What Is and What Isn't Single-Payer

John Torinus took his fifth swing at Healthy Wisconsin in his column yesterday, and the theme of the day was "single-payer."

In his previous four columns (see here, here, here, and here), Torinus used the phrase "single-payer" a total of twice. In his column yesterday, it's used seven times.

The fact is, Healthy Wisconsin isn't single-payer legislation. If the situation is right, there's much to like about single-payer models, as evidenced by the successful state farmer's cooperative, which operates under a single payer. But Healthy Wisconsin just doesn't fall into that category.

The key policy difference between a single-payer model and the consolidated payer model of Healthy Wisconsin and the Wisconsin Health Plan is that the latter allows for payer competition.

In a consolidated payer model, based on the ideas of economist Alain Enthoven, consumers are given a direct choice of health plans. If they opt for the most cost effective plan -- which would need to contract with the most cost effective providers to gain that status -- they pay nothing per month aside from what they pay into the system as a whole through some form of taxes or assessments. If consumers opt for a higher cost plan, on the other hand, they pay the difference between that plan and the lowest cost plan.

This type of competition can't exist in a single-payer model since, obviously, the one payer isn't going to be competing with itself in any meaningful sort of way.

There's no question that Torinus understands all of this -- to be sure, David Riemer explained it to him in a debate the two had back in August -- which makes it both odd and eye-rolling that he would push Healthy Wisconsin as a single-payer system.

But why let the nuances and complexity of health care models get in the way of good ol' rhetoric?

"Consumer Driven" Health Care Is More Than High Deductibles & HSAs

The Journal Sentinel is fronting an interesting article today on recommendations for comprehensive health care reform coming out of the Committee for Economic Development (CED), which is a group that includes business leaders from around the country.

The article does a good job of explaining how the CED recommendations reject the notion that the only competition that's needed in the health care market is at the point of care. Instead, due to the existence of third-party payers, the CED backs re-working the market so that insurers are put into direct competition for participants rather than working through the employment system.

As the full CED report explains:

The earlier discussion of CDHPs expressed doubt that consumers could drive health-care efficiency by shopping for lower prices for individual treatments and therapies for serious illnesses. However, consumers could have meaningful influence on the health-care market by shopping in a more deliberate fashion for cost-efficient health-care plans.

The JS astutely recognizes the connections between this proposed model and the Healthy Wisconsin plan pushed by legislative Dems over the summer.

Both proposals involve individuals using a fixed publicly-financed credit to select from a grouping of plan options that vary in price -- individuals would pay the difference if the plan costs more than the credit -- and both employ a payroll-driven funding mechanism (an income tax mechanism similar to the "cash out" option proposed by Sen. Wyden is also listed as an option).

In a fairly obvious attempt at "balance," the article misstates the link between Healthy WI and a "Medicare-for-all" model that's rejected by the CED. While Healthy WI does include a public fee-for-service option, that option is just one of many that consumers could select, and in all likelihood it would be among the most costly -- and therefore least chosen -- of the options.

But, overall, the article did a nice job of pointing out that a good chunk of the national business community recognizes there's more to consumer-driven health care than high deductibles and HSAs, and the government is needed to fundamentally re-work the system to maximize the full competitive potential that's in the multi-layered health care market.

Health Care Reform is Coming Back

Not in the 07-09 budget, of course. That ship has sailed (or, at least, it sounds like it's sailing).

But, as expected, legislative Dems are making clear that fundamental health care reform is still in the works. As Senator Erpenbach put it bluntly: "It's not going away."

I hope this time away from the spotlight also prompts the Dems to give the Healthy Wisconsin bill a bit of an overhaul. I'd really like to see them come back with the Wisconsin Health Plan and call it a day, but that doesn't seem to be too likely.

There are, however, a couple of key areas that could be altered in the proposal to improve it and make it more politically palatable.

First, allow for HDHP options. These options could mirror those in the WHP where cost sharing isn't applied to preventive care, the deductible is set at a reasonable annual level, and there's a pre-set level of funding in a HSA to allow for first-dollar coverage.

Managing this alongside comprehensive options could be difficult, particularly if people are allowed to switch between plans during an annual open enrollment period. Nevertheless, it's something that should be explored.

Second, explore new funding mechanisms. This is a big one, but it's also the one that would be most difficult to realize. Clearly the biggest substantive objections to Healthy Wisconsin were related to its funding, particularly mandating that all employers contribute a fixed amount to health care.

The reasoning for this mandate is simply that employer-sponsored health care has developed over years and years in this country, and simply abandoning it in one swoop is difficult. But, as I discuss in more detail here, severing the tie between health care and employment should be a goal that's right up there alongside universal coverage in any reform plan.

Third, get some active state Republicans on board. I realize it's highly unlikely anyone in the GOP leadership will sign on, but Republican support for fundamental health care reform isn't impossible.

After all, former Rep. Curt Gielow was a co-sponsor of the WHP and Rep. Terry Musser was a co-sponsor of the Wisconsin Health Care Partnership Plan. And, on the national level, Sen. Bill Bennett -- one of the most conservative Republicans in Congress -- has jumped on board with Sen. Ron Wyden's sweeping Healthy Americans Act.

And, along the same lines, the support of the business community is also key. Healthy Wisconsin and the WHP have some solid business support, but more always can be done. Wyden's Healthy Americans Act is another example on this front; it has the backing of some key national corporations, most notably the CEO of Safeway.

There are other details that also should be examined, such as including more health professionals on the board that oversees the new system, eliminating the use of special affinity groups, creating a mechanism for new businesses to be phased into the plan, and loosening or eliminating the restrictions on insurance company profits.

Needless to say, let's hope the Dems use this break from pushing health care reform as a working vacation.

Does WI Right to Life Know Something We Don't?

Throughout the summer, Wisconsin Right to Life has been pushing the line that a health care reform plan like Healthy Wisconsin would increase the number of abortions performed in the state because it follows the covered benefits currently offered to state employees.

In its latest release, titled "Wisconsin Abortions Will Skyrocket Under 'Healthy Wisconsin'!" the group states:

"[S]tate employees currently have what amounts to unrestricted coverage for abortion," said Susan Armacost, Legislative Director for Wisconsin Right to Life. "It is bad enough that Wisconsin taxpayers are currently reimbursing abortionists for the abortions of state employees and their dependents but under 'Healthy Wisconsin' they would be reimbursing them for all abortions in the state and the number of abortions will rise dramatically."

As a state employee, this was news to me, so I grabbed my handy benefits guide for 2007 and looked it up. Here's what I found about abortions in the statement uniform benefits under the "Reproductive Services" section (emphasis mine):

Maternity services for prenatal and postnatal care, including services such as normal deliveries, ectopic pregnancies, Cesarean sections, therapeutic abortions, and miscarriages.

The word "abortion" doesn't appear again in the rest of the statement of benefits. As Cory Liebmann pointed out the other day, only therapeutic abortions -- that is, abortions to preserve the health of the mother -- are covered for state employees.

But, just to be certain, I called my health plan, WPS, to double check. And, yes, only therapeutic abortions are covered; all elective abortions need to be paid out-of-pocket.

So where exactly is Wisconsin Right to Life getting its information?

Thankfully, it appears the abortion line has been a lame duck in the fight against health care reform. Wisconsin Right to Life has been pushing it in press releases since at least June, yet I haven't seen it picked up as a feature story by any major media outlet in the state.

Yet, still, simply flooding the press release sections of WisPolitics and the Wheeler Report with misinformation to further a pet cause at the expense of needed health care reform seems bad enough.

UPDATE (9/9): Rick Esenberg has come across an article that claims the state's Standard Plan that's operated by WPS covers all legal abortions, which is apparently the basis upon which Wisconsin Right to Life was making its claims.

This is worth noting, and I should've done that in the post, but I'm not sure how it really changes my basic point.

That is, the RTL aim is to drum up opposition to Healthy Wisconsin -- along with other reform plans like the WHP -- by making people think that all abortions would be covered by taxpayer money if a plan like that was implemented, which would surely, it argues, result in a sharp increase in the number of abortions performed. And, in the case of at least one person who attended a health care forum in Wausau last week, the line worked.

But I'm wondering if it would've worked so well if Wisconsin Right to Life explained that the Standard Plan is Tier 3 coverage, meaning it's the only option out of twenty-plus plans available to state employees that isn't required to follow the uniform benefits policy. And, as such, the Standard Plan costs state employees $290 more per month than Tier 1 coverage, which is enough to fund one or more elective abortions each year out-of-pocket.

This is important because it explains why the vast majority of state employees -- and state citizens, if the tiering system was implemented on a statewide basis under Healthy WI or the WHP -- don't have the Standard Plan (see UPDATE II below for exact figures). And, since the vast majority don't have the plan, the vast majority don't have access to coverage of elective abortions, which pretty clearly deflates the point RTL is trying to make about the "skyrocketing" effect Healthy Wisconsin would supposedly have on abortions in the state.

But Rick assures us in his post that RTL is a professional group, so I'm sure it won't have a problem clarifying its press releases with this important caveat.

And, what's more -- in the interest of moving the discussion forward rather than dragging it down with misleading sensationalist claims -- the group could also aim its releases at simply asking that all plans under any reform strictly adhere to the state's uniform benefits policy, at least when it comes to abortions, which would assure that only therapeutic abortions are covered.

UPDATE II (9/10): According to ETF figures, 2.6 percent of active state employees -- or 1,773 of 69,413 -- had the Standard Plan in 2006. The other 97.4 percent of state employees only have access to coverage of therapeutic abortions.

Another Shot at Healthy Wisconsin Falls Short

John Torinus took another swing at Healthy Wisconsin in his Journal Sentinel column on Sunday. And, again, he missed the mark.

Torinus tries to use a Lewin Group report to criticize the Healthy Wisconsin plan. He writes:

The payroll tax to fund Healthy Wisconsin has been pegged at 14.5% - 4% from every employee in the state and 10.5% from the employer.

...

Now, 14.5% is a big number, but it's not the whole story.

On page 57 of the final Lewin Report, the initial payroll tax percentages are shown as 11.55% for the employer and 3.95% for the employee. That's 15.5% going in, not 14.5%.

It's true that page 57 of the final Lewin report puts the initial payroll assessment at 15.5 percent to start. But that report deals with the Wisconsin Health Plan (WHP), not Healthy Wisconsin.

This is an acknowledgement that Torinus awkwardly makes a few paragraphs later, and he tries to use it to his advantage by saying that the use of high deductibles in the WHP should really make it less expensive than Healthy Wisconsin; hence, the 14.5 percent assessment projection for Healthy Wisconsin must really be low.

To bolster his point, Torinus cites an insurance broker who makes the obvious point that premiums decrease as the deductible increases.

On the surface, it appears that Torinus has struck gold -- he's managed to use a key piece of evidence for fundamental health care reform against the Healthy Wisconsin proposal. However, if you read that evidence a little more closely, the point virtually crumbles.

The most basic reason that the WHP costs more than Healthy Wisconsin is because it covers more people -- 225,000 more, to be exact. That's a 6 percent difference, which is due to the fact that Healthy Wisconsin incorporates the BadgerCare Plus plan that would increase participation in state health programs, thereby decreasing the number of people who would be eligible for Healthy Wisconsin.

This has an impact on the assessment rate since the WHP would have more low-income participants than the Healthy Wisconsin proposal, at least as they're both currently written.

What's more, while it's true that the premiums for plans under the WHP should be cheaper -- and they probably are -- the fact that the proposal includes funding each participant's HSA with $500, at a total cost of $1.5 billion in the first year, dries up a good chunk of that savings. There are also administrative differences between the two proposals that have an affect on costs.

Here's (page 59) the cost breakdown for the WHP:

Click for larger view.

And here's (page 12) the cost breakdown for the Healthy Wisconsin proposal:

Click for larger view.

Bottom line, David Riemer and the people at the Lewin Group aren't trying to pull a fast one on the public with the Healthy Wisconsin proposal. The numbers make sense, though sometimes it takes a little more than just cherry-picking particular points in the 170-plus page Lewin report to see that.

But it was encouraging to see Torinus continue to speak positively, though in a veiled way, about the WHP. If he -- or, more importantly, the state GOP -- preferred to use that proposal as a starting point for discussions, it would be a big step in the right direction for health care reform in the state.

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.

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.

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.

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.

It Depends How You Define "All In"

Jo Egelhoff over at FoxPolitics has been following up on the questions I raised about the numbers John Torinus used in his recent columns critiquing the Healthy Wisconsin plan.

Torinus claims that "per employee" costs are "less than $6,000" for KI in Green Bay, where he is on the board of directors, and around $7,400 for Serigraph, which is the company he runs.

My response focused on the fact that high deductible health plans (HDHPs) have lower premiums -- the bulk of which are typically paid by the employer -- and, true to their name, higher deductibles, the bulk of which are typically paid by the employee. As a result, comparing premium costs for a HDHP to premium costs for a traditional comprehensive plan is comparing apples to oranges.

Another issue is using "per employee" costs. The trouble with that is it doesn't account for those employees who opt out of the company plan, and it also doesn't allow for any distinguishing between those employees who opt for a less expensive single plan and those who opt for a more expensive family plan.

Egelhoff acknowledges the "per employee" issue, though not by explaining it for her readers; rather, she just tells them there are "good additional questions" that have been raised about the figures cited by Torinus.

But I think Egelhoff mistakenly believes that the other issue about comparing HDHPs to traditional plans was addressed when she received this response from Torinus about what exactly "all in" costs mean:

[It] includes every drop of health cost, employee and employer, dental, mental, drugs, HRA, prevention, wellness, disease management, on-site nurses, administration -- everything.

Notice the key word missing from that list is "deductible." Sure, the deductible is alluded to in the reference to an HRA -- or Health Reimbursement Account -- but that really only covers the employer-funded portion of the deductible since employees can't contribute to HRAs.

According to a report in the medical journal Pediatrics, the average employer HRA contribution is $1,556, while the average deductible amount is $3,686. That leaves a $2,100 doughnut hole for the employee to fill in each year.

Who knows, perhaps KI and Serigraph are very generous with their HRA contributions and put in well over the average while still keeping costs down to $6,000-$7,400 "per employee." Or maybe the two managed to convince the health plan to keep the deductible lower than the average while simultaneously decreasing the premium well below $8,530, which is the average for a family HDHP with a HRA.

But, in the end, I'm struggling to see how an army of cost-conscious consumers is going to lower premium and deductible rates that are privately negotiated with health care providers in advance of care.

I can see how that army could avoid overutilization (the key would be simultaneously avoiding underutilization, which can result in an increase in costs) and potentially shop around for the best price on certain non-immediate treatments (although studies suggest that even with pricing data, consumers really aren't in a good position to shop around for care, nor do they really want to shop around for it).

But how does that affect pre-set premium and deductible levels? Seems to me it's just about stretching your deductible dollar further. In terms of contracting with the lowest cost provider in the area, health plans already typically try to do that, hopefully while considering some quality measures at the same time. And in that game, what really makes a difference is the size of the health plan. The bigger the pool, the more negotiating power it has.

The key to lowering overall costs -- rather than just focusing on non-immediate procedures that tend to be relatively inexpensive, anyway -- is by addressing administrative inefficiencies on both the payer and provider sides (streamlining billing procedures, utilizing electronic medical records, etc.), along with reducing or ending the cost-shifting that takes place between uninsured and insured patients.

In any event, I've put in an email to Torinus to find out for sure what his numbers actually represent, and I'll update if I hear back.

And if it turns out KI and Serigraph are providing employees with adequate family coverage that runs $6,000-$7,400 per plan when you include the total premium and deductible costs for the employer and the employee, then I'll gladly lobby to include whatever steps they implemented within a universal structure. As I've explained before, I'm certainly not adverse to the use of HDHPs, as long as certain protections are in place.

Ultimately, I'm just after an honest and open debate about fundamental health care reform in the state, and that includes critiquing the Healthy Wisconsin plan with an apples to apples comparison. I know Jo Egelhoff is after the same.

On the topic of contacting Torinus, I want to mention an online forum that's being sponsored by the Journal Sentinel next Wednesday, August 1 from noon until 1:30pm. Torinus and David Reimer will be engaging in a moderated debate using questions sent in by viewers. It should be interesting, so check it out and submit a question if you get a chance.

Torinus Swings and Misses Again at Healthy WI

Serigraph CEO, WMC board member, and Journal Sentinel business columnist John Torinus took his second swing at the Healthy Wisconsin plan yesterday using the same misleading argument he did a few weeks ago.

In his July 1 column, Torinus compared the premium costs of his company's high deductible health plan (HDHP) with the premium costs of the state's traditional comprehensive health plan; the latter is similar to the plans that would be offered under the HW plan.

As I pointed out at the time, the trouble with such a comparison is that HDHPs are premium light and deductible heavy, while traditional plans are premium heavy and deductible light (or deductible non-existent, as is the case with the state plan).

According to a report in the April 2007 issue of the medical journal Pediatrics, the average traditional comprehensive health plan has an average family premium of $11,090 per year and an average family deductible of $646 per year. The average family HDHP, on the other hand, had an average premium of $7,909 and an average family deductible of $4,070.

So, in other words, each plan costs about the same in relationship to the benefits that are offered. The only difference is how the money is being paid (and who's doing the paying, since the bulk of premiums are typically paid by the employer while the bulk of deductibles are typically paid by the employee).

Torinus never mentions this in the July 1 column, or when he trundled out the same argument yesterday by comparing the premium cost of a HDHP offered by the company KI in Green Bay and the premium cost of the average traditional plan in the state. The cost of the HDHP offered by KI, according to Torinus, is less than $6,000 per employee, which, expectedly, isn't as much as the $11,000-$12,000 premium for the average traditional plan.

Of course, there's another little wrinkle in Torinus' argument since he claims the total cost of covering the 1,429 KI employees who get insurance through the company is $8.8 million per year, which comes out to $6,128 per employee (a little over $6,000 per employee, not a little under). This is important because unless all of KI's employees are under a family plan, the $6,128 figure is going to be skewed low by everyone who is on a less expensive single plan.

But even setting that wrinkle aside, the fundamental point Torinus tries to make for a second time is simply off the mark. If we're going to have an honest debate here, why not also share how much the employee is paying into the premium and how much is being paid through the annual high deductible?

With two down, hopefully the JS is keeping track of Torinus' swings because he really shouldn't have that many left.

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Side-Note: I won't have access to my home computer for most of the week, so postings probably will be sparse. In fact, unless something big or frustrating happens -- the column by Torinus is an example of the latter -- this may be the only post for the week. Next week I'll be back to my typical 3-5 posts per week.

Critics Continue to Reach for Arguments Against Healthy WI

If the critiques of it are any indication, Healthy Wisconsin (HW) must be one good fundamental health care plan.

Initially there were the critiques that came up short trying to attack the way the HW was structured. Now they're developing into shots at what might happen if the plan was instituted.

According to a number of conservatives in the past few days (here, here, and here), the HW plan will result in a tide of out-of-state people looking to scam the system by getting menial jobs just to meet the minimum requirements for insurance under the HW.

Christian Schneider sums up the conservative position with a question and warning:

Why would any poor person in Illinois or Minnesota with a serious illness not immediately pick up, move to Wisconsin, and get a job at Dairy Queen? How hard can it be to claim you’re “self employed” or work for a farm? OB/GYNs could be flooded with out of state pregnant women seeking free care, as they are immediately eligible.

To be honest, I'm surprised the flood of OB/GYNs out of the state hasn't already happened considering pregnant women under 185 percent of the FPL can already get free coverage through the state's Medicaid or BadgerCare programs.

And that's where the conservative charge falls woefully short. Since BadgerCare already picks up the health care tab for all low income families with kids, yet without a flood of them into the state, that really leaves childless adults as the big concern.

Of course, if a low income childless adult from Illinois or Minnesota wanted to come here now and get care without even getting a job, they could always move to Milwaukee County and wait 180 days to qualify for GAMP (and if you do land that gig at Dairy Queen, just make sure it doesn't pay you more than $902 per month). I'm sure there are a number of other medical programs out there for low income people in other areas of the state.

And even if the HW plan is scrapped, our concerns over a flood of poor childless adult scammers at our borders isn't over since it's really Doyle's BadgerCare Plus plan -- which is incorporated into the HW plan -- that's the driver of universal health care. It would get us up to 98 percent insured by increasing the current BadgerCare FPL maximums and extending care to, you guessed it, childless adults up to 200 percent of the FPL! Dairy Queen managers across the state aren't going to know what to do with all of those applications.

I don't mean to be glib about this, but I'm having a tough time putting a lot of stock in this argument.

Once you widdle down the population of potential flooders to sick and poor childless adults with the means to move across state lines -- a population that becomes virtually non-existent under BadgerCare Plus -- it appears to be quite a logical leap to frame this as a significant issue that could bankrupt the system. Add to that the somewhat obvious fact that health coverage is only one of many factors that could prompt someone to move across state lines, even if they have the economic ability to do so, which is why thousands of uninsured people remain in states with less generous Medicaid programs when they could move to another state and get covered.

Another argument against HW that is less of a logical leap, yet equally as unconvincing, is coming from a recent press release by Senate Minority Leader Scott Fitzgerald (R-Juneau) who is now dubbing the employee payroll assessment as the "Success Tax." As Fitzgerald sees it, "The $15.2 billion government-run health care plan included in the state budget by Senate Democrats would punish Wisconsin workers every time they received a pay raise or a promotion by forcing them to pay more for the same health care coverage."

It's true that as a flat tax on social security wages, the employee assessment would increase with any raise as long as the total salary remains under $97,500. This is no different than how the income tax works -- except the employee assessment is flat and has a cap -- which comprises the bulk of GPR dollars that go to fund all sorts of services that remain the same for people regardless of their earnings, including public education. Does that mean UW tuition should be income-rated so that wealthier residents pay less in tuition because they pay more in taxes?

A raise is still going to be a raise under the HW plan, and no one is going to mistake it for a bad thing because they'll pay more under the flat employee assessment.

In the end, I just can't believe these are some of the discussions we're having about the prospect of fundamental health care reform. It could be that HW is just that good of a plan, but I think the more likely culprit is that while conservatives will recognize health care as a significant problem, conservative ideology just doesn't allow them to offer a significant solution.

New Healthy Wisconsin Website

Just wanted to make a quick plug for a new website on the Healthy Wisconsin plan. It was put together by the folks at the Institute for One Wisconsin.

The site includes an overview of the plan, the plan details, news about the plan (including in the blogs), some handy links to plan documents, and a section to write to your legislators about the plan.

Check it out.

Critiques of Healthy WI Keep Coming Up Short

As expected (by me, at least), Serigraph CEO and WMC board member John Torinus took a shot at the Healthy Wisconsin plan in his weekly JS column yesterday.

At the start of the column, Torinus makes a curious claim. He writes that the HW plan is solely about coverage and not costs. This is curious because the Lewin Group actually found that HW would reduce health care spending by over $750 million in the first year alone.

The thing is, Torinus has a monolithic view of health care costs. It's like every other market to Torinus in which consumers purchase a service for a price that's entirely driven by the cost and value of that service from the perspective of the seller.

There is certainly some of that in the health care market, but the reality is much more complex. Since health care typically works with third-party payers -- which is necessary if you want to distribute risk -- there is the added cost of paying for those third-parties. Also, since health care is unlike most other markets in that its services are often required to sustain life, people's ability to pay does not always dictate whether they receive the service. And when they can't pay, others pay more to compensate.

In short, when consumers pay for their health care -- or, more accurately, their third party payers pay for it -- they're not just paying for the health care they received. To be sure, in its recent review of the Wisconsin Health Plan (WHP), the Lewin Group estimated (page 13) that health care services actually cost private payers 70 percent more, on average, than the true cost of those services.

So when we talk about reducing health care costs, there's much more that needs to factor in the equation than simply the literal cost of that care.

But, actually, the literal cost of care is something that the HW plan addresses, Torinus just doesn't acknowledge it. He laments that the HW doesn't include a higher deductible with a HSA like the Wisconsin Health Plan does. On that we're in agreement.

But Torinus ignores the fact that there is a significant deductible -- $300 for individuals and $600 for families -- included in the HW for non-preventive adult care. So there is some incentive to shop around for care under the HW plan; and, if it's raised as a substantive issue, perhaps Dems would be willing to include a HSA option in the mix.

However, the majority of cost savings under the HW plan comes from increased administrative efficiencies and reduced cost shifting. And this is really the most appropriate place to target cost savings. As studies have shown, even with pricing data, consumers really aren't in a good position to "shop around" for health care, nor do they really want to shop around for it. And with the increasing geographic disbursement of different hospital and clinic systems -- a byproduct of provider consolidation -- the options for shopping around are decreasing by the year.

The rest of Torinus' column relies on a numbers game in an attempt to demonstrate how businesses are already handling health care costs in a much better way than the HW would. He writes:

The Democratic rhetoric is that every citizen of Wisconsin should have the same coverage as do state employees. The problem is that many private companies are offering essentially the same level of benefits as does the ETF plan, but at about half the cost. Last I checked, the ETF plan was more that $11,000 per employee.

Best practice private sector plans are at about $6,000 per employee for all-in costs. (My company is at $7,400.)

This is disingenuous on a couple of levels.

For starters, when Dems say every citizen of Wisconsin should have the same coverage as state employees, they truly mean coverage, not cost. Under the HW plan, health care costs would increase for state employees (although they would decrease significantly for their employer). The 4 percent payroll assessment would be a lot more than virtually any state employee currently pays in premiums, and while co-payments would be about the same, the deductible would be something new for state employees that would significantly increase their cost sharing.

So that $11,000 figure Torinus cites is little more than a red herring since that number, from the ETF perspective, would decrease under the HW plan even though coverage would remain the same.

What's more, the "best practice private sector plans" that Torinus refers to are high deductible health plans (HDHPs) that may or may not include a HSA. The thing about HDHPs is that they're low on premiums and -- true to their name -- high on deductibles.

According to a report in the March 2007 issue of Pediatrics, the average traditional comprehensive health plan -- which is what the HW plan would involve -- had an average family premium of $11,090 per year and an average family deductible of $646 per year. The average family HDHP, on the other hand, had an average premium of $7,909 and an average family deductible of $4,070.

So when Torinus puts these "best practice private sector plans" up against the ETF plan -- which, again, isn't the same in terms of employer cost as the HW plan -- he's really comparing apples to oranges since the figures are weighted toward premiums (which is always going to be higher in a traditional comprehensive plan) rather than deductibles (which is always going to be higher in a HDHP).

There's more. Torinus writes:

My company, where management and co-workers aggressively and collaboratively manage health costs, spends about 14% to 15% of payroll on overall health costs. The Riemer plan calls for an initial payroll tax of 14.5% - 10 1/2 % from the employer and 4% from the employee.

The Senate bill allows, however, for 16% - 12% from the employer and 4% from the employee. You just know that the 16% - or more - will become the assessment once the government is in charge of the system.

For the life of me, I can't find where Torinus is getting that "16%-12% from the employer" figure. Here is what the HW bill literally says about the employer assessment (page 48): "Subject to sub. (4), the board shall calculate an assessment, based on its anticipated revenue needs, that is a percent of aggregate social security wages that is at least 9 percent and not more than 12 percent."

That's 9-12 percent of social security wages, not even payroll, so any portion of an individual employee's pay that exceeded $97,500 (in 2007) wouldn't be subject to the assessment. When you add in what employees would pay, the percentage goes to somewhere between 11 percent and 16 percent, but that's not what Torinus wrote. He wrote that employers alone would pay 12 to 16 percent, with employees contributing 4 percent more, which just isn't the case.

So Torinus' company right now has health care costs at 14 to 15 percent of total payroll, and he fears a universal health care plan that would run his company 9 to 12 percent of social security wages?

In the end, a couple of things about the Torinus column did make me happy, though. One, he speaks pretty highly of the WHP, which is certainly still an option that's on the table (actually, the HW isn't all that much different than the WHP to start). And, two, his inability to make solid points against the HW is, to me, little more than a demonstration of the plan's overall strength.

Health Care Reform: Making It Fairer

One of the more compelling arguments against any universal health care plan, not just Healthy Wisconsin, is that it's unfair to require employers -- particularly those who don't already offer their employees health insurance -- to contribute to a program; rather, the labor market should dictate their participation.

As with most of the other arguments against universal health care, this line assumes that the system that we have now is fair or another type of system could be fairer.

For starters, just because you don't have health insurance doesn't mean you're not going to need health care. And when the uninsured -- or underinsured -- go in for care that they can't pay for themselves, which is happening on an increasing basis each year, the costs get shifted onto paying patients and, in all likelihood, their employers through increased premiums, deductibles, co-payments, co-insurance, etc.

The same is essentially true for employed people who are forced into Medicaid because their employer does not offer them affordable health insurance. Not only do individuals and businesses pay for these people to get onto BadgerCare, those individuals and businesses that pay for health insurance pay more for that insurance because of low Medicaid reimbursement rates.

So if a set of employers chooses not to offer its employees health insurance because the labor market doesn't demand it, that decision is actually costing other employers and employees more.

What, then, are the options? Really, there are a few:

• Do nothing. The result of this will be a cycle in which cost shifting increases as more and more employers skimp on health insurance or remove it from their employment benefits altogether, which, in turn, places more pressure on those who are still in the system who, as a result, leave the system and so on.

• Refuse care to those who don't have health insurance -- or enough health insurance -- and cannot afford the care out-of-pocket. This reduces cost shifting and would likely put more pressure on the labor market, at least the middle and upper class portion of it, to have health insurance be a part of employment. However, the moral implications are obvious.

• Mandate that everyone carry an adequate level of health insurance, just as we do with car insurance, to reduce or eliminate cost shifting.
  

For most people, options 1 and 2 are out because of the economic and moral issues that arise with each.

That leaves option 3, which, if done centrally, has the added bonus of holding down costs through increased administrative efficiency and purchasing power. But the big issue for that option is how it's going to be funded. Do we place the onus on employers, individuals, or some of both? There's going to be winners and losers -- in terms of both cost and coverage -- any way to slice it.

The Healthy Wisconsin initiative involves both, but the weight is on the employer. Germany, which also offers its citizens universal coverage through an array private payers and providers just like Healthy Wisconsin proposes, also involves both, but the funding split is equal with employees putting in about 6.5 percent of wages and employers matching that amount.

You could opt to place the entire -- or even the vast majority -- of the onus on individuals, but would the resulting decrease in after-tax wages be any more desirable than requiring employers to foot the bulk of the bill?

As some critics have pointed out, some minimum wage employees -- mostly in the retail and service sectors -- would lose their jobs if all employers were required to pay into a health care system like Healthy Wisconsin, while other jobs -- the ones that currently don't get health insurance through their employer -- would see a decrease in wages to compensate for the increased labor costs associated with the employer assessment (of course, they'd now also have adequate health coverage).

But if the onus was placed on the individual, similar results would likely happen, except minimum wage workers would be quitting rather than getting fired since their after-tax income would decrease beyond the levels that would make it livable (it's pretty much beyond that point already for most who rely on minimum wage for their livelihoods).

Even if you split the difference like Germany, there will still be a drop in employment -- probably through a combination of firings and quittings -- as a result. There's simply no magic way around it.

And that's the reality -- there's no easy way out of the health care situation. Tinkering just won't cut it.

The quicker we start facing that reality in substantive discussions rather than politically-charged rants, the quicker we can move to a system that isn't without losers, but also doesn't have the amount or level of losing that we currently have or what other alternatives would bring.

Critiquing Healthy Wisconsin: Where's the Substance?

Conservatives were up in arms yesterday over the announcement of the Healthy Wisconsin initiative.

The Senate GOP had the fear-mongering in full effect with a press release stating that pregnant women, children, and seniors could lose access to their doctor under the initiative, while others focused on using politically-charged soundbites like "big government" and "socialized medicine" to generate alarm over the proposal.

There was little to no substance in any of these attacks. That doesn't mean, however, there are no substantive challenges that could be made to the Healthy Wisconsin initiative.

Here are a couple of points conservatives -- and liberals -- might want to try on if they're interested in a substantive discussion on health care reform.

The Deductible
If free marketers usually get one thing right and progressives usually get one thing wrong about health care reform it's that over-utilization of health care services is a serious problem. Some of this over-utilization is on the provider end -- for instance, utilizing unnecessary treatments and tests to generate more reimbursements -- but much of it is on the patient end.

Providing incentives for consumers to use health care wisely and consciously is an important piece of any universal health care reform plan. The Healthy Wisconsin initiative does this through its use of a $300 deductible for individuals and a $600 deductible for families. Aside from care of children and pregnant women, along with proven preventive care measures, other services under the proposal would be subject to the deductible.

It's good that the Healthy Wisconsin proposal involves cost-sharing through a deductible, co-pays, and co-insurance, but why not raise the deductible and include a HSA, which would make the plan virtually identical to the well-vetted Wisconsin Health Plan?

That way, if a portion of the deductible was state-funded through the HSA, it would give consumers some breathing room knowing that the first non-preventive treatment they receive won't be coming out of their regular bank account. Yet, since it still would be coming out of their HSA, the financial disincentive for over-utilization would remain.

Plus, then there's the added bonus of having a tax-sheltered account that could be self-funded (or employer-funded) to cover the remaining portion of the deductible or other cost-sharing, or rolled over from year to year to prepare for the more expensive catosphrophic or chronic care that could be needed in the future.

Special Affinity Groups
There is a clause in the Healthy Wisconsin bill that would allow health networks to restrict access to participants who are part of certain pre-defined "special affinity groups," such as farmers or teachers.

Part of the purpose of fundamental health care reform is to put everyone in the same boat when it comes to health benefits. This is important for practical purposes, such as community rating, but it's also important for conveying trust to the public that the system is equitable. Siphoning off a portion of the population works against this trust and -- to an extent -- the viability of community rating.

Perhaps there's a good practical reason to restrict particular health networks to a certain trade group, but I'm not seeing it on the surface. This is one point that Dems should explain in more detail.

The Healthy Wisconsin initiative -- in spite of likely being added to the Senate version of the budget today -- is very much a work in progress. The time now is much better spent parsing the substantive points of it rather than clinging to divisive and hyperbolic soundbites.

UPDATE: You can see a more reader-friendly detailed account of the Healthy Wisconsin plan here.