“Principles for comprehensive health care reform”: any measures that keep the ‘health’ insurance industry’s stranglehold on power while maintaining their ability to scalp each and every American family for at least $10,000.00 per year.

“Universal Coverage”: Quite the windfall for ‘health’ insurance profiteers - and mighty good for those shareholders.
By proxy or not, if it’s not combed over and approved by AHIP toadies, it won’t pass.
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I suppose I see this effort by the SEC as having a silver lining.

Every business already knows that healthcare costs are exploding. Every business already knows that the health insurance industry is holding every other business hostage. Every business already knows that international competition is difficult when other nations’ businesses have lower healthcare costs. Because the situation is unsustainable I think it’s perfectly legit for the SEC to ask people and corporations to think about healthcare reform in a formal way.

My heart bleeds as red as the next guy’s. I even remember embarrassing myself by crying while speaking to a bunch of insurance execs as I described how a head and neck cancer patient was sent away to die because no hospital would provide pro-bono OR time for a surgical team prepared to do pro-bono surgery.

But the costs of cost shifting are enormous! Until we have financially sustainable reform we will continue to shovel our uninsured into the scrap heap! I have no objection to nationalized charity care, but it still has to be paid for and I even a single-payer plan has to have a business model to be sustainable.

I don’t mind repeating that the most sustainable healthcare systems employ a private health insurance industry as part of the model.

First, I say kudos to the SEC. Second I say align the private health insruance industry to principles that persuade insurers to compete on price rather than to compete based on selection of the least risky clients. (This is where I fall into the C-MCGU routine.)

I see good things coming from these SEC required discussions. Let’s take some time to educate corporate heads about sustainable healthcare systems and the very basic need for a publicly sponsored not-for-profit health insurance plan. “Crowd-out” will not sink the health insurance industry; but it will change the way it does business.

http://www.chroniccrisis.com/Position_Statement_On_Healthcare_Reform_2.2.pdf

It is every citizens responsibility to learn about issues that affect our national and individual well being, and press their elected reps to take steps to assure their constituents interests are implemented through legislative action. If one could only have hope that Middle America motivated its BUTT to take an interest and learn.

Sure one can argue that this shareholder initiative is another avenue, assuming that the shareholders would support it, to pursue, however potentially raising costs, or the perception of additional costs is not in the best financial interest of the shareholder; unless of course this is a corporation who has a social mandate as an element of its mission, and then my guess is that it would be a non-profit and shareholders would not exist, just board members, and we all know how non profit board members are a bunch of radicals with radical thoughts.

All kidding aside weighing the fact that it may not pass, and most likely due to not being in the individuals financial best interests,,,,,and yeah, yeah, yeah about the “right model” will eventually yield measurable savings, in better health outcomes and costs,,,,,,,,,BUT………..let’s face it……….the majority of folk are not interested in long term, especially if there is a relationship to the pocketbook/wallet.

They are all publicly traded organizations who need that public money to stay afloat.
The large organizations buy the smaller organizations which decreases any form of competition.

Non compliance is costing managed care BILLIONS of dollars a year.
The prescription tiering is effecting the way MD’s are writing scripts because a patient may not be able to afford the 100,00 per month medication and so they have to take the 20.00 a month med. Eventually they may realize that is ineffective and decide that they must use the other.
Is there healthcare reform?

When a patient enters a hospital the same thing happens. Part of the problem is defensive medicine, but much of what goes on is simply up-selling. But the up-selling goes on before the patient has any choice. The doctors are sold the newest gadgets, the administrators are sold the newest gadgets, the nurses, pharmacists, radiologyand apthology departments are sold the newest gadgets. Then the patient pays for the newest gadgets. This isn’t news. It’s just may way of saying I think Rob is right.

When I taught healthcare policy we discussed the following graphic. It shows the standard model for Return On Investment. In this case, however, the return is not dollars, but Wellness. It is a great model in medicine and applies to every level of the system. (Also see attached)


As I said, this model works at every level. When we invest dollars in medical services we anticipate Wellness in return.

For the cost of a small smear of neosporin and a band-aid a child’s scraped knee will heal faster, but in order to provide those things Mom has to buy a whole tube of neosporin and a whole box of band-aids. She buys more capacity than she will immediately use. So the initial investment is always a little greater than the initial return on wellness.

Similarly, an ICU does not stand-alone. It must have an available lab, x-ray department and pharmacy. Someone has invested in the capacity to provide ICU services to not just one individual, but to several. So to reach the point of Increasing Returns there must be some investment in Capacity. Once that capacity is in place, however, lives are saved and we see the return in wellness.

Returns on Wellness then increase dramatically when the appropriate infrastructure is in place. Vaccines don’t magically appear in vials, but once the infrastructure is in place to make vaccines, the cost per vial is minimal and returns on Wellness, from a financial standpoint, are phenominal. The same goes for many other medical services.

And so we feel justified in spending on medical care right up to the point of Dininishing Returns - where we get a dollar’s worth of Wellness for a dollar invested. And maybe we spend a bit beyond if we have the money to spare, aiming for some spot just before the Point of Negative Returns.

But Americans are now spending well beyond the point of Negative returns! For a variety of reasons, we find ourselves in the situation of paying twice as much as we need for approximately the same level of wellness. John Kitzhaber addressed this in a recent talk. He points out the perversness of financial incentives in the U.S. healthcare system. I agree with him that part of the solution lies in changing incentives.

But spending beyond the point of Diminishing Returns, at least in our present system, is often removed from the hands of consumers. Consider prescription v. generic drugs. Suppose I could get comparable Wellness with either. Suppose my doctor is simply biased against generics. You already know this one. I spend more money for no more Wellness.

Suppose I am a doctor trying to rule out an acoustic neuroma and I give a patient a choice between an MRI or a repeat audiogram in one year. (As an otolaryngologist, I wear this hat all the time. I can count on my thumbs the number of times the patient has chosen the repeat audiogram.) Is this defensive medicine or consumer directed care?

Regarding overutilization, we do it all the time and for a variety of reasons. We all know we ought not do it, but there are simply too many incentives to continue doing it; it is easy and profitable. Purveyors of new gadgetry raise the “community standard” for the level of care in order to justify additional tests, non-generic drugs and more technical procedures - to sell new gadgets!

Once again, regarding the level of Wellness, does my hospital want me to be at the level of Wellness when I first reach the Point of Diminishing Returns, or think about this for a minute, does my hospital have an incentive for me to be at the same level of Wellness as at the point of Diminishing Returns, but paying for it on the right hand side of the curve as it turns down? (See that nice green arrow at the bottom of the figure? That’s cash!)

And if my hospital tells me that this level of Wellness costs this higher amount, and there is no way to avoid it, what am I to do? Furthermore, does my insurance comapany find some perverse pleasure in this?

If my insurance premium costs are proportional to my financial risk, then the greater my financial risk, the greater the value, and the higher my health insurance premium. I have got to find a way to reduce the cost of medical services to the cost of production at the first Point of Diminishing Returns. This has to be done in agregate. I has to be done on a community scale or it will be of no benefit to me as an individual.

The market may not be working the way we think it ought to work, but is working in a predictable manner simply because markets are accountable for profits and not wellness.

To lower both the cost of medical services and the cost of health insurance, one of two things must occur. Either we eliminate the market and set fees, or we find a way to tell the market “you may have profits only if you produce wellness and do it at or near the cost of production.”

It is a false assumption that lowering the cost of medical services will lower the cost of health insurance. Under the present system the health insurance industry has a perverse incentive to leave individual medical services’ costs high because insurers are selling a product to mitigate financial risk and not a product to improve wellness (medical services). (And they don’t want to pay for medical services!)

Eliminating the market means the adoption of a single payer system - by definition a publicly sponsored not-fot-profit health insurance product. (By now everyone knows my sentiment regarding the track record regarding the sustainability of single-payer systems.)

However, retaining any portion of the market means a new playing field for insurers. And this represents a huge hurdle - a paradigm shift of tremendous magnitude. This is also where Paul’s comments become very relevant.

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Paul’s comments in bold, my notes not in bold.

Principle #1. Access to quality healthcare is the right of every American citizen.

To me this means Universal enrollment and Guaranteed issue.

There are two ways to accomplish universal enrollment; Default enrollment and Mandatory enrollment.

Guaranteed issue means clients cannot be turned down regardless of where they wish to enroll.

Principle #2. Healthcare treatment under the finance and delivery system is equal to all.

To me this means a Uniform minimum benefits package must be offered by every insurer.

Principle #3. Healthcare is the same cost for everybody.

To me this means Community rating.

These seem agreeable to me.

I hope we are on the same page this far.

Paul.

Paul does not mention Choice. I believe there are efficiencies to be gained by retaining Choice - a private market for primary health insurance - a multi-payer universal enrollment system (or as the ACP calls it a “pluralistic system.” (But I would scuttle any multi-payer system without the following conditions: Mandatory enrollment, Community Rating, Guaranteed issue, and Uniform benefits. Lives are at stake!) And for choice to be meaningful, Americans need one choice that does not presently exist - a publicly sponsored not-for-profit health insurance product.

So in either scenario we must design a publicly sponsored not-for-profit health insurance product. If you are faint of heart, sit down. I’m going to use the “C” word, “Crowd-out.” There, it’s on the table. Crowd-out will generate tremendous incentives in the private health insurance industry.

Only when such a product - one that is sensitive to the populations’ natural aversion to spending and taxation - is finally available will the private insurance industry have the incentive to produce medical services at the cost of production and not simply deny claims in order to contain costs. Only when faced with such a system will the insurance industry confront the profit incentives for over-production and over-utilization inherent in our present system. Only when a publicly sponsored not-for-profit health insuranceproduct is available can citizens truly shop for value in healthcare.

And only when clients have the option of moving into a public plan and abandoning private insurance industry will the private insurance industry wake up and realize that it must become at least as efficient as the publicly sponsored plan if it wants to remain profitable or remain in the market at all! Only then will the private insurance industry place the necessary pressures on the medical services industry to produce medical services at the first Point of Diminishing Returns. Only then will they finally have any incentive to lower the cost of a health insurance premium.

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OK, the target is up. Shoot it full of holes. My ego is not on the line.

I know the biggest hurdle is the AHIP agenda. But when Americans see the potential for cost reduction in both medical services and health insurance they will gasp in amazement. I think the key to sustainability is Choice - a choice that includes a publicly sponsored not-for-profit health insurance product (with default enrollment).

Sel
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Selvoy M. Fillerup, MD, MSPH, FACS