One of the big ‘war of words’ in health care is the issue of Medicare managed care – namely the Medicare Advantage program. President Obama and many Democrats want to scuttle the program because the cost of the managed care version of the Medicare program is purportedly 13% above the costs of the same beneficiaries in the fee-for-service version. Many consumers, and many Republicans, like the features and benefits and the voucher-like market orientation (respectively) of these plans.

The basic objections are captured quite succinctly by Ezra Klein in a piece in the The Washington Post, A private Medicare System Would be a Costlier Medicare System. He states, “They save money by limiting the generosity of the vouchers. Because the dirty little secret is that turning Medicare into a voucher program would actually make it cost much, much more. How do we know? Well, putting aside the fact that Medicare currently costs much less than private insurance, we actually have a private voucher program in Medicare as we speak. [...] But today, the market-based arm of the program costs more, not less, per beneficiary. Those fixed monthly payments to Advantage plans are, on average, 13 percent above fee-for-service Medicare costs.”

I think Medicare Advantage plans are an inevitable solution for the Medicare plan. The current fee-for-service system is an ungainly muddle of rules, with only the reduction in benefits (not politically feasible) and reduction in provider fees as its cost containment mechanisms. Even the health care reform initiative recognizes this through the creation of “accountable care organizations,” which are essentially provider-owned managed care plans. (And, it won’t take long for those provider-owned plans to “buy” managed care infrastructure from the current managed care programs.) Only this change in financing, moving us away from fee-for-service, permits the health care system to move beyond the current silos of reimbursement and allows for the rationing of services, which is an inevitability with, or without, health care reform.

That said, the failure that we currently have in the excessive rates mentioned by Mr. Klein is not a failure in program design, but rather a failure in contract negotiations and management. Medicare Advantage plans should not cost 13% more (or any more) than their fee-for-service alternatives. And, the medical loss ratio reporting requirements absolutely must be applied to Medicare Advantage plans to permit true transparency for consumers and a contract management tool for Medicare.

Remember the story of the blind men and the elephant? In varying versions of the story, a group of blind men/men in the dark touch an elephant in an attempt to determine what it is; however, each one feels only one part of the creature, such as the tail or the leg. The men then compare notes and learn that all disagree on what they felt—the man who felt the tail thinks it is a rope, while the man who felt the leg believes it to be a pillar.  The story originated in India and is used to demonstrate the relativity of truth.

Well, such is the reporting on the fate of one insurer, Assurant Health, in an era of health care reform.  And, I’m certain that similar reports of facts, resulting distinctly different perspectives, will become more common as health care reform is implemented.

The facts: Assurant Health, a Milwaukee-based health insurance company, announced last month that it was laying off 130 employees in Milwaukee and Minneapolis.

The first perspective comes from “ObamaCare Has Failed,” an article by Grace-Marie Turner, Chief Executive Officer of the Galen Institute.  Ms. Turner writes:

“The wheels are coming off ObamaCare even sooner than most had predicted. The American people are not being fooled by the sugar-coated sales campaign, jobs are being lost, health costs are rising, and the first program to be launched is a dud […] 

Do liberals really believe that people aren't going to pay attention to double-digit premium increases that are coming, $575 billion coming out of Medicare to pay for massive new entitlement programs, the $500 billion in new taxes that are driving up health costs, the barrage of new regulations putting employers and the health sector in a straightjacket, and the despised individual mandate that will force Americans to purchase expensive, government-dictated health insurance?

Today’s news has direct evidence of jobs being lost as a result of ObamaCare. Assurant Health, a health insurer based in Milwaukee that specializes in individual and small group policies, announced that it is laying off 130 workers as of October 1. Assurant is a terrific company that was the first to sell a Health Savings Account policy and has continued to be responsive with innovative products to serve customer needs.

But new one-size-fits-all regulatory requirements are forcing insurers to slash personnel to meet new ‘administrative’ tests, rules that present real challenges to a company that focuses on direct customer service rather than selling policies thousands at a time. Assurant is highly adaptable and will survive, but many capable employees and their families can thank ObamaCare for losing their jobs.”

The second perspective comes from “As Reform Improves The Overall Market, Inefficient Insurers Could Take Hits,” by Jonathan Cohn, Senior Editor of The New Republic.  Mr. Cohn writes: 

“When Assurant Health, a Milwaukee-based health insurance company, announced this month it was laying off 130 employees in Milwaukee and Minneapolis, it blamed the health care overhaul for its struggles […].  The carrier is Assurant, which specializes in selling policies in the individual and small business markets […] – the place you find carriers that aggressively avoid people at risk of getting sick […]

The health law forces insurers to cover basic benefits […] And it limits the money they can spend on administrative overhead or broker commissions. Once fully implemented, reform will also prevent these carriers from avoiding people with pre-existing conditions. Make no mistake: These are all good things. They mean insurance is becoming more accessible, more comprehensive and more efficient.

Alas, that may […] be bad news for Assurant. If the company's name sounds familiar, that's because it was in the news early this year when a Colorado jury slapped it with a $37 million judgment for wrongly refusing to pay the bills of a woman in a car accident. (The company claimed the woman had hidden evidence of a pre-existing condition. The jury, obviously, disagreed.) And when the layoffs were announced, an article from the Milwaukee Journal-Sentinel noted that reform would ‘undercut one of Assurant's strengths – determining which customers are the best risks.’ I have no idea whether Assurant can find other ways to survive as a business. But, if it can't, then we're better off relying on competitors that can.”

I was struck by the difference in “perspective” on the facts...and would welcome your own unique perspectives.    

The process of participating in the political process has changed dramatically over the course of the past year.  In January 2010, the U.S. Supreme Court decided in Citizens United v. Federal Election Commission that, for the purposes of campaign contributions, organizations are citizens and have the right to "unlimited spending in pursuit of political ends."  This is a change of titanic magnitude in our political system.

I have very mixed thinking about the decision.  I generally support free market and libertarian sorts of ideas—including completely unlimited freedom of speech.  But, the power of unlimited corporate contributions in politics does daunt me.  In the wake of this decision however, there is one absolute – we must have transparency in these contributions. Whether by individuals or corporations, all donations to political campaigns, political action committees, the 527 advocacy groups, and the host of non-profit organizations that have grown up doing the bidding of political movements, must be publicly disclosed immediately.  Without transparency, what we have is a political system driven by propaganda (which is commonly differentiated from ‘advertising’ by its lack of identifiable source).  

This issue has new interest in the wake of some recent events.  We had the humorous ‘mock news’ reporter Jon Stewart on the  “The Daily Show” pointing out that the supposedly terrorism-tainted Saudi prince (whose foundation might contribute to the Islamic center much maligned on Fox News), Walid bin Talal, is not only the biggest non-Murdoch shareholder in Fox News’s parent company (he owns 7 percent of News Corporation), but is also the recipient of Murdoch’s mammoth investments in Saudi Arabia.
 
Then, there was a great analysis, “Covert Operations: The Billionaire Brothers Who are Waging A War Against Obama,” by Jane Mayer appearing in The New Yorker.  Its examination of the political funding apparatus of industrialists Charles and David Koch (Charles G. Koch Charitable Foundation, the Claude R. Lambe Charitable Foundation, the David H. Koch Charitable Foundation, KochPAC, and Koch Industries) is fascinating.  These two men, alone, are responsible for a host of ‘political brands’ that we are exposed to every day –  the Cato Institute, George Mason University, the Mercatus Center, Citizens for a Sound Economy, Citizens for the Environment, Americans for Prosperity, Century Strategies, and “Tea Party Talking Points.” 

I support the right of these individuals to say whatever they want, and to fund the means to move their message forward.  However, it is full disclosure and transparency that are a necessity.  Unfortunately, the very modest Disclose Act, which requires corporations to show how they spend money in elections, was recently defeated by Republican filibuster.  Without that, we are left with citizen action—which frequently comes in the form of consumerism—as our only recourse.  Target is one corporation that recently learned exactly how their political investments can impact their relationship with their customers.  It donated $150,000 to Minnesota Forward, a group channeling funds to Minnesota Republican gubernatorial candidate Tom Emmer—known for his opposition to lesbian, gay, bisexual, and transgender rights.  As a result, the company now faces both a consumer boycott and a movement by institutional stakeholders asking for a "comprehensive review" of Target's political donation process.  Still, I think that to rely solely on investigative journalism and institutional investor actions is silly.  We need transparency and disclosure.   After all, why would political contributors want to hide what they really believe?