The latest study released by the insurance industry, while better than the one that came before it, is riddled with flaws. The recent report produced by Oliver Wyman (an management consulting firm with an actuarial services arm) for the Blue Cross Blue Shield Association (BCBSA) is more reasonable than the PriceWaterhouseCoopers study issued by America's Health Insurance Plans (AHIP), but it, too, is designed to scare Americans into accepting the status quo rather than comprehensive health care reform.
Lets' be clear here: some of the best plans in the country are Blue plans, and we need all of them to get better post-reform. It's worth noting that the two things the Blues have been lobbying about most vigorously are the same positions that Wyman's analysis supports: (1) prevent the melding of the small group and individual markets, and (2) keep the insurance exchange as small as possible.
The report gets one thing right: reformers must make sure insurance coverage is affordable and that the mandate to buy insurance is enforceable so that most Americans get coverage. Otherwise, requiring insurers to sell to any customer who wants to buy (guaranteed issue) will risk the stability of the risk pool in the exchange. On this much we (and many others) agree.
What I cannot agree with is the attempt to sway the reform debate with data that cannot be checked and assumptions that seem to be designed to produce the results BCBSA wants us to believe. On many points Wyman and BCBSA could be correct. But since their data are not public, it is impossible to check.
These are the report's weaknesses:
Robert Greenstein over at the Center on Budget and Policy Priorities finds plenty to like about the bill the Senate Finance committee has approved -- and much that still needs work. With his usual mix of progressive values and budgetary common sense, here's how he balances it out:
The bill is a "major step toward enactment of legislation to extend health care to tens of millions of people who lack it, strengthen insurance protections for millions more who are underinsured or face exorbitant charges, and begin to address the nation's most serious fiscal threat -- the relentless rise in health care costs." It is fiscally responsible and will modestly reduce the budget deficit.
Last time I ran into Bill Frist, he was sounding distinctly nonpartisan on a panel discussion about preventive care and social determinants of health. We then talked about comparative effectiveness research at Vanderbilt, where he is affiliated, and he was so enthusiastic that he took my notebook out of my hands and began sketching diagrams of DNA molecules (at least I think that's what they were.) I asked him why he didn't write on op-ed about this, given that the research has been so controversial among his fellow Republicans. As far as I know, he hasn't written that an op-ed -- but he just penned an endorsement of an individual mandate to purchase health insurance.
The mandate is a lynch pin of effective insurance market reform and it's coming under increasing Republican attack. Some state legislators are even talking about amending their constitutions -- a largely symbolic conversation among conservatives -- to ban such a requirement.
In his guest column for U.S. News and World Report, Frist called for an individual mandate. He wants to begin smaller than the bills currently being considered in Congress, recommending a mandate for catastrophic coverage as "an appropriate place to start." But he defined catastrophic coverage as good enough to protect people from bankruptcy from medical bills, and made clear that he favors expanding coverage as the economy improves.
The White House has posted President Obama's letter to Senators Ted Kennedy and Max Baucus on health care reform. He reiterated his vision (and ours) that reform is an economic as well as a moral imperative. And he added a few points (and $$$) we hadn't heard before:
In addition to the $635 billion reserve fund Obama outlined this Winter in his budget proposal, (some of which Congress balked at) he's calling for an additional $200 to $300 billion over 10 years in Medicare and Medicaid savings. This isn't from slashing the entitlement benefits but by taking steps to better manage chronic diseases, utilize health services more wisely, and reduce the revolving door of hospital readmissions. We waste a lot of money on care that doesn't make people any better.
The health insurance industry, in what was widely seen as a step toward consensus on health reform, has said it would stop charging sick people higher rates as part of a comprehensive health reform plan that required everyone to have insurance.
The New York Times said the concessions on pricing in the individual market and acceptance of more regulation "came as a surprise to lawmakers" and could "make it easier for Congress to reach a consensus." The Times and others also pointed out, however, that the offer from America's Health Insurance Plans and Blue Cross Blue Shield Association were made in part to counter proposals that private insurers would have to compete against a new public insurance plan. (We're going to post separately about that shortly).
"Creating a new government-run plan would thwart the ability of the healthcare sector to implement meaningful delivery system reforms, exacerbate the cost shifting from public programs to consumers in the private market, and destabilize the employer-based system," AHIP CEO Karen Ignagni and BCBSA CEO Scott Serota wrote in a letter to the chairmen and ranking Republicans of the Senate HELP and Finance Committees.
This post also appears on the National Journal's Health Care Experts Blog. where you can also see what other health policy analysts have to say about insurance market reform.
The point of insurance market reform worthy of the name is twofold: to make markets more efficient and more fair for all, not just for some, and to transition the business model of insurers away from risk selection and toward care coordination and high value care. In order to maximize value per premium dollar, we need to align incentives among insurers, consumers, and health providers.
This post also appears on the National Journal's Health Care Experts Blog. where you can also see what other health policy analysts have to say.
On Wednesday, Senate Finance Chairman Max Baucus (D-MT) made clear that reforming our health care system is an economic imperative and that comprehensive health care reform should be a priority for Congress. I applaud his leadership, vision, and willingness to work with colleagues, stakeholders and the public to "get it done" in this Congress. He has laid down a key cornerstone in our pathway to a high quality health care system that works well for all Americans.
Senator Baucus emphasized two important messages on Wednesday: 1) The cost of "inaction is much more expensive" than reform, 2) We should approach health reform with a bipartisan attitude and endeavor to persuade "80 Senators" to support the final legislation. I believe the health care reform conversation would be well-served to continue to remember and echo these two points.
As for policy, the Baucus policy plan is extensive, so today I will simply highlight what I view as the most original contributions.
That strange bedfellow Divided We Fail coalition you've heard us talk about before about is putting its money where its mouth is in the name of health reform. The Business Roundtable, the National Federation of Independent Businesses, the AARP and the SEIU have sent President-elect Barack Obama an open letter urging him to enact comprehensive health reform. And they are backing it up with a nearly $1 million TV and newspaper ad campaign.
"What we are doing is reminding not just the president but the Congress as well that . . . this remains one of the most important issues facing the country," Business Roundtable President John Castellani was quoted as saying in the Los Angeles Times. The coalition sees health reform as an essential aspect of economic recovery and job creation.
"Addressing skyrocketing healthcare costs is a critical component of stabilizing household, national and global economies," the letter from the business-labor-senior citizen group said. "Inaction undermines the economic security of our families; limits the productivity of our workforce; stagnates job creation and wage growth; and threatens to crowd out investments in energy, education and infrastructure."
Forget about the Nationals' new stadium (you already had?), the hardest seat to get in town this summer has been at the Senate Finance hearings on health reform. We arrived 20 minutes early yesterday to find the halls of the Senate's Dirksen building packed. And for good reason, as the day's testimony on 47 Million & Counting: Why the Health Care Marketplace is Broken was as refreshing as the room's AC (68.2 degrees!)
The hearing opened with video testimony from Lisa Kelly, of Lake Jackson, Texas. Kelly is one of the 25 million underinsured Americans we wrote about yesterday. Kelly purchased a limited benefit plan with a $189 monthly premium that provided fine coverage for her allergy pills but was woefully inadequate when she was diagnosed with leukemia in 2006. Kelly's trials were the subject of a recent piece in the Wall Street Journal. Forced to dip into her savings and currently saddled with nearly $137,000 in medical debt, Kelly, was asked what she thought Congress should do. Her answer was particularly moving:
Myth: An individual mandate will stifle market competition.
Fact: An individual mandate, coupled with insurance market reforms and subsidies, would make markets work more effectively and efficiently. By reducing the risk of adverse selection, an individual mandate would force insurers to compete based on price and quality, not underwriting and marketing.