IN THIS ISSUE:
? Back in the Saddle Again
? In Pittsburgh with SEPP and the Allegheny Institute
? In Chicago on Retiree Health and HSAs
? In Boston with Tufts Health Plan
? In Kansas with Flint Hills
? New Paper on “Rethinking the Uninsured”
? Interesting Testimony From Jeff Closs of BENU
Back in the Saddle Again
After a winter and spring of brutal travel, giving 33 speeches in 26 weeks almost all out of town, I was able to spend July and August at home, getting caught up on my reading and authoring a new paper on the uninsured (see below). But now I’m back on the road, with four presentations last week and three more this week.
In Pittsburgh with SEPP and the Allegheny Institute
I’m writing this in the airport in Pittsburgh where I just finished giving a presentation on HSAs to the Allegheny Institute and the Society for the Education of Physicians and Patients (SEPP). On the program with me were Nina Owcharenko of The Heritage Foundation and Allen Wishner of Flexible Benefit Service Corporation. Senator Rick Santorum (R-PA) keynoted the day and brought with him Senator Jim Bunning (R-KY) who was in town for a fundraiser. Sen. Santorum could not have been more gung ho about HSAs, reminding the group that he was one of the first sponsors of an MSA bill in 1992 when he was in the House. The event attracted about 150 people, including quite a few physicians, business owners and media. Congratulations to doctors Bob Carroll, Dennis Gabos, Bob Urban of SEPP, and Jake Haulk president of the Allegheny Institute.
In Chicago on Retiree Health and HSAs
Last week started with a presentation on Monday on HSAs and retiree health at a conference in Chicago sponsored by the Institute for International Research. I shared the program with Paul Fronstin of EBRI and Doug Kronenberg of Lumenos. I tried to make the point that HSAs should help a little, but they are hardly the solution to the problem of funding retiree benefits. If anything, HRAs are likely to be more significant since they cannot be cashed out for non-medical uses and they suit employers’ defined contribution strategies better. More importantly, in an economy where almost no one actually stops working at age 65, we need to rethink our whole approach to retiree health to better match the needs of a modern workforce. Many workers may want to phase-in to retirement, for example, but neither Medicare nor employer benefits are very suitable for such a transition.
SOURCE: Go to http://www.iirUSA.com/HSA
In Boston with Tufts Health Plan
Last Thursday, I was in Boston giving three talks to brokers and consultants involved with Tufts Health Plan. Tufts is marketing an HSA product developed by Destiny Health called Liberty. The other big players in the Massachusetts market, Blue Cross and Harvard Pilgrim, are said to be about a year away from launching a competing product, so Tufts is well-positioned to gain market domination with their alliance. It is impressive that Tufts Health Plan took the plunge so decisively. My presentation was the full boat – “Where We’ve Been and Where We’re Going” going back to the formation of Blue Cross in the 1930s.
SOURCE: My slides are available at http://www.galen.org/ownins.asp?docID=691
For more about the Tufts/Destiny product go to http://www.tuftshealthplan.com/members/members.php?type=mem&sec=plans&content=liberty&rightnav=liberty
In Kansas with Flint Hills Center for Public Policy
Now it’s on to Kansas where I’ll be giving speeches in both Wichita and Kansas City on behalf of the Flint Hills Center for Public Policy and the Kauffman Foundation. The Wichita event is being co-sponsored by the state Chamber of Commerce, the medical society and other health and business groups. The Flint Hills folks have been very proactive, arranging for an op-ed in the Wichita Eagle and interviews with various reporters while I’m out there.
SOURCE: For the op-ed, go to http://www.kansas.com/mld/kansas/news/editorial/9774920.htm
For more about the Flint Hills Center for Public Policy, go to http://www.flinthills.org/
New Paper on “Rethinking the Uninsured”
Meanwhile, it was nice to be able to get some writing done over the course of the summer. One of the outputs is a new monograph on “Rethinking the Uninsured.” In this paper I argue that we need to reframe the issue of the uninsured – the idea that there is a firm dichotomy between Americans who are insured and those who are not simply doesn’t reflect reality and is not helpful in setting public policy. The real issue is accessing health care services, and insurance is only one of several ways to help do that. The paper also delves into some insurance principles that are too often ignored or distorted by policy makers. For instance, while many people talk about adverse selection they tend to ignore the flip side of selection, “moral hazard.” The principle of selection means that the people who know they will need services are the ones most likely to acquire coverage, but the principle of moral hazard means that people who are insured will be more likely to consume services than they would be otherwise. Avoiding selection often means imposing benefits on people who don’t want them, but once the benefits are in place, they will use them. Both are insurance-induced distortions of behavior, which suggests minimizing the role of insurance in financing health care services. The paper goes on to suggest ways of turning the discussion to more productive avenues.
Interesting Testimony From Jeff Closs of BENU
Testifying before the Joint Economic Committee of Congress on September 22, BENU president Jeff Closs touched on some of the same themes. He decries the lack of consumer choice in employer-sponsored plans, but notes that this is the result of employer decisions to use an “average cost” model of premium payment (also known as community rating). He says this is because “as a society we view health insurance as part social program.” But it also discourages a choice of health plans because carriers worry about being selected against (i.e., attracting higher risks than the average cost premium will pay for). Employers end up choosing a single option or a single carrier as their sole provider, “but employers are not as effective as employees in making value assessments because individual needs and preferences differ.” Mr. Closs says that BENU solves this problem by risk adjusting the payment to insurers. The employer (and employee) continues to pay based on average cost, but BENU takes those average cost payments and pays a variety of carriers based on the actual risk enrolled. The program enables a choice of carriers within a single employer. In Oregon the BENU program allows employees to choose between Cigna and Kaiser, in Washington state they can choose between Cigna and Group Health. It’s an interesting proposition, except that it seems to perpetuate community rating within a group, so a 25 year-old male still pays the same premium as a 55 year-old. This will continue to discourage younger people from participating in their employer’s benefit program. These back-room risk adjustments are fine, but there should still be some risk factors built into the premium at the user level.
SOURCE: To get all the testimony from the JEC hearing, go to http://jec.senate.gov/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=81
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