Inkwell: Authors and Artists
Cynthia Dyer-Bennet (cdb) Mon 15 May 06 17:37
Joining us today is futurist Joe Flower. Joe has written about healthcare for 25 years. He regularly speaks at industry gatherings in North America and Europe on the deep forces bringing unprecedented change to healthcare, from new technologies to payment systems. He is a columnist for publications of the American Hospital Association and the American College of Physician Executives. His speaking and consulting clients have included the World Health Organization, the U.S. Department of Defense, and the U.K. National Health Service. He is an independent voice with no ongoing financial ties to any company or industry entity. His professional website is ImagineWhatIf.com. Leading the conversation with Joe is native New Yorker Andrea McKillop. Andrea is an artist, a writer and a mother who likes keeping her brain limber. Her graduate studies were in health care planning and policy, with research interests including accessibility, care for the underserved and mass casualty planning. Her career has taken her from land use planning to family planning, and she is currently editing her handbook for families facing a catastrophic or terminal illness. She has been a reproductive health educator, and she is the creator of a model for cooperative, interorganizational systems for health care. Welcome to Inkwell.vue, Joe and Andrea!
Joe Flower (bbear) Tue 16 May 06 18:47
Should the U.S. switch to a single-payer healthcare system? That is the subject of this conversation. How to manage and pay for healthcare in the 21st century in the richest economy in the world is a complex question. So let me start this off by posting a short article I wrote recently for the American Hospital Association's online journal, laying out nine conservative, business-oriented reasons why we should nuke our current healthcare financing system.
Joe Flower (bbear) Tue 16 May 06 18:54
Nuke the Healthcare Financing System By Joe Flower A single-payer arrangement is a key to survival for U.S. hospitals. Besides liberal outrage and justice for the oppressed masses, there are at least eight solid, conservative, good-for-business reasons why the United States should knuckle down and just pay for health care for everybody like all the reasonable countries in the world. Every one of these reasons is an argument for the survival of the American hospital. 1. Transaction costs: Health care is one-sixth of the U.S. economy, the largest business sector in the history of the human species, and we throw away some 25 to 30 percent of the money by paying armies of keyboarders to parse out who exactly is eligible for what, exactly for how much, and when. If we just pay for everybody, most of that goes away overnight. American hospitals are being bled to the bone by insurers who not only demand unsustainably steep discounts, but randomly and routinely deny payments for legitimate covered services -- at the same time that U.S. employers are bled white by those huge transaction costs. The Canadian provincial systems have many problems, but think about Trillium, the largest health care system in Canada. Do you know how many people are in Trilliums accounts receivable department? Three. Sometimes four, when the workload gets heavy. 2. Employer funding: Why should employers pay for health care, anyway? How did we decide that health care is connected to a job? General Motors regularly complains about the vast sums it pays for health care. Why isn't it agitating for health care costs to be spread equitably throughout the population through a single-payer system -- a system that could more rationally allocate the funds necessary to build and run the hospitals we all need? Sure, taxes would rise -- but health care costs would fall to something closer to the 10 percent of GDP that other developed nations pay, instead of the 14 to 15 percent that we pay. 3. The idea of insurance: Spread risk among the broadest base. If you own and operate a car, you need to have car insurance, no exceptions. That benefits all drivers. Since you own and operate a human body, you should have a way to pay for its upkeep so that others dont have to bear that burden -- meaning usually hospitals, which have become without plan or compensation the providers of free health care to millions who cannot afford it. Helping hospitals survive benefits all owners and operators of human bodies -- and the businesses who employ those owners. 4. Value: Studies by Elliott Fisher, John Wennberg, Beth McGlynn and others have consistently shown that health care repeatedly and vividly violates this country's most strongly held and widespread belief, that you get what you pay for. Costs and charges vary widely and nonsensically, with no demonstrable connection to mortality rates or other outcome measures. A single-payer system would at least be a system, and might be able to get a handle on the wastelands of profligacy hidden in those statistical variations. 5. Risk cost of receivables: With a single payer, we could throttle the bankruptcy and collection industries in their beds. Half of all the bankruptcies in the United States, and the majority of liens on homes, are due to medical bills. You don't really enjoy putting widows and orphans out on the street, do you? It's distasteful. It's bad karma. It puts a kink in your golf stroke that you've been trying to get rid of. Trying to recover the unrecoverable through liens and bankruptcy, instead of funding for peoples' needs ahead of time, is not just cruel. It places a tax of inefficiency on the whole system. It's more sand in the gears. Cover everyone, and that sand disappears. 6. Service quality: Single payer is not the opposite of private, market driven or consumer choice. Think vouchers. Think Health Savings Accounts. Think tax credits. People are afraid that a government payer means a Soviet-style system in which anonymous bureaucrats force us to conform to thousands of obscure and arbitrary rules. Bingo! We already have a Soviet system -- outsourced, privatized, for-profit and divided into multiple variant sets of opaque, unnavigable rules. Do you want real competition, leading to lower prices, better products, the reliability of FedEx, the defect rate of American Express, the customer friendliness of Nordstrom or Home Depot? Give everyone a pot of money with which to buy health care, and let them buy. 7. Efficiency: People using emergency rooms for colds and ant bites is stupid. 8. Patriotism: It's really hard to love a country that forces millions of people to choose between such luxuries as food, rent, fuel oil to keep from freezing, and cancer treatment to keep themselves alive. If we want hospitals to survive -- and U.S. employers do need hospitals -- we need to find a way that everyone who needs hospital services can afford them. Here's a ninth reason, and it is the most important: In this system-that-is-no-system, no one is looking out for hospitals. The only people who really worry about the survival of hospitals are the people who run them. Every big payer, every big customer, just tries to strike the best deal and lets someone else worry about whether the institutions, the industry, can survive to serve the public. As long as we don't think of our system as a system, no one really cares about us but us. It's time for that to end.
Andrea McKillop (divinea) Wed 17 May 06 10:49
Thanks for that introduction, Cynthia, and many thanks to Joe for joining us for this conversation. Joe, may I begin by asking what led you to the conclusion that a single payer system is the key to saving hospitals? I'm sure that you didn't start out in the field with that opinion, so I'd be interested to hear about the journey that got you there.
Daniel (dfowlkes) Wed 17 May 06 11:51
<scribbled by dfowlkes Tue 3 Jul 12 10:14>
Joe Flower (bbear) Wed 17 May 06 13:07
>what led you to the conclusion that a single payer system is the key to saving hospitals? You're right, I used to be more agnostic on the question. But I have been writing about the hospital sector for 25 years. And they are getting squeezed. Half of their business (roughly) is government-paid, and that compensation is far less than their costs. Most of the rest of the business comes from health plans. Most markets are dominated by one or two major plans that are typically nationwide, which compete against each other almost solely by holding costs down. The hospitals have almost no bargaining power, and must provide huge discounts to the plans. Even at that, the plans randomly deny payment on many charges which they have a contractual obligation to pay. So here we have a sector we dearly need - hospitals - on the ropes and deeply constrained in what they can provide the people they serve, at the mercy of another sector - health plans - that frankly we could do without, that actually adds no value at all. And by the way, the above column singles out hospitals because it was written for the American Hospital Association journal. I could make almost the same arguments for doctors and other providers, for patients and families, for taxpayers, and certainly for employers. Our system is insane.
Carl LaFong (mcdee) Wed 17 May 06 13:10
Haha. Since you actually know this sphere in great detail, whereas I am merely an occupant of Blowhardistan on this subject, it's funny that you have come around to the view I've held for 20 years, which is basically "first, we kill all the health plans."
Public persona (jmcarlin) Wed 17 May 06 13:14
Granted our system is insane. And I think your points about single payer is not single choice are apt: > Single payer is not the opposite of private, market > driven or consumer choice. Think vouchers. Think Health Savings > Accounts. Think tax credits. But given what's happening with medicare funding, I'm very nervous about such a system. How can we be sure that Halliburton and its 'cousins' don't buy enough congresspeople and senators to game the system? I can't help but believe that corruption won't screw up even a perfect system.
gary (ggg) Thu 18 May 06 07:28
Joe, you make an impressive case, both in the reasoned clarity of your intelligence, and also in the empathetic, caring, and creative way you conceputalize to make vivid. (Such as use of your phrase "owners and operators of human bodies.") Before the discussion gets really meaty, I'd like to add, for nonWell-subscribers just tuning it, that you are a masterly moderator of the Well's "Writers" discussion group -- without which I'd be a lesser person myself. Now, here are a couple initial, unrelated questions. You mention the Soviets (I remember!). Do you think the bogey of socialism and communism is still a major obstacle here -- rather than, say, looking at this as a system of allocation of resources between the private and public sectors? I, for one, am concerned that, if my understanding is correct, by not paying benefits, but paying low wages, WalMart is outsourcing their employee health plan to the taxpayers' pocketbooks (E.G., mine). Two, isn't another colossal obstacle the insurance industry? Wouldn't single-payer mean buying out the insurance industry? (Are there any must- read books about the insurance industry? Or recent feature articles?) Three, what lessons do you derive from the current administrative fiasco arising from recent MediCare legislation?
Cynthia Dyer-Bennet (cdb) Thu 18 May 06 09:20
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Joe Flower (bbear) Thu 18 May 06 16:14
> will corruption screw it up? This is possible, and as in any system, the devil is in the details. But we have to view that possibiity against the current system that is inherently corrupt. >the bogey of socialism Yes, that is a problem, both in the sense that it is still easy to scare Americans away from anything by labeling it "socialist" or "nationalizing," and in the sense that it is not in the American political culture to do things in a coherent, rational way across whole sectors. For instance, in many countries, what we call the "military-industrial complex" is all part of the military. Here it is mostly private, and we even outsource many purely militaryn functions.
Joe Flower (bbear) Thu 18 May 06 16:18
> WalMart is outsourcing their employee health plan to the taxpayers' pocketbooks Exactly. We should either expect all employers to pay for their workers' healthcare, or take the burden from them completely. Why sould we incentivise employers not to provide insurance. In Hawaii, if you are an employer, you must provide healthcare insurance. If you are a small or new employer, you get help in the form of tax credits. My company employs two people, and we provide healthcare insurance.
Joe Flower (bbear) Thu 18 May 06 16:23
>isn't another colossal obstacle the insurance industry? The insurance industry is an enormous obstacle, probably a show-stopper to any serious attempt at reform. For one thing, it has enormous political power. Equally important, it is about 4% of the entire US economy ($500 billion of a $12 trillion economy). If I were made Czar of All Things American, I would not eliminate the healthcare insurance industry overnight, because to do that would cause an overnight depression, and cause untold misery. Whether it is possible to downwind the industry and turn it into one that adds rather than subtracts value, is a difficult question indeed.
Joe Flower (bbear) Thu 18 May 06 16:27
> What lessons do you derive from the current administrative fiasco arising from recent MediCare legislation? That people and organizations do what they are paid to do. Look at the legislation: No one would profit from doing it right. In fact, doing it right would cost them much more money than screwing it up. I am not a conspiracy theorist. I do not imagine executives sitting around plotting how to screw it up. But on margin, organizations follow their incentives, and there was no incentive in this plan to do it right.
gary (ggg) Thu 18 May 06 19:24
Am w/ you, so far, Joe. And <13> might bring up a whole separate sidebar, about how U.S. government entitites aren't run with the same accountability as counterpart private companies, and so veer towards thick inefficiencies.
Paulina Borsook (loris) Thu 18 May 06 19:25
can you say more about how no one would profit from doing the current medicare plan d right? i has assumed this was true, without any specifics aside from the general healthcare disaster in the u.s. --- can you say more?
Joe Flower (bbear) Thu 18 May 06 20:36
> can you say more about how no one would profit from doing the current medicare plan d right? The plan is enormously complicated, but the driving business plan is not: insurance companies get a flat premium per patient per month, and in return they shoulder some of the cost of the drugs. Some people can shop around for a plan (though without much good comparative information); many people (especially the "dual eligibles" who are on Medicare and Medicaid, and are more often poor, frail, and in nursing homes - and for whom Part D is mandatory) just get dumped into an insurance plan - there is no real competition. And due to the nature of the market, I would assume that though the health plans are getting volume discounts on the drugs, they are not actually making much on the arbitrage - the whole idea of the thing is supposed to be keeping drug costs down. Obviously, the ideal patient would be one who pays the premium and never uses any drugs on the plan. The plan is confusing, there are many details, exceptions, and loopholes. An insurer could be a good citizen and spend a lot of money on education and help lines - with the result that more of its members successfully use the plan to obtain drugs. A rival insurer could just let its members stay confused, and see maybe 5% fewer of its members successfully get drugs on the plan. The premiums of that 5% is pure profit, and the costs to educate them? None. The incentive is to do it poorly.
Sharon Lynne Fisher (slf) Thu 18 May 06 21:00
I've been kinda following the Medicaid waiver plan that Idaho is trying to do. What are other states doing and how is it working out?
Paulina Borsook (loris) Thu 18 May 06 22:13
yeah, i sort of instinctively got that, and did wonder what was in it for the insurance companies. just as, i have wondered, since they all (theoretically), have the same kinds of populations to deal with and the same costs of doing biusiness --- why do the premiums and offerings very so wildly?
Erin Noteboom (erinbow) Fri 19 May 06 13:17
An historical question for our futurist: how did we get in this fix in the first place? How did health care came to be funded by private insurance companies accessed through employers? Did it used to be so elsewhere? And if so, how did those places make the transition?
Alan M. Eshleman (doctore) Fri 19 May 06 15:49
A good question. My medical group was a response to an industrialist's need to provide health care to employees at relatively remote spots (the Grand Coulee Dam and the California desert). It (Kaiser) expanded with WWII and Kaiser's shipbuilding enterprises. I still have some of my father's old pay slips from the Richmond Kaiser shipyard. They took, I think, 50 cents out of each paycheck for healthcare. That was then. In the early 1950s Kaiser turned his health plan over to an independent corporation. Today, Kaiser is a tri-partite entity: a non-profit insurance plan, a non-profit hospital corporation, and a for-profit medical group that staffs everything. And Kaiser, which is doing better than many plans, is getting squeezed. Every time I go to a meeting that discusses how we should position our "product"(individual directed health care is the latest fad)I come away feeling like I've just heard another series of good arguments for single payer. I do, however, get annoyed when I hear people lumping Kaiser with some of those insurance company health plans--companies that actually provide no direct medical care, but only act as financial institutions and gatekeepers. Per capita medical expenses in the USA are the highest in the world. Switzerland, which spends a little more than half per capita than we do, manages to do this with private insurers. I can talk a little bit more about this later, but I think really long posts make the eyes glaze over.
(divinea) Fri 19 May 06 19:31
There are some great questions being raised here, and we'll get to them, I'm certain, as we move along here. If we can return to the single payer issue for a moment, though: one question that I hear often is simply, what's in it for doctors and other care providers? In what ways does it serve them, or create new opportunities? And what's the downside for providers? The strident opposition of the AMA to the single payer concept has continued, has it not? Why are they so opposed?
Alan M. Eshleman (doctore) Fri 19 May 06 22:39
I wouldn't call it "strident" any more. They're opposed because (1) they fear loss of income and (2) they fear some sort of loss of control with Big Brother looking over their shoulders. It's the insurance companies who are really opposed! For high dollar specialists, I'm sure single-payer would reduce their incomes. For us primary care types, I doubt there'd be much change. There'd be a lot to gain in managing a practice. Consider that some practices are returning more than half of their gross receipts to administrative expense. Dealing with a zillion different insurance plans is a huge pain in the ass. It's started folks in a lot of traditional fee-for-service practices thinking about alternatives. I have a weakness for spending time on tropical islands. I sometimes run into physicians from countries with single payer systems vacationing on those same tropical islands. So I guess they're making enough money to take nice vacations.
Carl LaFong (mcdee) Sat 20 May 06 04:46
Two different docs have told my wife in the last year that they are ready for single payer.
Andrea McKillop (divinea) Sat 20 May 06 05:35
I know some doctors here, too, who are not averse. They recognize that the current reimbursement system is not working very well for them, to put it mildly. I understand the concerns about systemic interference in the doctor-patient relationship, and the ongoing struggle to maintain independence in medical judgment in the face of increasingly complex reimbursement requirements. I'm interested in hearing from Joe about the larger political issues attached to AMA opposition, though, and how the issues they're raising can be addressed and perhaps mitigated at the macro level.
Joe Flower (bbear) Sat 20 May 06 14:23
Whoah! A lot questions piled up quickly. Let me take a shot at them: What's in Medicare Part D for insurance companies and why do the offerings vary so widely? I suspect thqat the companies themselves are not sure whether they want to be in this market, adn are doing it largely out of fear of being left out of what could be an opening wedge for competitors in a rapidly growing population segment. And since the details of the plans are left up to the insurers, they come up with all sorts of different offerings and prices in an attempt to figure out what will be profitable for them. But the law is very complex, and it's a new slice of the market, so they don't really know.
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