What Do Scott Brown, Ben Nelson & Mike Pence Have In Commmon?

I am in Washington D.C. at the National Association of Health Underwriters annual "Capitol Conference". With the President making his final (?) push for passage of the Senate reform bill - calling for a House vote March 18th - it is timely to be at 'ground zero'.

Newly elected Senator Scott Brown (R-MA) was one of our first speakers. He was followed by the somewhat infamous (as in "Corn husker Kickback") Senator Ben Nelson (D-NE). Congressman Mike Pence (R-IN) rounded out the morning session. Besides all three speaking at our NAHU event, I was struck by how different they seemed from their media portrayals. Frankly, Senator Brown wasn't all that gifted or charismatic as a speaker. (Although the ladies in the room obvioulsy found him to be pretty hot!) No, his message was just straight talk about being sick of politics as usual. It was I think that message that got him elected not some slick style.

Senator Nelson displayed a workable understanding of the complexities of health care reform; I particularly liked his comments about preserving the role of the agent/broker in a revitalized system. (Of course, he was preaching to the choir.) Representative Pence was terrific. I think I'd most enjoy having a beer with him. It seemed interesting that with Congress' approval ratings so low, all three came across as honest sincere guys.

Also, all three shared this assessment of "reconciliation"; don't hold your breath! Here's what they said. The Senate has passed a Bill. The House will be asked to pass the same Bill next week. If they do so - and that is a BIG if - HR 3590 (The Patient Protection and Affordable Care Act) becomes law when the President signs it. And he surely will.

Those that expect HR 3590 to be changed/fixed after passage are drinking the Kool Aid. Once it is law, it's done.

Just thought you ought to know what the insiders think.

Exposing One Public Servant's Bias

Yesterday I attended the WMC Business Day in Madison. The afternoon session included a panel discussion on health care which was recorded (about 65 minutes). It will be archived on Wisconsin Eye in a few days. John Torinus talked about how he is controlling health care costs at his company and how those same principals can be applied to other businesses and the public sector. It was a compelling presentation; one everyone should watch.

Also on the panel was the Secretary of the Department of Health Services, Karen Timberlake. She talked about steps the state is taking to control costs. Again, I hope you will seek out this presentation and listen to her remarks as there are some very positive steps being taken. Regrettably, she had a few comments on health insurers that showed her great bias against 'my' industry.

A power point slide focused on how in 2009 health insurers profits increased by 56% while over the same period they were "dropping" 2 million people. I don't have access to the industry wide P & L results for 2008 and 2009 but I happen to know 2008 was a terrible year for health insurers. In addition to the usual underwriting losses, their investment portfolios (like everyone's) were hammered by the stock market crash. (Investment returns often offset unexpected claims.) So if insurers collectively had earnings in 2008 of about 1.8% of revenues but in 2009 earnings recovered to about 2.8% (these are estimates but pretty darn close, I'd wager), that would be a 56% increase. By reporting only the % increase, it sounds pretty bad doesn't it? (Now I ask you, what business owner in his/her right mind would be content with earnings of only 3% of revenues?)

As for "dropping" 2 million members, do you suppose the economy had something to do with that? H-m-m-m, haven't I been reading something about unemployment over recent months and don't the majority of Americans get their health insurance through their employer?

At least in this case, Secretary Timberlake - like so many politicians on both sides of the aisle - seems to be distorting the facts to her end; i.e., if you portray health insurers as scheming to drop 2 million (just the sick, of course) customers to pad profits, does a gullible public conclude government might do better?

Well, we're not as gullible as 'they' think. And by distorting the truth so badly, 'their' overall credibility is even lower than the insurers they vilify.

And while I'm thinking of insurers, I'm sure you're hearing a lot from the same political class about recent premium increases. While I'm hardly a lackey for those insurers I represent - and clearly some of their increases seem unnecessarily high - regulators have a lot to do with premiums. Insurers are required to remain solvent. If we applied the same rules to Medicare, the tax increases would make premium hikes seem small! My suggestion is that Medicare's 'Board of Directors' (that would be Congress) get their own house in order before they presume to second guess insurers!

When Will Obama Deliver His State of the Union Address?

There was a short article in this morning's paper describing the process by which the Senate and House Health Care Reform Bills will be reconciled. What I found interesting is that the time line for the process suggested a completion date sometime in February. Previous reports had suggested a Reform Bill had to be on President Obama's desk before January 19th so he could sign it in time for his State of the Union Address. I had the date circled on my calendar!

Apparently there is no requirement that the SOTUA must occur in January; in fact, in the first year of a new President's term, it usually doesn't happen until February. Nevertheless, previous reports had indicated a January 19th target date for Health Reform legislation to be done. This followed earlier reports that it would be done by Christmas. Or Thanksgiving. Or, Labor Day.

It's actually pretty sad. About 75% of what is in both the House and Senate Bills is acceptable to liberals and conservatives alike. A Bill could have been passed months ago.

Is The Public Option Dead?

In a marathon session ending at 2:15 a.m. today, the Senate finished its markup of their health reform bill. Two amendments earlier in the week proposing a Public Option were defeated and while I couldn't possibly have reviewed the Senate Bill as of this posting, it would appear - at least in the Senate - there is not enough support for that to resurface.

Why is that? Well, I think these two clips from YouTube might shed some light on the subject. In the first, a Harvard Professor by the name of Jacob Hacker - who many consider the 'architect' of the Public Option - makes clear his 'strategy'; i.e. that the Public Option is just a stepping stone to a Single Payer System.

In the second clip, those who have bought in to Hacker's strategy, 'confess' their intentions.

So the real question becomes, do you support health care reform that incrementally leads us to a total government takeover - Single Payer - or not. Last night on Larry King live, Michael Moore proclaimed that the majority of Americans did indeed support Single Payer. Fact checks of such proclamations can often be found at a Pulitzer Prize winning site called PolitiFact . Apparently a growing majority of Americans actually fear further expansion of the government's role in their health care. And growing deficits.

It will be fascinating to see how the CBO 'scores' the new Senate Bill. Things are about to get interesting!

"Just The Facts, Ma'am"

Congresswoman Gwen Moore and Congressman Paul Ryan held a Town Hall Meeting of sorts at The Milwaukee Press Club Friday. I listened to two very different views of reform. Following a round of questions posed by a panel of local media folks, the moderator opened the meeting to questions from the audience. Up popped a woman I have seen at countless health care forums. Her 'question' had to do with the salary being paid to Unitedhealthcare's CEO Stephen Hemsley which she stated was $700 million. (Gasp!)

This lead to a discussion about corporate greed. A $700 million salary sure lends support to those advocating for a government run 'Public Option' to "keep private insurers honest". Trouble is, Mr Hemsley's salary for 2008 was 'only' $1.3 million . Total compensation including contributions to his 401(k) were reported by at least one independent source to be about $3.24 million. (I'll leave it up to others to further check public records; surely the SEC collects salary information for the heads of all publicly traded corporations.)

Related to that, I have heard this same lady - and many others who know better - claim insurers administrative expenses consume about 30 cents of every premium dollar. The real number varies but averages a lot closer to 12%. Shame on those who twist facts to make their case. (Shame on me for not challenging them when I am in the same room!)

Joe Friday is a fun memory from the past; would that his call for "Just the Facts, Ma 'am" was more alive today.

And speaking of 'facts', take a moment to click here to see our national debt growing . . . . . . . without the added cost of a 'Public Option'. When the Congressional Budget Office reports HR-3200 would add massive new amounts to our deficit, how on earth can we call on government to spend even more? The better course is for the government to lead reform but in the private sector.

Debunking 'The Debunker' Part II: Promoting Competition Between Health Insurers Through A Public Option

Following his Saturday radio address which I discussed in my last blog, the President continued his 'pitch' for a government run Public Option by further vilifying insurers monopolistic control of the marketplace. Monday's news coverage focused on how Blue Cross completely dominated certain states to the detriment of consumers, the presumption being that monopolistic control of a market automatically resulted in artificially high premiums. My own experience differs from what I read yesterday.

Our insurance agency focuses on group coverage for small to medium sized businesses. In southeastern Wisconsin four insurers dominate this segment. They are Anthem Blue Cross (12%), Humana (20%), Unitedhealthcare (28%) and WPS Health Insurance Company (13%). The numbers in parentheses represent the respective insurers' market share for just our own client base and fall well below 100%; the remainder of our clients are (partially) self-funding using a variety of Third Party Administrators (TPA's) and stop loss insurers.

Three of the four insurers above are publicly traded insurers while one is a non-profit. To listen to 'The Debunker' one would assume the non-profit insurer would dominate the market. Parenthetically, a couple of mutual insurers do business in Wisconsin but their rates are not competitive. One might then conclude that insurer profits are not the driver of health care premiums. Beyond that, the 23% of my client base that self funds is disproportionately low compared to figures gathered by the Wisconsin Insurance Commissioner. The last time I checked, I think OCI was reporting about 37% of Wisconsin residents are covered under self-funded health plans.

I think you can see there already is robust competition in Wisconsin amongst those who employers hire to pay for health care. In contrast, just a couple of health systems dominate each city/region. Many would argue there is a need for more competition amongst those who deliver health care. It begs the question, if the government offered health care to all Americans through say, an expansion of the VA, wouldn't that foster competition between providers of care? (In fact, the government inhibits competition through laws that have frozen expansions of physician owned and/or for profit hospitals.)

Competition in the health insurance marketplace is important and through its regulatory authority, government plays a critical role. That role should be expanded to promote price transparency and the development of interoperable electronic medical record keeping. Going beyond that - to the proposed Public Option - is a Trojan Horse for a complete government takeover.

Obama's Saturday Radio Address: Debunking The Debunker

I tuned in to the President's Saturday radio address yesterday morning. The topic: the need for "honest debate" in our country's struggle to reform health care. The President accused those opposed to HR3200 - the massive House health reform bill - of using "willful misrepresentations" and "outright distortions". He sighted specific examples such as the idea we would insure illegal immigrants; that, he said, is not a part of any measure he would support. Pardon my confusion Mr. President but if you are so adamantly opposed to insuring illegal immigrants why do you continue to speak of the 47 million Americans who do not have health insurance. According to census bureau figures, that number includes 13 million illegal immigrants. You want "honest debate"? Then be honest! Is it 34 million uninsured or 47 million? Neither number is acceptable but the larger one includes folks who are not "Americans".

Caught in this one "distortion", should we believe you when you say you will not support any reform measure that includes "death panels" or requires payment for abortions? We'll see. What could happen is an omnibus reform bill gets to your desk with many many good provisions but also some that you have 'promised' to oppose. What then, Mr. President?

The real meat of the radio address was devoted to an explanation of how the proposed "Public Option" was so badly needed to promote honest competition within the insurance industry. The 34 million Americans without health insurance presumably would all be able to afford coverage if the government run plan simply charged less premiums. The question Mr. President is, why would the premiums for a public option be lower? Is it because you would reimburse for health care services at rates 50 - 60% lower than private insured plans; the way the government pays for Medicare and Medicaid? So you promise me if I want to keep my private insurance plan I can. "Period." Now Mr. President, be honest. Don't you think over time most people will gravitate toward a government run option if it is 60% cheaper than their private plans?

And "cheaper" is a good word to use in this case because if you pay for care at rates arbitrarily set 50 - 60% lower than it costs providers to deliver care, you will get cheaper care? You promised me Mr. President I can keep my doctor but what if he/she won't accept these lower payment schedules?

Recently I wrote about better ways to promote quality of care and lower costs. You can view that article here. If I were "The Decider" I'd be talking more about how we deliver care than how we pay for it. Unfortunately, "The Debunker" thinks vilifying insurance companies is the route to reform.

The Health Reform Debate: Will The Energy And Interest Still Be There When It Counts?

Congress is in recess and our representatives are back 'in district' taking the pulse of their constituents at the much reported Town Hall listening sessions. People are justifiably upset about some of the details of the House Bill being vetted (HR-3200).

After Labor Day the Senate will try and work out the details of their version of reform. Co-Chaired by Democrat Max Baucus and Republican Charles Grassley, every indication is the Finance Committee Bill will be far more middle of the road. Then of course, the House and Senate bills have to be 'reconciled'. All of this is going to take some time. So the final version may well look entirely different than HR-3200. (We can only hope!)

I worry that all of us will tire of the process. If the final compromise bill is still riddled with government intrusions into this most personal area of our lives, will our interest have waned. That would be a shame.

Central to this debate are certain things I think you should know about reform; click here and ponder the complexity of the issue. When asked, I urge clients and friends to be patient. Don't overplay your hand. Wait until all the cards have been dealt. But be vigilant. Stay interested. It is good to see our citizens so engaged for a change!!

JUST WHAT ARE 'GLOBAL REIMBURSEMENTS'?

I wrote an Op-Ed piece for the Journal Sentinel this week and sent friends/clients a sneak preview. In it I discussed a fundamental re-make of the payment models for health care. I opined we should stop paying a discounted fee for every service and instead develop "global pricing" for "episodes of care". A little more explanation would have helped sell this vision.

The way we pay for care now, docs are actually rewarded for non-compliant patients. The diabetic who fails to take his meds for example, sees his health spiral out of control. Problems develop with vision (in the extreme resulting in blindness), circulation (amputation!), heart failure, etc etc. all requiring more treatment and more income for the doc. The patient that takes his meds, changes his diet and controls his disease obviously doesn't need to see the doc nearly as often. So the doc has the less income but the same overhead. He loses money delivering better outcomes. Isn't that just wrong?

Why not develop a fixed price for each diabetic patient. What will it cost on average to treat them? $2,500 a year? $15,000 a year? I don't know what would be a fair number but whatever it is, that becomes the "global" reimbursement for the diabetic's entire "episode of care". Doesn't this change all the incentives?

Here's another example. You have a strained back. Under the current system you might seek out a physical therapist who recommends twice weekly visits. This goes on and on and on . . . . . and on. Every visit, another payment. What other market gives the seller of services so much control over the buyer? Do you have the knowledge to question whether or not you really need 35 treatments! Heck, if the insurance company is paying the bill, what do you care. Well, if the diagnosis is a strained back, why not just set a fixed fee for treatment. If the PT can get you back to normal in three or four visits, he makes out nicely. If it takes 15 visits, not so well.

Now, couple this change in payment methodology with complete transparency. PT 'A' is charging $1000 for every strained back so PT 'B' figures out a way to charge $850 and with better outcomes. Do you see where this could go?

This isn't nearly as controversial as you might think. Many health systems have pretty much moved to this model already. When payers (government and insurers) better align the incentives, we will see enormous savings. Waste, fraud and abuse are estimated by some to be as high as 50% of our total health care spend. How many more people could be insured if premiums were 40 - 50% lower?!

The question is, when so many agree on the need for this change, why is it taking so long?

This Just In From the Congressional Budget Office

Blogs by definition are supposed to be short. Indeed, this one will be very short.

If you have any interest in health care reform and what will or will not work, you must read the just released Congressional Budget Office document entitled 'Health Care Reform and the Federal Budget'.

It may take you 30 minutes or more to carefully read and understand this 16 page tome. If however you are overwhelmed by the politics of health care reform and confused by the disparate points of view, would a 30 minute investment of time be worth it to get to a modicum of reality?

I beg you to read this CBO paper. Please! Then ask your friends to read it. I dare you to ask your local and state legislators if they have read it. Transformational health care public policy should be based on unfiltered unbiased information. Get informed now. Then get involved.

Thank you.

Spending on Health Care: A Couple of 'Trick' Questions

Do you know what the average life expectancy is in the United States? Now, do you know what the average life expectancy is in Canada or Great Britain? One more; do you know the average life expectancy of practitioners of the 'Christian Science' faith?

As a percentage of our GDP, we in the U.S. spend far more than any other country. Those that practice 'Christian Science' by definition spend hardly anything. I'd wager the life expectancy of all three populations is about the same. So can one conclude the amount we spend on health care does not translate to a longer life . . . . . or even better outcomes?

I think we spend so much more on health care as a nation is largely because as the richest country in the world, we can! (Perhaps I should use the past tense as something about our current financial crisis suggests we may never again have the luxury of such excess.) The 2.6 trillion dollar question becomes, who will be the governor of how much we spend going forward? And related to that, is it "fair" for some to have unlimited health care resources while others will not?

Many countries allocate their defined health care budgets equally throughout the entire population. Long waits and rationing are the means by which the budget is not exceeded. Those that can afford to do so, just go elsewhere and pay for whatever care they want and can afford.

Health care research and technology has evolved to the point where it will bankrupt our country unless limits are set. I wonder if all the talk about ways to reform health care is just a stall tactic until we dare to take on the ultimate question: how much should we spend on any one life? Our country's history suggests we will develop a unique and very special way of solving this most vexing riddle.

Health Insurance Renewals for Small Groups: Mid Year 'Report Card'

Our Agency works with many small businesses who have health insurance primarily on a fully insured basis with one of four insurers. We've pretty much completed January 1 thru June 1 renewals so I asked for a comparison of last year's renewals to this year. Here are the mid-year results:

2008 +17.31% vs 2009 +16.86%; clients of Insurance Co. A

2008 +20.26% vs 2009 +22.08%; clients of Insurance Co. B

2008 +16.40% vs 2009 +19.88%; clients of Insurance Co. C

2008 +10.61% vs 2009 + 8.45%; clients of Insurance Co. D

All Clients Combined: +16.96% 2008; +19.18% 2009

The above increases are almost always reduced to single digits after plan design changes and/or underwriting with a new insurer. Never the less, what does it say about 'our' insurer's ability to "manage care" if during such troubled economic times and with all the political pressure to contain costs, premium increases like these are still needed to cover more expensive health care and greater utilization!?

Results like these are used by many as proof we need to move to a government run plan as the pace of health care inflation is clearly unsustainable. But such a conclusion misses the more important point. Simply changing payers will either lead to the bankruptcy of the government or rationing of care. Fortunately, as serious reform talk heats up in Washington, the brightest prospects for meaningful "change" address systemic reform of the way we deliver health care.

And might I add that under our current system, at least I have the option of moving to Insurance Company D!

Wisconsin State of the State Address

Governor Jim Doyle did yeoman's work last night delivering somber news about Wisconsin's budget issues which are sure to be exacerbated with the state of the economy and shrinking revenues. No one appointed me as the Siskel & Ebert of political speeches but I just thought he struck the right balanced tone.

My personal interest was in what ways he would address health care. Would he take on big, bold new programs? (Apparently not.) Would he be content with Wisconsin's achievements at covering the uninsured? (Only a couple of states do better.) Would he finally allow state tax deductions of HSA contributions? (Not a peep.)

Beyond the message itself, to get the full value of the State of the State address, one has to watch the audience reactions to the Governor. (You can easily do so at our state's version of C-Span, Wisconsin Eye.) Getting Republicans to applaud (much less stand to) a Democratic Governor's proposals is no easy task but when that does happen, it surely must foreshadow legislation that will quickly pass. Such was the case for the proposal to require health insurers to cover autism treatment. I wish in a free market certain carriers would offer this coverage and have a competitive advantage for doing so but since ample time has been allowed for that to happen, I'm ready to concede there may be a need for this mandate . . . . . . . . even though it will have an effect on premiums. (Fortunately, there are many ways to reduce costs that can more than offset a new mandate; those ideas are also percolating in Washington and Madison.)

All in all, I agree with the Governor that tough times create opportunity. After the first bipartisan standing ovation, it seemed several others more easily followed. Perhaps this was symbolic of the realization (only now?!?!) that the time for divisive rhetoric has ended. At the end of the speech, everyone went off to various receptions. I would have preferred if they had rolled up their sleeves for a long night of work!

CAN THIS BE RIGHT: A Physician Office Visit Is Worth Just $26?!

Surely I must have heard this before as people have been talking about low Medicare/Medicaid reimbursement levels for years. Somehow though, when I heard this number the other day it just seemed so ridiculous: primary care physicians are paid just $26 from Medicare for each (1/2 hour) office visit.

What behavior does this low reimbursement produce? Is the doctor motivated to jam more patients into every hour? Does the doctor have time to discuss preventive medicine and lifestyle changes? Is it easier - and more profitable - to instead 'prescribe' other tests, services and drugs that produce additional revenues?

And, if the more profitable revenue streams must come from services performed in a hospital setting, isn't it logical that physicians would align (sell) themselves to larger health systems?

At the root of many of our health care cost problems is a perverse system of government payment levels. Although private insurers pay more for like services, it is not all that much more and still off a model that is fundamentally flawed.

Is there a better example of how government is the problem, not the solution?!?! I'd love to hear more from other physicians about additional ways in which government and insurers incentivize incorrectly. Oh, but that probably won't happen as long as their contracts include 'Gag Clauses'!

MPTV Health Care Report January 2nd: What Surely Must Have Been Left on the Cutting Room Floor

Milwaukee Public Television aired a 27 minute report over the weekend entitled "Critical Condition: The Wisconsin Perspective". Featured were three individuals with serious health conditions. While it appeared all three were coping pretty well with the physical aspects of their illness (two cancers and MS), the focus of the show was the financial impact. I am so blessed to have good health but that is not the case with many friends, family members and clients so I do not want to trivialize how difficult dealing with illness can be. Having acknowledged that, the MPTV production - and so many others like it - repeatedly attributed the cost question to "affordable" health insurance.

For example, one of the featured individuals was working in California when her cancer was diagnosed. It wasn't clear to me her reasons for returning to Wisconsin but she did so without health insurance. Why didn't she have insurance? The report didn't ask that question but instead vilified health insurers for not wanting her as a customer with a 'pre-existing condition'. (Presumably it is also just wrong to deny someone homeowners insurance after the house is on fire.)

Maybe this particular featured patient returned to Wisconsin because our legislators have already provided at least two remedies for the uninsured; guaranteed issue of coverage for all small businesses (defined as having 2 to 50 employees) or our HIRSP Plan which stands for Health Insurance Risk Sharing Pool - again, a guaranteed issue policy for individuals who have been turned down by insurers.

And here is where what must have been left on the MPTV cutting room floor did the greatest disservice. Premiums for small group health insurance and the HIRSP Plan are strictly regulated by the state; they are "unaffordable" not because of insurers administrative costs and profits (combined, only 14% of the total premium) but because of the underlying delivery of health care. Not once in the 27 minute report were the costs of surgery, chemotherapy or miraculous life saving drugs revealed or discussed. Not once.

The cost of health insurance will not be reduced by tinkering with the size of pools or further regulating underwriting guidelines to guarantee access. MPTV should do its next health care feature dissecting the waste fraud and abuse in the delivery of health care, accounting for 86 cents of every premium dollar and where the real savings are to be found.

The Day After An Historic Day

Wednesday November 5th. My first appointment; an employer/client with a staff of 16 (average age, 35). I'm delivering their health insurance renewal. It's a 4.4% increase without any changes to deductible or co-pays. (I wish they were all this good!) After the increase, the annualized billed premium per covered employee will be $4,960.

This afternoon we are delivering another renewal to a client with 156 employees (average age, 41). They are getting an 11.7% increase but after switching to a new provider network - with the same insurer and a 99% overlay (match) - we end up with a 5.2% increase. With no other plan design changes, after the renewal, the annualized billed premium per covered employee will be $7,027. Note: I did not cherry pick these two groups because they have exceptionally low costs. They just happen to be on my calendar today and in fact, across the board, our clients pay on average an annualized premium of $5589 per employee. Premium sharing between employer and employees further reduce our client's cost by about 25%.

I share such detail because yesterday's election results included advisory referendums from 22 cities and counties across the state on the question: "Shall the state legislature enact health care reform legislation by December 31, 2009, that guarantees every Wisconsin resident affordable coverage as good as what is provided to state legislators?" By about a 74% margin - it wasn't even close - all 22 voted 'Yes'.

Have the voters spoken? Figures available on line show that 81,440 employees covered under the Wisconsin Employee Trust Fund cost taxpayers $950,775,000. Despite the size of the pool and the state's obvious 'buying power', that works out to $11,675 for each employee; about double - but sometimes triple - what our small business clients are paying. Would the results of the referendums have been the same if the wording defined "affordable"? [Everyone wants their children to have a good education but referendums asking for millions to build new schools more often than not are rejected.]

As soon as January, the new majorities in the State Assembly and Senate will be eager to respond to the voice of their constituents. We've asked for change so by golly, change we're going to get! "Affordable health care as good as what is provided to state legislators" will be at the top of their list. Every client I work with has a different take on what health coverage is "good" and what premiums are "affordable". The great thing about my work as a broker/consultant is the choices I bring to each situation. Those who will be crafting reform legislation would do well to model their ideas on the results achieved by small businesses and not state employees. To do otherwise would bankrupt an already cash strapped state.

Bubbles Burst: Dot Com, Then Housing, Then Credit Markets. Next Up: Health Care?

As a kid, when things seemed to be going the wrong way, my father always advised patience: "the pendulum may be off to one side now but as surely as time itself, it will swing back soon enough". It has been hard to watch the economy implode these past couple of weeks. (And, at the same time, I have been preoccupied trying to be an out of state care giver for an ailing mother.) For a brief interlude anyway, blogging about such dramatic turns of events seemed inappropriate. (Although the sudden expertise I have acquired in long term care could well be a source of new commentary soon.)

As the credit markets adjust to this crisis, doesn't it seem eerily obvious that what lies ahead for health care is similar to what we have just witnessed? Are warnings that unsustainable health care cost increases producing meaningful change? Or are many of the alarmists simply using the problem to advance an agenda? At $2.2 trillion and rising, one sector of the economy simply can not so dominate GDP. Medicare and Medicaid will implode. Local governments and businesses will perish under the weight of expensive promises that can not be kept.

When the out of control health care cost pendulum begins its swing back to sanity, will it be a violent swing as we just witnessed in the credit markets? Or will it be a more deliberate movement? Will government be the dominant force for change or will markets learn by this episode and preempt government control?

One thing is certain. All the campaign rhetoric about "lowering" health care costs is about to end. (Thanks goodness!) The time has come to explain HOW!

Insurers Really Ought To Stop "Cherry Picking" Applicants!

Here's an actual email I got from a business friend the other day:

"Jon, I never had dental insurance and am looking into family coverage. My spouse needs a $3000 procedure. Any thoughts on whether I should get it and any suggestions on policies?" signed, Mary. (Not the real name but every other word is exactly as I received it.

Here is how I wanted to reply:

"Mary, as a friend and an experienced financial advisor, I would expect you to have a little better grasp of the concept of insurance. You see, buying dental insurance for your 55 year old spouse with a newly diagnosed dental problem is sort of like calling State Farm for homeowner's insurance after the garage is on fire! Now I can only assume you weighed the pros and cons of "never" buying dental insurance over the years. Would you care to guess at the premiums you have saved over that time. Here's just a ballpark figure: family dental at $50/month (a very low number at today's rates) over 30 years = $18000. I would have thought at least some of that money - surely $3000 - might be in your HSA, right?

"Here is what I think you should do. Call someone in Madison or Washington and complain about your inability to get dental coverage because those greedy for-profit insurers "cherry pick" applicants. Demand that government should finance your coverage because it is after all a right. And then when the government responds by putting out of business the agents and insurance company executives who have brought consulting work to you these past 30 years, you - like us - can find a new line of work. See you in the unemployment line."

Of course, I'm reluctant to actually send this reply to my friend. (I'll just post it for everyone to see!!) It does illustrate a related point. High deductible health insurance on a young healthy person can be purchased for less than the cost of monthly cell phone service. Yet millions of young Americans badly prioritize and chose to be uninsured. Later on in life when their health goes south, they consider insurers that underwrite risk to be unfair.

That's a crock!

Prerare To Be Surprised

General perceptions often are that health insurers profit only at the expense of their policyholders vis a vis denied claims. This week industry trades reported second quarter results for managed care companies. As a percentage of revenues, earnings for three of the larger managed care companies were as follows:
* Humana 2.0%
* United Health 3.3%
* Wellpoint (Blue Cross) 4.3%

For your consideration: Are those 'excessive' earnings? As a business owner, would you be content with that ROI? More fundamentally, do you believe the profit motive creates incentives to run a health insurance company efficiently; ie. to compete on price and value? There are many who believe government would actually be more efficient than the private sector. Should one become dissatisfied with the financials of their insurer - say for example the executive compensation packages are unacceptable to you as a consumer - isn't it relatively easy to change companies? But what if, after switching to a government run health plan, we become dissatisfied with the inefficiencies of bureaucratic malaise. How do we change plans then?

As a final thought, I'd ask you to compare the above earnings of those who finance health care to the health systems who deliver care. I'm fairly certain you will be surprised.

Tit For Tat: Health Care Consolidations Continue

There is news today of the demise of yet another independent physicians group. It seems they need the bargaining power of the large health systems to survive the payers pressure for ever lower reimbursements. Not surprisingly, the pace of provider mergers has pretty much been matched by payer consolidations.

In the S.E. Wisconsin marketplace where I do business, we're down to just a handful of mega providers and just as few payers (insurers). Did anyone get the upper hand in this progression? Are we on course for the ultimate consolidation to just one payer - the government? I'll bet providers will just love those fee schedules! And would health insurers be looking for new work?

Perhaps belatedly recognizing the folly of this arms race, provider and insurer websites are blossoming with information on price and quality. Have you looked recently? There are also nascent enterprises such as OutOfPocket.com - an independent health care transparency search engine - that will keep the pressure on. Think of a time when consumers have information and they (finally) make the market. The cycle of consolidations is likely to be broken and health care costs may actually come down.

Health Care Referendum: Let's Try A Little Truth in the Wording

There have been reports in recent days about a group collecting the required signatures to get Advisory Referendum on ballots in Oshkosh, Eau Claire and Douglas County; now Oak Creek and South Milwaukee have joined this "statewide movement".

Following is the language of the resolution being promoted by Citizen Action of Wisconsin: "Shall the state legislature enact health care reform legislation by December 31, 2009, that guarantees to every Wisconsin resident affordable coverage as good as what is provided to state legislators?"

Wisconsin has one of the lowest rates of uninsured residents in the entire country and under Governor Doyle's leadership, Badger Care was expanded this year to make health insurance more easily accessible at low cost to virtually every child in the state. The Citizen Action "movement" is simply a thinly veiled attempt to promote the "Healthy Wisconsin" Senate Bill that failed to advance in the last legislative session. Apparently these folks think it a good idea to try and mandate the most expensive (state employee) coverage and then pay for it with a huge new payroll tax on all employers - a tax that would more than double insurance costs for most in the private sector. Where would this "feel good" movement be if the Board of Directors of Citizen Action included the businesses that would have to pay for it?

Without a little truth in the language of the referendum, I suppose a gullible public fed up with high health care costs will 'vote' their support of this measure. Heck, I think we should also vote for $2.00 a gallon gas and "a chicken in every pot"!

A Health Care Tidbit from the Czech Republic

Visiting his home in Milwaukee, U. S. Ambassador to the Czech Republic Rick Graber spoke at my Rotary Club this noon. He talked about his experiences in nearly two years of service in Central Europe. Jumping around to touch on several topics, of course my antennae were most sensitive to his brief remarks about health care in this country of about 10 million residents.

To paraphrase what I think I heard: health care in the Czech Republic is 'free'. It is interesting however that they - like the U.S. and most countries - are struggling to deal with rapidly rising costs. Up until recently, there had been no cost for receiving care and so, the average Czech sees his/her doctor 16 times per year. "There's no charge, so why not; it's like a social event", Ambassador Graber reported. Faced with such (over) utilization, they are now trying small co-pays; a koruna per office visit. FYI: the currency of the Czech Republic is the koruna which converts at about 15.1 korunas to the dollar. It would surprise the heck out of me if a 6 1/2 cent co-pay had any impact on costs and yet the Ambassador reported the citizens are in an uproar over the new charges!

Interesting, isn't it? I've referenced a P.J. O'Rourke quote before but it bears repeating here: "If you think health care is expensive now, wait until you see what it costs when it's free!"

After All, We're 'Only' Talking About Two Trillion Dollars!

I have written about this before elsewhere but think it bears repetition here as the fall election cycle begins to heat up. I wonder how it is every candidate for office is "selling" ideas for health care reform without abiding by the same principals of ethics that are required for licensed professionals such as myself.

Of course, one might argue that an insurance consultant really ought to stay out of the world of politics and believe me, I would happily do so if 'they' would just stay out of my business!!

Here's all I ask. Under insurance regulations, when I make a sales presentation I am required to give a full analysis of both the pros and cons of the product or service being sold - not just one side of the story. You know: "The Truth. The Whole Truth. And Nothing but the Truth." When candidates for office "sell" their vision for health care reform, they should be held to the same standards of full disclosure and honesty. (And it might also be noted, it is illegal for me to talk negatively about the competition!)

Whether it is through market based strategies or a Single Payer solution, we need to know all the features, benefits and costs - with realistic projections for the future - of health care reform. (At this link, a Cato Institute article helps make my point.)

No one buys from me without all this information. Why do we allow candidates for office to "sell" us a bill of goods with only half truths and soundbites? One can only conclude selling insurance requires a level of ethics we do not expect from most of our candidates for office! Now that is truly amazing.

Health Care Independence Day

Would that there might be a time in the future when we might celebrate health care free from the 'tyranny' of government.

The Declaration of Independence and our Constitution are silent as to the role of government in health care. Could that be so because in 1776 life expectancy was only 35 years; that a new born child had only a 60% chance of reaching adulthood; that the cost of medicine then was incidental to daily life.

Today government accounts for nearly 50% of every health care dollar spent, setting the standards of care and reimbursement levels for the other half spent in the private sector. Every day in health care, in decisions that literally involve matters of life and death, we have ceded our "representation" to others.

On this special day when we celebrate our independence as a nation, we might also give thought as to who in the future will govern our health care.

Perdue Leads Georgia In Romp Over Badgers

I wish this was a sports story. As much as I would hate to see Wisconsin lose to the Bulldogs, a football or basketball game would after all be just that; a game. In this case however, my headline above refers to health care legislation. As reported in the July 1 issue of the Heartland Institutes's 'HEALTH CARE NEWS', Governor Sonny Perdue has recently signed into law legislation designed to make health insurance far more affordable in Georgia. The legislation provides new tax breaks for "qualified" high deductible health plans (HSA's) and other market based, consumer directed reforms.

Dubbed Healthy Wisconsin by its Senate sponsors, 'our' approach to health care reform has largely been centered around a sweeping takeover by the state. While Georgia embraces market based reform, Wisconsin seems hell bent on destroying markets. Perhaps however rational minds will prevail. Just yesterday, the Wisconsin Policy Research Institute released a detailed report entitled "Will Healthy Wisconsin Bust the State Budget?".

The contrast between the breaking news out of Georgia and the WPRI report on Healthy Wisconsin is striking. I never thought I'd be a Georgia fan but their 'team' seems to have a far better 'game plan' for health care reform. Now sit back and watch as they run up the score!

Legislating Common Sense

Dental hygenists in Wisconsin have a new requirement as a condition of renewing their licenses. Under 'Act 104' they must now show evidence of proficiency in the use of an Automated External Defibrillator (AED) and Cardiopulmonary Resuscitation. http://drl.wi.gov/prof/denh/whatsnew.htm

At first blush, this news didn't seem all that relevent to the employee benefits arena but then I got to thinking, how many dental offices already have AED's on site and one or more staff members proficient in CPR? Do any of them advertise this competitive advantage? Wouldn't it be nice if market forces prodded common sense change instead of legislators. (Of course, I am sure there is at least one AED in both the Assembly and Senate chambers in Madison!)

More to the point, is it just a matter of time before employers are required to have AEDs at the work site? The very best Work site Wellness Plan is arguably fatally flawed (pun intended), if there are no contingencies for a sudden cardiac event. http://www.redcross.org/services/hss/courses/aed.html