We need a Single Payer System like a Fish needs an XBox

I used to wear T-shirt that I got from a thrift store that said "It's time for Peace, Jerry Brown '92" while I drank from a water bottle with a Dennis Kucinich sticker. Yet, I don't see how a single payer system can be viable.

Here are the reasons that I hear from proponents of a single payer system:

1. It will provide health insurance for everyone and cover all services.
2. Insurance companies will no longer make huge profits and the money saved will cover health insurance for everyone, the national debt, and an Xbox for every fish.
3. It will make the health care system simpler and more efficient and the money saved will provide Guitar Hero III for every non-vertebrae.
4. It's easy to do, just expand Medicare to cover everyone.

Here are the problems:
1. Health Reform has been working towards preventing the denial of health insurance which is necessary to have a humane society. However, access to health insurance won't solve health care costs that exceed inflation. It won't create more primary care physicians or more care providers. It also won't address the approximstely 33% of the uninsured who make more than $50,000/year and refuse to buy auto insurance, wear motorcycle helmets, and still probably try to smoke on airplanes.

2. With a little extrapolation from this data of the large publicly traded health insurance companies, I see about $12-$15 billion in profits that can be seized. That would cover about 50,000 hip replacements which will probably be needed by the 50 million Baby Boomers or 12,500 very premature babies. In today's health care dollars, that's actually not a lot of money. Health insurance plans have an average profit margin of 3%. Some might argue that we should include money spent on marketing and CEO salaries. However, a single payer system will have to market to explain its system and have expenses developing a large enough system to cover the whole US. If I was feeling really snarky, I would counter that the likely rich benefit packages from unionized government workers would be about the same as large CEO salaries. If I was feeling less snarky, I would point out that $10 million in salaries is 1% of a billion dollar in revenue company so that savings opportunities is closer to 40 more hip replacements.

While ending the existance of evil health plans creates the same delight that one gets when their favorite team beats the New England Patriots, the money would cover the cost increases for the next few years at the most.

3. One claims system, one billing system, one benefit package, and one coverage system is very appealing. I have heard that it would eliminate provider administrative costs by 30%. Oregon had made movements towards consolidating its Medicaid carriers into one carrier per geographic region with this same argument. However, they pulled away because there were not necessarily carriers that could serve all the Medicaid beneficiaries in that region. Some carriers and provider groups that did service a particular county would be eliminated. That approach would award a monopoly to one group. That's the danger of the Highlander (In the end, there can only be one) approach. If one company controls an entire market with no competitors, how do we expect them to behave?

Health care is also very local and segmented both geographically and demographically. The east coast features large academic medical centers while the west coast features the integrated delivery systems while the south has entrants as new as most of its latest round of carpet baggers. In Oregon, you have to cover naturopathic medicine to be competitive while in Boston, you have to include the Partners Health Group.

Some individuals want alternative care covered, some can't afford their diabetic medications unless there is no cost share, and some want the cheapest plan possible and would rather pay 50% when they have to use services. It's not possible to create one universal benefit plan that would meet the needs of everyone and be affordable. Segmentation is a hallmark of successful business ventures. Trying to be all things to all people is a recipe for failure. The banking system and telephone lines lends itself towards a national model. Most other services lend themselves to a state wide model at best.

Creating this simplicity would entail a lot of sacrifice of personal choice. We're not good at sacrificing choice in cell phone plans, let alone health care coverage. Part of growing up as a health care system is figuring out what we really want to be. One universal model is not something that appeals to any characteristic of our nation.

4. The biggest problem is that the only group that is really equipped to offer a universal health plan is Unitedhealth Group. They are the only ones who have the size and scale.

The Medicare program has no experience with any level of sophisticated claims processing, network management, or negotiating for medical services. Network management and even a rudimentery claims processing is necessary for any type of system that pays providers for offering the right level of services and not just lots of services. Their price negotiations involves setting a price and telling people to take it or leave it. The idea that they can negotiate with prescription drug companies on pricing will be undermined by the fact that they have no department that can do it. Currently, they rely on the same companies that private insuracne companies use for prescription drug negotiation. Medicare can barely prevent fraud and abuse let alone managing costs. It has driven disease management programs into bankruptcy.

Someone who provides universal coverage would also need to staff up on customer service and basic communications which are not Medicare's area of expertise. I would offer the image of the DMV running your health plan except that I don't like to drag in the poor DMV. They get picked on enough.

Since Medicare doesn't have the basic expertise, the other option is to contract with private health plans to offer universal coverage. This is called the Medicare Advantage program which has its critics, including President Obama.

The solution: Since I haven't come up with a colonoscopy joke, by my new rule, I have to come up with a solution. Personally, I like Germany's approach. A basic level of services is covered by the government and people can buy private insurance for more coverage. This is basically like our eduction system.

Are ACO's DOA?

A lot of people have been staking the future of health care on the idea of Accountable Care Organizations (ACO's). President Obama thinks they will reduce health care costs, providers have been reorganizing to take advantage of the opportunity, and bloggers have praised them. Even the event planning industry loves them as it has spawned a whole new line of conference opportunities.

To those who have not been following the ACO's like fantasy league baseball owners follow spring training, an ACO is an old idea that aligns the financial incentives of providers and payers. It provides a global budget for managing the care for Medicare beneficiaries. This rewards providers for efficient health care or keeping patients healthy rather than lots of invasive procedures. Medicare projects that it will save $510 million over a 2 year period. However, the release of the proposed ACO rules by Center for Medicare and Medicaid (CMS) at the end of the March had the same effect on the party as urine in the punch bowl. Or as my blog title foreshadows, it's like Weekend at Bernie's 2 where providers realize that participating in an ACO is like partying with a dead guy. It's a lot of work, not a lot of fun, and starts to smell after a while. In summary:

Lots of work: To participate in an ACO, providers will need more reporting, IT systems, have to develop some insurance functions, and build up the infrastructure to better track patients health. This is not unexpected and was part of the ROI analysis. What pushes the amount of work over the edge is the governance requirement. There must be a separate Board of Directors that runs the ACO that includes patient representation. This is a common aspect of Federally Qualified Health Centers and also the most challenging requirement to meet. Creating a separate governance board with complete control removes a lot of control from the providers who are launching a new venture. It's not easy to give up control of something that requires this much investment.

Not a lot of fun: The fun in ACO's was the opportunity to get paid more treating Medicare beneficiaries through shared savings compared to a benchmark. However, CMS took away the fun or opportunity to make more money by doing the following:

• The benchmark or cost target that providers have to beat to make additional money is the current Medicare benchmark for the geographic area. For providers in the Northwest where benchmarks are very low because they are historically low cost areas, that means limited opportunity. For providers in Texas and Florida, where the benchmarks are very high because these are expensive areas, there is opportunity. However, these providers get paid enough by Medicare already so there is not the incentive. In other words, providers that are well-organized and poised to form an ACO have little room to get additional money. The wide variation in geographic payment for Medicare has been a continual problem and removes a lot of incentive from the ACO.
  
• CMS also keeps the first 2% of any savings. Therefore, providers have to lower costs by greater than 2% in order to get additional payment. Or yet another barrier to participation. That's like having to watch Weekend at Bernie's 2 before you get to watch the first one or just turn off the TV.

Smelling like a corpse: Given the current structure, there is a risk that no provider group will apply to the ACO's. The current rules went over like a fart in a spacesuit to the 10 provider groups that participated in the original Physician Group Practice demo. If those provider groups who are the most likely to be successful aka make additional money in this model don't participate, who will? This would be a large blow to the Obama administration's vision of designing a more efficient health care system.

Hope or Yes we Can: It's too easy to write a critical blog post about how a new idea in health care might not work. Any blogger who writes such a critical post should either balance it out with a solution or some really good colonoscopy or animal husbandry jokes. Since I don't have any new jokes, I'll pick the solution option.

Despite the fact that CMS has made participation in an ACO as appealing as a colonoscopy, this model represents the best solution to the US health care system. The fee for service model has proven to be unsustainable. Others besides CMS, like large employers or unions will start to demand this type of model from insurance companies and provider groups. While the revenue opportunities in an ACO are not good, there are not any better revenue opportunities elsewhere. Provider groups can no longer compare opportunities to today's payment but should compare it to the future payment opportunities. Provider groups who can organize under an ACO structure and lower health care costs will be more viable in the future. Those who cannot and expect to continue to be paid at today's levels will become just like the main character/corpse in Weekend at Bernie's.

Provider groups best option is still the ACO model. If CMS can't develop a good structure, that presents the opportunity for the health care industry to develop its own.

Ryan's Field of Dreams while Oregon is not just waiting for them to come after Building It

Last week, representative Paul Ryan released a budget proposal that was called everything from "interesting" by Ezra Klein to "bold" and "game-changing" by Fox news. The popular sports analogy was how Ryan changed the playing field on the health reform debate with his hail merry. My mixed sports analogy would be that Ryan punted to the Field of Dreams where he thinks that if he builds it, they will come.

Ryan's proposal specifically "would provide Medicare beneficiaries with lump-sum vouchers to buy private insurance and turn Medicaid into a block-grant system." States would get $11,00 per Medicaid beneficiary and the federal government could cap its exposure to health care costs. In other words, the federal government is turning its health care programs from a defined benefit to a defined contribution program and getting out of the health insurance business.

I used to think that block grants were a good thing because the word block has positive connotations. It makes me think of a block party or playing with blocks. The idea that the government gives you a block of money and a lot of freedom also sounds appealing. However, I have realized that block grants should really be called blockhead grants because they are generally used for programs that the granter doesn't like. That's why block grants won't cover the actual costs of the programs. Calling the programs, "Hey blockhead, how much money do I have to give you to go away? That's it? Great!" would be too honest and the acronym would be too long.

Ryan's idea of vouchers and block grants for Medicare and Medicaid is nothing new. Democratic and Republican politicians have proposed these ideas since 1981. What would make this proposal interesting is if Ryan attempted to design a market that would create an incentive to participate in these programs and provide care. That is the challenging part and why this is just another example of Republicans punting on actually coming up with a solution for the health care system. It will shift costs to employers who will become a main source of health insurance for older workers or beneficiaries who won't be able to cover their health care costs. It does nothing to change a fee for service system that will respond to lower payments with higher volume and more invasive treatments that get higher reimbursement.

The state of Oregon is seeking federal waivers for its Medicare and Medicaid funding in order to design a real system of health care. Waivers doesn't have the same warm and fuzzy feel as block grants. However, it's better because with waivers you actually get the same amount of money as before. Oregon is taking the ball and running with it by designing a care delivery system to support it called Coordinated Care Organizations (CCO's). They are similar to the federal governments Accountable Care Organizations (ACO) with 2 key differences. Patients select their CCO in advance and have a relationship with the providers while patients are assigned to an ACO retrospectively and don't have the same provider relationship. The other difference is that one starts with C and the other stars with A. I really wish Oregon could come up with a BCO acronym since they skipped that letter but the only one that I could think of was Boring Care Organization.

The relationship aspect of the CCO gives the organizations an opportunity to attract patients to join. The CCO's will start by serving the growing Medicaid population (which will become 30% of Oregon's under 65 insurance market in 2015) but will have business steadily funneled to it by the state government bodies like the Oregon Healthcare Authority. For example, the state has indicated that they may only contract with CCO's for the lucrative public employees insurance. That is how the system creates incentives to participate in providing care to difficult populations like Medicaid and Medicare. This is very different from Ryan's plan to have these beneficiaries fend for themselves with a 50% off coupon.

This Oregon proposal is something that I would call bold and game changing.

Wrestling with the Individual Mandate or We still Don't Know what kind of Health System we Want

As a nation, we do not know what we want our health system to be when it grows up. We are still using our health system as a source for our own fantasies and shortcomings. The fantasies are on such a grand scale that we expect our health system to be like James Bond with better abs when it grows up.

Allow me to step down from my somewhat random analogy. We still have the illusion that we can provide health coverage and access to care for everyone, keep it affordable, and not make any sacrifices like increased wait times for services, no longer offer the most invasive option possible, or not have an individual mandate. We have delayed tough decisions under the delusion that wellness, better chronic disease management, and Electronic Medical Records will result our health system being affordable, high quality, and with access for all. The reality is that health systems can usually only offer two of the three.

The sacrifice of the individual mandate is the topic of this blog post. Those who are still reading, probably realized that from the title and are now glad that I finally got to the point. Economists have explained that an individual mandate is required in order to have affordable universal health coverage. The healthy, like James Bond, has to pay into the pool to support the sick and those who are not really really really ridiculously good-looking. However, politicians continually look for a way to remove the watered down individual mandate that is included in health reform. This shows a continued inability to make tough decisions about what we want our future health system to look like. The current individual mandate is a $700 fine which should hardly dissuade the die hard libertarian from not buying insurance. That individual can continue to not buy auto insurance, not wear a helmet while riding a motorcycle, not pay taxes, or refrain from bringing samurai swords on a plane or any of those other things that individuals are currently mandated to do by law.

This post on the individual mandate is mainly driven by Senator Ben Nelson's request to the Government Accountability Office (GAO) to see alternatives to the individual mandate. Now, given Nelson's history with the Cornhusker Kickback, his request for this analysis could be driven by a desire to fry up some more pork for his state or campaign contributions. Nelson never seems to have a position that he doesn't use to gain some benefit for himself. However, I'll assume that Nelson's inability to make hard choices about our health care system matches others. The GAO alternatives to the individual mandates can fall into the following categories:

Just another form of an individual mandate that will maybe convince those who aren't paying attention that it's not an individual mandate. It's kind of like reducing the number of uninsured by just changing the definition of uninsured to those whose religion forbid accessing medical care.

1. Impose a tax to pay for uncompensated care (How is that different than the current $700 fine other than it's called a tax?)


2. Restrict access to some federal benefits to people with insurance (whose value might be around $700?)


3. Require or encourage credit-rating agencies to factor in insurance status in credit ratings (and the impact could be greater than $700 for those whose credit rating results in a higher interest rate for their loan)

General proclamations and principle like "We support preventive medicine and ice cream for kids on hot days" that don't really mean anything. The only thing they offer is something that everyone can agree on.

1. Conduct a public education and outreach campaign


2. Provide broad access to personalized help with health coverage enrollment by creating access points such as pharmacies, schools, and grocery stores (How about bars, shooting ranges, and casinos which is where those who won't buy insurance are more likely to hang out and be drunk enough to maybe sign up?)

Ideas that insurance companies really like but don't really help the public or solve the problem.

1. Modify open enrollment periods and impose penalties for late enrollment (Insurance companies love this provision because it creates an incentive for people to preemptively sign up for insurance and stay enrolled longer. However, it doesn't work for the average citizen because this would mean that all of us who have insurance through our employers should start thinking about enrolling in individual insurance just in case we lose coverage. Open enrollment works in Medicare because the market is static. Once someone has Medicare, they always have it. The individual market is much more fluid since people will switch between Medicaid, Employer, and Individual insurance.)


2. Allow greater variation in premium rates based on the enrollees' age to get more young and healthy people to sign up (Insurance companies would love to have lower prices for the young and healthy which means higher prices for the old, sick, and those who are not really really really really ridiculously good-looking. The problem is that it's hard to get the price low enough to be appealing to the young and healthy while keeping the price affordable for the old.)

Ideas that don't really have anything to do with the individual mandate but address other issues.

1. Facilitate auto-enrollment for employer-sponsored coverage (If employees are not signing up for their health insurance, it's probably because they can't afford it or don't want it and are the type that need an individual mandate.)


2. Pay insurance agents and brokers a flat fee rather than commissions to help people enroll (The Exchanges and brokers' inability to demonstrate their value proposition may eliminte the entire broker and producer industry. This provision is a life preserver for the industry. It is also duplicates the Exchange and doesn't address the core problem of individuals who don't want to enroll in insurance. The flat fee should be given to the young and healthy who enroll instead.)

Every country has struggled with balancing access, cost, and quality. The United States believes that it is exempt from those struggles which is why it wrestles with tough choices like an individual mandate. However, these 9 alternatives are not really alternatives at all. When we finally realize that we need to make sacrifices and tough decisions, the United States' health care system will be all growns up.

PS If anyone has been wondering where Roll Away the Dew has been in the month of February and March, I got hooked on the Office and spent my free time watching the series. I have watched 131 of the series 136 episodes so I am preparing myself for life after the Office. Thanks to those who are still reading.

We Have No Idea how to Hire People

I participated in some recent interviews and the discussion to select the final candidate. We are a mid-sized health plan and were looking for someone with experience in a specific line of business and who preferably worked at a larger, more sophisticated health plan. During the process, it became clear that we have no idea how to hire someone and evaluate relevant skills. For those looking for work, I hope that this post will offer some comfort. If you are turned down for a job or not treated well during the process, don't worry it's not you. The potential employer is a moron. For some reason, when a company brings a bunch of folks together to try and hire someone, they act like Hansel and Zoolander trying to turn on a computer. It's like a bunch of monkey jumping around, flailing their arms, and hitting things. The only thing missing was throwing our own poop at each other.

The biggest problem was driven by completely unrealistic expectations. Our ideal candidate was someone from a larger health plan who had worked in this line of business but was humble and down to earth enough to take a pay cut and come work for a smaller health plan to build this line of business for a bunch of monkeys jumping around like ourselves. Here is what we specifically did during the hiring process:

We made things up about the candidates:

• One candidate was labeled a job hopper by one of us because she had left her last two positions after 2 years. A closer look at her resume revealed that she had stayed at her early jobs for 5 years. Did we also want this person to stay at this job for 10 years and were scared off by anyone who showed some signs of mobility?


• We decided one candidate who was currently managing people, would not be happy of they were not managing anyone at this new job. This is despite the fact that the candidate told us that not having to manage people and deal with performance issues was an appealing part of the job. This makes perfect sense since no one really likes managing people but you have to do it for your career progression. But we decided to make up that not managing people was an issue and make it a con.

We questioned motives and past history:

• One of the candidates was from a smaller health plan so we assumed that anything that she did probably wasn't as sophisticated as what we would do ourselves. We had no basis other than our own egos. Given our inability to define job hopping, I question our own level of sophistication


• We questioned why one of the candidates was interested in leaving their current job after being there for only a year. Someone pointed out it was because we recruited her and asked her to come interview. Luckily, that was satisfactory.


• We questioned why someone truly wanted to come to the Pacific Northwest after they told us that they had family in the area and visited it often. Why do we need to question why someone would want to come to an inexpensive part of the country with great natural beauty and a strong local culture? If we were in Omaha, Nebraska, that's an issue.

We had no ability to understand trade-off's

• One of the top candidates came from a larger plan and had the experience that we craved like a drug but came across as more egotistical. The other candidate came from a smaller plan and was scrappier but more humble and grounded. Those two profiles should make complete sense and it should be up to us to choose if we wanted the big league player who had the ego that is often required to make it into the big leagues or the role player with potential. However, folks really seemed to think that there was this humble down to earth person with the experience and skills of someone who fought their way up in a larger organization out there and we should wait for them.


• One individual commented that we didn't have time for the person that we hired to learn the position and develop but needed someone who could start contributing immediately. However, we had spent the last 2 years getting this position approved and deciding if we needed it. We get to spend as much time a we want putzing around but the person we hire has deliverables right after they complete orientation.


• It was also clear that we couldn't distinguish between skills and experience. A career switcher would have had no chance because we were only looking for someone who had specific experience in this line of business. Answers to interview questions that did not include examples from the specific line of business were discounted.
  

This rant is both cathartic for me but truly intended to provide some relief for those looking for work. The inmates are running the insane asylum. Employers have no ability to make tough decisions while hiring someone and have unrealistic expectations. It's not you, it's us.