Hammergrin on Health Care

While looking around the Internet, I ran across a great little essay on the 800-CEO-Read Blog penned by John Hammergrin of McKesson Corporation, a 175-year-old heath care company. Since he seems to be very much of a similar mind to George C. Halvorson, I thought that sharing parts of that blog might be well received. Here is a bit from the column in which he addresses the issue of our national health care crisis from the standpoint of business and the market:

In most industries, top performing businesses excel by being the low cost producer, putting out the best product, and meeting or beating customer expectations. The market works because consumers are able to choose the services that meet their needs best. In the health care industry, costs are distorted by government interference in the market and quality differences are disguised by a lack of consumer information and choice. Moreover, while we can argue that "customer" is another word for patient, would the customer in any other market make critical decisions without concern for cost or quality and put up with the inconveniences, inefficiencies and high error rates of health care?

The lack of available and consistent information is indeed a huge stumbling block, and one that I have written about here on several occasions. While the argument does seem lucid overall, I must point out that for many in this country medical care is a last resort, mostly due to these aforementioned costs. This means waiting until a trip to the emergency room in unavoidable, at which point cost comparisons and examination of the care quality of the provider are moot.

Chronic diseases account for most of our health care expenditures and require coordinated rather than episodic care. We need to incentivize and organize providers to manage long-term illnesses better. The fear of medical malpractice suits are driving up costs by encouraging unnecessary treatment. We need sensible reform to reduce the preponderance of defensive medicine. Quality of care and outcomes need to be the new measuring sticks by which we assess, select and pay providers for their health care services. We need greater transparency to give primary care physicians and health care consumers the ability to choose the best doctors, hospitals, insurance providers and technicians, while also creating industry-wide standards for the latest in best practice.

No matter which candidate prevails in November, the popular concerns we have about health care right now are going to evolve rapidly once the next administration begins. As a business leader, I support universal access through tax incentives and individual choice (not a de facto expansion of Medicare) because I believe that having everyone in the insurance pool is fundamental to reducing costs and creating a competitive insurance market. But as Governor Schwarzenegger learned when the California Senate Health Care Panel rejected a bill mandating health care for all state residents, sweeping reform is even more difficult when economic times are tough.

And that would seem to be a major concern as we watch the news become more pessimistic each day regarding the American economy. Even so, many other factors do play an important part that is not to be overshadowed by economic insecurity. Hammergrin sums up his position in this regard as follows:

We don't need to control the health care market through mandates and cost containment legislation, we need to unleash it by giving people the ability to make better informed choices. After all, health care is the one product all consumers need, guaranteed.

SOURCE: "An essay from John Hammergren on health care reform"04/14/08
photo courtesy of brykmantra, used according to its Creative Commons license

On The Road With Robert Reich

Today our media offering is from The Wall Street Journal. This morning in their commentary section we find Robert B. Reich, professor of public policy at the University of California at Berkeley and former U.S. Secretary of Labor under President Clinton, sharing his views on "The Road to Universal Coverage."

He begins by noting that on the Democratic side of the current race for the White House all three major candidates (Senators Clinton, Obama, and Edwards) have made health insurance issues a major part of their individual platforms. He also notes the despite overwhelming similarities in their plans they are focusing on the small differences in the battle for their party's nomination. "Mandates are a sideshow, and fighting over them risks turning away voters from the main event."

After a lucid and concise comparison of the plans presented by Democratic frontrunners, in which he demonstrates just how similar they are, he continues:

This fight is little more than a distraction, given that a mandate would matter only to a tiny portion of Americans. All major Democratic candidates and virtually all experts agree that the combination of purchasing pools, subsidies, easy enrollment and mandatory coverage of children will cover a large majority of those who currently lack insurance -- even without a mandate that adults purchase it. A big chunk of the remainder are undocumented immigrants, who aren't covered by any of the plans.

Should the remaining 3% of the population be required to purchase insurance, or lured into it by rate decreases and subsidies? Reich's position is that the answer depends on who you think comprises that 3%.

Comparing Senators Clinton and Obama he shows us the difference in views on this topic. Senator Clinton's position is that the 3% are youthful and in good health, which means they would lower the overall cost of health care as their payments subsidize others. Senator Obama's position is that many of them simply cannot afford coverage even with subsidized premiums. His belief is that they would either ignore the mandate or simply be unable to afford it. To Mr. Reich's credit his conclusion after comparing them is cautious and well reasoned. Like much of the current discussion on the topic it also casts an eye towards Massachusetts:

Who's correct? It's hard to know. So far, the Massachusetts experiment suggests Mr. Obama. Massachusetts is the only state to require that every resident purchase health insurance. The penalty for failing to do so could reach $4,000 next year, but the state has already exempted almost 20% of its current uninsured from the requirement. Massachusetts is concerned they can't afford a policy, even with subsidies similar to those in all the Democratic plans. So far, about 50% of Massachusetts's uninsured have complied with the mandate.

He closes with a call to action for Democrats, encouraging them to "stop leading with their chins," in counterproductive arguments over mandates and begin building momentum for large scale and desperately needed change. Change that they all already agree upon.

SOURCE: "The Road to Universal Coverage" 01/09/08
photo courtesy of Kevin Dooley, used under this Creative Commons license

Massachusetts Uninsured Penalty to Quadruple

I would like to start off today by wishing all of our readers a healthy and happy New Year from all of us on the Health Care Reform Now Blog Team! May 2008 be a fantastic year for all, and hopefully a year in which we will see substantive strides toward health care reform in the United States.

To kick off 2008 I would like to direct your attention to the Boston Globe's Jefffrey Krasner, who has his eye on Massachusetts.

2008 will be an important year for the state's health care reforms, which were signed into law by U.S. Presidential hopeful Mitt Romney during his term as Governor of Massachusetts in 2006. The maximum penalties for remaining uninsured will increase nearly four fold to almost a thousand dollars a year. The cap for 2007 was $219 and was implemented as a forfeiture of the individual's tax exemption, not a fine.

Mr. Krasner provides a nice breakdown of how the penalty fee structure is supposed to work. The amount of the penalty is directly tied to the lowest cost insurance option using a formula determined by the state's Department of Revenue:

Under the formula issued yesterday, the amount an uninsured resident pays for 2008 varies by income and how long the resident goes without insurance. For instance, those 26 and younger that earn too much to qualify for low-cost insurance and who go the whole year without coverage would pay a $672 penalty. Those 27 and older would pay $912, the maximum. Those who have coverage for part of the year would pay a corresponding amount of the penalty.

In addition, those who earn less than 150 percent of the federal poverty level, or $15,324 for an individual won't face penalty.

The fees are based on half the cost of the least expensive insurance plan available to each resident but are capped to avoid excessive fees. Thus, a 60-year-old resident of Boston, who would pay more than $4,600 a year for health insurance provided by the state, could have been hit with a $2,300 penalty. But the maximum possible penalty is $912 for all residents. The draft regulations are available at the revenue department's website at mass.gov/dor.

There is no accurate estimate of how many Massachusetts residents will have to pay the penalty for 2007 yet, due to the fact that the penalty is tied to individual tax returns which are not due for several months.

This will be the crucible in which the mandate approach is tested, and I am certain that as the U.S. Presidential campaign ramps up many eyes will be on the Massachusetts plan. Mandates have been a central part of the political discussions on health care, with Democratic Presidential hopeful Barrack Obama being the only member of his party not proposing one.

SOURCE: "Penalties to rise for shunning insurance: State healthcare levy could exceed $900" 01/01/08
SOURCE: "Massachusetts Dept. of Revenue"
photo courtesy of koalie, used under this Creative Commons license