Wednesday, August 15, 2007

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.

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23 Comments:

Anonymous John P said...

Seth:

I must say that you have been very imformative regarding the debate around HW. I am not sure where I stand on plan. I am married to an internist and I read though some of her AMA and Wis. Medical Society journals and I am not sure where the medical profession stands on the HW plan.

I am a conservative, but I have my doubts if the free-market principles apply to health care. I mean, if I am having a heart attack I am not going to be pricing provider services. I know this is an extreme example, but I think my point is relevant.

I think their are many ways to get health care costs down, for example tort reform. I saw first hand what happened to OB/GYN's in Illinois, and I know for a fact that doctors are ordering test just to practice a little "CYA" against lawsuits, even when they are 95% sure that the test results will be fine.

I am also not sure how the HMO will work, when So. Eastern Wisconsin does not have many HMO's right now. Also, what happens to the providers that are not in the lowest cost bid?

I also have a problem with the HW board being political appointees, appointed by the Governor and approved by the Senate. Why no medical providers on the board other than as advisors?

Also, I point that you brought up why are fee for service payments capped. This could be a major problem.

This plan needs more HSA's to increase personal responsibility with regard to heath care, in my opinion.

I am not one for comparing what is done in Europe to what is done here. I really do not care what is done in Germany. However, it would be interesting to know if in Germany, how all of the costs incurred at the end of life are handled. Meaning, do they pay all of the costs for someone who is 75 years old and has heart diesase or cancer? We in the United States spend a great deal of money on people who are in their later years of life and have many health problems, what is the protocal in Europe?

Again, I enjoy your blog, even though I fundmentally disagree with the liberal viewpoint.

August 15, 2007  
Blogger Seth Zlotocha said...

Thanks for your comment, John P. I think all of your points are solid, and if we could get a discussion of them going at the legislative level, we might actually be looking at some progress on the health care issue rather than spinning wheels.

To address a couple of your concerns, while the HW board would be selected by the governor and approved by the senate, the governor wouldn't have free reign over the selections. One member must be from a small business organization, two must be farmers, three must be from health care consumer organizations, etc. But if there's a better way to go about electing the board, that's certainly something that could be negotiated, as could including a medical society and/or hospital association member on the board.

As for providers who don't get into the low-cost network, they'll really just need to examine why internally. The determination of who lands in that low-cost network is a combination of cost and quality factors -- it's not just cost alone -- so if a provider can't compete on those measures, it wouldn't be the most effective use of public resources to funnel money its way in spite of its inability to compete. The same would be true, ostensibly, by increasing the use of consumer-driven plans, which I agree should be at least an option in any reform plan (as long as certain protections are included such as annual income-weighted pre-funding of the HSA, fully covered preventive care, etc.).

To the best of my knowledge, European countries handle the issue of paying for elderly health problems differently. My suspicion is that the UK is the most restrictive in what procedures it OKs -- which is also why it spends among the least -- while places like France and Germany would provide greater coverage since they both allow for private coverage that could be greater depending upon a person's ability and willingness to pay more for it. But, of course, the US can decide for itself how it wants to handle the issue of rationing even if it borrows structural aspects from other systems.

In the end, this is exactly the type of discussion we should be having as a public and, more importantly, in the legislature.

August 15, 2007  
Anonymous John P said...

Seth:

From reviewing the Wisconsin Health Care plan, it appears that the plan is assuming a 50-60% reduction in provider fees, this is a huge discount. Isnt HW assuming the same thing? If they are, why would a doctor, especially a specialist want to stay in Wisconsin? I alreay know of a few doctors, (Internists and OB/Gyn's) who are in private practice that are considering leaving medicine due to all of the decreases in reimbursements. There costs are increasing, but their revenue in going down.

I would think that instead of limiting fees, we should take a more progressive approach, and put more money in primary care and to decrease the need for so many highly paid specialists.

In addition, isnt this type of plan going to force the private doctors to join groups which employee physicians, like Dean and Aurora? My gosh, isnt Aurora the largest single employer in the state?

One of my biggest concerns with any single-pay plan, is that it is going to force good doctors from wanting to practice in Wisconsin. It costs someone a lot, in terms of time and money to become a doctor and there should be a large enough payoff at the end for it to be worth it.

I also feel the same regarding the pay of nurses, and other patient care staff.

I have a problem that the HW plan is going to cut over $2 billion out of the health care system and cover more people and increase coverages, without decreasing fees. I do not know any doctors who are greedy, (that does not mean that there are not any), but they want to be paid fairly for their services and not have their fees dictated to them by a government board.

We moved to Wisconsin, because it has a good medical environment and some of the best doctors and nurses in the country. I would hate to see that be lost.

August 15, 2007  
Blogger Seth Zlotocha said...

John P,

The Wisconsin Health Plan actually assumes only a 2 percent increase in hosptial (16 to 18 percent) and physician (25 to 27 percent) reimbursement discounts if the plan was fully implemented. Most ancilliary discounts -- ambulance, home health, etc. -- would stay the same, but prescription drug discounts would jump dramatically (25 to 40 percent for generics and 7 to 20 percent for brand names) due to the fact that they would be purchased through a single PBM. All of these figures are on page 84 of this Lewin Group report.

Preceding these figures in the report is a discussion of the effects of the WHP on providers, and Lewin actually estimates that spending on health care providers would increase by 2.2 percent (from $17.6 billion to $18 billion) under the WHP.

No one wants to see good health care professionals leave the state. When the state employee plan was revamped -- a revamping that is helping to inform both the WHP and Healthy WI -- it saved the state millions due to increased insurer competition, stronger purchasing pools for prescription drugs, etc., yet I doubt you'll find a provider out there who isn't happy to accept a state employee as a patient.

As I mention in the post, there are many layers to the health care market -- delivery is just one of them. Re-structuring the coverage system is aimed at getting cost savings through the other layers of the market, for the most part (there would still be that slight increase in physician/provider discounts along with some utilization decreases that would come through the use of HDHPs). There are other more appropriate reforms for lowering costs on the delivery end, such as the increased use of electronic medical records, malpractice reform, etc.

August 15, 2007  
Anonymous John P said...

Thank you for the clarification Seth, I was reviewing the assumptions under the Wisconsin Health Plan and I must have looked at them wrong.

August 15, 2007  
Anonymous Anonymous said...

Seth,

The arguments about provider competition work in Dane County for ETF. No other county even resembles Dane when it comes to provider type/employee number.

In the northern regions you may have single provider areas that may not have the ability to meet the board's regualtion regarding either cost or quality and so entire regions of the state will be fee for service. That will either result in huge cost increases for taxpayers or low rates for doctors. Unfortunately, the power point presentation for HW does not address any of these issues which makes it easier for Senate Dems to promote a plan without the details.

And as for the state saving millions - when you compare the ETF plans for state employees in just the 0 to 64 age range, and don't watert down the numbers with retiree wra-around figures, the state pays an enormous amount per employee.

Since I don't have the exact number in front of me, I won't just throww out what I think is close, but the ETF plan is a very expensive plan.

August 15, 2007  
Blogger Seth Zlotocha said...

Anon,

Every county in the state has at least two plan choices through the ETF -- which involves the exact cost and quality regulations that would be set undre Healthy WI -- and the vast majority of counties have four or more. The county-by-county breakdown is here.

And, yes, the ETF plan has the most leverage in Dane County because -- not surprisingly -- Dane County has the largest concentration of state employees. If the coordinated system the state uses was employed universally throughout the state, you'd see the same type of leverage in every county. That's the whole idea of purchasing pools.

But it's also worth noting that no one is suggesting expanding the exact set of plans the state currently uses. Healthy WI would differ in that it would include increased premium contributions and cost sharing for participants, while the WHP would involve entirely HDHPs, which inherently include greater cost sharing.

August 15, 2007  
Blogger Jack Lohman said...

If you are going to talk rationing, it certainly doesn't make sense to compare us to countries that spend 50% less dollars. Too few dollars is what causes rationing in the first place. That won't happen under Healthy Wisconsin. And since the state legislators are going to be on this same system, I doubt that too few dollars will be spent.

As for John P's issue of tort reform, the best way to solve that is with a three-judge medical court. But that said, malpractice premiums are increasing not because medical errors are increasing, but because the "free market" insurance industry needs to make up for Katrina and Rita. It's called "cost shifting." But CYA costs that result from needless testing indeed do consume about 5% of total costs.

I'd rather see the board appointed by the new ethics commission, but I'd be okay starting with what has been proposed.

>>> "Also, what happens to the providers that are not in the lowest cost bid?"

I'd say they should be able to convert their staff to a fee-for-service model, but if they were not efficient enough to come close to being low bidder they may fail here too. Also, the first and second lowest bidders may be selected at the board's discretion.

>>> "Why no medical providers on the board other than as advisors?"

Because medical providers have a conflict of interest.

>>> "This plan needs more HSA's…."

HSAs are great investment tools but lousy health care plans, and they would undermine the complete system. And as the HAS members become older they will want to enroll in a system they have not supported in the past. It is a HW killer.

>>> "Meaning, do they pay all of the costs for someone who is 75 years old and has heart diesase or cancer?"

Until we accept involuntary euthanasia, the best we can do is make people comfortable in their later years (and at 70 that gets me nervous), and to have an automatic no-code at 90 (unless the family is willing and able to pick up future costs). Or better yet, John, that's where we can apply the so-called free-market! :-)

>>> "are, why would a doctor, especially a specialist want to stay in Wisconsin?"

Because (a) the 50-60% is wrong. The savings is going to come from the 31% that is currently being wasted on insurance bureaucracy, and (b) the payments physicians would receive will be (a) fair and equitable, and (b) guaranteed. They eliminate bad debt and allow him/her to reduce billing staff.

All that said, legislators need to adjust Healthy Wisconsin to include a small business tax incentive to ensure that small businesses are not hurt. Tax cuts are what Republicans have been good at, and they should jump in and contribute that part to the system. Instead they are sitting on the outside supporting the HSAs their campaign contributors have paid them to support.

August 15, 2007  
Anonymous Anonymous said...

Seth,

According to your link there are a number of counties where the second option is the tier 3 standard plan. Who provides that coverage?

Also, all of these companies that qualify for ETF would not necessarily qualify under HW. All of the new networks must operate with 92% of cost going to patient care. While that makes for a good line in Erpenbach's stump speech, it also creates a situation where companies will either choose not to bid for service or simply unable to qualify.

But back to my previous post - why is there no anaylsis about HW and its specific network provider/fee for service cost ratios?

August 15, 2007  
Anonymous Anonymous said...

Whether or not you agree with the Healthy WI plan (I do), it is great to FINALLY see some real issues being discussed rationally and comprehensively. Thank you to all who have posted concerned and thougthful questions/points. This is a great discussion without ANY name calling or partisanship. Why can't we see this more often?

August 15, 2007  
Blogger Seth Zlotocha said...

Anon 1,

WPS operates the Standard Plan.

And the 92 percent requirement could always be adjusted, if necessary, or eliminated altogether as it is under the WHP. I certainly don't see it as a sticking point for moving forward with fundamental reform.

And I'm as frustrated as anyone that the Senate Dems haven't released a detailed Lewin report on Healthy WI. I don't think it would differ all that much from the 180+ page report Lewin did on the WHP, but I still think it would be a good idea to get some specifics on Healthy WI out there. The AARP-sponsored PowerPoint hits some high points, but more in depth analysis of the proposal's effects would be helpful.

But, again, details on the WHP do exist and Republican legislators aren't any more supportive of that proposal than they are of Healthy WI.

In terms of network providers rates, you're not going to be able to get those in advance since they're privately negotiated between the network and providers. The FFS rate schedule will need to be created in advance, and I'm not sure when that'll happen. My own belief is that the FFS rates should be roughly equivalent to what the private networks are paying and participants should need to fund the full cost difference between the lowest cost network in their area and the FFS option (as long as there are at least two networks to choose from in the area).

Anon 2,

I agree completely. Thanks for your comment.

August 16, 2007  
Anonymous Anonymous said...

Seth,

If the rates and ratios won't set until later, how can anyone state with accuracy what HW will cost? If the 92% limit is alleviated, that also could have a dramatic impact on the cost of the plan?

August 16, 2007  
Blogger Jack Lohman said...

Rather than re-inventing the wheel on the FFS rates, they should use the current Medicare fee schedule and adjust it accordingly with a simple factor (+5%, -19%, etc).

August 16, 2007  
Blogger Seth Zlotocha said...

Anon,

There are estimates that were put in place by Lewin using a Wisconsin-specific version of its Health Benefits Simulation Model. You can read all about how the Wisconsin-specific HBSM is set-up in Appendix A of this report.

And the 92% requirement isn't included in the WHP, so those numbers -- which are similar to those for Healthy WI -- wouldn't be affected at all.

And, FYI, I don't see my role as a defender of a single piece of legislation like Healthy WI (although I do think it's important that proposal is discussed honestly and critically). Rather, even more than that, this is about figuring out the most cost effective strucuture for fundamental health care reform. (And I happen to think the WHP is closer to that goal than Healthy WI.)

Jack,

I'm sure the FFS fee schedule would mirror the Medicare fee schedule in some way. Hopefully the two wouldn't be exactly the same, since that would create an uneven playing field between the FFS plan and the private networks that typically need to pay more than Medicare. But using the Medicare fee schedule as a starting point wouldn't be a bad idea.

August 16, 2007  
Anonymous Anonymous said...

Seth,

The probelm is, HW has passed the Senate and is being considered in conference committee. If the goal is simply conversation, then the Dems should not have put it in the budget.

By passing a plan on the Senate floor that is obviously not ready for prime time, it shows that this was purely a campaign stunt designed for campaign flyers and not a serious policy proposal.

August 16, 2007  
Blogger Seth Zlotocha said...

Healthy WI is ready for prime time, Anon. That doesn't necessarily mean it's the proposal that I prefer, nor does it mean it's the only proposal that Senate Dems are willing to agree to. Legislation, particularly big legislation, is often altered during the legislative process -- that doesn't mean that the initial measure that passed through one of the legislative steps wasn't serious or well-crafted.

August 16, 2007  
Anonymous Anonymous said...

Seth,

24 hours notice - then passed. Don't tell me that a serious proposal goes through that route. You have heard of committee hearings? There is a process that happens for a reason.

A serious proposal is open to the process - it invites it so the end product is better.

They passed it through the Senate with almost no review. None.

They did it for one simple reason. Campaigns. They did not want it out for review and still refuse to give the details.

They talk about a poll they did prior to the relase of HW and prop it up like people support HW. They don't want the details out there.

Reps Sherman, Zepnick and Fields all did OP-ED peices about helath care and never once did any of them mention HW - not once.

You may be right. This might be a legit plan. But the way this was rolled out stinks.

August 16, 2007  
Blogger Seth Zlotocha said...

You're right, there were legitimate issues with the proposal's initial rollout. But that happened two months ago, and since Healthy WI has gone before numerous public forums (this link only includes upcoming events; many more have already happened) while Republicans have still refused to have an honest and substantive debate about the proposal.

And check out my post from today. Even when Dems went through the "appropriate" channels of announcing a proposal, enrolling it as a legislative bill, requesting it go to committee, etc. -- which it did with the WHP in 2005 -- the GOP leadership had the exact same ideological and reactionary response to it as it did Healthy WI. The only difference is that the media didn't ignore Healthy WI like it did, for the most part, the WHP because the Senate passage meant Healthy WI was in at least some version of the budget. I don't like how that happened, either, but never before have we talked so much about fundamental health care reform in this state, and I'd say that's a good thing.

August 16, 2007  
Anonymous John P said...

I am not sure why people here feel that medicare rates are what HW should adopt. There are many primary care doctors that are limiting new medicare patients due to their low reimbursment rates. Dont give me the crap about, " you will make it up on volume", well one can one see so many patients in a day. In contrast, to what some imply, most doctors are not greedy. Medicare rates can be a good starting point, but if those are the rates that HW adopts, I think it will be a tough sell to the medical community.

I also agree with others that I think the Senate Democrats are being disingenous about the plan. This should never have been proposed in a budget. The surveys that are being touted are suspect. I think the plan is a good start to get us talking and I give the Dems credit for that, but I think they should have used a different route.

August 16, 2007  
Blogger Seth Zlotocha said...

John P,

As I mention above, I agree with you about the Medicare fee schedule and, to an extent, about the initial rollout of Healthy WI. I do think the Dems could've and should've gone about initiating the proposal differently, but I don't think the way they did it makes the proposal itself disingenuous.

August 16, 2007  
Anonymous John P said...

Seth:

We will have to agree to disagree on the disingenuous part :)

August 16, 2007  
Blogger Seth Zlotocha said...

Fair enough.

August 16, 2007  
Anonymous busana muslim said...

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January 26, 2012  

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