One of the things not being discussed is the fact that there is overwhelming skepticism that  any of the current legislation will slow down future health care cost increases. The political tactic is to expand health care coverage and leave the responsibility for “bending the health care cost curve” to a future group of legislators. Here are some sage comments by two organizations on the front line of health care.

The chief executives of the Cleveland Clinic and Mayo clinic, both held up as models for health reform, voiced concerns about the health care proposals moving forward in Congress.

Cleveland And Mayo Clinic CEOs Raise Concerns About Congressional Reform Proposals
(author unknown)
Fri, 02 Oct 2009 13:22:00 GMT

Last week my boss and I were talking about health care insurance. He said the reason our company offers a Health Reimbursement Account is because the the price offered to corporations for health insurance is so much higher than the price offered to individuals. Although I did not have specific knowledge on corporate rates, I am familiar with individual rates. I am amazed that the individual rates for a high deductable plan, $4,000/year, are so low compared to the rates reported in news stories for Verizon($20,000/year) and an Ohio lobbyist($30,000/year). The high rates paid at Verizon and others makes me wonder why such “smart” people can be so dumb.

Today an editorial in the Wall Street Journal, Another Health-Care Invention, reaffirms that point.

The Congressional Budget Office expects premiums for employer-sponsored coverage to cost about $5,000 for singles and $13,000 for families this year on average. "Premiums for policies purchased in the individual market," adds CBO, "are much lower””about one-third lower for single coverage and half that level for family policies."

The best health care deal for a frugal, healthy family is to combine a high deductable plan with a savings account for medical expenses.

One of the interesting ironies of the government option in the health care reform plan is that it is supposed to increase competitiveness in the health care insurance market. For those of us who have studied markets in a micro-economics class or read the Wall Street Journal, the key to increasing competitiveness has been to make it easier for competitors to enter into the market. When I look at the existing health care insurance market and compare it to the reform plan, I do not find any significant changes that will make it easier for companies to enter into the market. In fact a very good argument could be made that the increased regulations from the proposed Health Care Reform will make it even harder for companies or organizations to enter into the market.

Why Don’t the Health Insurance companies complain more?

When you consider the scenario that a government option could be the end of the health care insurance industry, you would think that the health insurance companies would be gathering up their supporters and flooding the airwaves with “public interest” commercials. The fact that we do not see the commercials tells me something. Although it is difficult to determine the insurance companies strategy, I think the insurance companies look at the government option as a likely failure. If the government option is modeled after Medicare the insurance companies are betting that they will be up against a very weak competitor. Up until this year Medicare was widely thought of as the high cost provider of health insurance and a poor model for state health care plans. The complaints about Medicare are fairly numerous. Unless something miraculous has occurred to Medicare, it is unlikely Medicare will be an adequate model for a new and improved health system. The biggest problem with this option is that it does not provide any incentive to improve efficiency at insurance companies.

If the government option is modeled after the Massachusetts or TennCare system, the insurance companies are betting that it will heavily subsidized and probably fail in a couple of years. TennCare was closed down because it failed at controlling costs.  The Massachusetts system has been effective at enrolling people but has not yet reduced the rate of health care cost increases. This leaves us with a scenario in which the government option fails to reduce health care costs and the people will demand the insurance companies to come and rescue us. It looks like a win-win situation for the insurance companies and an unnecessary detour for the people who desire a health care reform that actually gets us more bang for our buck.

Here’s a nice article on health care from a local newspaper for those who are frustrated with the current plans. The article highlighted an alternative health care bill proposed by Sen. Ron Wyden, D-Ore., and Sen. Robert Bennett, R-Utah. The key provisions of the bill are:

• Money that employers pay for coverage would go directly to workers.
• Workers would use the money to choose their own insurance on the competitive, open market.
• Everyone would be required to have insurance.

The Congressional Budget Office says this plan will quickly pay for itself and studies indicate it might reduce health care costs.

Health reform: Hit the Reset button | Cincinnati.com | The Cincinnati Enquirer

Here are some ideas on how to reform the health care system that the average folks would probably support.

Reform Medicare/Medicaid using an independent process similar to the process used to close the military bases

As the Obama administration has found out, the process of reforming Medicare and Medicaid into a more efficient government service is a contentious process that is gradually overwhelming the health care bill. Many people using Medicare are rightly concerned that the benefits they depend on are going to be taken away and given to some other part of society. The supporters of the health care bill can talk till they are blue in the face but the Medicare beneficiaries are scared and are unlikely to change their opinion. The Obama administration has lost this battle.

Create a government sponsored health care insurance plan whose sole source of financing is insurance premiums

If the advocates of government sponsored plans are so sure they can provide better health care at a lower cost, let’s let them play in the insurance game as long as they follow the same rules as the insurance companies. If they can provide better health care at a lower cost than my insurance company and not need a bailout in two years, I am sure a lot of people will sign up. If we have “real competition” for health care customers between insurance companies and a government option, we will probably start to bend the cost curve. The biggest problem conservatives have with government option is that they envision government meddling will create another fiasco like Fannie Mae that is too big to fail. Since the previous experiments with a government sponsored health care option have failed, this experiment needs an exit strategy and a sunset clause.

Create health care insurance vouchers for people on government plans

I am sure this is going to make some liberals gag but health care vouchers can solve some problems and help reform Medicare. School vouchers are popular with voters and it puts a lot of pressure on school systems to improve performance. A similar voucher process in the health care area might be helpful.

1. Some families are covered by multiple plans and would like to consolidate their health care services.
2. Some doctors are not taking Medicare patients due to reimbursement rates.
3. This would put increased pressure on making Medicare and Medicaid a better health insurance provider.

Last week FactCheck wrote a nice article on the Obama’s Health Care News Conference. For a moment I thought that they had finally turned the corner and were now writing about something more substantive than debunking email hoaxes and political ads I had never seen. Then I saw that they were not alone.  The AP published this story, FACT CHECK: Obama’s health care claims adrift?, and the NY Times printed this story, Concerns on Plan Show Clashing Goals. Are the lap dogs rebelling?

So far the health care reform looks like a plan with lots of cost shifting and very few improvements in cost controls. Without significant cost control improvements it sure looks like the proposed health care plans are going to get the same results as Tenncare and Massachusetts.  RealClearPollitics published a nice summary of the TennCare history last week, Lessons For Health Care Reform. I find it amusing seeing the huge cost savings being promoted in the health care plans by removing “overpayments” in the Medicare and Medicaid plans. The details of these savings remain pretty sketchy but the Dynamist Blog does a nice job discussing the subject with this post, Medicare First!. The proposed savings bring up a lot of unanswered questions. Why were these programs not reformed in previous years if the cost savings are so great? Can we trust our legislators and Medicare administrators to implement reforms this time if they chose not to reform the programs in previous years? Can we afford a supersized TennCare-like health care failure in our economy if these savings do not pan out?

This week I started reading Kaiser Health News. I enjoyed reading the article, Checking In With Carol Steckel On Expanding Medicaid. The article did a nice job of explaining why so many governors are having problems with the expanding health coverage in this economy and the sacrifices the states are making to keep present health care coverage in tact. It is interesting to note that many states are unable to expand health coverage to the extent provided by already existing laws due to lack of state funds. Unless there are major changes in the funding for the proposed health care plans, it looks like the expansion of the health care coverage is dependent on a dramatic improvement in state tax income.

Here is a pragmatic alternative to “universal” health care. Everyone seems to have a different idea of what a “universal” health care plan will entail. The Tennessee plan does not address many of the critical issues with managing health cost growth but it does have with a viable plan for cost sharing and it looks affordable for individuals, small businesses, and governments. Since I believe that a “universal” health care plan with nationwide coverage will probably come out of these experiments at the state level, it is definitely worth watching.

Coverage with limits is better than no coverage at all.

What Tennessee Is Doing About Health Insurance
Sat, 22 Nov 2008 01:37:23 GMT

Here are two posts from the Health Affairs Blog concerning the unsuccessful health care reform in California. What I learned was that even when you have bi-partisan support health care reform is a tough proposition to advocate in a declining economy.

Editor’s Note: This is the second post in a Health Affairs Blog roundtable on the unsuccessful health care reform effort California. Rick Curtis and Ed Neuschler, Lucien Wulsin, and Rick Kronick are also participating in the roundtable.

Kaiser Permanente views the failure to put the health reform legislation developed by Gov. Arnold Schwarzenegger and Speaker Fabian Núñez before the voters as a major lost opportunity. The bill, which would have significantly expanded coverage, enacted comprehensive market reform, and begun much-needed delivery system reform, was supported by, and developed in conjunction with, a broad coalition of business, labor, providers, consumers and health plans. Organizations that rarely work together were willing to moderate their differences and stretch their comfort zones to achieve larger goals.

[…]

Opportunity Lost: The Failure Of California’s Health Reform
Patricia Lynch
Wed, 05 Mar 2008 20:06:34 GMT

Editor’s Note: This is the first post in a Health Affairs Blog roundtable on the unsuccessful health care reform effort in California. Patricia Lynch, Lucien Wulsin, and Rick Kronick are also participating in the roundtable.

Although stymied by economic woes and governance constraints unique to California, the Golden State’s health care reform effort is particularly noteworthy because the serious attempt to address its outsize uninsurance problem may well serve as a model for other states and for the nation. The low-income uninsured (those with incomes under 250 percent of the federal poverty level, or FPL) in need of subsidies constitute a larger share of the nonelderly population in California (13.5 percent) than the national average (11.6 percent), and much larger than in Massachusetts (6.1 percent), based on 2005-2007 data from the Current Population Survey (CPS). When it undertook reform, Massachusetts was in a unique position, facing a relatively small uninsurance problem and having available substantial federal funds that could be reprogrammed. A similar coverage framework would cost much more in California than in Massachusetts.

[…]

California’s Shelved Health Care Reform

SCHIP has not performed well in terms of stable coverage, access to primary care and preventive services, and the quality of care.

SCHIP Will Not Improve Quality of Kids’ Health Care

This is an interesting article that confirms some of my suspicions about the effectiveness of SCHIP in improving children’s health care. When I read the GAO report on SCHIP, I saw actions by various states that implied that the underlying problems with providing children’s health care were too tough to solve so they diverted the  SCHIP funds to other health care problems they thought they could solve. That is my interpretation on why so many adults are in the program and the lack of progress on the number of uninsured children. I was somewhat fascinated that these children’s health care effectiveness problems have such a low profile. After a little more reading at the Health Affairs web site it is apparent that many of the problems with the effectiveness of children’s health care are independent of whether the payments come from the government or the private sector. As the saying goes, “You can lead a horse to water but you cannot make it drink”.

I also found that the Secretary of Health has a blog, http://secretarysblog.hhs.gov/.