IN THIS ISSUE:
? Hospital Price Transparency in Harvard Business Review
? Hospitals Resist Charging Uninsured Reasonable Fees
? Consejo to Testify Before Energy & Commerce Committee
? Robert Kuttner in Business Week and the Boston Globe
? An Honest Look at the Individual Market
The “Boston Globe” has a write-up of a new essay in “Harvard Business Review” by Michael Porter of the Harvard Business School and Elizabeth Olmsted Teisberg of the University of Virginia. Mr. Porter is described in the article as “America’s foremost business strategist.” He argues for “the right kind of competition” in health care, based on specific diseases and treatments, rather than on networks, health plans or hospital groups, all of which try to shift costs onto other players. The authors “call for collecting and disseminating information about the outcomes of medical procedures, so patients can make intelligent choices about physicians and hospitals.” The article adds, “They also recommend transparency in billing and pricing to reduce cost shifting, discrimination, and other inefficiencies.” “The Globe” says, “Porter and Teisberg both anticipate pushback from the parties invested in the current system.” This article in “HBR” is published as part of an “OnPoint” collection along with related essays on, “Will Disruptive Innovations Cure Health Care?” by Clayton M. Christensen, Richard Bohmer, and John Kenagy, and “Let’s Put Consumers in Charge of Health Care” by Regina E. Herzlinger. All three can be purchased for $16.95.
SOURCE: to get the entire collection, go to: http://harvardbusinessonline.hbsp.harvard.edu/b02/en/common/item_detail.jhtml?id=6956
To read the Boston Globe article, go to:
Hospitals Resist Charging Uninsured Reasonable Fees
The “pushback” predicted by Professor Porter is already taking place in the hospital industry, as “Business Week” reports on a dispute over hospital price transparency. The article by Lorraine Woellert discusses the efforts of Medical Savings Insurance (MSI) and KB Forbes of the Consejo de Latinos Unidos to make hospitals charge reasonable prices to self-pay patients. The article is very strange, however, calling Mr. Forbes a “Republican strategist” and Mr. Rooney “one of the most powerful voices on the Right,” as if what hospitals charge patients is somehow a political issue. In fact, Consejo has been very effective in bringing attention to the plight of the uninsured, who are often charged three to four times what someone in a PPO is charged for the exact same service. Linda Quick (her party affiliation is not mentioned), the president of the South Florida Hospital Association is quoted in the article as saying, “Forbes presents himself as an advocate of the consumer, (but Consejo) seems to be initiated and financed by Rooney and others selling individual insurance.” But that doesn’t make any sense, since it is the insurance companies that can obtain the discounts that Mr. Forbes objects to. The article goes on to say that hospitals feel threatened by Health Savings Accounts, because of their mounting bad debt. It says, “In April, HCA (hospital chain) blamed a rising tide of unpaid bills for its first soft quarter.” But that doesn’t make sense, either — since HSAs didn’t go into effect until January, they can hardly be the cause of HCA’s poor performance in the first quarter of 2004.
SOURCE: The article was in the June 7 edition of “Business Week,” but a subscription is required to access the article online.
Consejo to Testify Before Energy & Commerce Committee
I met with KB Forbes to ask him about some of these charges. He says Consejo is completely independent from Pat Rooney and gets no money from insurance companies or labor unions. They are scheduled to present a new report to the Energy and Commerce Committee on the problems the uninsured face in paying for hospital care. The hearing was scheduled for Thursday, June 10, but has been postponed due to the death of President Reagan. The report will be available on the Committee’s web site once the hearing takes place, but Mr. Forbes tells me it will cover the woes of over 100 patients who have been mis-served by HCA facilities in Florida and Colorado. He is also forming a legal aid program to defend uninsured people who are sued by hospitals in Florida and to monitor their collection procedures to ensure they are following the law. He said Consejo has a brochure available for people who are facing unreasonable hospital charges and collection efforts. The brochure advises patients to do four things:
? Keep meticulous notes and photocopy any documents involved
? Demand an application for the hospital’s charity care or discount plan
? Use only certified mail when communicating with the hospital
? Demand a copy of the standardized UB-92 statement
SOURCE: To reach Consejo, go to http://www.consejohelp.org
To access the Energy & Commerce material, go to:
Robert Kuttner in Business Week and the Boston Globe
Robert Kuttner has been ubiquitous lately. The editor of “American Prospect” is also a frequent contributor to “Business Week” and the “Boston Globe.” He is welcome to express his own views, but he needs to get his facts right. For instance, on May 24, Mr. Kuttner had an article in “Business Week” criticizing Mr. Bush’s health care ideas. But what he wrote was “Bush’s proposed health tax credit would cover only $1,000 of the cost of a decent family policy ($6,000 to $9,000)…. His health savings account requires insurance plans with high deductibles, which undermines the goal of preventive care.” This is all factually wrong. The family tax credit would be $3,000, not $1,000, and HSAs allow for first dollar coverage of preventive care. But three days later (May 27), he had another opinion piece called “Bush’s Health Care Scam” in the “Boston Globe,” in which he cites an entirely different set of mistaken facts. Now he concedes the family tax credit is $3,000, but no longer says coverage could be purchased for $6,000. Now he says it would have to cost $9,000. Now he says the problem with tax credits is that “about half of the uninsured have histories of serious medical problems” (wrong again, Bob). He assumes low-income workers would get the tax credit even if their employer is already paying for their coverage (wrong), and he argues that the President’s Association Health Plan idea “would exempt such associations from regulations that currently prohibit discrimination against individuals based on health status.” I wish this were true, but he’s wrong again. About all AHPs would pre-empt are state mandated benefits, which is hardly worth the fuss. Finally he says, “Bush wants to expand (HSAs) so they can also be used to pay premiums.” Alas, again I wish he were right, but he isn’t. There is no such proposal coming out of the Administration or before Congress.
SOURCE: The “Business Week” article was published on May 24, 2004, and the “Boston Globe” article on May 27, 2004. Both publications require a subscription or a fee.
An Honest Look at the Individual Market
Tom Musco and Tom Wildsmith wrote an important article on the individual insurance market that hasn’t gotten much press. They address the charges that individual coverage costs too much, provides lousy benefits, and cherry picks the healthiest applicants. They surveyed insurance carriers about real world experience in the individual market in those states that allow underwriting and received information on 502,000 applications received and processed in 2001. Of the 466,000 applications that were complete and could be processed, 88.2% were offered coverage and 71.2% at standard rates. 5.9% were rated up, 13.5% were issued coverage with riders, and 2.8% got coverage with both riders and extra premiums. The coverage was quite affordable with the average annual premium for single coverage $2,070, and $4,009 for family coverage (less than half of Mr. Kuttner’s supposed $9,000). Benefits were good, too, with PPO deductibles for singles ranging from $750 to $2,000, OOP limits from $3,000 to $7,500, and lifetime maximums of $2 million to $5 million. The policies typically allow applicants to purchase additional coverage for prescription drugs, wellness, and routine maternity. Mental health, substance abuse and complications of pregnancy are built into the core benefits.
Over three/fifths (61.2%) of the uninsured are under age 35 and could be covered for less than $120 a month. If the President’s tax credit of $1,000 per year were adopted it would cover the vast majority of the premium for most of the currently uninsured.
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