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Friday, September 11, 2009

Reinvigorated about Health Care Reform: The Good, the Bad, and the Ugly

I'll admit, I got tingly, hearing Obama say, "I still believe" and about his vow to be the last president to address health care reform. Kind of like I got during some of those good early Grey's Anatomy episodes when they would play a montage of the different patients and characters wrestling with tough emotional decision while playing music from the latest Emo folk singer.

What's gotten me even more excited is Senator Max Baucus's 18 page framework for his working group on the Senate Finance Committee. The proposal has real specific ideas that address serious issues in health care like a dysfunctional individual market and underpayment of primary care. This proposal is a working draft for his "Gang of Six". While I don't think that everything in it is a good idea, I think that Baucus can now spend more time thinking of a better nickname than "Gang of Six". What about the "The Sick Shooters" or "Maverick Baucus and the Top Gunners"?

We've got some solid ideas and some inspiration back on the health care reform table. It's enough for me to ignore the fact that the Republicans are not interested in health care reform. For me, the work will be between Obama, the Blue Dogs aka fiscally conservative Democrats who will have a tough re-election, and the California Democrats aka liberal wing who can spend more time worrying about their flossing schedule than their re-election chances.

For the purposes of this blog post, I can think of no better way to express myself than my favorite format, the good, the bad, and the ugly

The Good

  • Help for those who need it the most, small groups and individuals: Groups with less than 50 employees and individuals have the worst options when purchasing health care. They get the least benefits, most limitations, and denied most often. Baucus's proposal of risk adjustment that will pay a plan more for insuring sicker members and guaranteed coverage gives consumers more options. Additionally, the proposal requires that plans offer 4 levels of benefits (bronze through platinum) and even a "young invincible" option. It cracks me that they even call it the "young invincible" option when they could call it "Doesn't give a crap about buying insurance option". This limits cherry picking by requiring plans to offer something for everyone and the prices of the different levels are at 1:7.5 ratio.
  • Interesting definition of Affordability: It defines an affordable plan as costing 13% of someone's income. Maybe it's the health care policy geek in me, but it's a pretty clear expectation of how much someone is expected to pay for health care before the government helps. Overall, the specificity of the definition of affordability provides a specific direction on the opinion of how much health care should cost someone. It's not free and Baucus will get specific.
  • Reward the right medical practice: Medicare will pay a 10% bonus to primary care physicians or surgeons who practice in an area with a health care shortage. This is funded by a 0.5% cut everywhere else. Primary care is considered to be underfunded and other areas of care (like imaging) are probably overfunded. It's a nice way to reward primary care for being considered the best value in health care.
  • Rewards quality, prevention, wellness, good outcomes and gives ice cream and warm puppies to nice boys and girls: There are also a whole host of pilot projects and funds for new innovations in care, preventive services, and making quality data more readily available so you actually know if you are less likely to die in your local hospital. These are general provisions that we can all agree on like the fact that we like ice cream and kids like puppies.
The Bad
  • Co-pting the word co-op to replace a public plan: I have blogged repeatedly on how the public plan option is a bad idea since the federal government has little experience with administering health plans and it would introduce a new mediocre government-sponsored plan. While Obama backed off the public plan, Baucus is now calling it a Health Care Cooperative. Only difference is the government would pay someone else to start multiple public plans. If they are really interested in a cooperative, have a real cooperative where members volunteer 2 hours per month and pay claims or answer phones. If members use less services than anticipated and costs are lower, everyone gets a dividend. Baucus's idea is not really a co-op. When everyone sees through the rebranding, I'm waiting for Health Care Cooperative to be replaced by Health Care Communes or Health Care Sewing Circles.
  • Talk about Torte reform or talk health care costs, stop mixing them: Republicans and physicians have focused on malpractice reform as a key to reducing health care costs. However, there is little evidence that malpractice reform will significantly impact medical costs. Texas enacted malpractice reform in 2003 with no drop in medical costs and has some of the highest costs areas in the country. A Harvard study also finds few frivolous law suits or lower costs with malpractice reform. If we want to talk about torte reform in general to prevent law suits, that's fine as I have no interest in preserving a litigious environment. However, holding up torte reform as a solution to lower medical costs is like me claiming that switching to diet soda is the solution to my weight loss plan.
  • Selling Insurance across state lines or a solution looking for a problem: This was in the Baucus proposal and it's an example of clean coal. Sounds good but doesn't really exist. In my current role, I make strategic decisions about individual insurance plans and I would have no interest in this opportunity. Insurance costs more in certain states because medical costs are high not because of state mandates (except maternity coverage). Mandated mental health benefits add $2/month and mandated acupuncture could add $1/month. If we tried to sell a $210 Oregon insurance plan for a 35 year old in New Jersey where it costs $320, we would probably have to charge closer to $300. That would be less than a 10% discount for a plan with a smaller network and no brand awareness. Medical costs in New Jersey are simply higher. We could subsidize our New Jersey business with our Oregon business but than our prices would rise in Oregon. The only opportunity that emerges from selling insurance across state lines and ignoring a state's legislation is that males could get cheaper plans in states that don't mandate maternity coverage. The main result of this legislation would give males a way to avoid contributing towards pregnancies (except by causing them).
The Ugly
  • Potential loss of an industry: Many of the reform proposals feature health exchanges which facilitate the purchasing of insurance plans through a web site or government entity. The goal is to make it very easy to compare and research insurance plans. This would remove business from insurance brokers who currently are paid quite well. While not all brokers create the same level of value, I don't begrudge their profession or ability to make a living. The health exchanges would take a lot of business away from brokers and we won't know if they will provide the same level of service.
  • Republican's best contributions to the health care debate was Joe Wilson's lack of ability to control his mouth: With the complexity of the health care system, it lends itself well towards a vigorous debate and solutions across the political spectrum. The Republicans have stopped taking the debate seriously. Their contributions have been to reclassify the number of uninsured from 46 million to 12-15 million by offering a new methodology. Or they would rather talk about torte reform instead (see my 2nd bad idea). They're even demonizing undocumented immigrants rather than talk about health care (as if the fact that some percent of 10 million undocumented immigrants receiving a health care service outweighs designing a system that can help 300 million Americans). Their only idea of selling insurance across states lines was my 3rd bad idea. As a result, I turn to the different factions of the Democratic party to forge a solution since the Republicans are probably more interested in finding Iphone fart applications than health care reform.

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