Discussing Sicko: Agent Resources

June 29th marks the release of Michael Moore’s latest film, Sicko. The movie is a brutal attack on America’s health care system. It reflects Moores stated hope that the film sparks a movement “to eliminate private, profit-making health-insurance companies. There’s absolutely no room for them in this country,” he has said.

Michael Moore is an Ocsar-winning director and is generating tremendous publicity for his film. He has or will be appearing on Oprah, Leno and Letterman. He’s already testified on behalf of SB 840, the single payer bill now be considered by California’s Legislature. So it is highly likely you’ll be asked by clients and friends as to what the fuss is all about.

Fortunately, there are several resources available to help you respond to these questions:
The “Three Myths of a Single-Payer Health Care Delivery System” Presentation. This PowerPoint presentation — complete with speaker’s notes — debunks the myths of single-payer system superiority.

Janet Trautwin’s Letter to the Editor Published in Time Magazine.
NAHU’s Executive Vice President and CEO directly takes on Michael Moore and Sicko. The text of her letter is below.

Daniel Weintraub’s Column in the Sacramento Bee. While Weintraub usually writes favorably concerning single payer reform proposals, in this column he writes a thorough critique of the errors in Moore’s film.

On the Fence Films This is independent film maker Stuart Browning’s site with several short films on powerfully illustrating the failings of Canada’s single payer system.

Agents should review these resources prior to June 29th and to make use of them. The tremendous publicity for Sicko will mean local radio stations, community organizations and others will be receptive to hearing alternative views to Michael Moore. Become the expert they want to hear from and get the message out: yes, America’s health care system needs reforming, but what Moore proposes isn’t the way.

Fortunately, Health Underwriters has alternatives. In addition to CAHU’s Healthy Solutions plan, the National Association of Health Underwriters will be unveiling it’s health care reform plan during its national convention in Denver this coming week.Agents have an important perspective on the health care system. We also have a responsibility to share it. I hope these resources help.

The following is Janet Trautwein’s letter to the editor published by Time Magazine on June 6th:
“Filmmaker Michael Moore romanticizes the government-run health-care system in Canada [May 28]. I wonder if he really understands what a single-payer system would mean for Americans. The government would hold a monopoly over health-care coverage, offering one insurance plan with no alternatives. If the government decided to reduce funding or deny coverage for certain medical technologies or procedures, patients would have to forgo their use or pay for it out of pocket. Under the current system, if people are dissatisfied with their plan, they can simply switch insurance carriers. No one denies the moral imperative for reform to provide health-care access to all Americans, but a single-payer system is not the answer.”

Unified Legislative Health Care Reform Plan

Legislative leaders have combined their bills to create a unified alternative to Governor Arnold Schwarzenegger’s health care reform bill.  Assembly Speaker Fabian Nunez and Senate President pro Tem Don Perata announced on Thursday that the Senate bill (SB 48) would be rolled into an amended version of the Assembly bill (AB 8).

That Democrats in the legislature felt a need to present a unified approach is not surprising. They both have incentives to resolve the health care reform debate this session. These pressures include a desire to demonstrate accomplishments on “big issues” prior to expected ballot initiatives on reapportionment and term limits next year.

It’s also not surprising Speaker Nunez and Senator Perata resolved differences between their original health care reform bills by adopting the most expensive and intrusive option. (AB 8 and SB 48 Key Compromises).  This gives them plenty of negotiating room as they prepare for the inevitable talks to come with Governor Schwarzenegger. And adopting provisions advocated by their liberal and union constituencies has positive political benefits for them as well.

So now the pressure is on Governor Schwarzenegger to stake out his position by publishing details of his plan. The ideal format would be in the form of legislation, although that’s not really necessary for the Governor to have influence. Once the negotiations begin the legislative language will change quickly. The key is to have starting points with roughly equivalent levels of details.

In a future post I’ll discuss the key provisions of the new AB 8. For now, the most interesting dynamic to watch is the pre-negotiations positioning. It’s going to be a long summer.

Moore’s Solution: Eliminate For-Profit Health Plans

Michael Moore has made it clear one purpose of his film, Sicko, is to build support for eliminating for-profit health plans. For example, the Dow Jones Newswires recently reported Moore as hoping his film “film sparks a movement ‘to eliminate private, profit-making health-insurance companies. ‘There’s absolutely no room for them in this country,’ he said.

Moore’s take seems to be that pursuit of profits is a direct conflict with health care financing. Health care is too important to let for-profit companies to participate in this sector.

But food is important. So is shelter and transportation. Should all of these functions be taken over by the government? Moore notes that police services are government supported. That’s true. Yet there’s also a huge for-profit security industry in this country. So why the fixation on the health insurance industry? Especially since many of the practices he deplores in his films are also engaged in by non-profit health care companies?

So, two requests for comments:
1. Please post your take on why for-profit concerns should be removed from health care, but not other important needs such as food and housing; and
2. Please share your experiences with for-profit, non-profit and government heatlh care coverage in the context of whether one type of entity is better than another.

Thanks.

Motley Fool versus Administrative Cost Caps

It’s kind of surprising for me to be bringing a column from the Motley Fool web site concerning a fairly arcane aspect of the health care reform debate: requiring carriers to spend at least 85% of premium dollars they receive on medical costs. This approach to tamping down escalating health insurance premiums is advocated by Governor Arnold Schwarzenegger, leading Democrats in the state legislature and, on the national front, by former Senator John Edwards.

It was Senator Edward’s recent speech calling for a 15% administrative cost cap which caught the eye Motley Fool writer Rich Smith. In an online column entitled “John Edwards’ Fuzzy Insurance Math,” Smith takes the Senator to task for proposing a reform which simply doesn’t add up.

Senator Edwards claimed health insurers currently spend 30% of premiums on administrative costs and profits. The Senator believes, as does the Governor and others, that no more than 15% of premiums should be spent on such things. In questioning the presidential candidate’s proposal (a candidacy the reporter claims to support) Mr. Smith cites statistics showing the actual number is closer to 21%.

But he goes on to say that a 15% cap would risk putting the insurers out of business, citing the margins enjoyed by some of the leading health insurance carriers:

    Gross Margin    
    Operating Margin    
    Net Margin    
Aetna

30%

11%

7%

Cigna

43%

11%

6%

Coventry Health Care

29%

10%

7%

Humana

18%

3%

2%

UnitedHealth Group

25%

10%

6%

 WellPoint

25%

9%

5%

Margins are trailing-12-months.

Since none of these major health plans currently enjoy the 15% operating margin necessary to fund Senator Edward’s 15-point reduction in margins, Mr. Smith notes that each of these currently profitable companies would begin losing money.

Mr. Smith notes this would encourage the carriers to achieve one of Senator Edward’s goal for his proposal: to make the insurance companies operate more efficiently. However, Mr. Smith also notes that when a company is forced to quickly become more efficient, it “automates some functions, outsources others, and lays off employees in droves.”

Of course, there’s another way for carriers to address a mandated percentage. It seems that every factor has a numerator and denomenator. So forced to achieve a medical cost ratio of 85%, carriers could eliminate disease management programs, reduce customer service staffs, fire some attorneys and reduce commissions. That would address the numerator. But they could also address the denominator by increasing premiums — or eliminating low cost plans. After all, the greater their premium the more they have to spend on operations. This approach isn’t what advocates of the administrative cost cap are seeking to accomplish, but it is a likely result of this approach.

So it’s not just fuzzy math reformers need to guard against. It’s also unintended consequences they should avoid. And they don’t have to take my word for it. They can listen to any ol’ motley fool.

More on Michael Moore’s “Sicko”

Michael Moore continues to seek publicity for his new film, Sicko, which blasts the American health care system. My earlier post warned about the dangers of basing public policy on anecdotes. But as I noted there, I hadn’t seen the film.

Sacramento Bee reporter Daniel Weintraub has and he’s written a very intiguing column titled, “Moore on health insurance: Entertaining but flawed.” His views are interesting in that he’s written very favorably concerning single payer systems (the solution Moore advocates), yet his column takes Moore and his film down several notches. I urge you to read the entire column, but to whet your appetite, here’s some excerpts:

“At turns funny, shocking and just plain sad, the documentary builds a solid indictment of private health insurance.”

“But while his film might be effective as propaganda, it is also flawed. It is a hodgepodge of anecdotes, hasty conclusions and glaring omissions layered one on top of another until the viewer is almost forced to submit to Moore’s thesis.”

“He blames all of the industry’s bad behavior on the profit motive. But one of his biggest villains — Kaiser Permanante — is a nonprofit. And while he does a gut-wrenching segment on Los Angeles hospitals dumping homeless patients back on the street after they are treated, he mentions only in passing that one of the guilty parties is a public hospital owned by the government. Aren’t those the same people he wants to put in charge of all of our health care?”

“He tells the gripping story of a man who died of cancer after his health plan refused to pay for experimental treatment. But he never asks his audience to consider that no matter what kind of system we have, it will not provide unlimited care, especially experimental care. There will always be a gatekeeper. Under a single-payer plan, that person would be a government employee — some might even say a bureaucrat. Would that really be any better?”

For better or worse, Sicko is a film all of us concerned about health care reform are going to have to see. Hopefully we can view it with as open a mind, and as deep an insight, as Weintraub.

Here’s a pdf of the column: Daniel Weintraub: “Moore on health insurance: Entertaining but flawed” 

Health Care Reform Blast from the Past

Back in April 1993 I was a member of the California Commission on Economic Development and a partner of a small group general agency, West Coast Multiple Services (later renamed Centerstone and then, a few year’s later, rebranded as Benefitmall). Small group health care reform, known as AB 1672, was to take effect on July 1st of that year and promised to reconfigure the small group health insurance marketplace. As president of CAHU at the time, I represented agents during negotiations over the legislation. And West Coast Multiple Services had made educating agents, carriers, the public — and sometimes even the regulators — a major priority.

So on April 12th of that year, West Coast Multiple Services, the Economic Development Commission, the Los Angeles Business Journal, the Small Business Times and California Broker Magazine sponsored a “Summit on Health Insurance Reform: AB 1672” at the Biltmore Hotel in Los Angeles. I was googling some things the other day and came across an article in the Business Journal describing the event.

Reading it was a bit spooky. Not only were some of the issues and arguments similar to what’s happening in Sacramento today, but so were some of the players. For example, one of the speakers was Kim Belshe, then Deputy Secretary of the California Health and Welfare Agency; today Secretary of the Health and Human Services Agency where she helps spearhead Governor Arnold Schwarzenegger’s health care reform efforts.

What follows are some excerpts from the article:

Lieutenant Governor Leo McCarthy, chair of the California Commission for Economic Development opened the event noting the importance of containing the underlying cost of health care and the need for providing affordable health care for the state’s six million uninsured.

Kim Belshe focused her remarks on the purchasing pool created by AB 1672, the Health Insurance Plan of California (“HIPC”) as a significant test of the validity of “Managed Competition.” (14 years later the results are in and the HIPC is out of business. Ironically, however, purchasing pools, now renamed “Exchanges” or “Connectors” are a central component of the health care reform plans offered by Governor Schwarzenegger, Speaker Fabian Nunez and Speaker Pro Tempore Don Perata.)  

Martyn Hopper, California State Director of the National Federation of Independent Businesses, commented on various “pay or play” proposals being debated in Washington. Hopper claimed such plans “not only makes no economic sense, but would spell economic ruin for California.” (Today “pay or play” is a key element of the major health care reform plans.)

Dr. Richard Corlin, Immediate Past President of the California Medical Association emphasized the importance of wellness programs and cost containment. (Health care costs, of course, have not been contained, and is too often overlooked in the health care reform debate).

In my presentation I identified three elements of comprehensive reform: creating a stable and fair marketplace; effectively containing health care costs; and achieving universal access to coverage. (CAHU’s Healthy Solutions health care reform plan continues to focus on these elements.) Among the cost containment efforts I described was what’s now known as experience-based medicine — a topic that’s still on the table.

As for universal access, I predicted that, once a fair and stable market was in place, an employer or individual mandate “or, more likely, a combination of the two” would be required. But I warned that imposing mandates to buy without first controlling underlying health care costs would unfairly require consumers to “sign blank checks for ever-more expensive coverage.” (I’m not sure we have a fair and stable market, but the mandates are coming).

I also warned against requiring small employers to buy exclusively through government run purchasing pools. I emphasized consumers desire for choice, not only in selecting their doctors and insurers, but as to how they purchase their coverage, as well.

Stumbling across this article prompted a pleasant jaunt down Memory Lane. It also was a reminder that the challenges we’re tackling have been around for a long time. And we’ve known equally as long what’s required: cost containment; a fair market that preserves choice; and tough decisions.

We’ve made some progress: AB 1672 has been extremely effective in eliminating many of the market abuses in the small group market prevalent at the time. There’s a lot more to do, however. Hopefully we’ll build on the process which generated AB 1672. Assemblyman Burt Margolin, who chaired the conference committee which produced the small group health reform bill, worked tirelessly to make the process an inclusive one that took all perspectives taken into account. Most significantly, he kept the negotiations focused on addressing problems, not on scoring political points.

Reading the article made clear the current debate could use the kind of leadership Burt Margolin displayed 14 years ago. Whether such leadership exists in Sacramento today remains to be seen.

Here Comes Michael Moore

Get ready. Michael Moore, the director of Farenheit 911 and other documentaries is taking on America’s health care system. His stated goal for his new film, Sicko, is to do away with insurance companies, turn all health care coverage over to the government and regulate pharmacies as if they were utilities.

The movie will be in theaters everywhere come the end of June and I can’t comment on the details until I’ve seen it (I know that doesn’t stop others, but I’ve never understood how someone can criticize a piece of work they’ve never seen). I have seen the trailer, however, and read interviews Moore has given. It’s clear this film will be like his others: blatantly confrontational, heavily anecdotal, and chock full of “gotcha’s.”

So, saving comments on the content of the film for a after-release post, it seems to me the film will be a two-edged sword. On the one hand it will raise awareness of the need to fix what’s wrong in the current health care system. On the hand, by relying on anecdotes to make its case for reform, it may lead distract from reasoned, thoughtful debate.

The power of movies is immense. They not only help people think, they help them to feel.  Moore is an artist and his use of sight and sound brings his anecdotes home. He makes his anecdotes compelling and motivating.

He’s not alone in this. You won’t see Stuart Browning of On the Fence Films sitting down with Oprah Winfrey or Jay Leno (Moore is already booked). But his short films taking to task the Canadian single-payer system are as devastating as Sicko is likely to be. And like Moore, they are emotionally charged.

Bringing emotion to the health care reform debate is important — but if meaningful solutions are going to emerge it will take thoughtful analysis, vigorous debate among people of good faith with open minds, and the leadership required to make difficult choices. Hopefully the cinematic fireworks sparked by the Moores and Brownings will focus attention and inspire the passion to face up to problems in the health care system. To the extent they distract and polarize, however, they will make reaching a solution harder and the debate uglier.