Americans are not of one mind about health care reform— a recent Gallup survey showed that 46% were in favor of repeal and 40% wanted to move forward with the law being enacted. (Interestingly, there were great differences in support of the law based on age – with the under 30 crowd clearly in support and the 50+ crowd favoring repeal.)

I can understand having qualms about some provisions of the health care reform law. If I were queen, I would have done things slightly differently. But, I am absolutely opposed to repeal. And what I don't see coming from the repeal advocates is a plan—for anything.

Our health care status quo isn't working for anyone—not for consumers, employers, governments, or anyone else. Last Thursday, the Congressional Budget Office concluded that between 2012 and 2021, repealing the law would increase the national debt by approximately $230 billion (more on that in a future blog post…). And so when I talk to the folks looking for repeal, my question for them is always: what's your plan?

Like many of you, on Monday I saw the news that a federal district judge in Virginia ruled that the insurance mandate in the health care reform bill exceeds the authority granted to congress under the Commerce Clause of the Constitution. (It apparently is Constitutional to mandate that employers provide health insurance, but not individuals – a distinction I don't quite get.)

But that is not the purpose of this missive. To all of my colleagues who are applauding the death of the individual mandate, I would like to give a quick remedial course in health care financing. In order for our health system to eliminate preexisting condition clauses and exclusionary enrollment in health plans, the current mandate for individuals to buy health insurance is a necessity. It is financially impossible to have one without the other; if there were no mandate, everyone would simply wait until they were ill to get health insurance – something akin to allowing an individual to buy homeowners insurance the day after they have a fire.

So what is the answer?
 

#1. Fight the Virginia Court decision to the Supreme Court (likely), and restore the individual health insurance purchase mandate within health care reform.

#2. Accept the Virginia Court decision and allow the return of preexisting condition clauses and exclusionary enrollment in health plans. I think this is poor (and penny-wise, pound-foolish) policy choice. We have many Americans who forced into bankruptcy paying for treatment for devastating acute and chronic health conditions.

#3.  Accept the Virginia Court decision and have the federal government provide health insurance for all uninsured persons, which would keep the ban on preexisting condition exclusions in health plans.

For those of us trying to find the “middle ground” in health care reform, I'd like to point out that ruling that individual purchase mandates are unconstitutional is likely to spur an increase in federally-financed coverage.  I'm not sure this is the outcome that many of those organizations financing the anti-health care reform lawsuits will want.  But, as they say, be careful what you ask for. . .

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.    

They say health care is recession-proof. But, that's not exactly the case. The health and human services sector has proven to be both recession-resistant and a recession laggard. And—if U.S. governors are right—the start of the ‘recession’ in the health and human service sector will begin on July 1, 2011. The fiscal year that begins in July will be “the most difficult to date,” according to a survey of 45 states released at the winter meeting of the National Governors Association.

States must find a cumulative $18.8 billion to balance their budgets in remaining months of the current fiscal year, and in fiscal 2011, an estimated $53.6 billion in shortfalls awaits, according to the survey. For governors, Medicaid is one of the top budget issues. Medicaid spending for fiscal year 2009 was $335 billion, an increase of 7.8 percent over the previous year. Enrollment increased 5.4 percent in fiscal year 2009 and will grow 6.6 percent in fiscal 2010. Additionally, 3.3 million more people were enrolled in Medicaid in June 2009 compared to the previous year—the largest one-year increase to date.

If you haven't started your management strategy for this time of economic freefall, now is the time. For starters, employ a three-prong recession management strategy consisting of short-term cash management, business development, and preparing for the post-recession marketplace.

For more, check out:

• Prepare for the Emerging Post-Recession Marketplace: Five Management Best Practices for Organizational Sustainability
• Anticipating Emerging Post-Recession Market Models: Consumer & Payer Demands for Behavioral Health & Social Services

The burden of uncompensated care looms large for most health care organizations—especially with the press pronouncing the "death" of health care reform. For the most part, the term 'health care reform' refers to some package of legislation that has two elements—increasing the number of Americans with some form of health care coverage (particularly catastrophic coverage) and putting in provisions to reduce overall U.S. health care costs. The first is of particular interest to health care provider organizations and the second to small employers like my organization.

Now, you may be like one of my many friends who is celebrating the death of the current set of health care reform proposals. You may say that the free market alone is enough to both reduce costs and provide expanded coverage (one leading to the other)—by having individuals pay for their own health plans and health services. While I'm a fan of many free market elements in health care reform (including consumer vouchers for purchasing plans), I would caution those of you in that camp that the free market alone won't solve the coverage and cost challenges that face us (for many reasons too numerous to list here).

The rumors of the death of any health care reform proposal are going to continue to destabilize any organization in the health service delivery system that is not solely a private pay operation. The rising number of uninsured and inexplicably underinsured Americans will overwhelm the charitable capacity of the delivery system without some paradigm shift. But, I would caution my friends in the health care field to realize that we can't afford universal coverage without cost containment. It's just not a fiscal possibility.

And, as a small employer that provides health coverage to our team, I can state unequivocally that no health care bill will cause increasing stress—both financial and ethical. Over the past two years at OPEN MINDS, we have had two proposed increases in the cost of health care coverage—15% in 2008, and 40% in 2009. So, I wasn't surprised (though the press seemed shocked) at the recent decision by Anthem to raise their premiums by 30-39%.

I hope you'll join me in pushing our representatives of both parties to take action—to move toward a system of universal coverage (even if only for catastrophic coverage) and to come up with rational solutions to reducing health care costs.

Regardless of the final direction health care reform legislation will go, comparative effectiveness research (CER) will be a part of it. While many see CER as a vital piece of the puzzle, some in the health care industry are on the fence about its actual value in improving health care as a whole. A New England Journal of Medicine piece I read recently, by Alvin I. Mushlin, M.D., and Hassan Ghomrawi, Ph.D., M.P.H., “Health Care Reform and the Need for Comparative Effectiveness Research” gave four straightforward reasons for how/why CER is both valuable and necessary in our existing system:

1. Findings from CER will provide a buffer against “blind” cost containment.
2. CER can identify preferred therapies, promoting changes in care and outcomes by identifying and validating such treatments. Such research suggests ways for new financial incentives to be applied both safely and effectively.
3. CER should enable innovation in medicine, by creating ‘disincentives’ for the development of “me too” drugs and devices, and by raising expectations and demands for clear evidence of superiority.
4. CER serves as what the authors call the “first line of defense against blind cost containment,” and can serve as a stimulus for the academic medical and public health communities, thus resulting in greater demand and more opportunities for physicians-scientists to get in on the research.

Let’s wait to see how CER fares in the final health reform bill—and if either side stifles the progress in science and service delivery that CER can bring about and that the health care system as a whole desperately needs.

I was heartened to see that the Senate version of the health care reform bill would set the medical loss ratio for health plans at 85% for large group plans and 80% for small group and individual plans, and that the House set everyone's rate at 85%. The original proposal by Senator John D. Rockefeller of West Virginia had the ratio at 90%—a number rejected as unrealistic.

And, the reform bills have a penalty clause built in for insurers failing to hit the prescribed medical loss ratio (MLR)—they have to rebate the difference to their customers. See "To Your Health: How Congress plans to get insurers to spend money on actual health care" by Slate writer Christopher Beam. For major insurance companies, this wouldn't change much. The average MLR of for-profit insurance plans offered to large employers is about 84%. Small employers, or companies with 50 or fewer workers, have an average MLR of 80%. But, in the individual insurance market, the MLR is around 70%.

While this is a great start, I think 80% is too low. And, the devil is in the details, so to speak. The reform bills are still defining what exactly 'health care spending' is—a critical set of definitions. Stay tuned

The health care reform bill tug-of-war currently happening between the House and Senate is too much for many of us to keep up with. I took interest with an article in Slate by Christopher Beam that includes a hit-list of those health care reform issues that still need to be ‘hammered out’ in the final bill. His six issues include:

• The exchanges—while the House bill would create a national exchange, the Senate bill would create a series of state-based exchanges. There’s no happy medium. It is either state or national.
• The mandates—what will be the real penalty for not buying health insurance? The House bill would charge a 2.5% tax on all income above the filing threshold ($9,000/individuals or $19,000 for couples), while the Senate bill would impose a flat penalty, which itself fails to acknowledge the wide variance in American income levels and their ability to pay up. The employer mandate is a big one as well; will employers pay an 8% tax on total wages or levy a $750 fine per employee? Who will be eligible for exemptions?
• Medicaid expansion and subsidies—the House bill would make Medicaid available to individuals earning up to 150% of the poverty level, while Senate bill would expand it 133%. The differences are in the subsidies, in that the House bill provides far more support for families at or below 300%, while the Senate bill seems to focus more on middle income families between 300% and 400%.
• CHIP—key questions posed by Beam: “Does Congress really want to end the Children’s Health Insurance Program and push kids into exchanges and Medicaid, as the House bill would do? Or does it want to extend CHIP until 2015, as the Senate bill would do?
• Narrowing the ‘donut hole’—the gap in Medicare coverage known as the ‘donut hole’ is addressed far more in the House bill, which phases it out altogether by 2019 by ‘filling’ it with money from the pharma industry. The Senate bill would only close the gap halfway (and only temporarily).
• Paying for it—the House would levy a 5.4% surtax on individual income above $500,000 while the Senate would tax plans that cost more than $8,500 for individual and $23,000 for a family; Senate would also tax indoor tanning services (yes, seriously).

As our eyes dart back and forth between this legislative ‘volley,’ I will be interested to see how flexible the House and Senate are on certain issues—and which issues they refuse to compromise on.

Emily Friedman, in her recent piece “Almost Paradise” featured in Hospitals & Health Networks, gave a great history of Hawaii’s efforts to establish and maintain universal health coverage for its residents (it ranks second among the states in terms of population coverage). And, while the history was fascinating in terms of its magnification of the issues being discussed today in Washington, Ms. Friedman’s “ten lessons learned” were even more compelling for thinking about our current reform efforts:

1. Every state is unique. Whatever the health care reform prescription coming out of D.C., if it is a ‘national’ as opposed to state-based approach, variation at the state level is key to long-term success.
2. The right people have to be in the right places at the right time. To get big initiatives passed, alignment behind core tenets is necessary in several sectors of government. Given the current state of certain parts of the U.S. Congress (the ‘just say no’ contingent), this is problematic—it’s hard to figure out what they would support.
3. The political, economic, and cultural environments have to be right. Passing an expansion of health care coverage is difficult now given the economics. The proponents need to do a better job of making the case for expansion of health care coverage in the current context.
4. Having a predominantly nonprofit health care sector helps. In Hawaii, at the time that health care reform was passed, the health care sector was predominantly non-profit. In the current debate, there has been no end of the controversy about the role of for-profit sectors of the U.S. health care system.
5. If costs are not controlled, nothing will work in the long term. If costs keep on escalating, there is no coverage program in the world that can continue to function—public or private, employer-based or individual.
6. Mandates help but are difficult to enforce. Whether mandates to purchase insurance or mandates to provide coverage or mandates for taxation, mandates are easy to pass and hard to enforce. Complete compliance can never be assumed.
7. Truly universal coverage is impossible to achieve. "Universal coverage" is a great goal but a practical myth. Some small percentage(5% is a common figure cited by scholars ) of people participate, even if the coverage is free.
8. Providers can (or will) absorb only so much loss. There is much discussion about the end of fee-for-service and moving risk to provider organizations. This is a great potential model but cannot be the only cost containment measure.
9. Don't underestimate your opponents. Those who oppose an idea are generally more fervent than those who support it, especially when the benefits will largely go to people other than themselves.
10. All situations change over time. Flexibility needs to be built into any health care reform initiative. Accommodation of change (financial, political, technological, etc.) are necessary for health policy initiatives to last.