Tag Archives: insurance

Cowen calls for evidence in health care options

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Yes, it’s been a little quiet here lately (other than comments about 9/11 being an inside job, and who knows what kind of traffic mentioning that will bring?).  The reasons are twofold:  first, I have been building a new business I started early last year; and second, I just launched a blog that describes my thinking about that business.  I’m very excited about both.

That said, PublicOrgTheory has been my first love for over five years, and I always come back to it.  This meditation by Tyler Cowen on health care caught my attention this morning:

Over at Twitter, Matt Yglesias asks:

Do rightwingers really believe that US health insurance has no mortality-curbing impact?

I don’t speak for “right-wingers,” but I’ll say this:

1. I genuinely don’t know what to believe.  And I often toy with the idea of an “innovation-maximizing” health care policy, so that future coverage is more effective.

2. I am commonly excoriated by people (not Matt) for not supporting government-subsidized universal health insurance, yet few if any of these people grapple seriously with the best evidence.

3. I live in a country where the extension of health insurance is a major issue, and a major budgetary issue, yet much of the discussion is in an evidence-free zone.

There’s more, but it was the evidence-based points that I found most compelling.  While I think coverage for all Americans should make for a healthier nation, an economically stronger nation, and a nation better prepared for its own defense, I have to agree with Cowen that no one–including myself–is offering up evidence that would support the plans being discussed.  There’s an opportunity to be seized here.

National debate seems to be one of the few areas left in American society–management and medicine being two notable others–in which evidence need not be the basis of an argument or action.  “Proving it” is a big deal among people whose lives and livelihoods hang in the balance.  It would be an excellent change to see that kind of urgency to “prove it” in all matters of national interest.

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Harvard: lack of health insurance kills more than kidney disease

My intention was to start the deep dive on change dynamics in health care today, but my own health is suffering (lingering flu).  I’ll get back to it tomorrow if all goes well, and I offer this as something to think about until then:

As the White House and Congress continue debating how best to provide coverage to tens of millions of Americans currently without health insurance, a new study (PDF) is meant to offer a stark reminder of why lawmakers should continue to try. Researchers from Harvard Medical School say the lack of coverage can be tied to about 45,000 deaths a year in the United States — a toll that is greater than the number of people who die each year from kidney disease.

“If you extend coverage, you can save lives,” said Dr. Steffie Woolhandler, a professor of medicine at Harvard who is one of the study’s authors. The research is being published in the December issue of the American Journal of Health and was posted online Thursday.

The Harvard study found that people without health insurance had a 40 percent higher risk of death than those with private health insurance — as a result of being unable to obtain necessary medical care. The risk appears to have increased since 1993, when a similar study found the risk of death was 25 percent greater for the uninsured.

That’s why I’d rather try to understand this than debate it.

Big-Picture Health Care: Who are the players? (part 2)

[Note:  This post is part of an ongoing series on Big-Picture Health Care.  The introduction to the series is here.]

This is the second post of three on the players in the big picture of health care.  Although a lot of this may be familiar–even obvious–this is an important bit of stage-setting before we go deep into the dynamics of change and the connections between the complex parts of this system.  Hang in there.

Yesterday we took a look at the direct participants in health care:  patients and medical professionals.  Today we’ll address the primary authorities determining how that care works:  insurance companies and government.  Let’s start with everyone’s favorite villain:

Insurance Providers. HMOs, PPOs, supplementals, government plans–it isn’t technically accurate to call them all insurance companies, but we’ll consider them together as insurance providers in order to understand how they work.  While the technical labels may differ, the processes are very similar.

At its most basic, the system works like this:  you pay some money (premiums) and your employer pays some money to an insurance provider, who puts all the money in a pot and pays for your health care out of that pot.  The insurance provider makes its money by managing the pot, which means more money taking care of you is less money for them.  In order to make the numbers work, the insurance provider needs to set some restrictions on what it pays for your care (it wouldn’t make sense to give boob jobs and laser eye surgery to everyone who wanted them), including co-pays and referrals.  In order to stay in business as a viable concern, the insurance provider needs to make sure that it is taking in more than it pays out, and also covering its internal costs like salaries and Post-It Notes.

In this scenario, “insurance company” can mean Blue Cross, Kaiser Permanente, the Veterans Administration (VA), or any number of organizations established as businesses, non-profits, cooperatives, or government programs.  The key is that bit about some people paying in, the provider paying out, and a bunch of rules in between (in the case of the VA and government programs, some of the provider’s money pot is funded by taxes, which we will return to later).  When you use this system, you are a patient and your money is going to medical professionals.

The insurance providers wield a lot of power in the current health care system.  Despite not being popular, it’s better to have insurance companies than not have them.  If you had to pay medical professionals only when you got sick, that would be great most of the time.  However, if you needed heart surgery or months of hospitalization, it would suck.  The pot of money everyone pays into provides some safety–you’re paying a little on a regular basis so that you don’t pay a lot when a very bad situation arises.  At least that’s the theory.

The problem–and this may surprise you–is that although insurance companies wield a lot of power through rules and oversight of the big pot of money, they don’t actually make a lot of money.  Their profit margins are reported in the high single digits (by comparison, oil, banking, and pharmaceuticals have profit margins of 20-30% as a percentage of revenues;  health insurance doesn’t make it into the top 10.).  Their procedures are sometimes maddeningly bureaucratic because they are fighting to hang onto premiums without paying out any more than necessary.

Insurance providers are almost certain to lose in the political battle over health care reform.  Few people like them, and many have horror stories.  The call for health care reform really is for health insurance reform, and the industry isn’t likely to emerge unscathed.

This brings us to the insurance providers’ uneasy relationship with…

Government. The role of the government in health care–at least at the moment–is to maintain oversight of the insurance companies through regulations.  Government also funds its own health care plans through budget appropriations, which are primarily funded by taxes.  Perversely, Congress and the VA have universal health care coverage with high rates of customer satisfaction.  This will become important later in the series.

The government has a great deal of power, though it would have much more if not for the constitutional system of checks and balances that promotes bureaucracy and gridlock.  Think of your last visit to the DMV and you’ll get an idea of why government with all its resources doesn’t wield more power (quick note:  my DMV in Colorado is an exception–their service is fast, friendly, and generally better than the experience you’ll get at most for-profit industries.  I don’t understand why, but I’ll try to find out.).  The government’s power is checked by government itself.

Government makes the rules the insurance providers operate under, which means that the relationship between you as a patient and your medical professional is restricted by the insurance provider, but only to the degree the government allows.  While you and your doctor may agree on what you need, there is a clash of titans outside that examining room that may or may not permit you to pursue that treatment.

Government, like insurance providers, doesn’t have a lot of friends among citizens primarily because it can be clunky and slow, and because you have to chip in money in the form of taxes to support it.  This is what people are on about at town halls.

Okay.  With the insurance providers and government explained as they relate to patients and medical professionals, we are almost ready to talk about what happens when they fight it out.  Before we can do that, though, we need to pause to look at the groups orbiting around this nucleus of health care:  employers, taxpayers, medical suppliers, and lawyers.  I’ll have a brief sketch of each of these in tomorrow’s post.  After that, we’ll move into what change is likely to look like, and who will ultimately control it.

Hanlon reveals less malice, more humanity

Sorry it’s been so quiet here of late.  The last few days have been filled with adjusting to a new country and climate, more meetings than I care to list, and–both important and topical–the broad strokes of a series on the power dynamics and interconnections of health care in the United States.  More on that coming Monday.

Meanwhile, boing boing highlights my favorite argument against conspiracy theories:

But as former Nixon aide G. Gordon Liddy once told me (and he should know!), the problem with government conspiracies is that bureaucrats are incompetent and people can’t keep their mouths shut. Complex conspiracies are difficult to pull off, and so many people want their quarter hour of fame that even the Men in Black couldn’t squelch the squealers from spilling the beans. So there’s a good chance that the more elaborate a conspiracy theory is, and the more people that would need to be involved, the less likely it is true.

Or, as Hanlon’s Razor implores, “Never attribute to malice that which can be adequately explained by stupidity.”  Lincoln, JFK, the moon landing, UFOs, 9/11, Taylor Hicks winning American Idol…  Assuming a conspiracy accords far too much credit to the organizations involved.  That’s not to say that omnipotent organizations with sinister motives don’t exist…  well, yeah, actually that is what I want to say.

Hanlon is relevant to far more mundane matters, too–like health care.  Evil congressmen?  Nah, they’re probably well-intentioned people under a lot of pressure.  Diabolical insurance companies?  Nope, just a few companies trying to survive and protect single-digit profit margins.  Greedy pharmaceutical companies?  Well, maybe a little, but the vast majority of their employees are just trying to do good work in their narrow sphere of influence.  We often confuse organizations with the people who work in them, forgetting that anthropomorphizing organizations assumes too much of the firm and too little of its employees.

There’s no quick and easy moral here, just a nascent thought that it might be worth ratcheting down the rhetoric and thinking clearly about what it is we think and why we think it.  That clarity should produce better answers, or at least better questions, and it might remind us that ultimately we are all in this together.

Health care chess game gets mildly interesting

File this under “defensive cooperation”:

The nation’s hospitals agreed last night to contribute $155 billion over 10 years toward the cost of insuring the 47 million Americans without health coverage, according to two industry sources.

The agreement that three hospital associations reached with White House officials and leaders of the Senate Finance Committee is the latest in a series of side deals that aim to reduce the cost of revamping the nation’s health-care system and to neutralize influential industries that have historically opposed such reforms.

What if this were the endgame from the beginning?  The end may look very much like the public-private partnerships I suspect would be most effective at getting the system under control–and in line with where such a powerful country’s general level of health should reasonably be.

Of course, PhRMA is playing its own game in preserving the status quo–or as much of it as can be preserved.  Despite a pledge of US$80B toward a new system, the industry knows how to play the influence game.  Also, 155+80=235, which is about US$765B ahead of the estimates of what it would cost to get to full coverage in the US.  With two of the biggest players having placed their bids, it’s hard to imagine who other than government can come up with that kind of cabbage.

By the way, I don’t entirely buy the US$1T figure.  Surely a collaborative, innovative approach can do better than that.

Safford on sustainability in health care

The über-reliable Sean Safford has a longish post on orgtheory.net today about the shift in health care debate from fairness and equity to sustainability:

Sustainability is related to the notion of conservation in the sense that it is interested, primarily, in the preservation of the social system. But it shifts the nature of that argument significantly. Rather than focusing on the maintenance of order and stability through systematization, sustainability focuses on interdependence. Its origins are in the environmentalist movement, but I would suggest that statements like Leonhardt’s and even Ken Lewis’s suggest that is has spread to form an ideological basis for government action outside of concerns about the environment.

The argument goes something like this: We live in a highly interconnected society which operates within a series of interconnected systems. Resources (physical, material, social, and political) are not only scarce, they are extinguishable. The system is in place, not so much to keep social order, but to ensure the reproduction of the resources needed to reproduce society over time. Undermining any of the systems on which society depends threatens to have ripple effects on others. But importantly, the biggest threat to the system comes not from external threats, but from individuals acting in their own self interest in ways that could undermine the delicate balance on which interdependencies of the system depends. Government action is needed, not to ensure fairness, but in order to save us from ourselves.

His points on org theory and social movements are especially insightful, albeit brief.

As an example of the ripple effect mentioned above, think about the uninsured using hospital emergency rooms as primary care facilities.  The uninsured wait until the situation is dire enough to merit going to the hospital rather than using preventive care or early treatment.  The severity of health problems is likely to be more advanced than those of people who have coverage and regular check-ups.  Treatment in the hospital emergency room–already expensive–becomes more so as advanced illness is treated.  Cost soars.  Unable to pay bills, the uninsured go bankrupt.  Hospitals or insurance companies eat the losses and pass on the cost to consumers in the form of higher premiums.  The now-bankrupt uninsured take advantage of government services, which increases the burden on tax revenues.

It would take more time than I have at the moment to dig out studies supporting the above scenario, but most of it should be fairly intuitive.  If people who are uninsured get health care and cannot pay for it, the costs have to be absorbed somewhere.  To a degree, a somewhat socialized health care system already exists, and it is a truly inefficient one.

If arguments for fundamental fairness in the most powerful country in the world aren’t enough, the economic case–including the current burden to individuals–should be more than clear.

[Note:  chart above from AHIP.]