Why are Health Insurers Launching An 11th Hour Attack on Health Care Reform?

They are running scared.

And why are they so scared?

Because they know that the public sector option is still alive. And here I’m not talking about the possibility that some states will offer public plans: Most state plans would be too puny to challenge the strongmen of the health care industry. I’m talking about  a federal public plan–Medicare E (Medicare for everyone) a public option for patients under 65,  run by the federal government.  The scent of real competition is what has insurers on the run.

Some progressives have declared a strong federal government insurance plan dead because it isn’t in the Senate Finance bill.   But, as I have argued in earlier posts, the Baucus bill should not be seen as the template for health care reform.  Max Baucus possesses neither the muscle nor the gravitas of past Finance Committee Chairmen.  And my guess is that when it comes to sensing how the political power struggle is unfolding in Washington– and how it might threaten insurers  — Karen Ignani, president of America’s Health Insurance Plans (AHIP), has better antennae than any political pundit.  This is why AHIP has suddenly gone out on a limb, becoming the “chief foe”  of President Obama’s reform effort.   Granted, there is good reason while many think that a final reform bill will  never embrace  Meicare E. Within the for-profit health care industry, opposition to a government plan is fierce.  Drug-makers, device-makers and inefficient hospitals that have been over-paid by private insurers (see HealthBeat here) fear that such a plan might introduce rational pricing for their products and services. Some specialists suspect that reimbursements for certain particularly lucrative tests and procedures might be trimmed. And insurers, of course, are loath to compete with a version of Medicare–arguably the most popular public program this country has ever invented.  But for that very reason, support for the public option remains high among both patients and physicians. Meanwhile, legislators are beginning to realize that the premiums for mandated private sector insurance could prove too rich for many Americans.

An Associated Press headline summed up the situation yesterday:  No Quiet Fadeaway for Federal Insurance Option.  “Republicans say the fix is in for a public plan. Behind the scenes, Democrats will take Baucus' middle-of-the-road plan and turn it hard to the left . . . ‘We know that the bill written behind closed doors here in the Capitol will be another 1,000-page, trillion-dollar Washington takeover,’ said Senate Republican leader Mitch McConnell of Kentucky.

Admittedly McConnell is not a man known for his optimistic outlook on life (you have only to look at his face).  But Senate Majority Leader Harry Reid (D. Nev) has refused to assuage insurers’ fears. “Asked Wednesday if he thought it was likely there would be a public plan in his merged bill, he responded: 'I'm not betting on health care. "Likely" is in a game of craps.'" 
 The public plan is still on the table. And I believe that this is why AHIP has shelled out millions for a sudden– and I would say suicidal—media blitz  aimed at blocking reform.  Because the insurance industry is panicked,  it has been doing itself more harm than good.

First, last week-end, AHIP issued a study that it had commissioned from PriceWaterhouseCoopers ,warning that if we adopt the blueprint for universal coverage embodied in the Senate Finance Plan, by 2019, the average family premium will be $4000 higher than it is today. (To be fair, AHIP is right on two points: the subsidies  in the Baucus Bill to help the  middle-class pay for insurance at current prices are too low —as are the penalties for those individuals who choose to ignore the mandate. As it stands, young healthy Americans who earn too much to qualify for subsidies are likely to pay the fines rather than buy the insurance. This pushes premiums higher for the older, less healthy and less wealthy Americans left in the insurance pool. But subsidies—and even penalties—can be adjusted as the bill moves forward. There was no need for AHIP to launch an all-out assault on health care reform itself—unless it saw a  public plan on the horizon.) 

PCP was embarrassed by the way AHIP attempted to use the study as a blunt instrument to bludgeon reform. As a result  it all but disavowed the report, pointing out that AHIP had “engaged PricewaterhouseCoopers to prepare a report that focused on four components of the Senate Finance Committee proposal”—and ignored anything  in the proposal that might lower premiums.

Then the insurance industry floated a second report , this one fashioned by  the Blue Cross Blue Shield Association (BCBSA), with the help of  accounting firm  Oliver Wyman.. Over at TNR Jon Cohn rightly describes this documentt as “a transparently hyperbolic and self-serving study on the effects of health reform” that has discredited the industry “ in the eyes of the media elite, alienated potentially sympathetic members of Congress, and rallied Democrats around a common foe.” Like PCP’s study, it aimed to frighten the middle class: Pass reform, it threatened,  and health care premiums will soar out of sight.

The final blow to the industry’s public image came yesterday when CNN had to acknowledge that AHIP had planted a mole in its midst. As Greg Sargent explains on “The Plum Line” policitcal pundit  Alex Castellanos’ consulting firm, National Media, was placing over $1 million of TV advertising for the insurance industry's anti-reform ads  while Castellanos appeared on air as “an ostensibly independent-minded, if right-leaning commentator.” His financial ties should have been disclosed. On the Hill, House Speaker Nancy Pelosi seized the opportunity that AHIP offered . Late yesterday, the Washington Post reported that  Pelosi had declared that she will “urge the House to adopt the toughest possible version of a public option, applying Medicare’s low reimbursement rtes to it, to strengthen prospects that the provision would survive final negotiations with the Senate.” As Paul Krugman notes: “the end result of AHIP’s blunder may be a better bill than we would otherwise have had.” How National Public Option Could Make Mandated Care Affordable: Everyone in Washington understands that if politicians promise affordable, high quality health care –and then can’t deliver—both Congressional Democrats and the White House will be pilloried.
 Fast forward three years to November 2012, just two months before health care reform becomes a reality.  At that moment of truth, voters will be going to  the polls, deciding whether or not to grant President Obama a second term. By then, tboth he cost of insurance, and the size of the subsidies, will be known.

If voters realize that the insurance policies the middle class is being asked to  buy are beyond their —or that the cost of subsidizing premiums is going to place a crushing burden on taxpayers– they will feel betrayed, duped—and very afraid 
 If the United State Government cannot find a way to guarantee health care coverage that costs less than a monthly mortgage payment, how can a mother hope to secure care for herself and her family? At that point, the temptation to vote the bums out of office will be overwhelming.

Progressive understand this.  If they cannot deliver, it would have been shrewder to let Republicans and conservative Democrats bury hopes for healthcare reform sometime in the last few months. At least then, conservatives would be the villains.
But ,to their credit, today's liberals are intent on achieving what Congress has tried and failed to do for more than half a century:  overhaul the nation’s health care system.  At the same time, they know that over the next three years, they have no choice: they must figure out how to make the numbers work. The subsidies have to be large enough to make coveage affordable —but not so large that they require hiking taxes for the vast majority of Americans. (The House bill would help seed reform by raising taxes for the wealthiest 1 ½ percent, bringing the top rate back to the levels of the mid-1990s.  The White House finds this acceptable, but is not willing to go further. )

The best solution, by far, is to find the funding within an out-of-control  health care system that has taken on a life of its own. We know that the medical-industrial complex no longer serves the patient. Rather it is designed to benefit those who profit from the system.  The only way to turn it into a patient-centered system is to eliminate both the waste and the  profiteering —and this is where a public option can set an example.
 At the very least, the non-partisan Commonwealth Fund reports, a government sponsored insurance plan would cost roughly $2,000 less than private sector coverage for a family simply because the government’s administrative costs would be so much lower. This represents  savings you can count on.
Moreover, and this is critical to understanding the importance of a pubic plan —if it adopts much-needed Medicare reforms, it could provide better care than Medicare does now,  at a lower cost.. In other words, when it comes to offering value for healthcare dollars, a government plan could set a very high bar for private sector rivals. Just How Much Would  Mandated Insurance Cost With and Without the Public Plan ? Here, let me repeat what I have said in the past: No One Knows.

At long last, even Congressional Budget Office Director Douglas Elmendorf has learned to accept that some of the most important aspects of reform can’t be measured. Wednesday, the Washington Post reported that “Republicans pressed CBO chief Douglas W. Elmendorf on the impact of the [Senate Finance] bill on total health spending nationwide and on insurance premiums, but he did not take a side in the debate: "We can't assess the effects on national health expenditures," he said. "There are so many conflicting forces we have not been able to assess the effect on premiums." (This isn’t to say that CBO won’t “mark up” bills—that  is its job. But Elmendorf is acknowledging that the  legislation contains so many moving parts, that it is all but impossible to calculate a final cost.)

Nevertheless, dogged reporters will never take an honest “We don’t  know” for an answer.Reporters, and their editors, want facts—even if said facts don’t exist. So today, the Washington Post announced that it had obtained a report from CBO showing that it has now scored two versions of the House plan, estimating  the cost of one version of the bill at $859 billion over the next decade and the other at $905 billion.

Am I the only person on the planet who wonders how they arrived at exactly $905 billion–versus precisely $859 billion (instead of $860 billion)– when projecting the costs and savings involved in reforming an extraordinarily complicated  $2.6 trillion industry over  the course of a decade?

In 1999, if you had tried to project how much your own household would gain and lose in savings and income over the next ten years, how close would you have come?  
(t might well be a useful exercise to do a back-of -the envelope estimate of your likely household income over ten years,  just to try to set a budget and get a feeling for how much you should be saving. But unless it’s a very uneventful ten years, your calculations will probably be way off.  And when it comes to healthcare costs, the next decade may be many things—but predictable is not one of them.)

In an earlier post, I quoted former Medicare executive Bruce Vladeck  on  CBO’s 10-year estimate of the cost of overhauling the  health care system: Valeck called the projection  “an informed wild guess.”

For one, we don’t know where premiums will be in 2013. If private insurers’ reimbursements to doctors, hospitals and patients continue to rise by 8% a year (as they have for the past ten years), premiums will be 25% higher than they are now.  One can predict, with some certainty that this is what will happen if we don’t have reform.

But if Washington begins to prepare for reform , and starts to look for savings by scraping some of waste out of our  Medicare system, we may begin to find the squandered health care dollars than we need to help to fund universal care. Over the next three years, Medicare reform can pave the way for system-wide reform.. President Obama has told us that there are savings to found within Medicare that willl not lower the quality fo care for serniors-and he  is entirely right.

Both the House bill and the MedPAC reports of recent years recommend ed financial carrots and sticks that would steer Medicare patients and doctors toward the most products and services  that would be most effective for particular patients. Sometimes these are the most expensive treatments; sometimes they are not.

Already, lower co-pays for generic drugs  have led patients to realize that in most cases, generics just as good as brand- name prescirptions.  Lower co-pays could also guide them to  other treatments that offer an equal or greater benefit for less.  Quietly, private sector insurers have told MedPAC that if Medicare provides political cover, they will follow its  lead in realigning financial incentives, rewarding providers, not for the quantity of care they provide, but for the quality.    However, Medicare will have to go first.  Private insurers never again want to find themselves on the evening news, accused of sacrificing human lives in order to line their own pockets.;
This is what happened when insurers attempted to “manage care” in the 1990s.  They did this badly because, when deciding which  treatments  to approve, insurers did not turn  turn to  medical reserarch. Instead, they  looked at the  cost. of the product or procedure.  Going forward, the American public does not want to see for-profit insurers making decisions about what is and isn’t “needed care.”  Insurers  have neither the political nor the moral standing to set the nation’s health-care priorities. Nor do they have the public's trust.

Most Americans do trust physicians. This is why we need an independent federal panel, made up  doctors and other medical experts, using medical evidence to compare the effectiveness of various treatments for certain patients. (The President has proposed setting up an Independent Medicare Advisory Commission (IMAC) that would be shielded from political influence. We know that up to a third of our health care dollars are squandered on unnecessary, often redundant tests, and unproven, sometimes unwanted treatments that provide neither comfort nor cure. We know that many drugs and medical devices are fantastically overpriced—and some are not safe.
 What we don’t know is how successful reformers will be in wringing the  waste out of the system.

To guess how much they might save, one would have to read the minds of thousands of doctors, hospital executives and patients, predicting how they will react to financial incentives designed to steer them toward more effective, lower-cost care. Medicare Begins to Make Cuts
What we do know is that Medicare is already taking steps to put a lid on gratuitous outlays. .While the media focuses on the healthcare debate in the Big Tent on the Hill, over at the Centers for Medicare and Medicaid, regulators are planning on reducing reimbursements for many types of diagnostic imaging, particuarly when done in a physician’s office.
 MedPac data shows that when physicians  own or lease their own imaging equipment, they  are likely to prescribe  twice as many scans and tests as physicians who send patients to the hospital for tests. 
After all,if the euipment is there, why not do the test? It's convenient  for the patient. And the only way physicians can pay for this very  pricey  medical equipment is to use it.  .

But stepping back and looking at use in a single city, it becomes clear that it’s just not economical for so many doctors to duplicate the equipment in their offices that is already available at hospital outpatient centers.  We all wind up paying for the redundancies.

Medicare is particularly concerned about the overuse of MRIs and CT scans. CT scans cost anywhere from $300 to $1,000. MRIs run as high as $1300. And from 2000 to 2007 the annual number of CT scans almost doubled to 69 million.

The  yearly  price tag for imaging is now  $100 billon. And experts estimate that up to one-third of these tests aren't necessary. That's potentially $35 billion wasted every year.

Worse, patients are being exposed to unnecessary radiation that could increase the risk of cancer.

"It's too easy, too fast,too good,” New Hampshire radiologist Dr. Steve Birnbaum, told CBS News last month.  "So it's much easier to order the test than it is to observe the patient, to monitor the patient, "

When Dr. Birnbaum’s own daughter, Molly, was in a car accident that left her with multiple injuries, Birnbaum stepped in to make sure that she wasn’t over-treated.  Molly had fractured her pelvis and suffered a sharp blow to the head. “I broke the windshield with my skull,” she  told reporters.
As a result, she was given a total of nine CT scans during her week-long hospital stay. Doctors wanted even more, but her father, resisted. "At that point, I drew a line in the sand and said, absolutely not. There is no reason to do this anymore," recalled Birnbaum.

Radiologists know, better than anyone, that we are doing too many of these tests. .

There is no medical evidence that doubling the number of scans in recent years has improved patient health. This is one area, many agree, where Medicae can discourage excess by lowering fees,, reducing costs, and protecting  patients. Of course, one group strongly disagrees– the corporations that make the diagnostic testing equipment.
    Medicare Reform and the Public Option It is telling , I think, that the  White House has  not yet named a new director to head the Centers for Medicaid and Medicare (CMS).. To me, this suggests that the administration plans to appoint someone who will have the spine to stand up to lobbyists.  That could explain why the White  House hasn’t yet made the announcement;  it didn’t need a battle over the CMS director while fighting the larger war over reform legislation. But the steps Medicare is already taking suggests that this administration is serious about  redistributing healthcare  dollars to improve  care  both for seniors and  for all Americans.  
 What does all of this have to do with the public option? As the  House bill makes clear, succedssful Medicare reforms would be incorporated in the public plan when –and if–it is rolled out in 2013.
Under the House bill–which I continue to think will leave its mark on the final bill– Medicare and the  public plan could ulimtately use their combined clout  to change how we pay for care, what we pay for, and how care is deliverdd.  This means movng away from reimbursing proividers for how much they do, and instead rewarding them for how well they do it. . . Health Care  Lobbyists May Be in For Some Surprises. But,will the finaly legislation actually include a vigorous public plan? At this point, I would guess "yes, " putting the odds at 60/40.  But my guess is not as important as this:  I see no reason to give up on the core of health care reform until the game is over.  In all honesty, I don't have a great deal invested in being right. But I would argue that the threat is real enough to have sent  AHIP on a disastrously self-destructive course. Setting itself up as the enemy of health care reform—just as the White House is heading into the home stretch—was not wise. I would predict that the insurance industry will pay the price for this mistake. 

I have long argued that whatever “deal” some observers think that health care lobbyists made with the White House, unless White House Budget director Peter Orszag has forgotten how to add and subtract, he and President Obama know that the “concessions” that the industry has offered are far too small to make national health insurance workable. We cannot let health care continue to be a growth industry.  If we want a health care system that works, we’re going to have to break the inflation curve – and shrink the pie, just a bit.
 Right now, our so-called health care “system” is filled with redundancies, outright fraud and contradictions. While some patients receive too little care, others are over-treated and over-medicated  Meanwhile, they see seven doctors, yet somehow, no one ever seems to listen to them.  Often it's not clear if the doctors listen to each other.
A final word:  If we begin to spend our health care dollars rationally—rather than haphazardly– we can have a better coordinated, more patient-centered, and affordable health care system.  No one should be afraid of Medicare cuts.
 Experience demonstrates that when it comes to health care, lower spending and higher quality go hand in hand.   Anyone who tells you otherwise is lying, pure and simple. 


18 thoughts on “Why are Health Insurers Launching An 11th Hour Attack on Health Care Reform?

  1. Maggie, who ‘rocked the house’ at Health2.0, t’was I who shouted at you as you climbed into the shuttle bus on Weds evening.
    Again, your insight and truth telling is profoundly on point.
    During my days at Berkeley (admittedly some time ago), I came across a quote by Friedrich Nietzsche, which I will paraphrase: ‘truth is but a series of errors in relation to each other…’.
    Clearly he had in mind the likes of the ‘K street’ or the network of ‘Beltway Bandits’ crowd, who regularly flood Washington with ‘high confidence’ (and very expensively derived) ‘models’, via the management credo method: where the formula goes something like this: M/C = B3 (cubed). Or in plan in english, the Management Credo is ‘Bullshit Baffles Brilliance’.
    That Elemdorf would publically own such an obvious limitation is indeed a victory for truth, and further provides context, wherein the ‘debate’, especially of ‘the disingenuous 10’ on the Senate Finance Committee, as they demanded precision scoring from such a flawed series of assumptions arrayed over 10 and 20 year event horizons, can be seen for what it was: pure political theater.
    Bravo girl! Keep up the good work!

  2. WOW!- What a mega post! Thanks Maggie!
    Yes-The tactic of characterizing the for profit health insurance companies as the boogeymen has worked because they ARE indeed the boogeymen.
    Now out of sheer desperation and fear thay have self destructed even further.
    As far as lower cost and better qaulity proven to work hand in hand- music to my tired ears
    We are close to making history.
    Our President hiself needs the moral courage to take issue to across the goal line
    Dr. Rick Lippin

  3. Excellent post. Thank you.
    Now I want to figure out how to get as many nurses, doctors, social workers, and other health professionals as possible to read it, along with seniors, mothers, uncles, neighbors, co-workers, and every other demographic in the U.S..
    Of course it will include the suggestion to participate in the upcoming Watch In! for America’s Health. The campaign that includes viewing the new documentary Money-Driven Medicine (based on Maggie’s book) at schools, house-parties, and in Congress, between Tues Oct 27 and Tues Nov 10, 2009. Help spread the word; more info at http://www.moneydrivenmedicine.org

  4. Maggie, this is a great summary, as it partly tries to outline the big picture of what happens if what gets enacted is along the lines of incremental changes with a public option as was promised in the proposals offered by candidates Obama and Clinton.
    But I also see a problem you don’t mention. I don’t see many “progressives” or liberals active in the blogosphere or working for the public option elsewhere understand this whole picture. What I see is that many of them are unrealistically expecting a magic pony in a Medicare-like public plan.
    They see insurance companies as causing ALL the cost. And they are expecting to get fee-for-service with all the choice that means (no enforced generics for them, they want whatever they and their doctor decide, and they will be expecting as many MRI’s as seniors get today, etc.)
    Many also seem to be expecting that kind of coverage for the same $200 month premiums that seniors pay, without realizing that those senior premiums are subsidized with a lifetime of taxes paid. Not to mention many don’t seem to have any knowledge of the co-pays and deductibles in current Medicare coverage that cause so many seniors to buy supplementals.
    So when you say (the following three paragraphs in quotes–I can’t get italics or blockquotes to work):
    “But if Washington begins to prepare for reform, as President Obama has suggested, by eliminating some of the waste in our bloated healthcare system, we may begin to rein in healthcare inflation. Over the next three years, reform will begin with Medicare. The president has said that there are savings to found within Medicare that will not harm the quality of care.”
    “Both the House bill and the MedPAC reports of recent years recommend financial carrots and sticks that would steer patients and doctors toward the most effective products and services for particular patients. Sometimes these are the most expensive treatments, sometimes they are not….”
    “Quietly, private sector insurers have told MedPAC that if Medicare provides political cover, they will follow Medicare’s lead in realigning financial incentives. But private insurers never again want to find themselves on the evening news, accused of sacrificing human lives in order to line their own pockets. This is what happened when they tried to “manage care” in the 1990s…”
    I foresee the latter happening to the government in the next few years if a public plan is adopted. What Obama and the Congressional supporters will be taking on if a public plan is rolled out around the same time Medicare reform is kicking in is the unthankful role that managed care providers took on in the 1990’s.
    Because most supporters of a public plan seem to be expecting a fee-for-service pony that is impossibly cheap and doesn’t restrict or manage any care, I do see a backlash a coming from liberals and progressives if they get their public plan, i.e., I expect you will see some mounting campaigns about Jenny getting her transplant that the public plan or the brand name drug a group says they need.
    I also think some Republican message planners somewhere in the background are real smart and know this, hence all the “death panels” and “hands off my Medicare” type agitprop preparing the way way in advance.
    Don’t get me wrong. I am not wholly negative about all this, just kind of resigned. Actually I think the incremental plans of both Obama and Clinton had a realization that a long PAINFUL process of transition was the only way the necessary change could happen. It’s along the lines of change only truly being possible when more citizens have a better realization of the problems inherent in our entire medical system, when they are not expecting that magic pony. Unfortunately, to get there, there will probably be a cycle of some politicians taking brave stands and then being punished for it.
    I see Obama as understanding all of this. That is why he chose to go the way of not leading so much and letting whatever happens come from a consensus of Congress and the major players involved. Whatever they decided was possible, that is what would be. With the economic crisis in the mix, and jobs being numero uno at the current point in time, it even looked more so the only way to go. Especially with his desire not to raise taxes.
    As you have said before, it is going to be a PROCESS. It’s going to be a long one, too, and I foresee a lot of disillusionment on the left side of the political spectrum even if a robust public option is enacted. My attitude has bcome “any change is good” only because it will start the painful process of understanding and transition, but make no mistake, a lot of pain is coming before we get to a place where people have realistic expectations and a better understanding of what decent health care for all means like other countries experience it.
    For all these reasons, I am sort of ambivalent about a public option being in a bill. If it is, it will be the recipient of some anger about necessary Medicare reform that surely must happen. If it’s not, the private companies, still having senior Medicare to play against, will get more of the blame. Either way, with or without a public plan, there will be backlash to the real necessary reforms, because so many people still expect fee-for-service type medicine with the consumer making all the choices.
    The way I see it, whether or not we get a public option doesn’t really matter that much, only that the long painful change and realization process gets started. There’s going to be good things and bad things happening with it or without it. (Meantime, those of us who have already learned from painful experience what good health care looks like will continue to desperately seek out those rare wholistic medical practitonters outside the whole money-driven system and a way to pay for their services, hah.)

  5. Another point I feel the need to add to my comment below, on the politics. To my eyes there is strong evidence that Obama deliberately chose to delay discussion about the necessity of “more managed care” changes needed to Medicare, and all health coverage, in that he avoided appointing a Medicare chief
    while starting the push for a reform bill.
    With any hearings on that appointment, that would have started a discussion they didn’t want to happen right now.
    He knows we eventually need care more managed, but it’s the topic that must not be discussed right now in order to get some changes enacted. This is why he stressed in his public statements that “if you like your plan and your doctor, you get to keep them,” and I think this is also why he would not strongly push/lead for a public plan, but would only support it if and after he had a strong call for it from below, from the public and Congress. The truth is that any “public” plans must eventually become more managed plans in the future if the cost problem is to be addressed, and managed care is something many people fear right now, and they have to come around to not fearing it but desiring it. To raise that issue now would be to kill any reform package. It’s being put off until a reform bill is passed, and actually, I think even the tactics of how it is going to be addressed are being held off on until they know what kind of reform bill is enacted. It’s crucial in that scenario that they have majority support for the reform bill, since the next steps are going to encounter a lot of screaming (i.e., “hands off my “Medicare!”)

  6. Also a minor correction is needed to something I said in my first comment–most seniors pay approx. $100 per month premium for Medicare Part B, not $200 as I mistakenly typed. (BTW, Medicare Part A is free for those seniors who paid enough past taxes in to qualify, but the current stated premium for those who haven’t is $443 per month.)

  7. Gregg, Rick, Ann–and Everyone, Art Appraisor (your first comment)
    Thank you all for your comments.
    I thought I heard someone call my name when I got on the bus at Health 2.0–but at that point, my feet hurt too much to even think about turning around.
    I did have a good time at Health 2.0.– I was surprised by how receptive the audience was.
    “Truth is but a series of errors in relation to each other . . .” I take that to mean that truth-seeking is a never ending process. Or,as the poet Wallace Stevens put it, with a stutter, “The . .
    the Truth” (I may have the punctuation wrong, but he’s saying that there is no “The Truth”.)
    And yes, all this b-s about “scoring” what something will cost over 10 years is largely political theatre.
    I guess they have to go through the exercise because voters want to know “what will it cost?”
    Not to even try to figure it out would seem irresponsible. But the fact, is they’re always wrong.
    Rick– In fact, I don’t think the private inusrance industry is so much the bogey-man as the middle-man–passing on unncessarily high costs for treatments that, too often, aren’t needed.
    Of course, insurers also add their own administrative costs –without adding much value.
    But Commonwealth’s numbers are right: they are adding “only” about $2,000 to a family plan–bringing it up to $13,500. Without their administrative costs it might be $11,500–still too high for a family earning, say $75,000.
    And yet taxpayers cannot afford to subsidize all low-income households, all middle-income households, and those just on the cusp of being “upper-middle”–earning $75,000.
    We need to bring those premiums down–which means bringing down the cost of care. We’re overpaying for some things (some drugs, devices and services) but we’re also buying too many unnecessary products and services–the MRIs we don’t need, the drugs that we don’t need. We’re “overdosed.”
    Going back to the insurers, if they had a total monopoly over universal coverage, they would become a larger part of the problem because their administrative costs would be added to a larger share of health care bills. (Right now private insurers are paying only about 1/3 of health care bills)
    Finally, it was incredibly stupid of AHIP to decide to turn the industry into the “enemy” of reform. That’s why I think they were caugh off guard–and panicked.
    Partly, they were upset by how low the penalty is in the Senate Finance bill if someone doesn’t sign up
    for insurance. They want everyone to have to sign up. They need the customers.
    But I also think that in a larger sense, they suddenly realized that they can’t count on things going their way– the public option is still alive. The liberals are more determined than they thought. And if the liberals really dig in their heels, this gives Obama an opportunity to say: I’m not trying to impost My will on reform– but these Congressmen represent Americans who want a public option . .
    Ann–and Everyone Thank you.
    I’m glad that you and others liked this post.
    I should tell you all that it was born from disaster.
    Tuesday, at about 4:00, I had just about finished it, and went downstairs to get some iced tea. (At that point, I had worked on it for 1 1/2 days.)
    What I forgot was that my laptop had been telling me that it wanted to update something.
    Whenever it did that, I clicked on “remind me later.”
    But of course while I was downstairs, the update notice flashed on the screen again, and I wasn’t here to click “tell me later.”
    So it downladed the update, and then closed down and re-started the computer.
    In the process, my entire post was lost. (No, I hadn’t backed it up.)
    It had a title, and I searched everywhere for it–by title, by time, by date.
    I expected to find an “autorecovered version” –nothing.
    After two hours of searching I realized I would have to reconstruct the whole thing from memory.
    I had several appointments over the next couple of days, but kept coming back to it. It was extremely frurstrating. I grew to hate this post.
    But in the process, the post grew, taking on a new form, growing organically from my memory of the original. (I dont’ work with an outline so am never sure what shape things will take.)
    And, by the end, I actualy liked it better than what I remember of the original.
    I have found that sometimes, when writing is most painful, and fraught with problems, the end-product is better.
    Pain concentrates the mind wonderfully.
    Art Appraisor–
    Glad to hear from you!
    I’m afraid that much of what you say is true.
    Too many people expect a magic pony.
    They think that somehow, “reform”–particularly reform with a public option–means that miraculously, health care will become affordable.
    They don’t realize how expensive Medicare is. (For example, they don’t realize that, under Medicare, there is no cap on out of pocket-spending. When you reach the limits of your medicare coverage, you have to spend your own savings down until you have very little–and only then are you eligible for Medicaid.)
    And people under 65 don’t realize how high Medicare co-pays and deducitbles are.
    Bottom line: health care in this country is very, very expensive–too expensive–in large part because it’s money-driven. Too many people are selling, and sell hard. As a result, we are buying too much, often unneeded, often over-priced care.
    But people are not eager to realize that perhaps they don’t need that MRI . . . Or that we can’t cure their cancer, no matter what the doctor does, and they are going to die.
    I fear you’re right that when Medicare and a public plan try to wring some of the waste out of the system, there will may be a backlash.
    Certainly the conservatives (and Fox News, conservative radio, etc) will be poised and ready to say that seniors are being denied care they need . . .
    And if and when we have a public plan, conservatives will point to it and say– “See, they’re charging you a high-co-pay for that PSA test that you need so that you don’t die from prostate cancer! Sure, they tell you there’s no medical evidence that the the tests saves lives, but I KNOW it saved my Uncle George.. . .”
    If that happens, it will be very frustrating. It’s hard to argue with ignorance– (We’re lucky that Obama seems to have fairly high tolerance for frustration–and great impulse control.)
    But I think the key is just to hike co-pays and lower fees for some services and products–without actually “denying care.”
    This is how people were weaned off prescription drugs. Rather than saying, “no we won’t cover that brand-name drug”, insuers simply upped the co-pay to $35–and said, but you could have this generic for $10. . . .Even if you don’t believe it’s as good–try it and see.”
    Eventually most people have come to realize that generics are fine.
    Meanwhile, rather than arguing with doctors and saying we won’t cover PSA tests, cover them, but lower the fees–and watch volume fall.
    You probably are right that Obama realized that as we try to rein in healthcare spending, there will be a backlash, and this is why he stepped back and tried to let Congress make some of the hard decisions.
    But I think that, in the end, he is going to have to make sure there is a public option in the bill because we have to begin to put a lid on health care inflation NOW.
    We can’t wait until healthcare is so expensive that 50% of the population can’t afford insurance. By then, Medicare will be broke.
    So, the Obama administration is going to have to begin doing some unpopular things–first with Medicare, then with the public plan, and in most/many cases private insurers will follow.
    I just hope that a good number the nation’s physicians stand up and say “You know they’re right”– the way that radiologist stood up and said “We do too many MRIs. I don’t want my daughter to have any more.”
    Radiologists know, better than anyone, that we do too many tests. Oncologists know that in the final months of life, some oncologists do too much chemo. Many Cardiologists will tell you that we are doing too many by-passes and angioplasties.
    Doctors–and nurses–recognize the excesses. If they would just tell patients, this would help.
    But even if they do, you and I agree, this will be a process–a process of education for the public and for health care providers.
    Hospital CEOs have to re-think their mission.
    And inevitably, as we move through a difficult process, Obama will be blamed.
    He faces a particular problem because so many of his younger supporters were so wildly enthusiastic when he ran in the primary. They saw him as a super-hero figure.
    Indeed, their expectations were so high that when he gave his inaugural speech and explained that we are all going to have to sacrifice something in order to move forward together, many were disappointed.
    And in the months that followed, many felt betrayed that he didn’t solve the banking mess, that he didn’t end war in the Middle East, that he didn’t roll out a brand new single-payer system that would be cheap and wonderful by the end of his first year in office.
    I think he has made mistakes (regarding Wall Street and the wars), but I also think that NO ONE could solve the banking mess and get us out of Iraq and Afghanistan, neatly and cleanly, in one year. Nor could anyone “fix” healthcare with the wave of a wand.
    Moreover, one cannot expect one president to be a genius in so many complicated areas: global finance; terrorism; the Middle East; Healthcare and- oh, I forgot Global Warming.
    For 8 years we put up with a president who knew NOTHING about any of these complex problems. We said, “that’s okay, he’s the type of guy I’d like to have a beer with.”
    Now we have elected an intelligent, hard-working and honest president and many of us are attacking him by not being some combination of Albert Einstein, Churchill, Paul Volcker and Atul Gawande, rolled into one.
    And let me add,that even if Paul Volcker were president , we would find that facing up to the banking mess–which was caused by the excesses of 1982- 2006– will be very painful, no matter who finally guides us through it.
    Solving all of these problems will be painful.
    I just hope that this adminsitration has the will to forge ahead, and that the public has the patience to give this administration 8 years to begin to dig us out of a very deep hole.

  8. Art Appraisor–Your second and third comments. .
    I agree that the decision not to appoint a Medicare director was deliberate.
    It’s surprising to me that no one has written about it (or at least I haven’t seen it). I would have expected a headline in the MYT or WAPO– Why No Medicare Head??
    I think you’re right, Obama didn’t want to have hearings on the appointment during the health reform debate.
    Because, inevitably, the questin of escalating Medicare spending-and how to rein it in–woudl come up. Along with the dreaded phrase “mangaged care.”
    I’m sure the administration is smart enough to know that we cannot ever, ever use that phrase again. The for-profit insuers so botched implementation that you might as well say “death squad.”
    I prefer “getting better value for our health care dollars–spending them wisely to keep people well and protecting patients from unncessary risks.”
    People also are fairly open to the idea that a greedy drug industry has been over-medicating seniors. (Typically, seniors get doses that are too high–their bodies can’t handle it.)
    But Obama didn’t even want to have the discussion this year. Meanwhile, Medicare is quietly going ahead and doing some of the things it needs to do.
    It’s interesting– he also appointed a deputy FDA commissioner who Pharma doesn’t like–ie. someone who will do the job. He is being put in charge of drugs and devices. Meanwhile,the Commissioer (who is less controversial0 will oversee regulation of food.
    Congress has to approve the Commissioner–but not the deputy commissioner.

  9. We already have experience with taxpayers subsidizing the health insurers to incentivize them to “cover” those whom they wouldn’t normally insure: Medicare beneficiaries, the sickest sector of the population, and very nearly the poorest. We have also seen that this design (Medicare Advantage) takes money away from traditional Medicare and forces CMS to reduce its reimbursements to any providers who are still willing to care for Medicare patients. We have also seen that this system costs the taxpayer 14% more than traditional Medicare for the same treatments and procedures but without providing better health outcomes for Medicare beneficiaries (or for our tax dollars). We have also seen that MA insurers continue to raise the costs of premiums and drugs while reducing the amount of “coverage” for those in their plans. Since doctors and hospitals are presumably giving the same care to Medicare patients who are covered by MA and those who are covered by traditional Medicare, it’s a safe bet to figure that the difference in the ultimate costs for Medicare beneficiaries is due to who the insurer is and not to the care provided (this is a different problem from the waste and fraud in the current system).
    “Fool me once, shame on you. Fool me twice, shame on me.” It’s hard to believe that, in the face of this actual experience, you still argue for subsidizing the insurers to “cover” those whom they wouldn’t normally cover. This argument merits no credit at all, based on real life experience (as opposed to wishful thinking about what providers will do and what insurers will agree to).
    On a further point, the public option in all of the bills that include it so far covers too few people and is too restrictive (no matter how “robust”–which nobody has defined yet–it will be). None of the bills even defines what “basic coverage” or a “basic healthcare benefit” would be. Thus, while we are subsidizing the insurers to cover more people (while still allowing them to disallow claims for covered services and charge older people 5 times more than younger people), the public plan will be made up of people who will be the sickest and the poorest because they will not be subsidized enough to be able to afford the premiums, copays, and deductibles that will be demanded by the insurers (unless they are foisted onto the bankrupted states with an expansion of Medicaid, the other public receptacle for the sickest and poorest Americans not deemed worthy for coverage by the insurance companies unless we “subsidize” them for these patients as well). This is not a doomsday-scenario but rather the known and understood consequences of the health system designs in the current bills by anyone who “does” healthcare policy and health services research.

  10. I enjoyed your post. It reminds me why I believe Medicare for all would be the best healthcare reform.
    I’m an insurance agent working with Medicare Advantage and Med Supps. My question is very specific to waste in Medicare Advantaage.
    I went on Medicare.gov and compared Humana plans in Tucson, AZ and Miami, FL and I could not believe the differences. Seniors here in AZ are faced with rising co-pays while seniors in Florida have virtually free healthcare. In AZ hospital co-pays are $195-$300 per day,up to 10 days. Dr co-pays are $40 for specialists. In Florida, seniors pay $0 for hospital stays, $0 for doctor visits, $50 for outpatient surgery. This is ridiculous. So how is this possible? Medicare pays on average $200 more in Florida for MA enrollees than in AZ and our seniors face huge medical bills in their MA plans.
    As I understand it, Medicare reimbursements in Florida are a lot higher than in AZ. So MA plans get to take advantage of this by providing virtually free healthcare to seniors there. Will sometihng be done about this? I’m going to write to Sen Kyl of AZ, who is a big defender of MA, and ask him why his constituents get screwed while Floridians get the gold standard.

  11. I hope the people who are for the best interests of the people can withstand the forces seemingly intent on making “reform” a systematic pillaging.
    In a way, that is the fight, a “system” vs. people. I really believe in the goodness of most folks, I really do. I mean look at Wendell Murray, he’s not a bad person, and wasn’t before. He was just part of a system of interrelated forces that served some and disserved others.
    I prefer the system vs. people approach because it doesn’t demonize anyone. Executives are doing the best they can for their businesses, doctors the best they can for patients, scientists the best they can for pharma.
    Its rare to find a Wendell Murray who has a Damascus minute. Most folks seriously can’t see their own projections, their own rationalizations.
    What I’m afraid of is that we address the part of the system that restricts health care spending and not address the lowering the cost aspect. This would be a disaster, spiraling total cost way out of control.
    I think we need to simply cap what we as a country can spend on healhcare and then leave the decision making to the doctors and patients to sort it out.
    That and some no brainers
    Direct to Consumer Healthcare Ads = Bad; so stop them.
    Public option for Healthcare Insurance = Good; so lets do it.
    Reform Court so that the Lawyers have some liability for bringing a bad case to court = Good; so let’s let losing lawyers eat the costs.
    Lack of Competition = Bad; so lets allow insurance companies to compete nationwide and break up healthcare providers who have gotten “too big” in their market.
    Preventative Care = Good; so let’s pay specialists less and primary care docs more.
    Me Too Drugs = Bad; so let’s stop approving them for general use unless they show drastic general population improvement.
    These are systematic changes to correct an unbalanced systems, not demonizations.
    Thank you Maggie for being so insightful and dilligent to point out the major reasons why cost has spiralled in healthcare. You have done the country a great service.

  12. As Medicare Advantage and Medicare Supplements are my focus, I now see that Med Supps are going to be changed eliminate 100% coverage through Med Supps. I orginally thought the new Plans M and N in 2010 were designed to compete with Medicare Advantage. But it looks more like a phasing in of non-100% coverage Medigap plans. The Senate Healthcare bill introduces new C and F plans that will require co-pays. This is all so seniors don’t overuse the healhcare system.
    Do other countries ration care based on requiring cost sharing?

  13. Denise, NG, Denise (1st comment)
    Denise –Yes, some other countries do charge co-pays.
    Though in some countries there is no co-pay for primary and preventive care. This makes great sense–there is no financial barrier to prvenetive care.
    This is true in Scandnavian countires. AS a result Everyone gets Pap Smears. And cervical cancer is virtually non-existent. (In the US it’s a “rare diseae” but poorer women who don’t get regular Pap smears, do die of cervical cancer.)
    NG– Thank you– and thanks for the link.
    Denise —
    You are right: Medicare reimbursements are skewed, to some degree, by the clout of legislators represnting the region in Washington.
    Florida’s legislators have made a particular ponint of pushing for higher Medicare reimbursements for their state.
    Though I should add that it’s probably not so much that Arizona providers are underpaid (though they may be–and certainly are for primary care, geriatric care, palliiative care etc.) as that Florida hospitals and some specialits are over-paid.
    Your comment is somehwat confusing.
    I’m not suggsting any extra payments to private insures “for covering those they wouldn’t normally.” Under reform they won’t be paid more for caring for patients with pre-existing conditions.
    Also, only the Senate Finance Committee bill called for charging older patient 5 times more than younger patients. It is very unlikely that this will survive in the final blll
    Finally, you write: “doomsday-scenario but rather the known and understood consequences of the health system designs in the current bills by anyone who “does” healthcare policy and health services research.”
    Not sure what “doing” health care policy means, but the people I talk to and read (Elliottt Fisher, Atula Gawande, etc. do not share your “doomsday” view.
    They understand that, over the next 3 years, many adjustments will be made to whatever legislation we pass this year. And we still don’t know hoow much of the Senate Finance Committee bill and how much of the House bill will be included in this year’s version.
    I think it makes sense to charge co-pays (even high co-pays) for services and products of marginal value (prescription drugs when there is an equally good generic drug available, tests and procedures that we know don’t help patients) . . . .
    But I don’t think that blind co-pays for all services (or blind sharing fo deductibes) is wise because reserach shows that when co-pays or deductibles are high patients are just as likely to defer needed care as unncessary care.

  14. The support for a public option to compete with private insurers has clear majority support from the public. Sizable majorities back the public option and the insurance mandate provisions of the upcoming health care reform bill.
    Even individual physicians, who have given a voice in the national discussion about health reform, demonstrated majority support for a public option, regardless of their type of practice or where they live.
    With a public option everyone will be better able to access coverage, better able to understand their coverage, and better able to use the coverage they have, at a price most everyone can afford.

  15. Sorry if my comment was confusing. Under all of the bills so far, subsidies will be paid to the insurance companies from the public coffers (not to the people who are buying the insurance) to incentivize them to cover people they wouldn’t normally otherwise insure. The subsidies are proposed to be paid because the politicians understand that lower and middle class people cannot afford to pay the premiums, copays, and deductibles that are demanded by the insurance companies, especially for those in the individual market. Nor can these people pay for medical care that is not covered by the insurers, or for claims for covered services that are denied by the insurers. There is nothing in these proposals that control the costs of insurance premiums, copays, and deductibles, or that makes coverage any fairer or more comprehensive. This is a textbook case of “moral hazard”: why should insurers control their prices if they know they will be bailed out by the taxpayer?
    To correct a previous comment I made, the Congressional Progressive Caucus has defined a “robust public option”: http://cpc.grijalva.house.gov/index.cfm?ItemID=420&ContentID=422&ParentID=0&SectionID=107&SectionTree=107&SearchKey=robust%20public%20option&sectionTypeID=4
    It sounds very much like the single payer program that is proposed in HR676.

  16. Gregory–
    Yes the support for a public option from both patients and physicians is impressive. And I continue to think that it will have an effect on Congress.

  17. Such an informative article. Too bad the majority of detracters have a 100 percent political agenda and could care less about the health of their fellow Americans. When it comes to looking out for the vast majority, why do all those wealthy or brainwashed Southerners always refuse to cooperate or compromise when their personal agenda’s are not being met? I’m sick and tired of the stubborn thick-headedness radical red-neck myopia thinly and knowingly disguised as Republican values and philosophy, perpetuating their generational biases and bigotry. Hopefully, soon, a higher level of intelligence will permeate the American education system and challenge all those cowards hiding within America’s red shadow lands.!!