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 December 17 issue of Business Week had a provocative headline—The Coming U.S. Doctor Shortage: Health-care reform will mean 30 million more patients—and bigger crowds in waiting rooms. I thought the positioning of this piece played into the 'fear of health care reform' camp that looks at the nation's health as a zero sum game. If you give minimal coverage to all, the rest of us with insurance will suffer. But the piece did raise some interesting points:

• In 1997, lawmakers placed a cap on the number of medical residencies in order to contain costs under Medicare, which pays for most of these training slots.Medicare pays $100,000 a year per residency, at a total cost to the program of about $9 billion. The funding began in 1965 when the U.S. was preparing to extend government health coverage to 19 million elderly Americans. As the Medicare rolls grew—to 45 million by the end of 2008—a cap was placed on the number of medical residencies to control spending.
• According to the U.S. Department of Health and Human Services, last year there were nearly 17,000 fewer primary-care doctors than needed in inner-city and rural areas. The Association of American Medical Colleges predicts that by 2025 there will be a shortage of as many as 159,300 doctors.
• An amendment to the health-care reform bill—proposed by Senate Majority Leader Harry Reid (D-NV), Charles Schumer (D-NY), Bill Nelson (D-FL.)—would add 15,000 residencies at a cost to Medicare of about $1.5 billion to anticipate and prepare for this shortage

What caught my attention in the article was this handy chart—showing the growing demand for services and the almost-flat supply line. I believe we can flatten the demand line for physicians and increase the supply line with just a few policy changes.

On the demand side, if we encourage individuals to take more control of their own health care, demand for physician time will decline. There are also a variety of technological substitutions for physician office visits and an array of non-physician health professionals that can fit the bill.


On the supply side, there are two major ways to enhance supply. First, use technology to increase physician productivity—less paperwork, e-health to extend reach, and more. The other way is to pay primary care physicians more. Payment policies have favored procedure-oriented specialists—and the physician’s choice of specialties reflects this.

The headline in the February 20, 2010, edition of The Los Angeles Times tells a story, "Consumers who buy individual health policies feel trapped. They have few options other than dropping coverage as insurers raise rates and slash benefits. Insurers blame the soaring cost of medical care and the churn of customers in the individual market."

No argument from me; for individual and small group health insurance policies, the rates—and rate increases—are crazy. But, the insurers' complaint about churn is spot on. Until we have universal health care coverage for 95% or more of the population, this ‘shift the risk’ game will continue. There is nothing that consumers or insurers can do about it. Solutions? Only two.


1. The government provides catastrophic health insurance for everyone, and/or


2. Employers are required to provide—and individuals are required to buy—health insurance.


Hopefully, our representatives in Washington will eventually understand these basic health care financing principles.

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.

“Making College ‘Relevant’”, a piece in the December 29, 2009, edition of The New York Times, was a classic example about how new college graduates are ‘missing the boat’ about being hired. As the CEO of a company that hires both college interns and new college graduates, I want to give some free advice:

1. Learn to write (it doesn't matter what your major is—this is the universally necessary skill for most businesses)
2. Computer skills are a must—and I'm not talking about using Twitter; the basic skills you need are word processing, spreadsheets, and web searches (others are a bonus)
3. Be able to do basic math and understand the meaning of charts and graphs
4. Remember that in the information-based economy workplace, attention to detail matters—your mother isn't there to clean up your work for you
5. Keep in mind that most of your personal preferences are not relevant on the job—if you're not happy with what you're doing, save your comments for after work or find a new job.

For college graduates (of whom there are many) who cannot master the first three items, it is really a systemic fault at the college level. No one should graduate from an academic institution without those basic skills.

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.