Physician Perspective on Health Care Reform

Like every good liberal, my primary news station is National Public Radio (I do take breaks to listen to the Dropkick Murphys every now and then). NPR had a series on the state of medical practice with physician interviews of 2 veteran doctors and 2 doctors who recently completed residency. I felt that their opinions on health care reform and what needed to change were so out of touch that it really disappointed me. To be fair, 1 of the physicians, an oncologist, was aware of current issues so this is indicative of the other three.

Now if I ask the average insurance person or pharmaceutical rep about health care reform, I will probably get some pretty stone age answers also that focus on preserving an unsustainable revenue and making their jobs easier. Also, there are strong physician leaders like Atul Gawande and Ezekiel Emanuel. Physicians for a National Health Program is a strong organization. However, we hold doctors to a higher standard and they are very smart so that's one of the reasons that their responses caused me to shake my head and have similar reactions that Robert Gibbs does whenever Joe Biden talks.

When asked about what needed to change about practicing medicine, the responses were:
1. They need to stop holding us to productivity standards and just let us do our jobs.
2. We have to go to many training sessions about the latest new topic.
3. Our patients are different than the norm and we should allow for the art of medicine as much as the science.
4. I wish that I could practice medicine like I did 20 years ago.

I interpreted those responses as being resistant to new practice ideas, being resistant to evidence-based medicine and protocols, being resistant to have any outside review, and a reinforcement of the doctor is always right concept. There is not a reverse Lake Wobegone effect where all of someone's patients are sicker than average. Finally, we all want to be able to do our jobs how we think they should be done and want our ideas to be right.

None of these responses are egregious or incorrect. It's just that these responses are not forward thinking in the slightest, especially #4. There is no acknowledgment of the rising cost of health care, how to improve medicine, or how to coordinate care with other providers. If this is the feeling of most physicians, I can see why the American Medical Association has brought forth no platforms, positions, or their own ideas. At first I thought it was the leadership of that organization but the emphasis on preserving the status quo from 20 years ago may be more widespread.

We all know that physicians are a key part of health care reform and could seize a leadership role. With responses like this, it shows a lack of desire to play a role. If physicians really want to practice like they did 20 years ago, they could propose being paid the same whether a visit is 15 minutes or 1 hour or whether the procedure had complications or not. Don't incur the expense of an office and just make house calls. An average primary care physician still makes $150,000/year after 3 years of practice so they still make a very good living even with medical school loans.

I know that physicians have strong opinions and it frustrates me that none have emerged in health care reform discussions other than they want to be left alone and not have to deal with the complicated business of medicine. As a result, physicians will find themselves working in a system that someone else designed and miss an opportunity to help form it. Where is being the change that you want to see in the world? What will get physicians more engaged in changing health care?

When health care reform stops getting nice and starts getting real

Usually when I tell people that I work in health insurance, their eyes can't glaze over fast enough. However, that's been changing. People now actually want to find out what I think of health care or they ask me what it's like to work at "ground zero." It's like I went from the Puck from the Real World of health care to a more likeable character like Al Bundy from Married with Children. The slight rise in popularity is probably because everyone is getting ready to fight about health care. Even Obama is starting to wade into the mix with his calls for stakeholders to put up or shut up today.

Health care stakholders are living in interesting times. Reform could go in any direction as nothing is certain. Employer health insurance could lose its tax exemption. There are underdog re-emerging such as Senator Wyden and Bennet's approach which would end employer sponsored health care and have plans compete with a standard benefit package.

Even the mantra of "Medicare Part E for Everyone" is being replaced with "Medicaid for Everyone". The Kaiser Family Foundation points out that Medicaid is the logical next step for the 2/3 of the uninsured who are within 200% of the Federal Poverty Level. Medicaid has the history of providing managed health care for low income citizens. On the other hand, Medicare is a fee for service fragmented model that is focused on the elderly and has no infrastructure to offer any services other than signing a check.

Health Care Stakeholders have stopped poking each with stakes in the rush to make concessions to stave off the complete reengineering of their business models. Insurance companies are offering to stop denying coverage or looking at pre existing conditions. Drug companies will offer 50% discounts to seniors who fall in the doughnut hole. Physicians are starting to pay attention and realize that they can either be the change that they see in the world or be short-changed (in their eyes). The Obama administration is starting to look like some pretty good cat herders. However, they have some ideas like the Public Plan that still could turn this into a cat fight.

I recently had a good on-line debate (probably need to join the website to get to the link) with another blogger about health care reform. Of course, we didn't change each other's opinions but it helped my crystalize my thinking which in usual bullet pointed format is as follows:

• There will still be a 3rd party: The above-linked debate was fueled by a 2001 Hoover Institute piece advocating that we do away with private and government insurance and have providers and patients negotiate away. An easy model to evaluate this approach is dental insurance. Only about half of the US has dental insurance and those that have dental insurance typically only get $1500 worth of services covered. Therefore, dentists and patients often discuss price as part of the treatment. Results are not good. Dental costs rise slightly above inflation (3%-4%) and dental practice is often described as "drill, fill, and bill." Consumers are negotiating with wolves. Insurance companies and the government have the best data to truly evaluate provider practices and thus still need to be the 3rd party.


• Hard to focus with so much noise: The reason that health care is so expensive is because of law suits! No, it's insurance administration costs! No, it's hospital construction! This is the noise which causes us to lose focus on the core issues of health care costs which is a system perfectly designed to encourage a Hummer-esque utilization of care for those who will pay. Law suits, insurance administration, hospital construction are all factors which do contribute to costs. However, they are not the core driver but rather a per cent here an there. For example with law suits, Oregon has no malpractice caps and low health care costs. Texas has strict malpractice caps and high health care costs. If malpractice was such a large driver, there wouldn't be that discrepency. Another example is that insurance administrative costs are 15% of the health care dollar and generally increase with inflation. Medical costs are 85% of the health care dollar and increase at a higher rate than inflation.


• I'd like to buy two health insurances please: Price controls has a likely future in health care. Wyden and Emanuel's plan include one price for a unit of health insurnance and call for the insurance companies to keep all provider payments under that cost of one unit of health care including administration and profit. This system also uses the government's considerable skill and experience in determining the price of health care. The free market has not reduced health care costs and there is little evidence that consumerism will. I see no other alternative other than price controls under which every stakholder will live. Future successful innovation will focus on cost effectiveness to help everyone live underneath that limit.


• If we think that we've seen managed care. . . we ain't seen nothing yet. That's why I have begun to realize that Medicaid for All is probably the true model. Lower costs, strict formularies, and tight managed care are the ingredients of a health care system that will need to live within a budget. Rationing health care is not just a European solution. The reason we haven't heard the rallying cry of Medicaid for All is because of Medicaid's reputation- er I mean branding (got to use the 2009 vocabulary) issue as insurance for low income Americans. However, it's probably the most viable insurance model under a health care budget that truly budgets. While there is talk that everyone would have the same insurance that Congress currently has, there is not enough taxes to pay that level of insurance.


• Whither employer insurance? There have been calls for the end of receiving health insurance from your employer. While employer-based insurance is a dated model, employers that have mastered health care costs do have a competitive advantage. Ultimately, with a Medicaid-esque public insurance model, I do see that employers may offer buy-up or supplement insurance to attract workers. That would truly be a benefit and I could see that as an appropriate role.

Health Care Reform: Threading the Needle of a Private/Public Solution

Two questions have emerged from this week's health care reform discussions around the role of the private sector which are:

1. Will employers still have a role in offering health insurance to their employees?
2. Will a government sponsored health plan emerge that will take market share from private health plans?

With regards to the 1st question, I had previously blogged that employer-sponsored health insurance was approaching bicycles for fish territory. Employers were able to offer a benefit for less than the cost due to the tax breaks and lower the distribution costs. However, it was adding costs to their products, taking their attention away from their business, and was not universally valued by all employees at the same level as much as other benefits that could be offered. In short, if the responsibility for offering health insurance was removed from employers, the only advantage that would be lost was lower distribution costs.

However, Senator Max Baucus, who is a real force in health care reform, was recently quoted as supporting the employer health insurance system. On the private side, the CEO of General Mills was also quoted as supporting employer sponsored health care insurance because he felt that their health care plan attracted talented employees and they were good at managing health care costs.

Why the recent shift toward keeping the employer-sponsored health insurance system and what to do these two know that your humble narrator does not? With regards to Senator Baucus, I suspect that it's merely politics and a desire to assauge fears that people will lose their good insurance from their employer. It's part of Obama's statements about not fixing something that isn't broken by not disrupting the 62% below 65 who have insurance from their employer. With regards to General Mills, that's more surprising and interesting. However, it's economics. General Mills is located in Minnesota which is a bastion of health care experimentation so they have gotten good at this health care business. Since they're so good at it, it's a competitive advantage against companies that flounder with health insurance administration. Why take health insurance administration away from them when they've "won" that battle against other companies? These are the spoils of the free market and competition, right?

As I initially argued, this competitive advantage should be taken away from General Mills because health insurance administration should not be the core competency of a foods company. Companies should have not to spend resources on health insurance administration unless they are in that business. Companies don't build their own computers or phones so they shouldn't build their own health insurance.

The 2nd question about a government plan outcompeting the private health plans came up recently, too. While the issue of employer-sponsored health insurance is an interesting business issue to weight out, this is just pure propaganda in the category of Obama taking away our guns. There are already a few government sponsored plans out there, such as Medicare, Traditional Medicare, and state portability plans that companies are mandated to offer. The only goverment sponsored plans that do well in the market place are the ones that are free like Medicaid or Medicare Part A for hospital care (beneficiaries pay $96.40 per month for Part B for physician services). The government has a terrible track record of offering attractive health plans. The state-sponsored portability plans in Oregon are very expensive and only have 20,000 participants in the whole state. Traditional Medicare and Medicaid not only have low reimbursement and so slow at paying that 25%-30% of physicians in Oregon won't have anything to do with those plans.

The government is good at setting prices, like with Medicare DRG's and consistently sending someone a monthly check like with Social Security. They are not good at the health plan business of answering calls, contracting with physicians, or timeliness. If private health plans can't outcompete a government plan that isn't free, that's the private sector's problem.

In summary, the government knows better than to launch its own health plan. I think that this issue is raised for propaganda purposes to prevent the Obama administration from getting too involved in health care by making it appear like a takeover. Insurance companies should adjust to a world proposed by Ezekiel Emanuel, brother of Rahm Emanuel. Under his plan, the governmet would set the prices and insurance companies would compete on quality of provider network, medical management to lower costs, and service.

How Public/Private Health Care Reform could work

My company's CEO delivered a presentation outlining the future that market-based health care faced against an incoming blitzkrieg and panzer attack of regulation and unsustainable rising costs. He had spent a few days in Washington DC and came back with encouraging news about how the Obama administration is viewing health care reform. The other highlight of the speech was watching him take the lord's name in vain twice which is funny only because we work in a Catholic health care organization and there was a nun in the audience.

The regulation comes from all the reform efforts. The unsustainable rising costs has been increasingly described with the "b" word as in bubble. The specific rising costs in health care have been from specialists and hospitals and the bubble comes in the form is that the services provided are being viewed as overvalued for the price. Eventually, payers will have the information to demonstrate how they are overvalued and/or the ability to refuse to pay and prices will come crashing down. While I do sound like a cranky health insurance guy when I called hospital services overvalued, I can point to the Dartmouth studies which show vast variation in care by geography that defies science and a pricing system that is based on what hospitals feel they need to get paid rather than any real costs. One dirty secret of hospitals is that they are not very good at pricing how much their services actually cost. Here is the most interesting aspects that I can share from the presentation (besides how to make a nun blush).

What the government is good at: The government is really good at determining the price of health care services or how much everyone gets paid. For Medicare and Medicaid, prices have been determined for decades of how much physicians gets paid, how much hospitals get paid, and how much health plans get paid. They are adjusted be geography, health acuity, and have risen at the same rate as inflation if not lower. The government actuaries determine the costs, adjust them, and everyone in the health care world accepts them because they have all the data. The government's ability to dictate price will probably grow as they have proven to be very good at it. Insurance companies and providers are not good at it because the biggest player in the game just tells everyone what they will be paid and others have no leverage to counter it.

What the private sector is good at: Health plans and providers are good at managing how much health care people use or utilization. Health plans have case managers for members with chronic diseases, use authorizations to not pay for inappropriate care or makes providers demonstrate why the care is appropriate. Providers will also enter into contracts where they get paid for managing care, keeping their patients healthy, or receive bonuses for following quality of care standards. The government would not be good at managing care because it is best done at the local level and it's also something that the government has never done. New expertise would have to be built from scratch.

Myth around drug negotiations: A common reform effort is that Medicare should negotiate prices with pharmaceutical companies. However, Medicare has no ability, staff, or idea how to negotiate prices. They can dictate a price (previous point) but do not have the history, data, or staff to negotiate since they have never done this in the past. Medicare negotiating with drug companies would be similar to my negotiation attempts with my cat.

Popping the bubble: Health care was the only sector that did not lose jobs in November and one in seven jobs in this country are in health care. If we reduce the money spent on health care (lower costs), jobs are going to go away at some point. I start to wonder if I should update my resume. However, if the Obama health care reform results in losses of thousands of health care jobs that are not absorbed by the private sector, I think that the administration knows better than to pursue that approach. Health care spending can be a good thing if there are good outcomes and the bubble can be eased by lowering those costs and allowing more people (the uninsured) to receive care. The total dollars will not dramatically lower but be spread out among more people.
With technology and health care investment, if reimbursement drops because everything is paid at the same rate, some investment may leave health care because the returns aren't there. However, that investment will then look for other sectors of the economy with better returns.

The Brothers Emanuel: Ezekiel Emanuel has been working on his own plan for health care reform and advised numerous democratic candidates. I had the pleasure of seeing him speak about his health care voucher plan and I could not find anything that it did not address. I adopted his plan as my own and wondered if it was going to happen. I think that Ezekiel's brother, Rahm Emanuel, might be able to make it happen in Rahm's new position as Barak Obama's Chief of Staff. I think that if we want to know where health care reform is going, we should listen to Ezekiel.