Thursday, September 10, 2009

Hyper-Competition on Health Care Reform Warrants Examination

I avoided the speech last night. It turns my stomach to see America's elected leaders act like the inter-fraternity council at a two frat school for rich boys. This morning friends asked my opinion of health care reform, given my over twenty years experience as a hospital administrator. I wrote the following:

The Red Team is blatantly irresponsible in their framing of health care reform. They have little, if anything to offer. My CPA Representative couldn't speak intelligently on health care reform. He had to offer his party's hollow talking points in a town hall meeting.

While I strongly agree with the need for change, I have concerns about elements of the plans on the table. I hoped to read a final reconciled bill before responding, but that might take months. That said, I offer:

1) Incentive pay will make things worse. Doctors and hospital administrators are as smart as Wall Street executives (who optimized their compensation at the expense of larger system). The notion that all payments are "fee for service" is bunk. Hospitals are paid DRG's, per diems, capitated rates, and highly discounted fee for service.

2) President Obama brags on the Mayo and Cleveland Clinic models for achieving quality. They pay doctors a salary. making quality the #1 priority. His plans contain little of the measures used by those organizations. It will impose barriers to improving quality the way Mayo does.

3) His plan to add more primary care doctors is a joke. The measly stipend is like spitting into a Category 4 hurricane. Also, it takes as long to train new physicians as it does to find carbon based energy sources, a decade. The only way to get doctors quickly is importation/immigration. Hospitals have done this with nurses.

On the process to date:

1) Obama's choice to lead reform is a For-Profiteer.

2) Many Congressional leaders (Max Baucus, Kent Conrad, Evan Bayh and about 8 other "moderate" Democrats) are in the pocket of health insurance, medical device, pharma, and other health care companies. They are enough to swing a bill in the Senate.

3) Conflicted insiders regularly advise Congress and various committees. This list includes Uwe Reinhardt, Gail Wilensky and Tom Scully. They have big ownership stakes in for-profit health care companies.

I believe a bare bones plan will pass, one with an individual mandate. While unstated as an objective, I believe reform sets the table for employers to shed that pesky health insurance benefit.

Democratic projections show 122 million with employer coverage after reform. Today, the Census Department revealed 176.3 million have work provided health insurance. That's a 54.3 million drop in employer coverage in just four years.

Unions will stand ready with group coverage, thus avoiding the public exchange. In most cases, I believe the employee will foot the bill for coverage in new union group coverage plans. This is why card check sits in the same Congressional cycle as health reform and why many unions have made reform a "do or die" initiative.

Even if the employer mandate stays, the payroll tax is 8%. Health insurance currently averages 12% of payroll. Employers could ditch the plan and save 4% of payroll costs. This is not mentioned by any politicians. On CNBC Rep. Debbie Wasserman Schultz said employers would be free to drop coverage, but they would be required to pay into the pool. She didn't illuminate any cost savings from doing so.

I could say more, but those are the low lights. I reserve the right to change this when a final reconciled bill is produced

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