Shell Game 2.0

It is important to remember that everything works in theory. Communism, in its purest form, is just as effective as Capitalism, in theory. Reality is a much different story. The Russians and Chinese are now embracing many of the benefits of Capitalism just as the U.S. faced-down the Robber Barons and put an end to such practices as child labor a hundred years ago.

Reality has a habit of rudely poking holes in theories. My favorite piece of Swiss cheese is the Patient Protection and Affordable Care Act (PPACA). Today we are going to revisit the Preexisting Condition Insurance Plan, the stop-gap measure to provide access to coverage to the long-time uninsured.

Eighteen months and millions of dollars later, it might be difficult to recall that the main justification for completely remaking our health care system was to provide coverage for the uninsured. Remember the uninsured? They were of real concern two years ago. The PPACA was supposed to cure this problem.

Last June, in a post entitled The Shell Game, I discussed the five billion dollars the federal government had allocated to the Preexisting Condition Insurance Plan. Of more local relevance, $152,000,000 was given to Ohio for the four year interim program. Even though Ohio had about 17,000 chronically uninsured, state officials were thrilled that $152,000,000 would help 5,000 people get insurance. I felt that they were a touch optimistic.

Theory, meet Reality.

How’s the program working? Initial projections from the Office of the Actuary of the Centers for Medicare and Medicaid had as many as 375,000 uninsured Americans rushing the states and jumping at the opportunity to acquire heavily discounted coverage. As of April that crush was only 21,454. Ohio, with almost 1800 enrollees, is one of the most successful programs. Don’t worry. We may not insure that many people, certainly no where near the governments rosy projections, but all of the money will be spent.

Sunday’s Cleveland Plain Dealer detailed the difficulties Ohio and Medical Mutual of Ohio, the state’s contractor, are having difficulty raising prices and limiting access. The biggest problem was that no one was prepared for the shocking reality that really sick people rack up big claims.

Now we’re paying actual claims and those claims have come in much higher – the loss ratio is much higher – then had been projected, said Carrie Haughawout, assistant director for health policy for the Ohio Department of Insurance.

The claims for 1800 people were more than what they thought 5,000 unhealthy people would incur? That is hard to imagine. The simple math in last year’s blog post showed that premiums for a 60 year old male would need to be around $800, with the subsidy, to have a chance of covering the cost of care. The Ohio High Risk Pool is charging between $416 and $458 for a 60 year old non-smoker! That isn’t even close.

The PPACA does not include any meaningful cost containment. There is also no underwriting and no exclusions for preexisting conditions in the PPACA’s planned future which begins in 2014. So, as theory invades reality, one day all of these incredibly unhealthy individuals will be moved into the common risk pool. How will this impact the premiums you or your employer pays for health insurance?

The theory is that the unhealthy will disappear in the sea of doctor avoiding, health obsessed, average Americans who will hardly notice the difference of adding a couple hundred thousand chronically ill individuals into the mix. And besides, now they will be paying premium instead of just invading the E/R and counting on the kindness of strangers to pay their bills. Yeah, right.

The High Risk Pools, the Preexisting Condition Insurance Plan, was a dry run for the future of the PPACA. No real planning. Not nearly enough honest, transparent public discussion. An idea that meant well, but was underfunded and was neither properly explained nor promoted. The Preexisting Condition Insurance Plans were projected to do so much at what may have almost seemed like a reasonable amount of money. Instead, we have another program that has fallen tragically short.

Reality, meet Theory.

DAVE

www.bcandb.com

Just a reminder, this post also now appears in the WordPress format on my website. It appears that more people are reading it there and that is where most of the comments are posted.

The Future Is Fine. I'm Concerned About The Present.

I'm sitting outside of Club Isabella waiting for a friend. There are six medical students at a near by table enjoying food, friendship, and a moment away from their daily stress. What do they talk about? They joke and laugh about doctors and classes, routines and procedures, and their daily grind. They are an interesting group. Two are women. Four appear to be of Asian descent. One, a tall thin white guy with his baseball cap on backwards, appears to have been delivered to us from Central Casting. They wave and shout to their friends walking by. They are incredibly normal.

I find this terribly reassuring. At 56, I am looking at the people who will be caring for me 20 years from now. They are bright, engaged, and sound like they are actually enjoying their work. This is important. If all of this work, time, and effort is just to get a title, a job, and a paycheck, they will never be fulfilled. And they probably won't be very good at the practice of medicine. One can only hope that their discussions of cadavers (over dinner!) is a precursor of great careers.

This concerns me, the general happiness of physicians, because so much is changing in the practice of medicine. Many previously independent doctors are now, in 2011, employees of the major hospitals. Some have adjusted to this change. Some doctors embraced this. Many, however, have not. Being an employee, even a highly compensated one, is not the same as being your own boss. There is a certain freedom in being an independent business owner. And other doctors, like radiologists, have seen specialty treated like a commodity.

I'm not ready to have my health dependent upon the lowest bidder.

Our young doc-to-be's at the next table have not experienced any of this. There is no transition for them. Medicine will be a corporate enterprise for them, complete with signing bonuses and holiday pay.

How will this impact the way they practice medicine? For one, they will have been initiated, from day one, into a system that allocates a specific number of minutes per patient. They will be instructed in profitability. They will always know the origins of their income. And once you are in this system, how hard is it to change employers? If, or when, the government becomes the major or single payer of health care, would these doctors even notice?

Hard to say.

We face a looming shortage of primary care physicians and gerontologists. I didn't ask any of the future docs what they wanted to practice. I only wonder if their future employers will bother to ask.

DAVE

www.bcandb.com

ACT 1

“…the only way affordable access can be achieved is for every citizen to have some type of health insurance.”

Barack Obama? Nancy Pelosi? No, that would be too easy. The above sentiments were voiced by the former Republican leader of the Senate, Dr. Bill Frist in September 2009.

And that is the problem. Democrat and Republican leaders know that mandating insurance, whether it is from an employer or individually purchased, is a core requirement to meaningful reform. If you accept that the system we had on March 22, 2010 was unsustainable, then getting everyone to participate is an integral part of any solution.

Is the individual mandate of the Patient Protection and Affordable Care Act (PPACA) constitutional? It depends on who you ask.

On Friday, August 12th, a three judge panel with the 11th Circuit Court of Appeals ruled against the President and the mandate. It was a split decision. Two of the judges, Joel Dubina a Bush appointee and Frank Hull who was brought to the bench by President Clinton, issued a 207 page ruling that clearly stated their opposition. “This economic mandate represents a wholly novel and potentially unbounded assertion of congressional authority: the ability to compel Americans to purchase an expensive health insurance product they have elected not to buy, and to make them re-purchase that insurance product every month for their entire lives.”

Judge Stanley Marcus, also a Clinton appointee, noted that his peers had ignored “the undeniable fact that Congress’ commerce power has grown exponentially over the past two centuries”.

The White House was quick to point out that insurance rates will skyrocket if all of their changes (free stuff) are implemented without the individual mandate. In other words, if insurance is guaranteed issue and preexisting conditions don’t matter, healthy people won’t bother to buy coverage. This would create a pricing death spiral.

This recent decision is just another step towards the inevitable Supreme Court showdown. In an evenly divided Court, Justice Anthony Kennedy becomes the swing vote. What will he decide? Darned if I know. My guess is that he will note that the individual states have the power to impose this mandate, but that the federal government does not. But that is just a guess.

And, if you have been reading this blog for awhile, you know that this ruling has no impact on my prediction of our final destination.

The federal government, the states, the insurers, and businesses have spent millions of dollars to comply with the PPACA. The Republicans may have won the House last November, but as predicted, they have not taken even the smallest of steps to modify this legislation. Their Bill – H.R. 2 Repealing the Job-Killing Health Care Law Act was neither serious nor constructive. This train has left the station.

If the mandate is struck down, but all of the benefits are retained, rates will continue to climb and the federal government will be forced to offer a competing Public Option. The Public Option will be designed like Medicare Part B, an optional benefit that covers doctors, testing, etc… that almost 90% of all Medicare Beneficiaries accept. There is a heavy fee for failing to purchase Medicare Part B when it is initially offered. Seniors aren’t forced (mandated) to take Medicare Part B. They are just screwed if they don’t. That’s constitutional!

The insurers will dump the individual and small group market on the government and concentrate on the far more profitable supplemental products.

So here we are in August 2011, seventeen months into the PPACA. All of the players are following the script. I suggest you get another popcorn. This show has just begun.

DAVE

www.bcandb.com

WAR!

It was war. Ugly. Bloody. And there was plenty of collateral damage. Angela F. Braley, Chair, President, and CEO of Anthem/WellPoint, dug in her heels. She was, after all, the leader of the largest health insurance company in the country. Thirty-four million Americans counted on HER company. Last year’s revenues were $57.8 billion dollars. Yes billion, with a B. And yet, she was fighting a board room coup.

Ken Goulet, Executive Vice President and CEO of the Commercial Business Division, had his own ideas of how the company should be run. His area accounted for twenty-seven million Americans, 80% of the WellPoint’s medical insureds. He and the Executive Vice President and Chief Financial Officer, Wayne DeVeydt, saw a need for an immediate rate increase to protect long-term financial security. They wanted more money in the company coffers, and they wanted that now. Ms. Braley disagreed.

The disagreement erupted at the Board meeting. Angry words were exchanged. Ms. Braley demanded spending cuts and changes in benefits. Goulet and DeVeydt tried to force across the board premium increases. Claims were suspended as the company attempted to sort out its finances and determine a prudent path to take. Insured’s were advised that their policies would be reactivated once a decision was reached, passed by the Board, and signed by the CEO. Until then, the best one could hope for was good health, a quick resolution, and a reasonable rate increase once the bill arrived.

The above is, of course, total fiction. Those are the names and titles of WellPoint’s leaders. The revenue and membership numbers are accurate, too. But the idea that an insurance company would hold up benefits while sorting out an internal conflict is just me being silly. Real businesses are too responsible to behave that way. No, the only place people’s lives are put in jeopardy like this is with the government.

Today is July 29, 2011. The Republicans just passed John Boehner’s bill. The Speaker of the House, the leader of the Republican majority, needed over 24 hours to get an almost meaningless piece of legislation approved by his own troops. In the end, the only thing he accomplished was the final destruction of his own reputation and position. This bill is Dead On Arrival at the Senate. Boehner knows that. His Republican members know that. And the Senate is incredibly clear about the bill’s status. There was only one reason to pass this legislation – political theater. If Boehner could have passed the bill with little effort, with all of the Republicans and a smattering of Blue Dog Democrats, he would have been in position to consolidate power and force a deal more to his members’ liking. Now? Who knows?

I don’t think we are going to default. I certainly hope we don’t. I keep thinking that the adults are going to step in at the last moment and resolve this. At the very least, I keep thinking that this will be kicked down the curb till next March.

Until this is resolved, seniors dependent on Medicare and countless others wait and wonder. Will they be paid next week? Will they be insured next week? Will the government shut down? We have states that have or are close to shut down. Why not Washington? With so many people campaigning against the federal government, what would happen if enough people got elected who wanted to dismantle the great social safety net?

And thus we return to my question – is your health care too important to be entrusted to politicians? This isn’t an unqualified endorsement of insurance companies, just a simple question. John Boehner? Harry Reid? Nancy Pelosi? John McCain? Which of these people would you like to have managing the nation’s health care industry? Which do you want in charge the next time you need a kidney?

Let me be clear, the insurance industry is only as good as the regulations that control it. Ask my friend John about his claims from Hurricane Katrina. Health insurance claims are far less aggravating then car or home insurance claims, but rules and regs play a large part in that. Financial stability comes, in part, from the laws the companies are forced to abide.

So, on Friday the 29^th, the idea of Anthem not paying my clients claims is ridiculous. The idea that my friends and neighbors are being threatened by a government default that may or may not cover their claims isn’t ridiculous. It is shameful.

DAVE

www.bcandb.com

More Free Stuff

“Unintended pregnancies carry health consequences for the mother - psychological, emotional and physical – and also consequences for the newborn”, said Dr. Linda Rosenstock, panel chairwoman and dean of public health at the University of California, Los Angeles. “The overwhelming evidence was strongly supportive of the health benefit” of contraception.

The above paragraph was part of an Associated Press story that appeared Tuesday at Cleveland.com. The headline was Panel urges no co-pay insurance coverage for women’s birth control.

Last year’s Patient Protection and Affordable Care Act (PPACA) included a provision for preventive care. Most health insurance plans are now required to cover a list of preventive care exams and tests without any co-payments. FREE! The costs for these services are simply shifted to the insurance company who eventually shifts them back to you or your employer in the form of higher premiums. Knowing that recommendations over and above mammograms and Pap tests would be controversial, the issue was shipped over to the 16 person panel at the Institute of Medicine.

The panel recommended that the following female-specific items be included under the free preventive care benefit:
* All forms of contraception – Birth Control Pills, IUD, and emergency contraception (the morning-after pill)
* At least one “well woman” preventive care visit annually
* Annual HIV counseling and screening for sexually active women
* Annual counseling on sexually transmitted infections for sexually active women
* Screening for and counseling about domestic violence
* Screening every 3 years starting at age 30 for the virus that causes cervical cancer
* Screening for diabetes during pregnancy
* Support for breast feeding mothers, including the cost of renting pumps

The recommendations didn’t have a 16-0 endorsement. Anthony LoSasso, a senior research professor at the University of Illinois School of Public Health, objected. He noted the absence of a cost-benefit analysis. But since money wasn’t relevant, the Rosenstock led panel pushed through their wish list.

There is a very good chance that Kathleen Sebelius, the Secretary of Health and Human Services, will incorporate these recommendations into public policy in the next few weeks. There is an even better chance that Kathleen Sebelius, the Secretary of Health and Human Services, will be attacking the insurance companies next year when your rates go up.

I am not suggesting that giving women information and access is bad. Far from it. The lack of concern over cost bothers me. And, this decision to explore personal habits opens us, as a society, to countless issues.

Dispensing free contraceptives as part of preventive care means, in essence, that any woman physically capable of getting pregnant, but not utilizing some form of contraception, is not following accepted medical care. Should your eleven year old daughter be on the pill or have the patch? IUD at fifteen? I believe that this is a family discussion.

Is sex a choice? Is sex too desirable to avoid?

What about gun ownership? I’ve never owned a gun. I have never fired a real gun. But I know people who feel even more strongly about their guns than I do about the wooden pen I’m using to write this post. We know that children find guns in their homes and accidentally kill themselves, siblings, or playmates. What is to keep Secretary Sebelius from incorporating a gun ownership prevention/education/safety program into every child’s preventive care visit?

It doesn’t stop there. I was a healthy kid, but I had numerous basketball injuries. Should my teenage preventive care exams have come with elbow and knee pads, or should the doctor have just given up and prescribed a 30 minute video on the horrors of knee injuries?

Football is a choice. So is riding a bike. We now require children to wear bicycle helmets. Shouldn’t the doctor just periodically dispense them as the child outgrows them? This is preventive care. The science supports the need.

And Money Is No Object.

We live in a fantasy world where there is an abundance of free stuff. The U.S. is currently fighting two or three (depending on who you talk to) unfunded wars. The party, Democrat or Republican, out of power is always more obsessed with budgets and deficits than whichever is in charge. And wherever there is a microphone you will find a politician promising something for nothing.

We’re adults. We know better. But we still want more free stuff.

DAVE

www.bcandb.com

me Me ME

I couldn’t write. I was too agitated to write. Now for someone like me who seems to write principally to vent, agitation is a useful state. Sometimes it is the starting point. But I have been handcuffed for over a week.

“If Congress really wanted to balance the budget,” I heard an elderly man say. “They could stop spending our money on things like…” an elderly woman continued. Turning my attention to the television, I found a parade of senior citizens complaining about the federal government having the nerve to allocate funds for anything other than their health, welfare, and happiness. Some of the claims were bogus, some merely exaggerations. The total of all of the alleged expenditures wasn’t enough to change anything. The commercial, sponsored by AARP, was simply one more salvo in the ongoing budget debate.

We are all in agreement that sacrifices need to be made. We are waiting for YOU to make them.

The nursing homes in Ohio feel that they are entitled to a larger and larger share of the State of Ohio’s budget. Deliver Medicaid care at home? Unthinkable. Thus we are treated to aged, decrepit seniors crying into the camera. “Please don’t take my dignity,” said the 200 year old guy wearing the Veterans of Foreign War hat. Too late. That ship has already sailed.

I heard the familiar strains of You Only Hurt The One You Love. The television screen was filled with sick people. The American Hospital Association wants you to know that cuts in federal funding will have an immediate impact on the elderly, children and the disabled. And just in case you have the sound off, their ad concludes with the camera focusing on the unhappy child in a wheelchair.

We in Greater Cleveland know how the hospitals have been suffering. It has been almost a week since a new facility opened!

We are in year two of the President’s health care reform. The Patient Protection and Affordable Care Act has succeeded in keeping a smattering of adult children on their parents’ policies. It has eliminated policies that covered only children. It has cost millions of dollars for compliance. But, the PPACA has not reformed health care.

You may not like insurance companies. Hell, I’m an insurance agent. There are lots of days that I don’t like insurance companies. But, you can’t reform health care without addressing the cost of medical care and how it is delivered. And no one is more change resistant than the medical industry when the subject is money.

Every time the government proposes a cut in the funding or even the growth of funding of medical care, we see more costs shifted to those who are covered by private insurance and the television commercials reappear. My goal is to eventually be one of those elderly actors. I bet AARP pays well.

We have yet to have a serious discussion. And it is hard to blame the doctors. Do you want to take a pay cut? Would you want to work more, see more patients, for the same money, or G-d forbid, less? Everyone involved, from the lab techs to the hospital administrators, has the same argument. And until anything happens, all of the participants are staking out their territory.

We are all in agreement that sacrifices need to be made. We are waiting for YOU to make them.

Somewhere there is someone reading this who is pounding the table and yelling, “Take the profit out of healthcare!” Balderdash. There is profit at every step. The doctors aren’t volunteers. The labs, the pharmacies, the drug companies, the equipment manufacturers, the company that cleans the linens, they all expect to be paid for their efforts and rewarded for their risks.

Of course, we could bring all of this under government control. Wouldn’t that solve everything? A recent Wall Street Journal article detailed the incredible cost (waste) when people are covered by both Medicare and Medicaid. Medicare is a federal program. Medicaid is controlled by the individual states with a partial reimbursement from Washington. There are 9.7 million patients covered by both systems. “Dual Eligibles” have disproportionately higher claims as they expose the inefficiencies of the two programs and their inability to effectively coordinate care. The examples in this article will give you pause.

The answer won’t be found in a scary commercial. Old veterans and disabled children are just stage props. We understand that there aren’t any 2011 Cadillacs waiting for us at the corner used car lot. At some point we have to decide what health care we really want and how much we can and will spend. Those tasks are still waiting for Congress, Republicans and Democrats, to tackle with the President. The business models will work themselves out, once those questions are answered.

And will someone please get the child actor in that wheelchair a teddy bear?

DAVE

www.bcandb.com

Team U.S.A.

Before we begin – The Tony Award Show is serving as background noise as I write this. The Dallas / Miami game may be on, but not in my home. I want the Mavs to win, or more importantly, I want the Heat to lose. I don’t want to invest two hours of my life cheering for someone to fail. That negativity isn’t healthy. For that matter, investing all of your energy praying for the other political party to fail is not only unhealthy for you, it can be devastating for the country.

It is only fair to warn you, dear reader, that this is another post about Medicare. Click. I just lost half of my readers. Medicare is boring and about old people. Since most of my readers are under 65, most don’t care about a program designed to provide health care to senior citizens and the permanently disabled. The average American has a notoriously short attention span. We need good guys and bad guys, winners and losers. There is little interest in nuance and detail.

The path to a true solution is built with patience, compromise, and lots and lots of detail.

Medicare was created in 1965. The business of health care has changed significantly in the last forty-six years. We are living longer, getting lots more treatments, many of which didn’t even exist in the mid-60’s, and we are taking an incredible amount of medications.

Senior citizens, in 1965, were thankful that the U.S. Government was coming to their rescue. Medicare filled a need. That need was very real. Today we take Medicare for granted and whine about copays and deductibles. Medicare is the ultimate entitlement program. Ask everyone on Medicare. They will tell you that they are entitled to all the medical care they could possibly need or want.

How do we pay for this? How do we control costs? Can we limit care without being accused of creating death panels? How much should the U.S. Government pay a doctor, a lab, a hospital? Does a doctor in Akron, Ohio really get paid the same amount as a doctor in Manhattan? Can a government really make all of these decisions, and thousands of others, efficiently?

The answer – Maybe.

The citizens of most of the developed world depend on their governments to make those decisions. We, emphatically, do not. We want choices. We want to feel like we are in control. We just want someone else to pick up the tab.

If Medicare is to survive, the government will need to get control of the cost of care. The insurance companies have had some success in this area. Medicare has not. The government will have to get control of fraud and abuse. The insurance companies have had some success in this area. Medicare has not. As long as the doctors have lobbyists, the hospitals have lobbyists, the labs have lobbyists, and the pharmaceutical companies have Congressmen, meaningful change will not happen easily.

There are almost 50 million Americans on Medicare. The influx of baby boomers with our growing life expectancy means that more and more people will be dependent upon a government that is unprepared and unwilling to change until forced.

Representative Paul Ryan’s plan is to pass the buck. Instead of controlling medical costs or even working with the medical providers and insurers, Representative Ryan would send you a check and tell you that you are on your own. If you view his plan as simply a starting point to a long discussion, then it has some (small) merit. If you view this as the ultimate answer, you might need new glasses. Dumping all of the decisions and problems on to the backs of our senior citizens is not the answer.

So how do we move forward? It will take a Presidential Commission comprised of serious, well-known and well-respected Democrats and Republicans. We desperately need to remove the politics from this if we are to have any chance of success. Some of the questions are:
* Medicare begins at what age?
* How much does it cost?
* Will the price be adjusted by age or assets (means testing)?
* How do we control medical expenses?
* Is every test a doctor orders necessary?

This is a partial list. It will take a fair amount of courage to answer those questions. It will take a historic effort to implement the final recommendations.

And when that time comes, when a bi-partisan group has created a workable framework to save and preserve Medicare, it will be our job to cheer for their success. Because their success will be our success. And their failure would be devastating.

I just snuck a peek. Five minutes are left and Dallas is up by 7!

DAVE

www.bcandb.com