Take $29,000 and Call Me In the Morning

The Wausau Daily Herald is running a story on a forum sponsored by Americans for Prosperity, which featured two Marathon County docs who oppose Healthy Wisconsin and, it appears, pretty much any fundamental health care reform plan.

The title of the article is "Doctors Slam Health Plan." Not much is given to explain why the two docs would want to slam Healthy Wisconsin, except that they fear the costs of the program will be high and it could draw out-of-state patients who would strain the economy.

Both of these lines have been typical conservative talking points in the debate over fundamental health care reform, and both are largely without merit. The high cost line is relative since, of course, independent studies have shown that the cost of doing nothing is what's the greatest, and the out-of-state line fails to consider state programs that already provide health care to a large portion of low-income residents as well as simple evidence that shows people -- particularly the poor -- often don't move across state lines simply to gain health coverage.

However, I really didn't expect the Daily Herald article to get into the analytical flaws of the presentation by the two docs trotted out by Americans for Prosperity, which the article did point out is an organization that seeks "limited government and market-based economic policies."

But something that might be considered pertinent information in a clearly political article such as this is the fact that the two docs at the forum have together contributed over $29,000 to GOP state candidates since 2005. And all it takes to find that info is a quick search for "Pam Galloway" and "Chris Magiera" on the Wisconsin Democracy Campaign site.

In the end, it's the analysis of the impact of fundamental health care reform that ultimately falls short. But what's potentially most devious in the article is that it gives the impression to readers that the two docs appeared at the forum as independent, professional voices as opposed to highly politicized spokespeople, which is really what their recent spending habits suggest.

Time to Pull Healthy Wisconsin from the Budget

The budget impasse is starting to make an appearance in the media -- see here and here -- as the summer comes to a close and schools begin to start-up. And the distinct flavor of the media coverage is shared guilt between Dems and GOPers for the stalling.

This is notably different than the way conference committee deliberations started off. After the Assembly released its budget in July, media accounts -- see here and here -- held that an impasse was likely because of how distant the Assembly budget was from the other three versions released up to that point (the Senate version was different in terms of total spending, but that difference was entirely due to the Healthy Wisconsin proposal).

From a political perspective, recent media accounts suggest that the Dems have largely lost that upperhand when it comes to focusing blame for an impasse on the GOP.

That being the case, the Dems need to find some way to jump start negotiations and regain some form of an upperhand -- not only because it will benefit them politically, but also because it's just time to get something accomplished with the budget.

And as much as I want to see fundamental health care reform get passed in Wisconsin, everyone has always known that 2007 isn't the year it's going to happen, which means it's time to pull Healthy Wisconsin from the budget.

Adding the proposal to the budget -- although certainly questionable in terms of timing -- has encouraged this state to both heighten and broaden the discussion of health care reform in important and positive ways. But that aim has run its course, and a plan like Healthy Wisconsin could now serve as much good in terms of raising awareness and furthering discussions as a standalone bill as it does in the budget.

If Healthy Wisconsin is pulled from the budget, the Dems could use the move as leverage to retain BadgerCare Plus, which is a solid short-term plan, along with a variety of other proposals included in the JFC budget and the governor's budget as well as focus public pressure on the GOP to also move to the middle with its positions.

The turn from restless to impatient is clearly coming in the media coverage of the budget, and just as it's in the best interest of the state to get something accomplished, it's in the best interest of the Dems to be ahead of the curve rather than being pulled under it.

Getting Health Care Out of the Labor Market

Yesterday, Rick Esenberg took issue with a comment of mine regarding the rationale behind health care rationing in the US today.

Responding to my statement that "either your employer offers good coverage or it doesn't," Rick writes:

That's not quite right. Your employer does not offer good coverage or not based upon her astrological chart or whether she is a naughty or nice. She provides it if she needs to do so in order to attract the type of workers that she needs and can afford.

Of course, Rick's essentially correct that coverage is an employment benefit that's typically considered a facet of compensation, which is generally determined by the labor market.

But that's a rationale for the rationing of coverage, not care.

To be sure, there are a good number of people who would be able to utilize their position in the labor market to find new coverage if their current employer decided to drop their existing coverage. It'd surely be a hassle finding a new job, but it would be possible.

But, as health care becomes more and more expensive, there's an increasing number of people who can't easily find a new job to secure new coverage -- people who would be left without coverage, and subsequently without access to most care, if their current employer dropped their health benefits.

And that's how the rationing of care in this country is irrational. It's not determined by need or cost-effectiveness of the treatment, but instead by whether the patient can afford it (there is charity care available for some critical standalone treatments, though the cost of that care is just shifted onto those who do pay, which further contributes to the cycle).

What's more, the larger question remains, should health coverage really be dependent upon your position in the labor market?

One of the most intriguing features of reform plans like Healthy Wisconsin (HW) or the Wisconsin Health Plan (WHP) is that they would effectively sever the tie between health coverage and employment.

At the same time, however, this brings up an issue with the funding for plans like HW and the WHP. While they would separate coverage from employment, they wouldn't separate funding from employers. In fact, employers would be relied upon the most for funding under HW and the WHP.

This is a legitimate concern, and one that is largely borne out of the fact that health coverage has been largely paid for directly by employers in the US throughout the last century. Changing that in one swoop wouldn't be easy.

Of course, it's also true that employers wouldn't necessarily get stuck holding the bag entirely under HW or the WHP. Similar to the way that many employers are cutting benefits -- i.e., reducing compensation -- as health care costs go up in today's system, under HW or the WHP the compensation freeze or cut would just come from somewhere else (probably wages) if the employer assessment becomes too great.

But perhaps a better answer to this dilemma of how to separate health coverage from employment is the Healthy Americans Act (HAA) proposed by Dem Sen. Ron Wyden late last year and recently co-sponsored by GOP Sen. Bob Bennett. Importantly, the HAA also has the backing of some major employers, such as the CEO of Safeway, along with major labor unions, such as the Service Employees International Union.

The basic idea of the HAA is that employers would "cash out" their health coverage expenses in the form of increased wages for employees for at least two years. Individuals then would be required to purchase a private insurance policy or face tax penalties, which is similar to the individual mandate in Massachusetts.

This two-year "cash out" period is intended as a transition from coverage as an employer-based benefit to coverage as a personal responsibility.

After the two year period, employers would no longer need to pay the extra wages, and instead would pay an assessment based upon an equation involving the average regional premium rate, the number of FTE employees, and revenue per FTE employee. This assessment would make up only about 10 percent of the total funding for the system as a whole; so, while employers would still be contributing something directly, it would not nearly be as much as they would be contributing directly to a system like HW or the WHP.

Key to the HAA is the federal subsidies that would be given to individuals up to 400 percent of the poverty level to help pay for their coverage. These subsidies would be paid for by the employer assessment described above along with the elimination of the federal tax break for employer-sponsored health coverage and some savings to Medicaid that would come along with the plan.

It's unclear -- to me, anyway -- whether something like the HAA could be tailored to Wisconsin alone, though it seems worth a look, especially if getting health care out of the labor market is a goal, and it certainly should be.

More details on the HAA can be found here.

There's Two in the Hole for Rudy, Too

Michael Mathias points out that Russ Feingold was tabbed by Forbes as DC's most eligible bachelor alongside the city's most eligible bachelorette, Condoleezza Rice.

According to the snippet on Feingold, a "second divorce probably puts the kibosh on any presidential ambitions he may harbor."

A second divorce would do him in, huh? Someone from Forbes better tell Rudy.

And, while they're at it, they should tell Steve Forbes, who's co-chairing Giuliani's presidential campaign.

UPDATE: I initially included the word "messy" in the quote above from Forbes, which it uses to describe Feingold's second divorce. In reality, it appears that Feingold's second divorce was quite amicable. I should've checked more into it prior to relaying the quote -- my mistake.

WMC Survey Shows Support for Healthy WI & WHP

Wisconsin Manufacturers and Commerce (WMC), along with the conservative Club for Growth, released a survey yesterday that found 64 percent of respondents believe:

[T]he best way to reform the current private health care system is to cut costs and provide more choices by increasing competition among private insurance companies and by requiring health care providers to be more transparent with their actual costs.

Of course, WMC thinks this means that people oppose a reform plan like Healthy Wisconsin or the Wisconsin Health Plan (WHP); but, in reality, this is essentially what those plans would do, especially the part about increasing competition among private insurance companies (the WHP would also increase the push for transparency via its use of HDHPs).

The alternative that respondents to the WMC/Club for Growth survey were allowed to choose was the following, which was supposed to represent plans like Healthy WI and the WHP:

[T]he best way to reform health care is to replace the current private health insurance system with a new universal insurance system that is run by the Wisconsin state government.

It isn't difficult to see how this survey is part of a broader attempt by conservative critics to frame Healthy WI and the WHP as "government run health care," thereby utilizing the negative connotations associated with that phrase; yet, both plans solidify, as opposed to replace, our system of private payers and private providers.

What's more, most polls -- such as this NY Times/CBS poll from February (see questions 27 and 28) -- are clear that the public widely supports the government involving itself in the health care market to ensure the entire population has adequate coverage; it's the issue of care that most people want to protect from government intrusion.

The more astute conservatives try to link the two by putting forward a rationing argument that claims by controlling coverage, the government would be, in effect, controlling care.

But this argument assumes the government would be able to limit coverage without public oversight. After all, if the government gets to the point where reducing coverage is on the table in an effort to avoid increasing revenue, the public still has a choice -- reduce coverage, increase revenue, or some combination of the two.

Some universal coverage countries, like the UK, have opted to limit coverage in an effort to reign in revenue. But others, like Switzerland, Germany, France, etc., have not.

And figuring out this coverage vs. revenue equation is an ongoing discussion that each country -- or state, in the case of Wisconsin -- should be able to have in a rational, democratic, and open manner, rather than the irrational way that rationing occurs in our current fragmented system (i.e., either your employer offers good coverage or it doesn't).

Further complicating the conservative argument about "government run health care" is the other argument the same commentators put forward about state mandates. The mandates argument is that the government in Wisconsin, and some other states, has been guilty of requiring insurance companies to increase benefits too much, which has driven up the cost of coverage.

So, on the one hand, government would surely reduce coverage and, thereby, interfere in decisions that should be left to the doctor and the patient. Yet, on the other hand, government is increasing doctor-patient options too much by mandating certain amounts of coverage.

It's quite a tangled web, and one that ultimately raises the question: At what point does opposition become merely opposition for opposition's sake?

----------------------

UPDATE I: Check out the Brawler's take on the re-hashed "Healthier Choices" plan from the WMC.

The main thrust of WMC's Healthier Choices proposal is allowing for a supposed "diversity" of health care plans, which is essentially a euphemism for keeping the door open to under-insurance and adverse selection, as I discuss in this post.

UPDATE II: Cory Liebmann offers more on the WMC/Club for Growth survey.

Aaron Rodgers' Improvement Is His Own

I have a confession to make: I'm not a big Brett Favre fan.

Don't get me wrong, I do think he's had a great career and he's a clear-cut Hall of Famer.

But my reasoning for not being a big fan doesn't have much to do with Favre's play on the field. Rather, it comes from the way Favre has largely shunned any sort of role as mentor for Aaron Rodgers.

That's why it's particularly frustrating to read an article on Rodgers' noticeable progress this pre-season, in terms of both play and maturity, and see this smack-dab in the middle of it: "Clearly, Brett Favre has rubbed off on him. The Packers hoped that would happen."

The paragraph comes after a discussion of how Rodgers' has ditched the California hair gel he sported out of college for a scruffy beard -- an apparent sign of humility.

Who else sports the scruff look in Green Bay? Well, Brett Favre, of course, so he must be the reason for Rodgers' scruff and his subsequent improved maturity and his subsequent improved play on the field.

It's quite a leap, particularly given the not-so-secret disinterest Favre has for providing Rodgers with that sort of help. Yet, if there's one benefit of not getting help from Favre, it's that Rodgers' improvement and success would be his own.

The Packers media at least needs to let him have that.

The Lone "No" Vote on Reciprocity

As expected, the JFC approved a new tuition reciprocity agreement with Minnesota yesterday in a 15-1 vote.

The lone vote against the new agreement was Sen. Glenn Grothman (R-West Bend). Grothman's complaint was that Wisconsin will be sending about $12 million per year to Minnesota to compensate for the fact that Wisconsin students pay less than U of M tuition while Minnesota students pay more than UW tuition.

According to Grothman, that means the state is subsidizing Wisconsin students who want to go out of state for their higher education.

This, of course, is quite a stance to take considering -- as higher education board director Connie Hutchinson explained to Grothman -- the extra money that Wisconsin makes off Minnesota reciprocity students more than makes up for the subsidy payment.

In spite of this explanation, apparently Grothman still voted against the agreement.

I know it's a nit-picky question to ask considering the agreement passed, and overwhelmingly so, but what was Grothman's reasoning for voting against the agreement?

Did he have data that contradicts Hutchinson's statements -- in which case the entire JFC should probably know about it -- or does he just generally oppose a program that at least breaks even fiscally while simultaneously providing more affordable higher education options for Wisconsin students?

While Grothman was the lone JFC vote against the new reciprocity agreement, he wouldn't be the only GOP legislator to just oppose reciprocity altogether.

Is a Productive Health Care Debate Possible in Today's State Legislature?

The Brawler came across an interesting article the other day on the state GOP leadership's reaction to the Wisconsin Health Plan when it was initially announced in summer of 2005.

Here's a snippet from the article, which appeared in the June 16, 2005 issue of the Cap Times:

Despite its backing by [Rep. Curt] Gielow, a Republican, other Republicans quickly blasted the proposal as a big-government scheme.

Rep. Robin Vos, R-Racine, described the plan as a form of government-mandated "Hillary-care," referring to former first lady Hillary Clinton's health insurance proposal of the 1990s.

"It's hard to know what to say," Vos told Gielow. "Radical is a kind term for this program, in my opinion."

Rep. Leah Vukmir, R-Wauwatosa, called it "nothing short of a framework for socialized medicine in Wisconsin" that would create a "slippery slope of compulsory managed care and unending tax increases."

Sen. Ted Kanavas, R-Brookfield, said he was "outraged" by the "ludicrous" plan. "I do not want a system where a Madison bureaucrat decides on a whim what doctors I am able to see or who provides care for my family," he said in a statement.

"Socialism and more government should not be the way of this new millennium," he said.

This is interesting because many of the specific complaints conservatives have been raising about Healthy Wisconsin wouldn't be an issue under the WHP:

• Healthy WI was hastily thrown together and into the budget. The same couldn't be said of the WHP, which was made public over two years ago. And the WHP also has been brought before numerous public forums since its announcement.

• No detailed report on the estimated effects of Healthy WI exists. The same can't be said for the WHP, which underwent a detailed review by the Lewin Group resulting in a 170+ page report.

• Healthy WI doesn't include enough consumer involvement. The same can't be said of the WHP, which is entirely comprised of high deductible health plans. It's possible to haggle over the specific deductible amount and how much should be pre-funded into the HSA, but the basic idea of consumer-driven health care is on prominent display in the WHP.

There are other smaller complaints raised about Healthy WI that wouldn't exist under the WHP, such as the 92 percent requirement for private insurers, the use of fee-for-service plans, the existence of affinity groups, etc.

And if we could get the two sides of the legislature to come to the table over a proposal like the WHP -- I'm not saying they need to agree on it as is, but just come to the table over it -- it would be a major step forward for the health care debate in Wisconsin.

But, as the Brawler deduces from the above quote, the current leadership of the state GOP doesn't seem all that interested in coming to any table where a fundamental solution to our health care woes is on tap.

The Health Care Debate Deserves Better

I've always enjoyed reading Christian Schneider's work. He's a smart commentator, and it didn't surprise me at all when the Wisconsin Policy Research Institute lured him out from behind the puppet to become one of its more prominent voices.

But I must say that his recent work on the Healthy Wisconsin plan is not among his better stuff.

There are certainly points where someone could critique Healthy WI, such as its use of affinity groups, its capping of extra payments for fee-for-service coverage, the fact that no HDHP choice exists, etc. But rather than hitting on these substantive points or others like them, Schneider has been tossing out some critiques that are, well, rather superficial.

The first was a post about how Healthy WI is supposedly going to draw a bunch of free-loading low income people to the state where they'll be able to enjoy publicly-sponsored health care through their job at Dairy Queen.

However, considering most low income families can already get free health care through BadgerCare and virtually all low income individuals would be able to get it through BadgerCare Plus -- a plan that even Republicans are considering -- the charge that Healthy WI would draw free-loaders to the state comes off as baseless rhetoric. (I offer more about why it's baseless here.)

Schneider followed up that post with another last week on how cutting health care spending must inevitably hurt the quality of care, just as cutting a proportionate sum from the UW budget would hurt -- at least in the eyes of Dems -- the quality of higher education in the state.

This argument way oversimplifies the health care market, which is far more complex than the UW budget. There are multiple layers within the health care market, mostly due to the existence of third party payers, which has created fragmentation that's led to administrative inefficiencies, cost-shifting, overutilization, poor disease management, etc. Restructuring the system as a whole to close these inefficiencies, stop cost-shifting, cut overutilization, etc., does nothing to the quality of health care delivery except make it more consistent and coordinated.

Indeed, this argument would mean that there's no way to cut health care costs without negatively impacting quality. So that means someone like John Torinus must have wreaked havoc on the quality of care for Serigraph employees when he instituted cost saving measures in recent years. And when the state revamped its health plan, a move that saved millions, it must have put a major dent in the Cadillac that state employees have been riding. (I can't speak for Serigraph, but I can say that the quality of care received by state employees didn't drop a bit after the system overhaul.)

And now Schneider's latest post is an attack on Healthy WI via one of the right's favorite, if grossly misleading, points of comparison: the UK. The post deals with the decision by the UK health care board to limit Alzheimer's drugs to later-stage patients due what was determined to be limited cost-effectiveness for early-stage patients.

Using this as an example of rationing, Schneider writes: "While supporters of Wisconsin’s proposed government-run health care system continue to speculate as to how the program will work, they forget that similar programs already exist."

Similar programs? Health care in the UK is entirely controlled by the government -- it owns the payer and it owns all of the providers. No one is proposing anything close to that for Wisconsin. What's being proposed is a coordinated system of private payers and private providers, very similar to what state employees have now.

(Side-Note: You want to talk about a lapse in logic, conservatives have made a sport out of deriding the rich "Cadillac" health care benefits enjoyed by state employees for years. Yet, when an offer is made to bring everyone under a similar system with benefits that are virtually as rich as what's currently offered by the state, conservatives attack the offer as a dastardly ploy for more government control that will inevitably make private sector health care worse.)

If conservatives want to pick a point of comparison abroad, the best place to look is probably Germany, which has a publicly-coordinated system of mostly private payers and private providers -- which is financed through an employee/employer payroll assessment -- just as Healthy Wisconsin, the Wisconsin Health Plan, the Healthy Americans Act, and the many other serious reform plans propose for the US.

If there are any allegations of substantial rationing in Germany, those would be far more on point than instances in the UK or Canada. (And, of course, it's always important to consider rationing in other systems in the context of the rationing that already takes place in the US system.)

In the end, I struggled with whether to center this post on Schneider's commentaries since my preference isn't to single out other voices in such a focused manner. But, similar to my reasons for critiquing John Torinus, I see Schneider as an important and respectable voice in the political sphere.

And, on the issue of health care, I just think Schneider can do better, and I know the debate itself deserves better.

The JS Continues to Pound Aurora

The latest article -- which follows a heated editorial and an already-skeptical initial article -- continues to hit the question of whether Aurora's plans to build new hospitals less than five miles from existing hospitals, which it's doing in both Ozaukee and Waukesha counties, will serve to help or hurt health care costs in the area.

Somewhat amusingly, the only response Aurora could muster to the charge is that it has an advisory board that includes community representation. So, community, don't say you didn't have any input on this!

As I explained last week, the move by Aurora is just profit-driven business. Likewise, the reporting on it by the Journal Sentinel is just good journalism.

But what I can't seem to figure is why, in the midst of its sharp stories on Aurora, the JS continues to give a free pass to actions by Columbia St. Mary's that are largely the same in nature and entirely the same in purpose.

The Budget is Halfway Done!

Or, to put it more accurately, it's not even close to being finished.

Assembly Speaker Mike Huebsch has been going out of his way at conference committee hearings to stress for the media in the room that 571 items have been agreed upon, which must mean serious progress has been made. Of course, those 571 uncontroversial items represent only 2 percent of the budget in terms of total dollars.

This suggests, to me, a couple of things.

First, the Dems went into conference committee deliberations with a much stronger hand than the GOP. The Assembly budget took a whooping in the press not only because of its positions, but also because of how drastically it differed from the budget that came out of the JFC.

A GOPer might respond that the JFC hearings were skewed to favor the Dems since a split vote sided with Doyle's budget. That's true, but that's also fair considering Dems control two out of the three budget pieces.

And, the fact is, Huebsch & Co. on the conference committee wouldn't even agree to the hundreds of proposals that passed the JFC with support from at least half of the GOP delegation, which is a clear testament to how far the Assembly budget strayed from the little progress that was made during the JFC portion of the process.

Plus, the bottom line for the point is that the public perception -- I happen to think it's accurate -- is that if the budget is delayed, it's the Assembly that's delaying it because of its outlandish budget positions, which is why Huebsch is so focused on stressing glass-is-half-full lines that don't really add up to significant progress.

The second thing these lines suggest is that the GOP isn't in all that much of a hurry to pass the budget. On the surface, this point may not seem to fit with the last, but it becomes clearer when you think of it in terms of two constituencies the GOP is trying to juggle.

On the last point -- the point of progress -- the GOP is aiming to pacify the feelings of the public at large. On the second point -- the point of putting up a fight -- the GOP is aiming to please the demands of its base, specifically the fire-breathing fiscal conservative base that resides most heavily in the SE part of the state.

The longer the GOP can hold out on the budget, the happier the base will be that it's sticking to its zero-tax-increase pledge. But, of course, it's a tightrope walk since the GOP doesn't want to simultaneously give the appearance that it's stalling progress.

This is largely the same tightrope walk that Mark Green tried to navigate in last year's gubernatorial election, and it was surely a big reason he wasn't able to craft a central message that could drive his campaign (of course, it didn't help that the Doyle campaign drove home the "Green is extreme" message perfectly, which prevented Green from making effective pleas to the public at large while simultaneously exciting the base).

I'd be surprised to see the GOP Assembly succeed where Green failed, especially since time is quickly running out. As Rep. Jeff Fitzgerald (R-Horicon) has said on more than one occasion about the budget, "I've got all summer. This is the only thing we have to pass."

Although the last day of summer is officially September 22, most tend to associate it with Labor Day weekend, which gives the conference committee three short weeks -- and meeting 1-2 times per week means they're really short -- to work something out before the kids go back to school and more folks start paying attention to what the heck is taking so long at the Capitol.

Torinus Responds to Inquiries

I noted yesterday that I would post an update when John Torinus responded to my questions, but it seemed worthwhile to separate the responses into a follow-up post.

One of my questions stemmed from this line that appeared in the August 5 column by Torinus:

Health maintenance organizations, another grand scheme that is a form of what the Riemer plan proposes, has been roundly rejected by patients and doctors alike. Why? Because it limits choice, narrows competition and often defaults to rationing.

Since the Healthy Wisconsin plan actually would be based upon the coordinated system of managed care plans currently used by the state, I asked Torinus if he was aware of any instances of limited choices or rationing for state employees.

Torinus' response: "I am not aware of complaints in particular about the ETF plan; nor did I cite them in my column. I am aware that the backlash against HMOs in the late 1990s was enormous, and almost all the major health plans backed off the rationing, off the 'management.' That comes from the heads of the heads plans [sic] who I have talked with many times."

Fair enough. But the fact is the Healthy Wisconsin plan is modeled after the state health plan, which doesn't contain any issues with limited choice or rationing (remember, it's a Cadillac).

Another question of mine pertained to this paragraph from the August 5 column, which immediately followed the quote above about HMOs:

In sharp contrast, employees in consumer-empowered plans generally rate their health benefits as excellent. Why? They are in control. They are given health accounts. It's their money to spend or not spend. They make the choices. They collaborate with their doctors on decisions about treatments. Some large system isn't managing them.

I presented Torinus with some recent independent survey data (see here and here) that shows HDHPs actually have low satisfaction rates from participants, particularly in relation to comprehensive coverage plans, and I asked if he has any data that suggests the opposite.

Torinus' response: "My satisfaction readings come from companies I have visited in Wisconsin and from an employee survey at Serigraph. I take my stuff from the real world, up close and personal."

This answer doesn't quite seem to cut it. The independent surveys I cited for Torinus come from the real world, too, and they are undoubtedly more representative than an internal company survey from Serigraph and the undocumented visits that Torinus has made with some companies around the state (who did he meet?, what did he ask?, etc.).

In addition to those two main questions, I also followed-up with Torinus on the initial question I asked a couple of week ago about the total costs for a family policy at Serigraph, including all cost-sharing amounts. The question came in response to Torinus citing "$7400 per employee" costs at the company in one of his July columns.

Shortly after I sent him the question the first time, Torinus forwarded my request to a benefits specialist at Serigraph, but I never heard back from that person. In this latest email, I asked Torinus if he could ask that person again to send me the figures.

Torinus' response: "When I gave you the number of $7400 per covered employee, that was all charges. It comes off total net charges. So, the deductibles and co-insurance and co-pays are included. At Serigraph, the split works out to about 78% company and 22% employee."

This, of course, still doesn't answer my question. Furthermore, the discussion about "total net charges" suggests that Serigraph self-insures, which means it uses an employer-sponsored fund to pay medical expenses rather than contracting through an insurance company.

Since the "per covered employee" figure is coming off total net charges, that means $7400 is the total amount Serigraph and its employees have spent in health care -- premiums and cost sharing -- divided by the number of employees at the company. This invariably deflates the cost because it includes single policy people along with those who didn't ever use their coverage and therefore didn't add up any cost sharing charges.

What's more, since the company self-insures, that means it needs to contract on its own with health care providers to get discounted prices once the deductible is paid and benefits kick in. Based on the response by Torinus, the $7400 figure doesn't include the administrative costs associated with this task.

In a reply, I laid out these concerns for Torinus, explaining that the $7400 figure really doesn't answer my question. He emailed back to say this is "an unproductive dialog," and he asked that it not continue.

So that's that. I'm disappointed I wasn't able to get a figure for total costs of a family policy, including all cost sharing, at Serigraph. I think it's an important question, and it gains in importance each time the $7400 figure is cited on the second page of the Business section in Sunday Journal Sentinel.

A Couple More Questions for John Torinus

John Torinus wrote his third column on the Healthy Wisconsin plan yesterday, and it raised about as many questions as the rest.

Here's the opening line from the latest: "When I challenged David Riemer, the architect of the pending bill for a Wisconsin single-payer system for health care, that his concept was Swiss cheese, more holes than solutions, he challenged me for my plan."

Feel free to check out the transcript of the debate here. I don't see a single place where Torinus points out "holes" in the Healthy Wisconsin plan that Riemer doesn't immediately address; in fact, the "swiss cheese" line doesn't even appear until the final comments.

And when Torinus pulled out his patented line about public health costs vs. private health costs, Riemer addressed it, and Torinus never broached the topic again during the debate. Although that didn't stop him from using it again in yesterday's column.

In fact, to better answer the public vs. private health costs question, I asked Torinus a couple of weeks ago for the total cost of a family policy at Serigraph, including all cost sharing. Even though I still don't have a response for that question, I have a couple more questions that I just sent to Torinus.

In his column from yesterday, Torinus writes:

Health maintenance organizations, another grand scheme that is a form of what the Riemer plan proposes, has been roundly rejected by patients and doctors alike. Why? Because it limits choice, narrows competition and often defaults to rationing.

In sharp contrast, employees in consumer-empowered plans generally rate their health benefits as excellent. Why? They are in control. They are given health accounts. It's their money to spend or not spend. They make the choices. They collaborate with their doctors on decisions about treatments. Some large system isn't managing them.

Since the Healthy Wisconsin plan is based upon the coordinated system of managed care plans used for the state health plan, does Torinus have any examples of situations where state employees have experienced limited choice or rationing?

Secondly, I'm hoping Torinus can share some evidence for his claim that "employees in consumer-empowered plans generally rate their health benefits as excellent." In fact, multiple studies have shown the consumer satisfaction is significantly lower under HDHPs than traditional comprehensive coverage.

According to a June article in the Wall Street Journal (which I imagine Torinus reads):

[T]hose who are in consumer-directed health plans often report lower satisfaction and confusion about how the plans are supposed to work. The general idea is for patients to conserve money in their savings accounts, which are meant to pay for care until they reach their high insurance deductible. In theory, patients who shop carefully could have money left over, which they can keep and let build into savings for bigger health-care costs down the line.

In a survey published last month by Towers Perrin, an employee-benefits firm, employees enrolled in them said they felt less capable of finding a quality doctor or hospital, though they often were in the same network as colleagues in other plans. Only 29% said they tried to save money in their accounts for future medical expenses.

The WSJ also cited a Kaiser Family Foundation survey that similarly found low satisfaction rates and high confusion for consumers enrolled in HDHPs. According to that survey, when given a choice between a HDHP and comprehensive coverage, only 19 percent of employees opt for the HDHP.

And yet another survey conducted by the Commonwealth Fund and the Employee Benefits Research Institute found that 63 percent of individuals with comprehensive coverage were extremely satisfied or very satisfied with their coverage, while only 42 percent of individuals in consumer-driven health plans felt the same.

As with my last question for Torinus -- which I'm still waiting on -- I'll post an update when I hear back.

UPDATE: See a rundown of Torinus' responses here.

A Hospital Arms Race -- What'd You Expect?

The Journal Sentinel editorial board is justifiably skeptical about the claims by Aurora and Advanced Healthcare that the newly proposed hospital in Grafton will reduce health care costs. It clearly won't.

But is it all that surprising of a move? Yes, Aurora is non-profit on paper, but it's still clearly a business. And so is health care in general. It's not like the move by Columbia St. Mary (CSM) to cut 33 percent of its licensed beds in Milwaukee County -- an area the CSM's CEO admits has "a ton of unmet needs" -- is any different. They're both profit-driven moves made by businesses.

We're talking about companies whose executives pull in over a half million dollars in salary alone each year -- and rising -- and they likely have a number of docs on the payroll who make as much, if not more.

Needless to say, these aren't your Habitat for Humanity-type non-profits.

And if you want to do something about these types of non-profit profit-driven moves, asking the businesses to explain themselves isn't the answer. Really, there are two fundamental options.

First, you require health systems to justify their hospital expansions through instituting a Certificate of Need (CON), as Jack Lohman mentions in this comment. A CON would require non-profit health systems to put their expansion plans in front of an impartial public board to assess whether the community truly needs the added services provided by the expansion.

But this would really only limit moves to create an overabundance of services in highly profitable areas -- read: well-insured areas -- such as the Aurora plan to build a hospital less than five miles away from a CSM hospital that is currently undergoing a $72 million expansion of its own.

A second avenue of reform is needed to prevent systems from downsizing in less profitable areas -- read: poorly-insured areas -- in spite of the unmet needs that may exist there, which is what CSM is doing in Milwaukee County. And you can't simply demand a health system remain in an area where it's going to lose money.

But what you can do is level the playing field so that there isn't any significant difference between the profitability of one area in relation to another.

In other words, you can institute fundamental health care reform that ensures equitable universal coverage and increases the Medicaid reimbursement levels to at or near the levels of private payers that would cover the rest of the population (or, better yet, eliminates Medicaid altogether and puts everyone under the same reimbursement structure).

Without these types of fundamental reforms, expecting a business to willingly not follow the profit is a little like expecting Bonds to hang it up at 754 -- it's not gonna happen.

See No Debate, Hear No Debate

David Riemer and John Torinus engaged in a barely-publicized online debate yesterday on the Healthy Wisconsin initiative.

Based on what I can tell, the only mention of the debate came on the JS DayWatch blog a few minutes before the debate started. I can't even find a link to it off the JS site today; but, if you're interested, you can find the transcript here.

In the end, it wasn't an overly exciting exchange. Both are clearly smart commentators, but what did shine through is that while Torinus knows his company's general position on health care quite well, Riemer has a stronger grasp of the overall nuances of how the health care market operates.

The most interesting part came when Torinus trundled out his argument about "per employee" health care costs being higher for the state than the private sector. He asks: "Why model after a high price plan, the state employeem [sic] plan at $11,000 to $13,000 per employee, versus $6,000 at private companies with rich benefits?"

Here's Riemer's response:

Sorry, John, the facts tell a different story.

I've double checked the numbers, and it turns out that the per-enrollee cost of Healthy Wisconsin, about $4,000, is not that distant from the SEHP's per-enroll cost, which Legislative Fiscal Bureau has calculated to be about $4,980. Last time I took a math refresher course, $4,980 was not "two to three to four times" higher than $4,000.

Yes, SEHP is more costly. But there are reasons for that.

First, although Healthy Wisconsin is modeled on the core principles that drive the state employee plan (such as consumer empowerment, consumer choice, price sensitivity at the time of plan selection, and price sensitivity in buying prescription drugs), SEHP has much “richer” benefits because it has no deductibles and far lower co-pays—and thus it costs more.

Second, SEHP has an older membership—and thus it costs more.

Third, while Healthy Wisconsin would bring to bear a large purchasing pool in every county, the SEHP has a strong purchasing pool in only a single county (Dane)—and thus, exercising far less market pressure, it costs more.

Finally, while Healthy Wisconsin would end cost-shifting from the uninsured and non-insuring employers to organizations that cover all their employees, the SEHP plan is on the receiving end of massive cost-shifting in today’s environment—and thus it costs more.

This is interesting because of the vastly different figures Riemer quotes for the state health plan -- Torinus says $11,000-$13,000 "per employee," Riemer says $4,980 "per enrollee." I'll try to locate that LFB report that Riemer mentions, and I'll post an update if I can find it.

But, as I've argued before, "per employee" or "per enrollee" costs really don't tell us that much since they mix single and family policies into one cost figure and they fail to consider cost sharing that can drastically decrease the initial costs of the coverage.

And that's why it's the latter part of Riemer's response that I find the most impressive of the entire debate. Rather than just relying on these "per enrollee" numbers, which are lower under Healthy Wisconsin, Riemer takes the time to explain why those numbers would be lower.

When Torinus has quoted his company's "per employee" numbers in the past, he's just left it at that, as if it tells the entire story. But there are a number of factors that can skew those figures, including the number of single vs. family policies, the risk factors associated with the covered population, and -- perhaps most importantly -- the cost sharing levels associated with the policies.

As reader John Foust put it in an email recently, there are no "magic beans of low-priced health care." There are certain factors that can make a policy cost more or cost less in our current fragmented health care environment -- such as the size of the purchasing pool and the risk factors associated with it -- but, for the most part, you get what you pay for.

We can always change the landscape of the current market to increase administrative efficiencies, more effectively leverage purchasing pools, and distribute risk more evenly -- which is what Healthy Wisconsin does -- but health care is still going to be expensive and the cost is still going to increase in the coming years unless we drastically cut provider payments or ration care, which no one is proposing. As Riemer put it in the online debate yesterday, "what we're all striving for [is] a significant reduction in the RATE of growth compared to the unacceptable status quo."

In any event, I'm still waiting to hear about the total policy costs for family coverage at Serigraph, including all cost sharing amounts. I did hear from Torinus that his "per employee" numbers only include covered employees and that they mix single and family policies, but he had to direct me to a company benefits specialist regarding total policy costs. I'll update back when I hear something.

UPDATE: The Brawler offers his take on the debate, along with a broader discussion of media coverage of Healthy WI, here.

Follow the Profits, Not the Patients

"It'll increase health care costs" has become the label of choice for health care executives commenting on a competitor's moves, while "it'll decrease health care costs" is shorthand for the moves that an executive's own company makes.

Case in point, the recent move by provider giant Aurora to buyout clinic giant Advanced Healthcare. This move is allowing Aurora to build a new hospital in Grafton, just under five miles from a Columbia St. Mary's hospital that's going through a $72 million expansion.

According to Advanced Healthcare president in the joint press release announcing the buyout:

If we can coordinate care for our patients, ensuring that they receive the right care at the right time and in the right place, we can improve outcomes and reduce costs. That’s what integrated care is all about, and that’s what Advanced and Aurora will work toward.

Contrast that with the reaction by Columbia St. Mary's CEO Leo Brideau:

You have a community that has a ton of unmet needs in Milwaukee County. And the last time I looked around, there were no unmet needs in Ozaukee County.

Adding: "There is no question among health care economists that adding excess capacity in a market drives up health care costs."

My guess is that Aurora's move won't do much at all to health care costs; they'd continue to go up either way. The idea that coordination of care is going to increase significantly under this buyout is a bit of a stretch. All that will change is that Advanced Healthcare patients will start getting referred to the new Aurora hospital rather than Columbia St. Mary's or Froedtert. That's not more or better coordination, nor is it less or worse coordination; it's just different coordination.

But what I love the most about this buyout is the reaction it's brought by execs like Brideau. While Brideau is certainly more on target about the impact of the buyout than the press release by Aurora and Advanced Healthcare, in the process of explaining his point, he essentially shots himself in the foot.

The line about "a ton of unmet needs in Milwaukee County" was obviously a shot at the placement of this new hospital in the well-insured, yet not that densely populated, Ozaukee County.

But it also brings into question the lines Brideau was giving the Journal Sentinel just a few days ago about his system's plans to cut licensed patient beds by 33 percent in Milwaukee County. And this is a little over a year after Wheaton Franciscan closed the only other hospital on the north side of Milwaukee, leaving Columbia St. Mary's as the lone hospital provider in the immediate area for many residents.

Just as I pointed out the other day, the question of why Columbia St. Mary's would reduce its beds by 1/3 in an area with "a ton of unmet needs" -- while funding a $72 million expansion in an area with "no unmet needs" -- is answered perfectly by another quote from Brideau in today's JS:

Let's be honest about this. It's not about integration. It's about moving into a market they think can be profitable.

It's gotta be like looking in a mirror sometimes.

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Side-Note: On Monday I mentioned an online debate that's supposed to be taking place between John Torinus and David Riemer on the Healthy Wisconsin plan today at noon on the JS website. However, I haven't seen anything advertised for it, so I'm double checking to see whether it's still going to take place. I'll update back when I hear something.

UPDATE: I'm told the online debate is still on, even though advertising by the JS has been sparse to non-existent. If you're interested, I suppose your best bet is to check out the JS site at noon to see if anything about it is there.

UPDATE II: You can find the Torinus-Riemer debate here.