What Do Consumers Want?

Following up on my commentary of last week about the National Federation of Independent Business joining forces with a big labor union and the AARP on health care, I inaccurately said that the NFIB sponsored the Harry and Louise ads about the Clinton health reform plan in the 1990s. In fact, the ads were produced by the Health Insurance Association of America. My apologies for the error.

But the main point stands. It is very dangerous for organizations to try to show their members they are "doing something" on health care when what they are doing is likely to backfire, costing them members and prestige. An individual mandate for health insurance isn't the answer because it immediately morphs into an employer mandate, which the NFIB adamantly opposes, with employers required to pay a government-determined share of the premiums.

The NFIB would be wise to better understand their members' goals and to support policies that would move in that direction.

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A new study out by Deloitte's Center for Health Solutions is a must read. The big consulting firm has produced the most comprehensive profile so far of the American health care consumer, under the direction of the center's executive director, Paul Keckley, Ph.D.

The 2008 Survey of Health Care Consumers found unequivocally that Americans are not passive patients willing to let others make decisions for them but are active consumers who want to be engaged in decisions.

They are hungry for information and want e-mail and web-based connections to their doctors, and given the chance, they would be value-shoppers, willing to make trade-offs, like accepting smaller networks of doctors to save money on insurance premiums.

At the same time, they are worried about future health care costs and are searching for alternative medicines and services that can save them money and offer convenience.

The survey, conducted last fall with a scientific online poll of more than 3,000 Americans, found many gaps between what consumers want, especially in timely and useful information and control over their health care decisions, and what's available to them today.

A few examples:

  • Four out of five people want to be able to make same-day appointments with their doctors, and three-quarters want online access to their medical records and to be able to communicate with their doctor by email.

    Few have these options. Payment policies must be modernized to allow doctors to get online — and get paid for it.

  • Two out of three Americans want to participate in programs that will help them learn how to better manage their health, but only 17% have participated in a wellness program — another gap just waiting to be filled.

And about health insurance:

When given a choice between getting health insurance through an employer or on their own, 54% would prefer the employer. But almost as many — 46% — would prefer to get insurance on their own. This is great progress in a health sector where people have been brainwashed to think that the only place to get health insurance is through their jobs. They understand intuitively that portability is crucial.

And what is the first thing they ask for in a health plan? Prescription drug coverage was at the top of the list, with 76% saying it was their most important consideration for health insurance, followed by 74% who say the monthly premium is most important. These issues were much more important than coverage for dependents (48%) or whether a plan covers mental health costs (33%).

The survey also shows that it would be a mistake to think of American health care consumers as a homogenous group. There are many different personality types with different levels of interest in navigating the health care system. Some are content and compliant, but the majority is interested in change, including innovative approaches to care and coverage and in having much more access to personalized, online information.

This barely skims the surface of this in-depth survey. It's worth a read by anyone, including political leaders, interested in finding out what services health care consumers want and will need in the future.

Market opportunities abound if politicians don't throw up roadblocks to progress.

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The number of uninsured people in the U.S. grew by 3.4 million between 2004 and 2006, a time of robust economic growth, largely due to a continued decline in employment-based health insurance. This is the key finding in the latest study by John Holahan of the Urban Institute entitled, "The U.S. Economy and Changes in Health Insurance Coverage, 2000-2006."

Not surprisingly, the declines were greatest among those with lower incomes.

It is worth remembering that every time the cost of health insurance rises by 1%, the number of people with health insurance declines by 200,000 to 300,000 people. During 2004-2006, employer health benefit costs rose by nearly 20%.

It is not surprising that those at the lower end of the income scale, whose wages are most sensitive to benefit cost pressures, are most likely to be impacted.

Is the answer going to be trying to force employers to provide health insurance, as both Sens. Clinton and Obama would do? Especially when the mandated coverage is going to be at least as rich as that provided to members of Congress?

Providing lower-income workers with meaningful subsidies to buy more affordable, portable coverage would seem a much more sound prescription for realistic reform.

To paraphrase the classic campaign line, "It's the costs, stupid."

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We learned late last night that Rep. John Shadegg of Arizona has decided to run again for Congress after announcing last week that he planned to retire. He is one of our heroes in the Congress on health reform, and he received letters from 146 of his colleagues in the House, from the heads of 33 conservative organizations (including us), and from thousands of constituents asking him to reconsider.

His letter to constituents is moving and classy. "I expected my decision would elicit little reaction here in Arizona, and less in Washington," he wrote. "The events of the last week have, to say the least, stunned and deeply humbled me."

This statement from his letter rang particularly true:

"The letter signed by my colleagues in the U.S. House emphasized my hard work and expertise in health care reform. I have fought for patient-centered health care reform since my arrival in Congress. I fear we may be on the brink of dramatically damaging the delivery of health care in America — making it worse, not better. We all recognize the current system doesn't work well for millions of Americans. Health care decisions are being made by third parties, such as insurance adjustors, employer personnel departments, and health care plans, not patients and their families. Many of the changes being promoted by some would make a bad situation even worse. They would move further a
way from patient choice, personal responsibility, and individual control and toward government run, bureaucrat-controlled health care."

We need Gen. Shadegg in this fight, and he is back to lead the battle!

Grace-Marie Turner

RECENT NEWS ARTICLES AND STUDIES:

State Legislative Health Care and Insurance Issues: 2007 Survey of Plans
BlueCross BlueShield Association, 02/13/08

State lawmakers explored a number of strategies in 2007 to expand access to health coverage, including efforts to increase public program eligibility and assist low-income populations in purchasing private insurance, according to this BCBSA study. A dozen states introduced bills requiring individuals to purchase state-approved health benefit plans, and 13 states introduced some type of employer "play or pay" proposal. All of these measures failed because of their controversial nature and the difficulty of finding adequate funding sources. Ten states created or expanded programs to subsidize private insurance coverage for low-income workers and/or children. And ten states approved bills to promote greater provider transparency, including requiring hospitals to disclose medical adverse events and hospital-acquired infection rates.

Aneurysm Lands Man in Health-Care Nightmare
Lisa Priest
The Globe and Mail, 02/19/08

A shortage of specialized services in Ontario hospitals has forced 164 patients with broken necks, burst aneurysms and other types of brain bleeding to hospitals in Michigan and New York State since April 2006, reports Toronto's Globe and Mail. Although Ontario has the worst problem by far, it is not alone. British Columbia sent four patients with spinal-cord injuries to Washington State hospitals for care from May to September 2007. And Saskatchewan sent patients to neighboring provinces, including Alberta, for specialized neurosurgical services. In Ontario, patients face barriers to receiving care at every turn, the Globe reports. There is limited access to teleradiology and operating-room time. There are too few intensive-care beds, a short supply of neurosurgically trained intensive-care nurses to staff them, and too few neurosurgeons.

The Toronto Star reports that Claude Castonguay, the architect of Quebec's now-overburdened public health-care system, is proposing a strong and controversial remedy that includes further privatization and user fees of up to $100 for people to see their family doctor. The report concludes that Quebec can no longer sustain the annual growth in health-care costs.

On Patent Reform, Don't Be Evil
Sally Pipes, Pacific Research Institute
Tri State Observer, 02/18/08

The Patent Reform Act, while purporting to bring efficiency and flexibility to the patent system, would actually water down existing patent protections, Pipes writes. While this may be good for a few large technology firms, it will inflict serious harm on small entrepreneurs and research-based health sciences firms, whose livelihoods depend on marketing just a handful of lifesaving inventions. And the costs to biotech and pharmaceutical companies are far greater than any efficiencies created by leaner patent litigation. Patent protection provides the security that chemists and other scientists need to undertake the labor — and time intensive — research at the core of drug production. All innovators could benefit if Congress considered meaningful reforms which strengthen, not weaken, patent protection. A strong patent system enables the research and creativity that have produced everything from the paper clip to asthma medication.

The Associated Press reports that Google will begin storing the medical records of a few thousand people as it tests its long-awaited service to provide secure, on-line electronic medical records.

Medicare Funding Warning Response Act of 2007
Department of Health and Human Services, 02/08

Secretary Leavitt sent a proposal to Congress this week asking legislators to make changes to Medicare that will begin to slow the flood of red ink the program is facing. The Medicare Trustees have determined that, for two consecutive years, more than 45% of total Medicare spending will be derived from general revenues within the current or following six years. Key components of the HHS proposal include: providing the Secretary of Health and Human Services the authority and responsibility to introduce principles of values-based health care in the Medicare program, including a payment system that pays for quality; reducing the excessive burden that the liability system places on the health care delivery system; and income-relating the Medicare prescription drug benefit premium.

Geographic Variation in Health Care Spending
Congressional Budget Office, 02/08

The CBO examines the geographic variation in health spending, the reasons for that variation, and its implications for evaluating the efficiency of the health care system. Per capita spending on health care varies widely, from about $4,000 in Utah to $6,700 in Massachusetts, the CBO reports. And variations can be even greater within regions. In California, for example, Medicare spending per patient in the last two years of life ranged from less than $20,000 in some areas to more than $90,000 in others. The CBO wrestles with the reasons for these variations, from higher prices for services, severity of illness, income and preferences of patients for specific types of care, and differences in medical practice styles. The CBO offers several suggestions for change: Use bundled payments to "curb incentives to provide increasingly intensive services that produce only modest or no improvement in health," enhance incentives to follow accepted care guidelines, and generate more information about variations in practice patterns to "reorient inefficient practice patterns toward greater efficiency."

Health Questions for the Candidates
Betsy McCaughey, Hudson Institute
The Wall Street Journal, 02/20/08

Betsy McCaughey offered a list of health policy questions for Sens. Clinton and Obama: She suggests that Sen. Clinton should be asked about the effect her individual mandate would have on young adults and if her plan would provide health care coverage for legal and illegal immigrants. Sen. Obama should be questioned about how he plans to enforce his requirement that all parents have he
alth insurance for their children and if he would allow people to shop for cheaper insurance outside of their own state. McCaughey notes that both Clinton and Obama call for limits on the profit margins of insurance companies. Attacking the most unpopular industry in America may sound politically attractive, but if profit margins are legally capped, investors will flee to other industries and private insurance could become a thing of the past. That would leave only a government-run health-care system.

UPCOMING EVENTS:

Economic Lessons from Indiana: A Speech by Indiana Governor Mitch Daniels
American Enterprise Institute Event
Monday, February 25, 2008, 2:00 p.m. – 3:00 p.m.
Washington, DC

Health on the Home Front: Focusing on Veterans' Needs
Oregon Health Forum Event
Tuesday, February 26, 2008, 7:00 a.m. – 9:00 a.m.
Portland, OR

Clinical Data as the Basic Staple of Health Learning: Creating and Protecting a Public Good
Institute of Medicine Event
February 28-29, 2008
Washington, DC

Health Information Technology and Privacy: Is There a Path to Consensus?
Alliance for Health Reform Briefing
Friday, February 29, 2008, 12:15 p.m. – 2:00 p.m. (Lunch included)
Washington, DC

New Center Poll Highlights Importance of Acting Now to Protect the Public's Health and Safety
Burness Communications Event
Tuesday, March 4, 2008, 12:00 p.m. – 2:00 p.m. (Lunch included)
Washington, DC

Market Reforms and Reelection: Are They Compatible?
Cato Institute Policy Forum
Tuesday, March 4, 2008, 4:00 p.m. (Reception to Follow)
Washington, DC

2008 Women Business Leaders Summit
Women Business Leaders of the U.S. Health Care Industry Foundation Event
March 5-7, 2008
Washington, DC

Pulling the Trigger: How the Funding Warning Could Shape Medicare's Future
Kaiser Family Foundation Policy Workshop
Thursday, March 6, 2008, 9:30 a.m. – 11:00 a.m.
For more information please contact Tiffany Ford at tford@kff.org or 202-347-5270.

Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It features research and writings by participants in the Health Policy Consensus Group, articles of interest from the health policy world, and announcements of coming events. Health Policy Matters is published by the Galen Institute, a not-for-profit public policy organization specializing in information and education on health policy. For more information about the newsletter and our organization, please visit our website at www.galen.org.

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