. However, I had been charged for the assessment by a different entity and my lender said they would figure it out. Based on the confusion from two assessors calling me, I actually think the wrong third party got paid. However, the technical term for that is "Not my problem."

A new regulated entity usually has some problems in the beginning that need to be worked out. Unfortunately, there is never a honeymoon period with new regulations where the impacted parties snuggle in bed together until the early afternoon. Even programs that involved giving away money like cash for clunkers or the first home buy tax credit had complaints about processing and turn-around times.

This is a long of making the point that when health insurance reform smacks us all across the face in 2013 or 2014, there will be an adjustment period. Someone will think they should have their dental implants covered and won't get them. Others will think that they should be paid for services and won't get paid for a while. The Health Care Exchanges that will open the much anticipated market bazaar for small groups and individuals will probably have the purchasing experience of a bizarre bazaar. The Exchanges are where previously uninsured individuals can use their government subsidies to buy insurance for the probably the first time in a long time so difficulties with navigating the Exchange will be heard loudly. Frustration is the gap between expectations and reality and expectations will be high. Reality will be lower and it will sound like long awaited health insurance reform is a clunker.

Therefore, we need to adjust our expectations about health care reform and give it time to work out the kinks. The last large government-pushed health care reform was the Medicare Modernization Act that brought seniors Part D or prescription drug coverage that was implemented in 2006. Today 90% of seniors are satisfied with this plan. This is up from 80% the year after it was first launched.

Despite a higher satisfaction rates than most Apple products have, the initial launch was almost a disaster. There were long wait times on the phone and confusion about whether drugs were still covered by Medicaid, the state program, for low income seniors. I was working overtime as a Spanish interpreter helping Spanish speaking seniors and health plan customer service speak to each other about prescription drug coverage. These calls involved my interpreting a long list of drug and dosage to help seniors find the drug plans that worked best for them. Try figuring out how to say Atenolol in Spanish or English. These calls were long (45 minutes) and painful to all involved. Although the start was as inauspicious as some new reality TV programs, the program was ultimately successful.

Health insurance reform is likely something that will be my problem and I'm getting ready for the disaster of a launch. However, it will be better than our current system.

Friday, December 4, 2009

The Time to Hate Health Care Reform is Over

It's easy to find something to criticize about the House and Senate health care reform proposals. They either cover too much abortion or too little. There are too many taxes on health insurance companies or there is too much new business and giveaways for them. Cost containment is either not taken seriously or a single payer system is not taken seriously.

The names of the legislation don't produce exciting acronyms. The House's Affordable Health Care for America Act would be AHCAA and the Senate's Patient Protection and Affordable Care Act is PPACA. What about Health Entitlement and Affordable Reform Treatise or HEART? The opposition could offer Healthy American Treatment and Empowerment or HATE?

Would COBRA (the option to keep your former employer's health insurance if you pay for it) still be around if it were called HMGPH instead of being named for GI Joe's archenemy?

The time to hate is over. The status quo is not a sustainable option and Congress has made more progress with health care reform than the last 40 years combined. As reform ticks closer, it's time to shape the solution rather than point out the flaws. If you can't be with one you love, love the one you're with. Republican Party, are you listening or do you enjoy being irrelevant?

I have criticized a national blogger for only pointing out the problems. Pointing out problems is easy blog fodder that can be written while sitting on the toilet. With this post, I plan to stake out my ideas for 1) the current proposals and 2) my ideal health care solution.

1. The current proposals: A health care reform proposal that will realistically pass will reshape the current system. Health care is a complex system that will take decades of tinkering since not all the parties in government take it seriously. The health care system also can't take a month off to reboot. Therefore, it is not realistic to expect a dramatic shift to single payer or another country's model.

With those very real constraints, I have to say that I agree with most of the current health insurance reform proposals. They shift money around from those with lots of insurance to those with none. That's the basic concept of insurance. They try to create rules to encourage good behavior. There is the hint of cost containment with an independent body that will make recommendations for Medicare that Congress must accept or reject as is. No horse trading, smoky rooms, or ear marks. Here's what I would change:

  • A real individual mandate: For health insurance to really work, everyone has to participate. The basic concept of insurance means that everyone has to pay into it, even if you might not use it. There needs to be a real penalty for not buying health insurance. The House's 2.5% of income is getting there. The Senate's penalties are closer to what you would pay for marijuana possession and last I heard, that's being mostly decriminalized.

  • Stop Medicare geographic discrimination: Original Medicare pays providers differently based on geography. That payment methodology is mostly based on how much is being currently spent so frugal regions receive less money. That means providers are paid less and less likely to accept Medicare patients. That's geographic discrimination as seniors in Florida get twice as many health care dollars and access to more providers than seniors in other states.

  • Don't mandate gold plated health plans: Congress is passing various mandates for health insurance plans such as lower deductibles, out of pocket maximums (which is the most that someone would have to pay in a year for health insurance), and preventive services for no cost. These are fairly expensive, comprehensive plans that will continue to shield the consumer from the real cost of health care. These mandated benefits could very well reach the levels of gold plated or cadillac plans which would cost someone (usually the employer) $8,000 per year, that the Senate is proposing to tax. These mandates are moving towards providing more insurance than is necessary. It's kind of like offering a buffet and hoping people don't overeat.

2. My ideal health care solution follows the US educational system or Germany.

There is a baseline government funded level of benefits. Medicaid and Medicare are dissolved except to provide subsidies for those with low income. The baseline level is determined using the same methodology as the Oregon Health Plan. A budget is set that would be a certain percent of GDP. Medical services are ranked, cost is estimated, and when the budget is used up, no more services are covered. Just like public school, everyone gets reading, writing, and math covered but if there's not money for art, music, or playground equipment, it may not be covered.
Everyone who offers a healthcare service from doctors to durable medical equipement has to fully participate. The role of this baseline plan is to prevent startvation but not provide an all you can eat buffet.

The private sector can still compete to offer more: The rest of medical services or art, music, and playground equipment or fancy private schools with uniforms and SAT preparation can be offered by employers to attract workers and insurance companies to sell fancy new insurance policies. Providers can offer services to attract those who have these plans and fight it out with insurance companies on how much they can get paid. The competition of the free markets can be unleashed without casualities.

Friday, November 27, 2009

Ban Objective Statements on Resumes because no one can write a good one

In the world of a resume writing, there's a fairly lively debate around the relevance of having an objective statement on a resume. By lively debate, I mean a debate that ranks in between "Who was the best Designated Hitter in the American League in the 1980's" and "What's your favorite jello flavor." There is only so much passion that even Human Resource folks can generate around an objective statement which is a sentence or two at the beginning of the resume that is intended to show you career interest or perhaps unique skills.

The theory is that this sentence or two will cause a recruiter to say, "Wow I am really interested in this candidate and I want to read more. I am so engaged that I am no longer going to continue this on-line debate that the Oakland A's Dave Henderson was the best designated hitter in the 80's and cherry jello rules."

In reality, most objective statements are something like, "Dynamic, results oriented experienced professional seeks management position with innovative, progressive company." Or in simpler terms, "Older guy seeks job with a company that doesn't suck." Hence the debate about the value of the objective statement.

However, I think that I have ended the debate once and for all and can prove that objective statements are bad ideas that should be dropped from your resume like your camp counselor job after your senior year in high school. Recently, I received the resume book from the Wharton Health Care Management program (from which I graduated). It includes the 2nd year class's pictures, a brief work history, and an objective statement.

Most of the objective statements were really lame. Therefore, if Wharton MBA's, who can be quantitatively demonstrated to be smart and receive a deluge of resume advice during their program, can't put together a non-cringeworthy objective statement, I can assume that the majority of the population can't either. Since you shouldn't waste space on resume with random crap, the objective statement should go away. Allow me to elaborate on the Wharton MBA objective statements.

First, the disclaimer. The students who I am about to make fun of are multiple orders of magnitude smarter than me. Additionally, I made fun of my own class's objective statements to their face so this is not a new activity. There has always been a bit of a sense of self-deprecation in the MBA community, so making fun of something as innocuous as an objective statement is not intended to offend anyone. Finally, I will rarely if ever be in a position to make hiring decisions about MBA's so no one should consider this to be advice from a potential employer.

Disclaimer aside, here are the multiple sins of the objective statements:
  • The only functional area they rule out is Facilities Management: The objectives announce interests in "marketing or operations", "private equity or business development", "management and entrepreneurial", and "corporate strategy, business development, or venture capital". A range of functional roles are combined that pretty much announce the candidate has ruled out very little.
  • The only industry rule out is Nursing Homes: Students will often gamble for a venture capital or private equity position but happily accept a business development role. Marketers will look at biotechnology, medical device, or pharmaceutical firms. Some don't want to rule out a cool start-up. That was the case when I was a student and I can tell that it hasn't changed by looking at the objective statements. They pretty much outlined plan A, B, and C. I know that the students don't display this ambivalence during interviews so why announce it in the objective statement? The fault lies more with the theory that we can sum up our career goals in an one or two sentences in a way that would be meaningful to anyone.
  • Here are everyone's favorite words: Almost everyone is looking for a strategic opportunity to display their strategic leadership at a strategic company. When they go to the bathroom, it will be strategic. No one wanted to stand out with a fire and brimstone leadership style at a chaotic company? The other invented word on these objective statements was "biopharmaceutical". At first I thought that was code for marijuana like 420 or maybe crystal meth. Later I realized that it was a combination of biotech and pharmaceutical industry and an easier way to announce interest in both industries.
To be fair, there were some good objective statements. Some put their stake in the ground with a desire for "a health care focused private equity position" or a "leadership development program". Some shared their uniqueness with an interest in "curing societal ills." However, most objective statements pretty much said, "I want to strategically work in a variety of functions in a variety of industries that I may or may not describe with made up words." If a group of talented MBA's whose resumes and cover letters are scrutinized with as much intensity as National Security Intelligence reports, produce value-destroying objective statements, why have them at all?

Thus, if some of the best can't write decent objective statements, they should be purged from resumes.

One game that I enjoy is looking at what kind of opportunities students are asking for in their objective statement. Most humbly request an "opportunity" do work in X, Y, or Z. A few brave request a "challenging opportunity". Some raise the stakes with a search for a "strategic opportunity." There was one that trumped them all with their vision for a "strategic leadership opportunity." Next year I expect someone to run the trifecta and boldly go for a "challenging strategic leadership opportunity."

Monday, November 23, 2009

A Food Cart can be a Disruptive Market Force but is it Free?

Food carts in Portland, OR are in the middle of a renaissance. They've come a long way from the days of street meat or porksicles or colon-bombing greasy goodness. According to the linked article, culinary school graduates are bypassing restaurants in favor of opening food carts. With assessments, and fees a lot lower than restaurants (a food cart license is around $300), it's the start-up of the food industry.

For established brick and mortar restaurants, this is not necessarily good news. The new technology of an infusion of highly trained chefs and interesting menus is turning food courts into potent competitors. With their lower cost structure, and higher quality food that is not typically served on a stick, restaurants are concerned. While this isn't exactly cloud computing dealing to a blow to operating systems or the internet disrupting the media, food carts are becoming a disruptive force to restaurants. One of the only differences is that mobile refers to a Korean food truck that twitters its latest location as opposed to smart phones and Iphone applications.

Since this is America, the bastion of the free market, how do restaurants respond? Do they review their marketing strategy? How about a segmentation study to understand how to attract their most profitable customers? Do they work on the variety of the menu and cleanliness to highlight areas that a food cart on a rainy street corner with a small kitchen cannot? No, in America, we now look to the government or at regulations to address new competitors.

Restaurant owners instead talk about how they face more regulations and fees which makes opening a restaurant more expensive to start and operate. They don't want to drive the food carts out of business but they want a break with their own fees and requirements.

Comments like these are why I struggle with the demand for free market solutions when there are strategies aimed at convincing the government to change the playing field. These same regulations, like having a bathroom, initially built up barriers to entry for restaurants. The purpose was public health not to define the business model. Now, the message is to deregulate in order to lower the cost structure to help compete.

This is probably the least effective and mostly costly strategy for restaurants to pursue. As a disclaimer, I am viewing this from the lens of the new competitive force of food carts. The real agenda may be to get rid of fees, assessments, or regulations that the restaurants have always disliked and the food carts are really just Trojan food courts. My other disclaimer is that I have always liked eating at food carts so that's the horse I'm riding.

The restaurants' government intervention strategy faces an uphill battle since localities are cash strapped themselves, this will take years, and this strategy is largely outside their control. A review of their own internal capabilities or market would probably be more successful and a better use of their time. For example, are restaurants really competing for the same customers as food carts? They may be looking or a cheaper or quicker meal than restaurants could provide. Families with young kids are more likely to eat at restaurants since they need that bathroom. Business deals will be done over a full meal as opposed to a corner waffle sandwich. Finally, there's the liquor license. With these differences, restaurants will not be driven out of business. Since restaurants are having a tough year, additional competition is not a good thing. However, why the call for government interventions? It's not like restaurants could compete on cost no matter how many fees were cut.

In reality, this is an example of how I wrestle with calls for deregulation as a free market solution. Government regulations and decision should be made to protect consumers, the environment, or for use of public resources. If it's a good idea to have bathrooms in restaurants before food carts started serving duck than it still should be a good idea. Restaurants were given media space and attention which they could have touted their smoke-free environments, healthier food options, video poker machines, or any number of features. Why did they use their media opportunity to call for a government intervention?

A free market economy vs heavily regulated economy should be more straight forward. Instead it's starting to feel like Me and Bobby McGee song where "Free [markets] is just another word for nothing left to lose"

Wednesday, November 18, 2009

Reminiscing about my Transgender Car

The first car that I owned as an adult was a white 1999 Subaru Outback. It's first name was Sipowicz since I was watching NYPD Blue reruns at the time and a big white functional but not flashy car reminded me of that character. However, Sipowicz doesn't exactly roll off the tongue and a bald, crude guy who got shot in the butt didn't exactly provide a great role model. It was nameless for most of its existence until we started calling it Baru (pronounced Barooo and short for Subaru) due to lack of a name. It also kind of looked like a Baru. When my wife started driving it for its last 6th months, it had a sex change and became a Sabrina.

Sabrina has a DNR written around the same time as its name change. Any repairs over $500 would result in a trip to hospice which it entered the end of October. In the end, Sabrina did fulfill the rock n roll dream of burning out before fading away. She ran up 137,000 miles in 11 years. Unlike a lot of cars with off road capability, Sabrina was tested and got stuck on a mountain road in Colorado.

Sabrina was also the ultimate road trip car. She went across the county and all over the west coast from Sacramento, CA to Vancouver, BC to Utah and back again as well as every corner of Oregon. There was no need to worry about sleeping arrangements with Sabrina as I could just blow up an air mattress and sleep in the back. The only problems that I ever had sleeping in Sabrina was explaining the smell and mess to carpool companions later in the week. But this post is not a roast on Sabrina or further elaboartion on a transgender car (although there are probably some disappointed google search results). I am here to praise Sabrina and reminisce about the greatest trips taken and the role that she played.

Colorado or You never forget your first: Shortly after buying Sabrina, a college friend and I drove around Colorado for 2 weeks. I had just returned from the Peace Corps while he was about to start medical school so we were both saying good-bye to our old comfortable lives. It was also an introduction to the west coast in the form of seeing snow in the mountains in July at Estes Park and roller skating waitresses at Sonic Burger. The Great Sand Dunes National Park in southeast Colorado was almost biblical in proportions and the Mesa Verde National Park in the northwest corner made us feel like we were back in the era when Native Americans were the only residents. This trip was an extended bonding experience with Sabrina as I got to know her. I also got her stuck on a mountain road so I got to know her limits.

Southeastern Oregon Tour: Southeastern Oregon has some the lowest population density in the United States. The town of Fields is out there with population of 9 but some of the best milk shakes in the state. Fields isn't even the most surprising town compared to Jordan Valley which is a Basque outpost on the Idaho border. The geology is incredible with the Steens Mountain range, Alvord desert, and Leslie Gulch. With no radio access nor current newspapers, I felt like I was almost in another country. The isolation was a welcome change from the usual city living with strangers.

The only time that I got nervous was when I shared a natural springs hot tub with an older gentleman that looked like he was almost in the movie Sling blade. The fact that he was reading the John Grisham book, The Firm, made me nervous since the book had been around 15 years and he was just reading it for the first time! That's a little too isolated for me. As you can probably guessed, I lived in Sabrina for the 4 days that I was out there. Most campsites involved pulling off the road into BLM land and firing up the camp stove.

Cross Country Skiing in Northeast Oregon: Another eastern Oregon trip that involved living in Sabrina was my excursion to Anthony Lakes for cross country skiing. Anthony Lakes had closed for the season so I was able to just camp out in my car for the night and spend the day exploring the Eagle Cap wilderness.

This was the trip where I discovered that Enterprise was my favorite small rural town. It was the only town in Eastern Oregon where I didn't get the "You're not from around here" vibe. After running into a brewer for the Terminal Gravity pub (I literally ran into her as I was coming down a slope on cross country ski and she was hiking up with her snow board), I spent the evening drinking and eating there. The local were interested in my story, how I wound up there, and I was able to listen to their stories. It seemed like Enterprise is more open to new arrivals than most smaller rural towns.

Monday, November 16, 2009

Me Speak Corporate Good

I was making myself a sandwich while holding my almost 2 year old son, Berserker (no that's not his real name but yes that's what I actually wanted to name him after the rock band in the movie Clerks) in one arm and spreading mayonnaise on a sandwich with the other. Berserker started reaching for the mayo and indicating that he wanted to eat it straight from the jar.

"No Berserker," I said, "we don't eat mayonnaise." My wife looked up. Since Berserker has reached an age where he pretty much understands everything that we say, she has been trying to get me to be better about explaining things to him directly and not say things that aren't correct. For example, when Berserker tries to climb on the table so he can pound on the computer keys, I'll often say, "No Berserker, there's nothing interesting on the table." That is incorrect since there is something very interesting on the table, the computer, which is why he was trying to climb on the table.

"Deadhedge," my wife said, "We do eat mayonnaise and Berserker knows that we eat mayonnaise so he probably doesn't believe you. What you should have just said is, 'Berserker we don't eat mayonaise directly out of the jar but we can give you some mayonnaise on a sandwich." She paused, her expression slightly changed and a grin emerged as she thought of something else.

"Deadhedge, when you talk to Berserker, why don't you talk to him like you would talk to your coworkers at a business meeting? At a business meeting, you are direct and think about the best way to describe something before speaking. You could use this an an opportunity to improve your presentation skills." Ah, that was an ingenious way to get me stop being lazy while talking with Berserker and relying on easy phrases like, "That's not interesting", or "We don't do that," or "The cat ran away from home."

However, I thought about how I talk at meetings at work and realized this wouldn't work.

"Wifey," I said, "If I talked to Berserker like I talked with my work colleagues, I would say things like:"

"Berserker, let's put eating mayonnaise from the jar in the Parking Lot."
"Berserker, we haven't prioritized eating mayonnaise from the jar on this year's strategic plan."
"Berserker, we haven't built a business case for eating mayonnaise from the jar."

With this type of corporate communication style, it's pretty incredible that we actually accomplish anything at all at our meetings.

Friday, November 13, 2009

I avoided the Quarter Life Crisis but can I escape the Mid-Life Crisis?

The quarter life crisis is the new mid-life crisis. A search for "Quarter Life Crisis" on the Generation Y career website Brazen Careerist reveals entries on how to assess if you're having a quarter life crisis, what happens when previously clear paths fog over, and the existential struggle in between.

It does not surprise me that this crisis involving the search for meaning, uncertainty about the future, and ambivalence about the past now hits us in our mid-twenties. Previously paths were more certain as you worked on the farm, your parent's business, or got married. Paths were also delayed as apprenticeships or paying your dues were typical so tough career decisions could be delayed until we were in our 30's. Now, Generation Y has to worry about the right decisions on their Facebook post let alone the choice of graduate school, entrepreneurship, corporate jobs, or year long bender in a Thai opium den.

I dodged and juked past my quarter life crisis like Barry Sanders used to dodge the Green Bay Packers defensive line. My early 20's were spent in the Peace Corps, working on-call at multiple psychiatric floors with complete control of my schedule, or living in a commune. Actually, I should clarify, communes are now called Intentional Communities since commune's got a bad name in the 1970's. During these jobs, I spent the time thinking about what kind of graduate degree I should get to be able to do what I wanted in the health care field. At the end of the 3 years, I had decided on an MBA. I had complete confidence in my decision and future path. Additionally I embraced the small victory of each skill developed. I had experience in construction, grant-writing, and social work. I knew how to knit a sock, spin a pottery wheel, traveled most of South America, cooked for 50 people, garden, used power tools, made soap, spoke 4 languages, and butchered a pig. Actually, my ability to butcher a pig excited one of my rugby classmates so much that everytime I answered the phone, I thought that I would hear squealing in the background with my classmate yelling, "Come on over and let's barbeque!" In summary, I had more than enough stories of adventures to take center stage at most cocktail party conversation. On a serious note, I felt accomplished, lived a life less ordinary, and had confidence in my ability to make decisions about my future.

My method of avoiding a quarter life crisis is not a new one. The idea of spending 2-3 years finding your way in the world, sewing wild grains, and experimenting is a pretty standard career path for my undergraduate class. I know there are those with bigger student loans, visa issues, or family expectations or culture that playtime was over and it was time to get a job that could not take this path. My point is that a quarter life crisis is, for the most part, a relatively modern construct of our making. Some part of it does involve the collapse of the American dream where 4 years in college leaves you with a staggering load of debt and no health insurance. The ability to spend 2-3 years traveling, being a subsistence organic farmer, Americorps, working part-time and doing art part-time, moving to San Francisco and seeing what happens, homesteading in Alaska, or any of my other classmate's pursuits has faded. However, the quarter life crisis emerged well before the economic crisis so I will stand by my position that the quarter life crisis is our own invention and we have more control over it than we may think.

I turned 35 this year so my mid-life crisis is approaching. In some ways, I'm ripe for it as I am married, have a child, clawed my way to middle management, and am 20 pounds heavier than I was in college. One of my high school classmates with a suburban lifestyle lamented how he's realized that we've reached the age where we have as much chance picking up young Generation Y women in a bar as our grandfathers do. My car died recently and I saw a perfect opportunity to embrace a mid-life crisis by buying a sporty red convertible. My wife said that it was fine as long as the baby's car seat fit in the front seat. We bought a station wagon.

What's saved me from a full blown mid-life crisis so far has been maintaining a life outside of work, family, and social life. I still climb a mountain or two a year which keeps me connected with life and the wilderness outside of the normal 9 to 5. My high school classmate who lives in suburban Chicago doesn't have this outlet and I can tell that he needs it badly. By some quirk, I am also in better shape than I was in my 20's. I can run farther and faster, get into more yoga positions, and rock climb harder routes. Blogging also keeps my feeling connected and involved in what's new in the world, whatever that may be.

However, I can't pronounce my mid-life crisis to be avoided until I have had at least 5 more years of hindsight. There's also still my plan to grow my hair down to my shoulders again when I turn 40. Long hair is part of my plan to embrace a mid-life crisis since I may not be able to avoid it.

Tuesday, November 10, 2009

How an MBA will view buffalo wings and other potentially irritating habits

We went out to dinner at the newest location of a local buffalo wing restaurant called Fire on the Mountain. The Grateful Dead reference, variety of food, local beer on tap, and comfortable northwest atmosphere all made it an enjoyable outing. I also used to play against the owner in some pick up Ultimate frisbee games. One of the highlights of my Ultimate career was forcing a stall with my lock down goal line defense against him. As you can guess from that highlight, my Ultimate frisbee career was not very illustrious.

We had previously been to their first location which was smaller and located in a transitional part of town. Given the size and central location of their new restaurant, we ventured that wing business was booming and Fire on the Mountain was doing well. Like any good Pavlovian conditioned MBA, I immediately started thinking about how the business model drove success. Just like a Peace Corps Volunteer becomes conditioned to salivate over the local bitter tea or gut rot grain alcohol, MBA's become conditioned to view the world in terms of margins and cost structures.

While dipping a french fly in blue cheese dressing, I wondered what the margins were like on buffalo wings. Given that places will give them a way for a nickel each, the gross margins must be incredible. $6 for 6 wings must be at least an 80% gross margin even if they bought from the farmer spent extra on free range chickens that were given cello lessons and yoga balls to sit! All right, that doesn't include the blue cheese dressing but we're still looking pretty good. They also don't need the most upscale kitchen or chefs to primarily make buffalo wings so the kitchen operations is probably pretty low cost. While wings look like a good business, the margins are probably as good if not better on their beer.

While those margins are great, there is only so many $6 wings or $4 beers that can be sold in a day. It's a similar problem that coffee stores face since there is only so many $3 coffee drinks that can be sold. While the new location looks great, I don't know if it was financed by loan shark debt or could be considered a rounding error in their bank account. At this point in the conversation, the rest of my dining mates had tuned me out in favor of the Trivial Pursuit cards, football game, and dipping their french fries in my water glass (the age of my dinner mates varied). As you can tell, this is that glamorous post-MBA life that you hear about.

Post-MBA life, you too will view the world in the context of gross margins, variable costs, and fixed costs. You may even try to bargain at closing time by trying to pay slightly above variable costs for the wings that will otherwise be thrown away.

While bargaining based on business model is rooted in the time honored tradition of haggling, I'll ask MBA's to avoid a more annoying post-MBA habit of talking about "operational efficiency." Invariably, when food takes a long time to arrive at a restaurant or the line is longer than some would like, one of your classmates will say, "They could really improve the operational efficiency in this place." The problem with that statement is the only operational improvement skills that any MBA learns is the newspaper vendor model and timing someone with a stop watch. That's really it. We really have no clue how to motivate an hourly cashier to move quicker when it has no impact on their salary or personal satisfaction. We have no great insight on how a waiter can prioritize a drink order, new table being sat, and soup being ready at the same time. Our knowledge of business process redesign is limited to key stroke short cuts on Excel. Talking about improving the operational efficiency is just a fancier and extremely irritating way of saying, "I'm bored/hungry/in a hurry/about to start eating my groceries in line, please hurry." That is why the FedEx commercial is still so popular.

Fellow MBA's, the sooner that we embrace the fact that we have no clue how to make someone unload a moving trucker faster than anyone else without using a Taser, the less annoying we will be to the world at large. That is a goal with an excellent business model.

Sunday, November 8, 2009

Review of the House Health Care Bill, Affordable Health Care for America

My review of the Affordable Health Care for America Act, HR 3962, is based on 2 key aspects. First, it's a health insurance reform bill, not health care bill reform. The prevailing mood around reform has been that if we just get everyone insured, we'll win. Insurance reform is not time for a victory lap but rather a quick pit stop to prepare for the hard work of cost containment. I am making the big assumption that government will address health care costs after addressing coverage. This strategy worked for the creation of Medicare as Lyndon Johson knew that he could never show Medicare would pay for itself initially. Instead he focused on creating the need and for better or worse, let future governments work on the financial viability.

Second, our current health care system is a mostly clogged artery that's waiting to burst. Taking the stairs instead of the elevator would be an improvement. Doing nothing is rapidly disappearing as a choice. That's why I found the Republican's decision to work on their Sudoku or their profiles on the new GOP social networking site to be so counterproductive. Their lack of interest made the narrow House vote less significant.

With those two caveats (and these caveats border on assumptions like Lindsey Lohan has finally gotten herself straightened out), I'll say that the House bill is not bad. Just like NCIS Los Angeles, I first found it to be unwatchable due to the complete lack of chemistry between the main parts. However, some role players have emerged and the writing has improved. While the Senate bill will dictate the final outcome, here's how I see the House bill using my trusted framework of the Good, the Bad, and the Ugly:

The Good:

  • The House was somewhat serious about the individual mandate: Everyone is starting to understand that in order for insurance to really be affordable, everyone has to participate. The young, healthy, and good-looking have to pay for the old, sick, and ugly. The House bill has a penalty that is 2.5% of income. Considering there should be available health plans for 8% of income, that penalty should be enough to make most participate. One of the biggest problems with the Massachusetts reform was that the penalty was not significant for people to care given the cost of insurance. While I'm going to congratulate Congress for growing a pair, I'll at least offer a fist bump.

  • The fact the Florida seniors get twice as much for Medicare was discussed: According to the >Huffington Post, there is a provision to study the geographic variation in the costs of health care or why it costs twice as much in Florida or McAllen, TX. I think the fact that some seniors receive twice as many health care dollars or that their doctors are paid enough to accept Medicare while others do not and are not is one of the least talked about injustices of our health care system. While I know commissioning a study is like forming a committee to address a problem, at least, it's getting discussed.

  • It's an insurance reform bill: There is no great secret to paying for universal health care. It's always been a matter of requiring the Haves to contribute to the Have Not in some way to prevent people from gaming the system. The wealthy, health care companies, and employers will be taxed more. Seniors will receive lower Medicare benefits and individuals will have to pay or play. Whether this is considered to be socialism, communism, or paganism, it's just the basic concept of how you pay for insurance.

The Bad:

  • There are no cost containment plans: Health insurance for everyone is going to be expensive and the government has had little success reducing costs. Medicare has had little to no success with disease management programs. No one in government has ever negotiated with drug companies or providers. Their only ideas around value-based benefit (value-based involves covering evidence-based services at little to no cost while charging more for services with questionable value) designs involve lower copays for preventive services. Private insurance companies figured that out 10 years ago. The government has had success with requiring providers to manage all care, including complications, for a set price (called DRGs). However, that's it and that's why I really hope that there is still the political fortitude to get serious about cost when the bills come. The bills will be about as pretty as lipstick on a pig.

  • Seniors are going to be pissed: This bill will cut funding for Medicare Advantage which includes health plans that have been providing Medicare coverage for decades. This year, we have seen that a 4.5% revenue cut resulted in higher prices for Medicare Advantage by 25%, reduced benefits, and had plans already leave the business. Seniors were told not to worry about benefit cuts and that the doughut hole in the drug plans will be filled with this bill. By the way, the doughnut hole (after a certain level of coverage, seniors whose drug spending is around the 75th percentile will have to pay $1500 on their own, and then only have to pay 5% of drug costs in the catastrophic category. The $1500 they they pay on their own is the doughnut hole), is an example of a value-based design to promote better utilization of drugs. However, the government is running away from it in an effort to show seniors something bright, shiny, and new with Medicare. Taking money away from Medicare to fund the uninsured is probably a good use of the health care dollars, but no one has been that honest with the seniors. No, I did not expect politicians to be upfront with a key voting block about bad news, but this is an impressive bait and switch considering the cuts will wipe out the prescription drug program and its newly filled doughnut hole.

The Ugly:

  • With this Public Plan Option, the government is going to start a brand new insurance company: A government-run health plan or the Public Plan was included in this bill but it requires that they negotiate with providers for fees and act like a regular insurance plans. I have written ad nauseum about how I think the Public Plan is a bad idea and the majority of the cost savings would come from paying providers lower rates. This Public Plan in the bill does not pay providers a lower fixed rate and the Congressional Budget Office notes that price for the Public Plan will be higher than comparable private plans. I have am image of dominant hospitals telling the Public Plan administrators the astronomical fees that they will have to pay them to make up for the fact that Medicare and Medicaid pay them too little. Next, the dominant hospital would tell them that they don't accept Medicare, don't accept Medicare, and where they can shove the Pubic Plan. The Public Plan has been a bigger distraction from the real issues than abortion or immigration.

If you're looking for more information or think I'm an idiot and want to hear other opinions, This American Life did an excellent job of explaining the key issues of the health care system that this bill does not address. Here's the more pessimistic view from an objective (but grumpy) health care insider or a slightly wonkish but accessible view.

Thursday, November 5, 2009

Buying a House or Car: Considering how much your soul is worth

This year my wife and I had the fortunate yet-gut-wrenching-experience-that triggers-doubt-and-doomsday-thoughts experience of buying a house and a car together. These are the two largest outlays of money that any couple is likely to make besides education, a hip replacement, or that last kilo of cocaine before you retire and go straight.

Our circumstances are very fortunate, we were conservative, and I knew that if our mortgage and car security were sold individually, pension funds would even buy them. If worse came to worse, I had sold my bodily fluids before so that wouldn't be new. Therefore, I was able to ponder how homes and cars are bought and sold, the parties involved in the purchase, the business model, and purchase experience.

The housing market still seems as unstable as a Southern California hill side during the raining season. Transparency has improved but is not completely there. The biggest problem to me seemed like those who work in the housing industry are either overwhelmed or aren't the brightest candles on the menorah too begin with.

We were refinancing the house (which still felt like buying it all over again with the financial paper work). I started with my current lender, Wells Fargo, which was able to give an easy trade in from a 6% interest rate to a 5.5% with no closing costs. We didn't find anything better so accepted and attempted to sign, initial, and notorize their tablet sized closing book. Wells Fargo has an "easy" 1-2-3 Do It Yourself (DIY) closing process where they give you instructions on where to sign and initial. Of course, we missed on signature somewhere on the back of page 8A, Section G. Wells Fargo didn't tell us until I call them asking for an update, and that offer had already become null and void. They offered to resend us the closing book so we could try the DIY process again. I told them what they could Do It Yourself with their closing book that involved physically impossible acts. They didn't really seem interested in actually helping us with the process.

I had also sent my information on Lending Tree prior to accepting Wells Fargo. Looks like the mortgage business was doing better since I got flooded with so many calls and emails that I felt like Lending Tree was run by a Turkish bazaar. The offers were better then the month before and I was now looking at 5% interest rate. Our main criteria was a lender with a local presence to prevent the DIY disaster. This narrowed it down to 2 lenders.

One of the lenders, Arivian Financial, put together a very accurate estimate with the right amount of days interest, months of state taxes, and other factors based on actual state laws and lending requirements. The other broker underestimated those factors to make their offer look better and included his photo in the email signature with his hipster soul patch and side burns. Arivian Financial not only had the best deal but was able to send me state legislation to support their terms. Finally, any documents that they sent us clearly showed me where to sign.

The final piece of incompetency in the mortgage lack of value chain was the Title company sent me someone else's initial estimate. The inability to handle personal financial information combined with inability of some banks to handle their work load, the Turkish bazaar atmosphere, and the ability to still misrepresent closing costs makes me understand the mortgage disaster even more.

On the other hand, the car market is remarkably clear and transparent with access to easy to compare information. The last time that I had been involved in a car purchase was during the Clinton administration so I felt like a cave man entering the Bronze Age. Car features were clearly outlined as well as the dealer price and the sticker price (although it was no longer actually on a sticker so it didn't leave glue on the windshield). The dealers told us their profit, their incentive plans, and how they got paid. I can't think of any other purchase where you know this much about their compensation and business model.

The sales force had some interesting approaches. At the first car dealership, the head sales guy came out with a piece of paper that had the dealer price. We talked about this family, my family, and my favorite cars. At one point, I thought that he was going to look at my teeth as part of the horse trading. Finally, he wrote down his profit next to the dealer price, added it up, and told me the total price. He told me that he was giving me the same price as his father-in-law which could mean he really liked me or really hated me, depending on the relationship with his father-in-law.

Ultimately, I bought a car from another dealership. After I agreed to their price, the sales person told me that part of their compensation ($25 per car sale) depended on their performance in a customer satisfaction survey that I would receive in the mail. They showed me the survey, explained it, and emphasized its importance to their compensation. As a result, it ceased to be a customer satisfaction survey but turned into a customer compassion survey as in how did I feel about the sales person receiving full compensation for their work. My satisfaction was irrelevant as I realized that my influence on their compensation did not stop with my decision to purchase a car from them.

Personally, I would rather have that influence on how much the participants in the mortgage business get paid.

Tuesday, November 3, 2009

Republican Health Care Proposal: Tweedledumb and Tweedledumber

The Republicans and their Congressional leader, John Boehner, seemed to have just realize that health care reform has longer staying power than the Spice Girls. With the Democrats bringing bills to the floor, the Republicans announced their latest health care reform proposal. My response was a Groundhog Day-esque sensation of "Haven't they announced their health care proposals before?" Looking at their four key aspects, I realize, that yes, it's deja vu all over again as they have the same ideas which consist of two ideas that every reform policy has, the Tweedle Dumb idea, and Tweedle Dumber idea.

I have spent enough time writing about how the Democratic Public Plan Option is the health plan to nowhere that I feel truly bipartisan by spending an equal amount of posts about how the Republican health care reform ideas have just gone nowhere. They don't seem to think that there are any problems that changing the methodology for classifying the uninsured won't fix. It's like they are waiting for someone to announce that the health care debate was just a test of the American Democratic system and we can now return to our regularly scheduled programming.

Here are the 4 ideas in their proposal that they either copied from someone else or fall in the Tweedledumb category:

Allow individuals, small businesses, and trade associations to pool together and acquire health insurance at lower prices, the same way large corporations and labor unions do today. This is copied from everyone else who has thought about reform for the last 20 years. This is basically the concept of insurance or a risk pool or the Democrat's Health Care Exchange proposal where you bring a large group of people together and hope you have enough healthy folks to pay for the sick. The problem that no one has solved is how to get relatively healthy people excited about participating in these pools. Generally, the only people who are interested in participating are those who are sick enough to need insurance and they get really high rates or no insurance company wants to offer them a policy. I call this a great example of market failure.

Give states the tools to create their own innovative reforms that lower health care costs. This is the equivalent of an idea like "Let's paint the White House white" or copied from someone else. States have been creating their own innovative reforms with existing tools like Medicare and Medicaid waivers since those program were invented. The Oregon Health Plan made tough choices in 1993 about benefits in order to cover more people with the truly important services. Massachusetts launched universal coverage in 2006. Vermont and Hawaii have their own reform programs. What do the Republicans have in mind, giving these state back rubs while they continue to look at innovative reform proposals?

End junk lawsuits that contribute to higher health care costs by increasing the number of tests and procedures that physicians sometimes order not because they think it's good medicine, but because they are afraid of being sued. Texas enacted malpractice reform in 2003 and didn't even cause a dip in the medical cost trajectory. A 2006 Harvard study showed that most malpractice law suits aren't frivilous and their impact on medical costs is overstated. Malpractice reform will not solve the health care system. It will help with tort reform which is really a separate topic. I share the Republicans lack of interest in a litigious society. However, we're talking about health care reform right now, so let's stay on topic. I all thisTweedledumb.

Let families and businesses buy health insurance across state lines. This idea is Tweedledumber and it's the only remotely new idea that the Republican have offered. It rests on the premise that state mandates like requiring coverage of domestic partners, smoking cessation, or birth control is a significant driver behind medical costs. It ignores the Medicare data which shows how medical costs vary significantly from state to state or city to city in a universal benefit design (Medicare).

I help make decisions for the health plan that families purchase and I have no interest in letting families in other states purchase our plan. It would attract interest from those in high cost states like New Jersey which have higher medical costs based on the practice patterns. As a result, they would drive up the cost of my plan and I would become more expensive compared to competitors in Oregon which is a low cost state. I would also lose money on the New Jersey residents.

If this proposal was enacted, I would charge a higher rate to any out of state residents from high cost states or market my competitors plan in those states so they would have higher medical costs.

With proposals likes this, I view a bipartisan plan as one that moderate and more liberal Democrats agree upon. When I think of the Republican viewpoint, I am reminded of how passionate they were about the Terry Schavio, the woman who was going to be disconnected from life support. The Republicans considered that to be a very important issue while I personally spent most of my time wondering if Schavio was a Greek or Italian name and thought it was a bigger waste of network time than the OJ Simpson white Bronco car chase. The Republicans seem to reserve a similar amount of interest in health care reform.

Monday, October 26, 2009

Oregon Health Insurance CEO Forum or Let your Children grow up to be Actuaries and not Naturopaths

Last week, I attended the Oregon Health Forum CEO round table, the well attended annual gathering where we get to see how truly collaborative (or cozy) the health insurance industry in Oregon is. Six of the top local seven insurance plans were represented on stage as well as the local head of United Healthcare, who is generally viewed as the Darth Vader of health insurance. The CEO’s had mostly similar views about the direction of the health care industry, and supported each other’s comments (except no one said “I’d like to support what the gentleman from United said”). Here is a summary:
  • There was a real call for the average American to more actively participate in their health care decisions. For example Oregon House Bill 2213 required that insurance carriers produce a tool that provides estimates of the cost of the top 30 procedures based on the individual's insurance coverage. However, my blog receives 20 times more traffic than those tools (and I don’t break triple digits). Americans have largely been shielded from both the financial impact and the necessary information to make health care decisions. Like retirement savings, both of those things need to change.
  • The CEO's discussed a new product intended to engage Americans that was developed by the Oregon Coalition of Healthcare Purchasers. It’s a value-based design supported by Jack Wennberg’s research with the Dartmouth Atlas. The plan design covers preventive services and those that treat chronic diseases so the individual pays little to nothing for those valued services. However, services like spine surgery for back pain or global nuclear thermodynamic three dimensional imaging that provide questionable value for the dollar on a population level will be more expensive. You call that rationing but it’s really recognizing there are limited health care dollars and using consumerism or market forces.
  • One CEO mentioned that there are 43 mandates for different benefits (like hearing aids for children) or eligibility (coverage of domestic partners) in Oregon. He suggested re-evaluating the mandates to see if they add unnecessary costs to the system. However, I have questioned if mandates 1) are covered by most insurance companies anyway, 2) really add up to significant savings compared to reduction of global nuclear thermal imaging, and 3) represent a failure of market forces to address a community need.
  • One CEO described their efforts to engage providers by providing information such as how many of their cardiac patients have come in for preventive services or diabetic patients who have their blood sugar within range. The only Chief Medical Officer who was there couldn’t help himself from saying, “I would loathe to receive that kind of letter from an insurance company.” However, physicians don’t have the ability or time to consistently track that information easily while insurance companies do.
  • I have developed my Bingo game at these events where I wait for the first CEO to mention the importance of caring for children in the most completely tangential off topic manner. Mentioning the importance of touching the lives of children is probably in the public relations guide for every industry that faces a skeptical public. Kaiser Permanente scored the Bingo this year. At least, it hasn't gotten so bad that insurance CEO's have to talk about warm puppies and ice cream.
  • A medical student at the college of naturopathic medicine asked if the CEO's had considered providing coverage for naturopathic services due to the primary care shortage and pointed out that Washington and Vermont mandate this coverage. The expression on everyone's face clearly said, "No we haven't. Not at all and we probably won't think about it in the future." The Chief Medical Officer broke the silence with a quick, "That's a good thing to consider." Personally, I can't disagree as I don't know if covering naturopathy will add even more costs to the system or improve access to primary care. However, for those still considering the course of study, if covering naturopathy hasn't been discussed in Oregon, that's not promising for more traditional states.
  • Instead of naturopathy, those with a quantitative skills should look at actuarial science. Most health care reform calls for increased actuarial evaluations and the value-based models will further increase the work. It's got a strong future. Sure, there are still jokes like "What do you call an actuary talking to someone else? Popular." For most of my co-workers, our children aren't going to be encouraged to become doctors but instead become actuaries.
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