It's The Consumer, Stupid!!

All is quiet on the health care reform front- for a little while. Things will heat up again when Congress returns from the break and we’ll likely have some type of health reform signed by the President over the next several months.

We all know something needs to change in the way we finance and deliver health care in our country. In some respects we’re thankful Obama made it an issue. It needed to be an issue. But, we are disappointed with the product, the result.

The 2000+ page Senate Bill and the 1000+ page House Bill are loaded with pilot programs, regulations, and requirements. The infrastructure that will be required to put this all in place will be huge. And, most estimates don’t even predict a break in the costs we will be paying for health care in the coming years. Employers will pay more, consumers will pay more, and government will pay more. Those providing care will receive less. And, insurance, pharma, and medical device companies will all contribute to the kitty to offset some of it. It’s not that complicated.

There are some good ideas in both bills. They aren’t all bad. But, the good ideas are overshadowed by the bureaucracy that will need to be created to implement them. It’s really quite sad. We hope it works, but we have very serious doubts.

And, through all of the debate we continue to neglect one of the primary reasons we have such an expensive “sickness-based” system in the first place- we live unhealthy lives. We live like we want to live, and expect the health care system to fix us when things go wrong. As Archelle Georgiou M.D of Fox News. so accurately put it, we have delegated our health to the health care system.

As part of the Healthy People initiative the CDC determined that approximately 50 percent of premature mortality in this country is directly related to individual lifestyle and behavior, about 20 percent is related to environmental factors, an additional 20 percent is directly related to one’s inherited genetic profile, and only about 10 percent is related to inadequate access to medical care.

Both bills include segments on health and wellness and everyone agrees that creating a healthier culture is a key to confronting the fact that 80% of our health care costs are being spent on chronic conditions- many created by the lifestyles we lead. We continue to focus our efforts only on the physical health of the individual- and nowhere do we talk about the emotional, spiritual, intellectual, or social health aspects that contribute to the physical aspects of our health.

Employers are trying to make health, wellness, and prevention part of their health care strategies- but they have a trust issue to overcome with their employees. The government “education campaigns and web sites” are a good idea but not many folks don’t have a lot of trust in the government right now either. Health plans are trying to do the same- and they have an even bigger trust issue to overcome.

It’s when a trusted resource is created for the individual consumer to guide and support a healthy lifestyle in all aspects of life that true health care reform will occur. This resource must be separate from but subtly linked-to the confusing, mistrusted system we have today. Real health care reform will occur when the individual consumer is involved.

We just don’t see this as part of the direction we’re heading today.

Meeting a Christmas Deadline

As we expected, the Senate moved forward with hitting their self-imposed “Christmas Deadline” to passing their own version of health care reform legislation. Some pretty interesting “sweet deals” were cut to get to the 60 votes Harry Reid needed to prevent a Republican filibuster. Now, they have to reconcile this legislation with what was passed in the House in order to send a final bill to the President for signature. That’s going to be interesting.

CBO released its own estimates of the financial impact of this legislation a few days ago. We’re going to be hearing about the $132 billion in net deficit reduction that will result from this legislation for momentum from the politicians to move this thing forward and justifying their actions. While the CBO is allegedly non-partisan, we just have a difficult time reconciling the numbers with reality.

We’ve also posted CBO’s correction to the letter that softens the savings impact estimated in the original letter for the 2020-2030 time-period. We don’t hold much confidence in estimates 20 years out anyway- but we’re sure the Republicans will likely jump on the error for some political leverage.

Here’s our take on some of the points of the Senate legislation based upon what we’re reading from the original CBO letter:

1. Net deficit reduction of $132 billion between 2010 and 2019 (sounds good- but we still question the reconciliation with reality)

2. The deficit will actually increase in 2010 because the legislation won’t really kick in until later. (If this occurs- this will be a major talking-point for the Republicans in the 2010 elections)

3. Health care premiums for employers and individuals will continue to increase in 2010 and the legislation actually won’t have significant impact on health insurance premiums throughout the 2010-2019 period. Even though federal tax credits may be available, they won’t do much for the employer or individual consumer in assuring that we are really doing something to address rising costs when they continue to increase. (This is another talking-point for the Republicans in 2010)

4. Most of the savings will come from the provider side and hospitals and physicians they will take a significant hit. We certainly agree that to deal with costs you have to go to the source but continuing to focus on fee-for-service savings when a new reimbursement model is needed for real reform is simply a mistake. (Providers- be ready)

5. The CBO didn’t include the “discretionary costs” of the IRS and HHS that will be required to put this in place. They currently estimate between $10 billion and $20 billion will be required, which would take the net deficit reduction down to between $122 billion and $112 billion if the numbers hold. (We think it will be more- and the IRS and HHS need to go to Congress to get this funding- which will be tough)

6. The unfunded mandates required for state and local governments are huge with this. The federal government will help for a time, but state and local governments are going to have to eventually pony-up to assist with Medicaid and SCHIP financing (with the exception of Nebraska); Hopefully, our economy is going to be at a better place when the state financing requirements kick in.

7. The public option idea is now replace by an “OPM Managed Exchange” that will be administered by 2 national or multi-state insurance plans- one which must be non-profit. (We’ll be relying on the same stakeholders Congress has vilified to now provide coverage through an exchange- an interesting turn-of-events).

As we have said from the beginning, we absolutely support the need for reforming our existing health care system. We just believe it should occur first by re-organizing care delivery as opposed to reforming the insurance/financing method. We have enough examples to know that covering everyone without reforming delivery only results in higher costs. And, costs are increased, and citizens are being hurt by the delivery system that is in place today.

We encourage all citizens to become much more informed with what is taking place. Our views are only our views and intended to provide a perspective to consider. The American people need to become informed about how this system works as they will be dealing with the results.

Regardless of the outcome, this is a historic time for health care. It’s just unfortunate we’re relying on legislation to make the changes we need. There are some good things included in the bills presented to help the average citizen but we had hoped the market would make the changes on its own. It didn’t, and now we have to deal with it at a different level.

Merry Christmas

It Had Better Work

Within the next couple of weeks something is going to come out of Congress regarding health care reform. We still don’t know what it will look like, as most of this is now behind closed doors negotiating specific details to solidify the vote. We know this may be democracy at work but can’t believe our Founding Fathers would support the idea of passing a major piece of social and economic legislation to meet a deadline. The approach is simply wrong for our country.

Despite all of the numbers being thrown around by CBO and the others, we really have no idea of what the ultimate costs of this endeavor will be. Unless things changed behind the closed doors, we find it hard to reconcile how this approach will “change the cost curve” we are experiencing in health care today. We just don’t see it.

According to Gallup, Congressional approval remains at an all-time low. If this legislation passes and still includes the hefty price tag we think it does, American’s will be looking for results. They aren’t a patient lot right now. If citizens (especially the independent voters) don’t see some improvement in the health care numbers or results early in the year, many Democrats may be looking for consulting and speaking gigs after they are replaced in next year’s mid-term elections. From a political perspective, getting on board behind this legislation is a huge risk.

There has never been a public strong public mandate to pass legislation this year. There has been a strong public mandate to fix what we’ve got but we expect it to be done right.

Gallup’s November 30th poll indicated that currently 49% are against the legislation while 44% are for it. A recent ABC/Washington Post poll indicated that 53% feel we will pay more individually, 55% feel we will pay more nationally, and 50% feel the quality of care would be better if we just kept the way things are today. These numbers don’t resemble anything close to a mandate.

Senator Harry Reid said on Monday, “I’m confident that by next week we will be on our way toward final passage of a bill that saves lives, saves money, and saves Medicare.”

He’d better be right. If he’s wrong he’ll be doing something else this time next year. And, so will many others in his party.

Some Reform Comments; December 8, 2009

We didn’t intend for this blog to be all about health care reform, but it is so fascinating to watch and follow we’re going to keep posting periodic updates. This is a historic time for our health care system and in our opinion putting a legislative solution in place still has a ways to go.

It sounds like Congress is trying to “water-down” the whole public option debate by introducing an approach similar to the Federal Employees Health Benefits Program (FEHBP) offered to federal employees. The Office of Personnel Management (OPM) would be involved for oversight- but a government-run/Medicare-like approach wouldn’t be part of the picture. This seems to have traction for some of the more moderate legislators on both sides- but those on the far left may not be as receptive. The details of how this would all work is still pretty sketchy but would be delivered through insurance exchanges of private non-profit organizations. We'll need to see more of the details before formulating an opinion.

The big issue of the day surrounds the topic of abortion. This topic may very-well determine whether health care reform legislation becomes a reality. The majority is dealing with a very fragile and fragmented constituency and the outcome of this high-profile topic could very well tip the momentum of reforming the system one way or another.

We spent some time reviewing the CBO’s estimates of the impact on insurance premiums of the Senate Bill (3590) as it is currently written. We remain skeptical of the impact this legislation will have on the primary issue facing health care today- the costs.

Kaiser Family Foundation recently determined that the average annual premium for individuals with single and family coverage was $4,800 and $13,000 respectively in 2009. According to the CBO estimates, these prices would increase to $7,300 and $20,000 under the legislation- roughly a 9% increase each year. This is the same increase (or a little higher) employers have been experiencing over the past 10 years. We really don't understand the benefit of the legislation related to moderating health care costs as it is laid out today.

As we have said numerous times in the past, the focus should be on efficiency, integration, consumer engagement, and cost-management in order to reform health care. Putting all the emphasis on reforming the insurance marketplace may address access, but doesn't do much for the costs (sounds like the Massachusetts experience).

Despite the goal of presenting legislation to the President before the end of the year- Congress still has a long ways to go. And, unfortunately they continue to focus on the wrong things. And, most consumers tend to agree right now.

We wish they would listen.