Rick Martinez has a column on health care co-ops in today's News and Observer. Co-ops are an attempt to develop a compromise between persons wanting a public option in a new system, and those desperately opposed. A co-op would presumably be a health insurance plan offered in a state and organized as a non-profit organization.
I think he is onto something when he says that liberals intuitively distrust insurance companies, and conservatives intuitively distrust anything government. No evidence to the contrary will sway either side. So, a co-op might offer a chance at a compromise. I would favor a public option in the context of the current debate, but I am not opposed to considering co-ops, though I am not sure that co-ops will work. Here are some general thoughts I had as a I read his column, and think about the public option v. co-op v. neither option.
*He uses the example of electric co-operatives in North Carolina. Howver, electric co-ops are monopolies, just like for profit electric companies. When I lived in Carrboro during graduate school, I got power via a co-op but am pretty sure I had no choice in the matter. If you lived at my street address you got power from the Co-op, or read by candle light. A co-op in the health insurance context would be just one option for an indivdiual to choose, just like a public option would be one choice. So, if electric co-ops have to serve members well, all the moreso that health insurance co-ops would do so because they are not guaranteed customers. This would argue in favor of co-ops.
*A co-op in health insurance wouldn't be able to take advantage of some of the scale benefits that a public option would have. Similarly, one knock of co-ops is that they don't have the profit motive that for profits do which would theoretically spur efficiency and which might mean they have trouble getting needed capital to start up. This would argue against co-ops, because they may not be robust enough to compete with private insruance companies.
*For competition to be fair and square, you would have to ensure that either a public option or co-op didn't get any more financial support other than premiums flowing based on consumers choosing those options. This is a legitimate concern for private insurers regarding a public option (or a co-op).
*Mr. Martinez notes that co-ops have more independence from governement than a public option, but that they will still have a degree of government involvement....this is an understatement generally in the insurance system. For profit (and not for profit) insurers currently have a big degree of government involvement via the tax exclusion of employer provided insurance premiums. No one in the health care business is free from government due to this huge tax subsidy of private health insurance.
*He ends his column with a puzzling sentence..."The last thing health care reform needs is a public option that offers little to no choice." It is public OPTION. No one has to choose it. It is just one choice. In fact, it is a little surprising that persons who truly think that government always gets everything wrong (not saying he says this, not sure if he thinks that or not) aren't actually salivating at the chance for there to be a public option....that might ultimately lose out and not get many subscribers. This is a big chance for private insurance companies to defeat a government plan head to head. No one has to sign up for it under any bill or idea being discussed. If private insurers make mince meat of public option fair and square, who knows, maybe the next step could be repeal of Medicare?
Wednesday, August 5, 2009
Tuesday, August 4, 2009
Getting out your message
Home from China, and of course awake at 4:30am due to jet lag....
The next month will be key for the health reform discussion as members of Congress are home and both trying to listen to their constituents as well as trying to get out their message. There is lots of confusion among the public as the Democrats and Republicans hone their message. The President and the Administration increasingly talk about 'health insurance reform' as opposed to health reform. I think this is an attempt to respond to the tried and true lingo of a 'government takeover of the health care system' that opponents are fond of. And insurance companies aren't as popular as doctors, so there is more focus on changing the ills of insurance, though Karen Ignani, President of American Health Insurance Plans notes in the last link above that insurers are in favor of many of the discussed reforms, including eliminating pre-existing conditions.
Several thoughts. One, 1 of every 2 dollars spent today in the U.S. health care system is paid by the federal government, and this doesn't include the impact of the tax exclusion of employer paid insurance premiums. So, we don't exactly have a system that is now devoid of government payers. Second, I get the need to have a message that people can understand, and they can get being harmed by an insurance company. But, there will have to be reform of how care is delivered if costs are to be changed/reduced. Finally, it is interesting how effective an argument about a government takeover is, and how people fear 'government bureaucrats making decisions.' Most of the horror stories about paperwork, care being denied, doctors having to jump through hoops to get approvals are about private health insurance, not Medicare, for example. In fact, one of the problems with Medicare costs is that almost nothing is done to determine whether care paid for is reasonable--it is left up to doctors and patients.
The next month will be key for the health reform discussion as members of Congress are home and both trying to listen to their constituents as well as trying to get out their message. There is lots of confusion among the public as the Democrats and Republicans hone their message. The President and the Administration increasingly talk about 'health insurance reform' as opposed to health reform. I think this is an attempt to respond to the tried and true lingo of a 'government takeover of the health care system' that opponents are fond of. And insurance companies aren't as popular as doctors, so there is more focus on changing the ills of insurance, though Karen Ignani, President of American Health Insurance Plans notes in the last link above that insurers are in favor of many of the discussed reforms, including eliminating pre-existing conditions.
Several thoughts. One, 1 of every 2 dollars spent today in the U.S. health care system is paid by the federal government, and this doesn't include the impact of the tax exclusion of employer paid insurance premiums. So, we don't exactly have a system that is now devoid of government payers. Second, I get the need to have a message that people can understand, and they can get being harmed by an insurance company. But, there will have to be reform of how care is delivered if costs are to be changed/reduced. Finally, it is interesting how effective an argument about a government takeover is, and how people fear 'government bureaucrats making decisions.' Most of the horror stories about paperwork, care being denied, doctors having to jump through hoops to get approvals are about private health insurance, not Medicare, for example. In fact, one of the problems with Medicare costs is that almost nothing is done to determine whether care paid for is reasonable--it is left up to doctors and patients.
Monday, August 3, 2009
China and H1N1
So,I wrote earlier about how China's aggressive H1N1 quarnantine policy wasn't really effective for H1N1 because the incubation period is quite short...so when you have symptoms you have likely already spread it. Decidedly different from SARS which had a 10 day incubation period.
Well, multiple knowledgeable people whom I talked with in China about this immediately said 'The gov't knows that...they are just practicing procedures so they will be ready for a more serious outbreak.'
There is a certain logic to practising when the disease in question is not particularly lethal in terms of case fatility rate. However, it is unimagineable that this would/could/should happen in the US. While I hope a new flu/emerging disease doesn't erupt anytime soon, the world will probably be better off if it breaks out in China.
Well, multiple knowledgeable people whom I talked with in China about this immediately said 'The gov't knows that...they are just practicing procedures so they will be ready for a more serious outbreak.'
There is a certain logic to practising when the disease in question is not particularly lethal in terms of case fatility rate. However, it is unimagineable that this would/could/should happen in the US. While I hope a new flu/emerging disease doesn't erupt anytime soon, the world will probably be better off if it breaks out in China.
Sunday, August 2, 2009
What not to do
It has been great fun teaching a short course in comparative health systems/financing around the world to students taking the Peking University/Duke University Diploma in Global Health. 90 students from 44 Universities around China.
On friday, they asked me to talk a bit about health reform in the U.S. (I was surprised by how much some of the students were following this). They wanted me to identify some lessons regarding what China might do given their recently stated goal of moving toward universal coverage in China. I am not really sure what China should do. I don't know enough about their system. So, I focused on things they should probably not do based on experience from the USA. Here are five of those thoughts, that I thought the most important. I plan to write a bit more about my experience in China, later. I am returning back to the states on Monday.
1. Do not provide large subsidy for rich to get private insurance. All subsidies provided to stimulate insurance need to be clear.
2. Don’t deny the existence of limits for what medicine can do. This has to do with a cultural conversation about what medicine can do versus public health versus individual choices versus things that can't be fixed.
3. Pay attention to the incentives in how doctors and hospitals are paid. The incentives in the Chinese system are now confusing, and there is a good deal of corruption and 'under the table' payment. We talked a great deal this week about the tradeoffs and incentives inherent in using FFS, capitation, salary as payment means.
4. While there is not much evidence that markets for insurance reduce health costs, you can have some ‘market notions’ inside a system that may help improve quality.
Choice of doctor, hospital and information provided to patients can help keep any system honest.
5. Be careful with age-related insurance financed via payroll taxes, demographic changes will greatly affect such a system. China has recently reversed its one child policy, and a couple who were both only children can now have two children. Lets say they do this for 20 years and then change back to a one child policy....that pig in the python would make the baby boomers impact on medicare look like a little blip.
Finally, you can’t or shouldn’t copy another system. You can learn from them, but your job is to build the CHINESE health system. This is generic advice....all nations can see models and learn lessons from others, but must ultimately build a system that works for them.
On friday, they asked me to talk a bit about health reform in the U.S. (I was surprised by how much some of the students were following this). They wanted me to identify some lessons regarding what China might do given their recently stated goal of moving toward universal coverage in China. I am not really sure what China should do. I don't know enough about their system. So, I focused on things they should probably not do based on experience from the USA. Here are five of those thoughts, that I thought the most important. I plan to write a bit more about my experience in China, later. I am returning back to the states on Monday.
1. Do not provide large subsidy for rich to get private insurance. All subsidies provided to stimulate insurance need to be clear.
2. Don’t deny the existence of limits for what medicine can do. This has to do with a cultural conversation about what medicine can do versus public health versus individual choices versus things that can't be fixed.
3. Pay attention to the incentives in how doctors and hospitals are paid. The incentives in the Chinese system are now confusing, and there is a good deal of corruption and 'under the table' payment. We talked a great deal this week about the tradeoffs and incentives inherent in using FFS, capitation, salary as payment means.
4. While there is not much evidence that markets for insurance reduce health costs, you can have some ‘market notions’ inside a system that may help improve quality.
Choice of doctor, hospital and information provided to patients can help keep any system honest.
5. Be careful with age-related insurance financed via payroll taxes, demographic changes will greatly affect such a system. China has recently reversed its one child policy, and a couple who were both only children can now have two children. Lets say they do this for 20 years and then change back to a one child policy....that pig in the python would make the baby boomers impact on medicare look like a little blip.
Finally, you can’t or shouldn’t copy another system. You can learn from them, but your job is to build the CHINESE health system. This is generic advice....all nations can see models and learn lessons from others, but must ultimately build a system that works for them.
Day 4@ Peking Univ.
Damjan Denoble of asiahealthcareblog.com has posted a write up of the lecture and discussion I did on long term care, here at Peking University.
Saturday, August 1, 2009
Asian health care models
The News and Observer has an article promoting Singapore as a reform model for the U.S., and the article laments that Canada and Europe seem to be the only places people look if they want to look at other systems. There are at least 3 Asian systems of note:
(1) Singapore has a gov't catastrophic plan, give gov't support to low income folks to purchase private health insurance, and is well known for use of health savings accounts. There article in the N and O is here http://www.newsobserver.com/opinion/columns/story/1629555.html. Singapore is quite an idiosyncratic place, and while individuals being involved in their own care is a libertarian goal, Singapore is one of the least libertarian places on the planet. Or maybe they make you be libertarian? In all seriousness, it is an example of incentivizing people to think about their health care expenditures...and is the anti-thesis of the U.S. upside down subsidy of private health insurance via the employer paid tax exclusion.
(2) Japan has a social insurance model with an insurer of last resort linked to geography, sort of like if county's insured all persons not otherwise covered. If Singapore is an attempt to de-link insurance from employment, Japan is heavily linked to employment (though you remain covered if you lose your job). Individuals are covered via payroll tax financed sickness funds that are insurance pools (Germany is based on this notion as well). Large employers self insure and run their own fund. Employees of smaller employers are placed in different funds, and there is a specific fund for civil servants. Co-pays are fairly high until one reaches age 70 and then are quite low. Private insurance is not a part of the mix.
Japan (along with Germany) has made the biggest changes in financing long term care over the last decade, with Japan creating a system that was designed to replace informally provided (family) care with care purchased via a gov't program. Essentially the goal of the reform was to address gender inequities and 'crowd out private care' with public money. The bill that created the reform was called the 'daughter in law bill.'
(3) Taiwan has a tax financed single payer approach, essentially US Medicare for everyone. One interesting aspect of Taiwan's system is that it covers western medicine along side of traditional chinese medicine. There is priviate coverage for gaps in coverage similar to medigap in USA.
There are some huge demographic differences in these nations... Singapore has 8.5-9% of the population 65+, USA has about 13% and Japan has about 21%. Also, Singapore is filled with guest workers who get deported if they get sick. But, still an interesting model.
So, there are models of note in Asia. Quickly you find an example of lots of private individual involvement (Singapore), a social insurance model (Japan), and a single payer (approach). Sorta like if you look at Europe and Canada.
All intersting models, but there is no magic bullet.
(1) Singapore has a gov't catastrophic plan, give gov't support to low income folks to purchase private health insurance, and is well known for use of health savings accounts. There article in the N and O is here http://www.newsobserver.com/opinion/columns/story/1629555.html. Singapore is quite an idiosyncratic place, and while individuals being involved in their own care is a libertarian goal, Singapore is one of the least libertarian places on the planet. Or maybe they make you be libertarian? In all seriousness, it is an example of incentivizing people to think about their health care expenditures...and is the anti-thesis of the U.S. upside down subsidy of private health insurance via the employer paid tax exclusion.
(2) Japan has a social insurance model with an insurer of last resort linked to geography, sort of like if county's insured all persons not otherwise covered. If Singapore is an attempt to de-link insurance from employment, Japan is heavily linked to employment (though you remain covered if you lose your job). Individuals are covered via payroll tax financed sickness funds that are insurance pools (Germany is based on this notion as well). Large employers self insure and run their own fund. Employees of smaller employers are placed in different funds, and there is a specific fund for civil servants. Co-pays are fairly high until one reaches age 70 and then are quite low. Private insurance is not a part of the mix.
Japan (along with Germany) has made the biggest changes in financing long term care over the last decade, with Japan creating a system that was designed to replace informally provided (family) care with care purchased via a gov't program. Essentially the goal of the reform was to address gender inequities and 'crowd out private care' with public money. The bill that created the reform was called the 'daughter in law bill.'
(3) Taiwan has a tax financed single payer approach, essentially US Medicare for everyone. One interesting aspect of Taiwan's system is that it covers western medicine along side of traditional chinese medicine. There is priviate coverage for gaps in coverage similar to medigap in USA.
There are some huge demographic differences in these nations... Singapore has 8.5-9% of the population 65+, USA has about 13% and Japan has about 21%. Also, Singapore is filled with guest workers who get deported if they get sick. But, still an interesting model.
So, there are models of note in Asia. Quickly you find an example of lots of private individual involvement (Singapore), a social insurance model (Japan), and a single payer (approach). Sorta like if you look at Europe and Canada.
All intersting models, but there is no magic bullet.
Comments on July 31 article
I can't comments in the comments section...but just a few brief replies to the thoughtful comments posted.
***economy of scale and public option***
I agree one of the arguments for a single payer or a public option is economies of scale, and a fear of private insurance is that public option would use knowledge gleaned from Medicare to give it competitive advantages. I think most opposition to public option and certainly single payer is based on general notions of 'gov't can't do anything right.' I wrote a few weeks ago about Medicare as a innovator in health insurance. In fact, most health insurance innovations of the past 25 years have come from Medicare. Prospective payment of hospitals which developed DRGs, which are now used by priviate insurers, RBRVS which allowed for attempts at differential payment policy designed to encourage primary care, etc. I suspect that there are innovations that have been developed by private insurers, but they are mostly related to underwriting and trying to not cover bad risks. This is what insurance does. So, culturally, we are stuck in no man's land. We say we don't want gov't (most people say they don't want gov't; you are saying opposite). Then when private insurance does what private insurance does, we say we don't like that. Lets develop regulations, etc. to stop private insurance from doing what private insurance does.
A very coherent argument can be made for single payer. I think if I were the king I might have universal single payer with very high deductibles, esp at younger ages and private insurance on top to fill the gaps. However, that is not going to happen this time around, and I suspect a public option won't either. If you really want single payer, you should probably be for whatever option ends up having indivdiuals do the most themselves for arranging their own health insurance...there will be many pitfalls and the experience may well make folks more ready for single payer later.
**do cross national comparisons include all persons or exclude uninsured**
They include all persons. You are saying that uninsured people are not as healthy as insured people...I agree and it is part of the point. If you add in 47 Million uninsured, the fact we spend twice as much as most is all the more amazing. Also, your general point is why people often look at measures such as healthy life expectancy at age 60 or life expectancy at 60 or 65....these measures mean given you live that long, then what is your experience. Just about all persons in US are covered when they reach age 65, and one of the knocks of other nations is that they don't invest as heavily in tertiary care...these later life measures are therefore comparing insured people across nations. And we still lag behind.
**how can you assess/change intensity without malpractice reform**
I think it is interesting how quiet malpractice has been in the debate. However, I suspect it is the CENTRAL political issue that paves the way for a consensus bill. I am writing about malpractice and patient safety this coming Friday.
**how would you propose to assess intensity?**
I would end or greatly limit the tax exclusion of employer paid insurance for one, which should at least stop insulating heavily insured folks from their decisions.
Key to me is developing a commission that is insulated from Congress to take a comprehensive look. I would start with the 10 most expensive conditions and look closely at what services may have little to no benefit and/or extremely high cost per benefit and perhaps stop paying (Medicare) for certain services or at least changing the current procedure whereby Medicare heavily sets payment rate but does virtually nothing about what can be done and when. This group would need ability to be very comprehsive not only in potentially red lining some stuff, but also proposing payment changes. Congress would then have to vote up or down a la base closing commission.
Note, the CBO said that the commission AS OUTLINED IN THE LETTER wouldn't do anything of consequence to alter costs. We need something consequential. Lessons learned from Medicare can move into private insurance...this is almost always how insurance innovation goes.
Note this will likely incrase admin costs of Medicare, especially if you likely end up with appeals or having to make the case for certain procedures in certain circumstances (like with private insurance) but you could argue Medicare doesn't pay enough in admin in this context.
***economy of scale and public option***
I agree one of the arguments for a single payer or a public option is economies of scale, and a fear of private insurance is that public option would use knowledge gleaned from Medicare to give it competitive advantages. I think most opposition to public option and certainly single payer is based on general notions of 'gov't can't do anything right.' I wrote a few weeks ago about Medicare as a innovator in health insurance. In fact, most health insurance innovations of the past 25 years have come from Medicare. Prospective payment of hospitals which developed DRGs, which are now used by priviate insurers, RBRVS which allowed for attempts at differential payment policy designed to encourage primary care, etc. I suspect that there are innovations that have been developed by private insurers, but they are mostly related to underwriting and trying to not cover bad risks. This is what insurance does. So, culturally, we are stuck in no man's land. We say we don't want gov't (most people say they don't want gov't; you are saying opposite). Then when private insurance does what private insurance does, we say we don't like that. Lets develop regulations, etc. to stop private insurance from doing what private insurance does.
A very coherent argument can be made for single payer. I think if I were the king I might have universal single payer with very high deductibles, esp at younger ages and private insurance on top to fill the gaps. However, that is not going to happen this time around, and I suspect a public option won't either. If you really want single payer, you should probably be for whatever option ends up having indivdiuals do the most themselves for arranging their own health insurance...there will be many pitfalls and the experience may well make folks more ready for single payer later.
**do cross national comparisons include all persons or exclude uninsured**
They include all persons. You are saying that uninsured people are not as healthy as insured people...I agree and it is part of the point. If you add in 47 Million uninsured, the fact we spend twice as much as most is all the more amazing. Also, your general point is why people often look at measures such as healthy life expectancy at age 60 or life expectancy at 60 or 65....these measures mean given you live that long, then what is your experience. Just about all persons in US are covered when they reach age 65, and one of the knocks of other nations is that they don't invest as heavily in tertiary care...these later life measures are therefore comparing insured people across nations. And we still lag behind.
**how can you assess/change intensity without malpractice reform**
I think it is interesting how quiet malpractice has been in the debate. However, I suspect it is the CENTRAL political issue that paves the way for a consensus bill. I am writing about malpractice and patient safety this coming Friday.
**how would you propose to assess intensity?**
I would end or greatly limit the tax exclusion of employer paid insurance for one, which should at least stop insulating heavily insured folks from their decisions.
Key to me is developing a commission that is insulated from Congress to take a comprehensive look. I would start with the 10 most expensive conditions and look closely at what services may have little to no benefit and/or extremely high cost per benefit and perhaps stop paying (Medicare) for certain services or at least changing the current procedure whereby Medicare heavily sets payment rate but does virtually nothing about what can be done and when. This group would need ability to be very comprehsive not only in potentially red lining some stuff, but also proposing payment changes. Congress would then have to vote up or down a la base closing commission.
Note, the CBO said that the commission AS OUTLINED IN THE LETTER wouldn't do anything of consequence to alter costs. We need something consequential. Lessons learned from Medicare can move into private insurance...this is almost always how insurance innovation goes.
Note this will likely incrase admin costs of Medicare, especially if you likely end up with appeals or having to make the case for certain procedures in certain circumstances (like with private insurance) but you could argue Medicare doesn't pay enough in admin in this context.
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