IN THIS ISSUE:
? Briefing on Medicare Reform Cosponsored by Galen
? Big Business Wants Universal Coverage
? Manipulating Numbers by the Health Care Establishment
? Tufts Health Plan Committed to Consumer Driven Plan
? Boston Employers Trying Out Consumer Driven Plans
? Texas Consultants Want to Get Patients Involved
Briefing on Medicare Reform Cosponsored by Galen
There will be a Hill briefing on Monday, June 2, co-sponsored by the Galen Institute, American Enterprise Institute, and The Heritage Foundation on, “The Bottom Line on Medicare Reform: Pitfalls and Possibilities.” The speakers will include Grace-Marie Turner, Joe Antos, and Robert Moffitt from each of these organizations. The briefing will also feature the release of a new joint statement from members of the Consensus Group on shared principles for adding prescription drug benefits to Medicare. The briefing will be in Room B-339 of the Rayburn House Office Building starting at noon. Lunch will be provided. To register, please contact: http://www.heritage.org/customcf/rsvp/index.cfm?EventID=ev060203a&EventDate=2003-06-02&EventTitle=GRMedicareReform
Big Business Wants Universal Coverage
Kent Hoover had an article in a number of local “Business Journals” headlined “Big Businesses Call for Universal Health Care Coverage.” The article says the National Coalition on Health Care is predicting “the average premium for family coverage in employer-sponsored plans will reach $14,545 in 2006,” and the numbers of uninsured will be 54 million by then. SBC president Bill Daley is quoted as saying, “The present course we are following is unsustainable.” The article notes that though the group hasn’t settled on prescriptions, it has agreed on five principles:
– Health Insurance For All
– Improved Quality of Care
– Controlling Total System Costs and Stopping Cost Shifting
– Creating a More Viable and Equitable Mechanism for Financing, and
– Simplified Administration
While the prescriptions have not been specified, the article provides a hint in the form of a quote from Dick Baird, the CEO of Dutch-owned Giant Foods. He says, “All we ask for, and what we need, is a ‘level playing field’ where every employer pays their fair share, and where a company’s competitive advantage is achieved by means other than avoiding the provision of medical care coverage and shifting the costs towards those companies who do provide that coverage.” Translation – “We’ve caved in to union demands for ever-richer benefits for decades, so now we want the government to mandate the same burden on our competitors.”
Manipulating Numbers by the Health Care Establishment
Well, now. This was fairly provocative, so I decided to dig a little deeper and look up this report by the National Coalition on Health Care titled “Charting the Cost of Inaction.” You will surely be shocked – shocked! – to learn that the numbers are cleverly manipulated to achieve a pre-determined conclusion. The report uses 1998 as the beginning point of a “trend” in premium changes, and compares that trend to 1993, “when there was widespread agreement that the health care system was in crisis.” I don’t have premium changes handy, but I do have rates of increase of National Health Expenditures (NHE), which are a more reliable measure of health care inflation since changes in premium costs fail to account for changes in benefits. As it turns out, 1998 was close to an historical low point in health inflation (at 5.4%), exceeded only by 1997 (at 4.9%), and 1996 (at 5.0%). These years of the mid-1990s are a huge anomaly, since at no time between 1961 and 1994 was the growth in NHE less than 7.0%, and often exceeded 10%. The authors may believe the system was in “crisis” in 1993, but at 7.4%, 1993 had the second lowest rate of increase up to that point, exceeded only by 1986 at 7.2%. In fact 1993 was the fifth year in a row that the rate of increase dropped (from 12.1% in 1988, to 11.8% in 1989, 11.8% in 1990, 9.5% in 1991, 8.6% in 1992). It is intellectually dishonest to project future trends by selecting as a starting point an historically low point.
That is not to dismiss the concern about the growing costs of coverage. But a straight-line projection from the past few years tells us next to nothing about the future. Later in the discussion, the report drops its reliance on projected premium trends, relying instead on CMS projections of NHE. They compare these projections to an estimate of “how much the United States would spend on health care? if total expenditures grew at a rate of (population growth and general inflation),” and conclude we could save $418 billion in three years. This is what they say “an effective cost containment strategy could potentially save.” Yikes! Can you imagine the draconian rationing that would be involved in holding health care costs down to the rate of population growth and general inflation? That completely disregards the aging of the population or any of the other uncontrollable factors that contribute to rising health care spending. And somehow, they suggest, having universal coverage will help lower the rate of health care spending.
So, who are the luminaries who have endorsed this report? In addition to the big corporate fat cats who are hoping for a taxpayer subsidy there are the Communications Workers (get the SBC connection?) and AARP. The web site also lists a host of prestigious “individual supporters” including former Presidents Jimmy Carter, George HW Bush, and Gerald Ford, former Congressional heavyweights like George Mitchell and Robert Michel, much of the academic health care establishment, and such liberal intellectuals as Henry Aaron, Marcia Angell, Arnold Relman, and Uwe Reinhardt. Here is the real Ruling Class of American health care. I can’t wait to find out what solutions they have up their sleeves for us peasants.
Tufts Health Plan Committed to Consumer Driven Plan
Meanwhile, the “Boston Globe” reports that Tufts Health Plan is solidly committed to a consumer driven model. Reporter Charles Stein quotes Tufts Sr. VP Jon Kingsdale as saying, “I think potentially what we are talking about is as radical in innovation as HMOs were 30 years ago.” Tufts will cover hospital care and drugs for chronic conditions, but use an MSA-type arrangement for more discretionary spending. The article notes that the product design is taken from South Africa’s Discovery (and its American affiliate Destiny) and says company president Adrian Gore “has reams of charts that show his plan slows the growth of health spending but doesn’t discourage people from seeking preventive care. Compared to people covered by traditional insurance, Gore’s customers spend less on dermatology, drugs and physical therapy but get more Pap smears, mammograms, and cholesterol screenings.” The article quotes Brandeis’ Stuart Altman (one of the “individual supporters” of NCHC) as saying, “It will be a niche product. People are too risk averse to go for it.” Mr. Stein rebuts, “I don’t agree. The plan will catch on because employers are desperate for something that might work.”
SOURCE: The article was published on May 25, 2003. There is a fee for accessing it through the archives at http://www.globe.com but I’ll wager that Mr. Stein would send it to you if you e-mail him at email@example.com
Boston Employers Trying Out Consumer Driven Plans
Also in Boston, Mary Pratt writes that employers are responding to rising health costs in a number of ways. “Some employers are passing on more of the rising costs to employees, while others are dropping the level of benefits being offered in order to keep costs in check. And a relatively small number are adopting a plan model designed to expose employees to the true cost of care.” She cites a local broker who had “three clients purchase new consumer-driven plans, which tout savings of about 15 percent for employers.” She adds, “Many of the major health insurance companies have either introduced or are now rolling out versions of these plans to help employers cope with the escalating premiums.”
Texas Consultants Want to Get Patients Involved
Writing in the “San Antonio Express-News,” Dave Beck urges employers to use consultants to help negotiate and structure their benefits programs. He says such consultants are typically working with CEOs and CFOs these days instead of just the HR departments. The top dogs are so concerned about the impact of health costs on their bottom lines they want to be personally involved in the decisions. One thing consultants can bring is expertise on new consumer driven health plans, he says. He quotes one consultant as saying, “We’re trying to get patients involved. We want that conversation with the physician or pharmacist, asking if a generic drug could be substituted for the name brand.”
My daughter gets back from the Persian Gulf next week and I will be in San Diego to greet her at the dock. She’s been on the USS Valley Forge as part of the USS Constellation battle group. Please forgive me if I am not able to get a newsletter out next week. I’ll try to make up for it the following week.
Please send all comments/questions directly to me at firstname.lastname@example.org.