SPBA Email Alert – Health Reform Insights

SPBA Email Alert – October 25, 2010

Health Reform Insights

Personal candid observations from SPBA President Fred Hunt

I’ll be saying this a lot because, you are an informed insider, and it is important as a reality-check in the coming weeks & months.  Talk of repealing health reform is just talk.  Not only is there the obstacle of Obama still President with a veto pen (thus requiring the numbers & determination of a 2/3 vote to override the veto), but opposition softened a bit as many conservatives and formerly-fierce opponents suddenly had their worry about getting their under-26 children covered, and those with pre-ex, and those blood tests and things that are the main health costs for most healthy people.  They still oppose the concept…but getting used to goodies sways public and political opinion.

There is no question that pieces will be changed, eased, repealed or de-funded.  However, they are apt to be more broad  & nonsensical items like the 1099 reporting, prescriptions for non-prescription items, etc.  The biggest changes in health reform will come from unexpected things, such as how states react in their many implementation duties of health reform, how the Feds will respond if states stall, if exchanges bomb for whatever reasons, if medical IT doesn’t evolve as expected, if millions decide to game the system by just getting insurance when they are sick, etc.  The fate of the health insurance industry also hangs in the balance of some flukes and what areas may still be open to them (such as ACOs)

So, this is a pre-election reality check that if Democrats & health reformers go down in flames next week, and the media is on over-drive discussing imminent repeal or big changes, it is unlikely to play out as predicted.  That is the reason that these e-mails from me tend to focus on factors that might not seem directly related to TPAs, self-funding, and employee benefits.  You need to understand the side issues which will probably trigger any significant changes.

Looking further ahead, pundits will inevitably start pointing to after the 2012 Presidential election as the time of major repeal and change.  However, by 2013, the health scene will have already changed considerably, and people will have gotten even more used to things they like (or are told they will like) .  Besides, by raising expectations in 2010 for dramatic change which they are pre-doomed to not be able to achieve (not to mention the significant chance of a bloody civil war within the Republican party), by 2012, the Republican party may be seen by fed-up voters as the do-nothing party to be thrown out.  So, don’t take the media’s simple predictions too seriously.

Frankly, I think that the biggest changes in health reform will be where it crashes down from its own unworkable assumptions, such as some of the issues described below.

The Washington Times recently had an excellent guest article walking through the early political strategy and missed opportunity of health reform.  Health reformers could have gone after the real problem of US healthcare…..runaway costs.  However, they soon realized that that would trigger massive opposition from doctors, hospitals, medical manufacturers, etc.  (In politics, the “Dr. Welby” effect, named for the on-screen feeling generated by the kindly wise TV doctor, plus the comment from a Congressman that “All of us feel vulnerable, and want to be agreeable because we’ve been in a skimpy gown with our doctor or in a hospital” has always had a very strong effect not to upset the medical community.)  Besides, it would be easier to sell health reform if the medical community were cheerleaders.

So…instead, the focus/goal was set on making care more efficient (cutting billions of dollars of waste & abuse), and creating options for coverage, especially for people with high risk situations.

On the over-use issue, Americans already go to the doctor less often, stay in hospitals fewer days, and pop fewer pills than people in other major industrialized countries (with government plans).  So, we seem to be world leaders in not over-using.  The problem in the US is that each of those fewer medical interactions costs much more than in other countries.  But to solve that problem would be to upset the medical folks and unleash their political opposition.

Reformers should have known that the desire for coverage, especially for children and pre-ex situations was more emotional than real.  The S-Chip program for children was already failing to attract anywhere near the expected number of eligible children.  

Pre-ex “discrimination” was a major topic reformers used to bludgeon “evil” insurers ad employee benefit plans.  Health Reform funded a temporary pre-ex program for states.  Those government-assisted pre-ex plans are getting embarrassingly few sign-ups.  

Why aren’t the millions of Americans supposedly craving for access to such a plan rushing to sign up?  Plans for high-risk and pre-ex is actuarially expected to be expensive, even with state & federal dollars to subsidize.  However, states & Uncle Sam are discovering that when Americans say they want “coverage” (and this applies to S-chip, under-26 children, and will apply to many aspects of health reform), they expect FREE or extremely cheap.  A recent survey found that the majority of Americans think that the state exchanges in 2014 will be free or super-cheap bargains.  When it comes to health care, the national motto is Something for Nothing.  This unrealistic expectation is going to undermine many parts of health reform.

So what to do about the dud pre-ex programs??  The government pre-ex programs are going to spend more millions of dollars to hire professional marketing/PR firms and advertising to lure pre-ex people into the plans that the politicians said they had desperately wanted.

Uncle Sam has already sent an average of $1 million each to 48 states and D.C. to get state exchanges started for 2014.   However, many states are dragging their feet for political or practical reasons.  Exchanges are the crown jewel of the health reform vision (and seen as perhaps a stepping stone to centralized health coverage).  What if states sputter or refuse to proceed with creating exchanges??  Uncle Sam has the authority, money, and will power to step into a state (unless Congressional de-funding intervenes).  Meanwhile, both HHS and some states have been using the threat of blackballing insurers from participating in exchanges as a bludgeon.  But, what if most or all insurers, have left the market, decline to be in exchanges, or have been barred for some reason??  Then you have an exchange with no insurance to offer.  Also, if a state refuses to set up its own exchange, and Uncle Sam sets one up in the state, how well will that work?  Won’t that be the embodiment of the old joke, “I’m from the federal government, and I’m here to help you.”

EHR (also known as Electronic Medical Record or EMR) is mandated by the Stimulus to be in place by 2014.  An IT trade group, CompTIA gives a snapshot status report:  Half of providers are using some form of EHR/EMR.  34% are fully using EHR/EMR.  16% partial usage.  20% evaluating the concept.  9% not yet thought about it.

Most of us have heard or assumed that HIPAA privacy & security were the providers’ main concerns, and there have been some reports that providers are uncomfortable having such a handy comprehensive record, because it invites fishing by attorneys for malpractice cases.  However, the CompTIA survey reports that providers feel that it seems impersonal in the doctor/patient relationship.  Also, 80% of doctors say that EHR/EMR users need more training in the technology.

Unwillingness to spend has also been a recurring theme when technology is mentioned to providers (the reason so few providers invested the money to get up to speed with EDI, when payers were required by law to do).  However, 1/3 of health care practices reported that they expect to increase their IT spending more than 5% next year.

The Federal Employee Health Plan (FEHP) is often used by politicians as the gold standard of what employee benefits should be.  For 2011, they are expecting a 7.2% increase (8.8% in 2010).  By comparison, recent surveys have estimated that private health plans expect about 8.8% increase for 2011.
FEHP hypocrisy:  Politicians have been nagging for decades for private employee benefit plans and insurers to take in high-risk people and other people without coverage (and thus laws like COBRA).  The chorus after such pontifications was often to say how wonderful the FEHP is.  One time, SPBA called their bluff.  We said that we agreed that all Americans in whatever medical condition deserve health coverage, and so they should be allowed to sign up for the great and glorious FEHP plan which those Americans’ taxes supported.  Wow!!  There was shock, and all sorts of sputtering double-talk about why FEHP would not be a good place for such Americans.  It was clear that the feds were looking down their nose and that they wouldn’t want high risks and just anybody in THEIR prized plan.  Needless to say, our suggestion died.  However, when some politician or bureaucrat wants to load up your employee benefit plan, ask them why the tax-supported FEHB wouldn’t be the more patriotic & democratic solution for all unfortunates to buy into. ☺