Thursday, August 02, 2007

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.

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Blogger Dad29 said...

If you want to take on rate-of-growth OR growth in premium charges, start dropping "Mandates."

August 02, 2007  
Blogger Seth Zlotocha said...

Please. Not the bogus mandate argument.

Most mandates are aimed at preventive care such as screenings, immunizations, mammograms, etc., which aren't that expensive. Plus, most experts agree that this type of minimal preventive care keeps costs down by catching ailments early in their development.

And the mandates that pertain to treatment, as opposed to detection, are intended to ensure that patients are provided complete coverage when any coverage that is included. For instance, it's mandated that if policies cover diabetes treatment, they also cover the cost of equipment that's necessary for treatment such as insulin pumps. But policies still have the option to not cover diabetes treatment at all, just like policies can avoid the optometry mandate by not covering vision treatments or the chiropractic mandate by not covering back treatments.

You can read all about those horribly oppressive WI mandates here.

August 02, 2007  
Blogger Russ said...

There is a bill on table in the US House that addresses the mandate problem. H.R. 2355 "Health Care Choice Act".
It allows a health insuarnce company to go through one process and sell to people in all 50 states.
The article written by Matt Kibbe gives an example of the impact of mandates.
A health policy for a single Pennsylvanian costs roughly $1,500 annually. Cross the Delaware into New Jersey and a similar plan costs about $4,000, thanks to government mandates.
Believe it or not, Wisconsin mandates health insurance to pay for marriage counselors.

August 02, 2007  
Blogger Seth Zlotocha said...

Ah, where in the WI statutes does it require health insurance policies to cover marriage counseling?

And do you have even a shred of evidence to support your contention about the supposed impact of mandates on PA vs. NJ health plans? And, FYI, if two plans are truly "similar," then the fact that one has mandated coverage would be meaningless since the other has essentially the same coverage, anyway.

As I've said countless times before, Russ, start your own blog if you want to push this nonsense.

August 02, 2007  
Anonymous Anonymous said...

If you had everyone that disagreed with you go to another blog, to push their nonsense, and left us with only your nonsense, it would be awfully quiet in here.

August 02, 2007  
Blogger Seth Zlotocha said...

That's almost poetic, Anon.

Care to share specifically what nonsense you think I'm pushing?

After all, I didn't just call Russ' point nonsense -- I explained why. The fact is his argument doesn't make any sense. If two plans are truly similar, it's meaningless if one has mandated coverage and the other doesn't because both plans essentially have the same coverage. And I'm still waiting to hear where in the WI statutes it says health insurance policies must cover marriage counseling; as far as I can tell, that contention has no basis in reality.

I know Russ is quite capable of making good points. We've had numerous lengthy debates on this blog and over email in the last 8 months, or so. But the comment he put on this post just doesn't cut it.

Just scroll through my posts and you'll see I indulge a wide number of points that disagree with mine, including some points made by Russ. I'm more than willing to debate with any view, but that view at least needs to be logical and, preferably, come along with some evidence to back it up.

August 02, 2007  
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