Medical Cost Containment Drum Beat Continues

File this under “Better Late Than Never” but the drum beat aimed at focusing attention on the need to constrain medical costs in America continues.

Earlier this week I wrote about Sacramento Bee columnist Daniel Weintraub’s posting a reality check for California lawmakers that all the insurance carrier bashing they’re enjoying will do little to address the rising cost of health care. That post also reported on Warren Buffet’s advice to the president to do much more to rein in costs.

Then, yesterday, President Obama indicated he’ll be incorporating into the legislation he’ll be proposing later today some of the medical cost cutting ideas put forward by Republicans during last week’s bipartisan health care reform summit.

And the beat goes on. CNN has been reporting this week on extraordinary and wasteful costs in America’s health care system. $140 for a single Tylenol pill? $1,000 for a toothbrush anyone?

Some of the unnecessary expenses are mistakes made by the hospital that slip past health insurers’ claim examiners (a Georgia patient billed for 41 bags of IV solutions for an emergency room visit that lasted two hours in which just one bag was used). But some of the outrageous expenses are intentionally designed “to make up for lower payments the government pays through Medicare and Medicaid.”

The CNN report goes on to cite, however, a Pricewaterhouse Cooper’s Health Research Institute finding that $1.2 trillion of health care spending in the United States – roughly half – represents waste. This analysis includes in the definition of waste defensive medicine, preventable hospital readmissions, medical errors, and unnecessary emergency room visits. (The Congressional Budget Office has estimated that 30 percent of America’s health care spending is wasted or spent on low-value services using a less broad definition of waste.

There hasn’t been this much talk focused on the need to reduce medical costs since Dr. Atul Gawande wrote about the difference in Medicare spending experienced in two Texas cities, McAllen and El Paso. That was right before attention shifted to the misbehavior of demonstrators during Congressional Town Hall meetings and the debate in Washington pivoted to health insurance reform rather than health care reform. And I am not suggesting that the need to focus on medical cost containment undermine efforts to reform health insurance company behavior where that’s necessary.

Nor am I saying that the health care reform bill the President will put forward today does enough to attack skyrocketing medical care costs. But it will be a start. And it will do more than the proposal he unveiled last week or those previously passed by the Senate and House of Representatives. And that’s a good thing. Let’s just hope it’s the beginning of the effort to reduce health care costs and not the end of it.

Bashing Insurance Companies May Be Fun, But Avoids the Real Issue

That health insurance carriers were ascending to the throne of political piñata in the health care reform debate has been apparent for some time now. Last July President Barack Obama began referring to health care reform as health insurance reform. A couple of weeks later Speaker Nancy Pelosi described insurance companies as “almost immoral” for opposing the creation of a government-run health plan. That insurance companies were to be cast as the villains was pretty much inevitable. People like and trust hospitals and doctors much more than health insurance carriers. And pharmaceutical companies, while profiting far more from health care than medical carriers are a bit removed from people’s daily experience. The reality is the only group Americans trust less when it comes to health care reform than insurance companies are Republicans in Congress.

Compounding the situation the health insurance industry has had atrocious timing. America’s Health Insurance Plans (AHIP), the industry’s trade organization, released a report warning that health care reform plans being considered by Congress would dramatically increase medical insurance premiums for many Americans. The message was hardly welcomed by Congressional Democrats, but what infuriated them was the timing. The Senate Finance Committee was about to vote upon the closest lawmakers had come to a bipartisan agreement (meaning at least one Republican voted for it. The vitriol the report inspired went far beyond its substance.

Then there’s the timing of recent rate increases in the individual health insurance market. While Anthem Blue Cross’ individual market increase first captured the public – and lawmakers’ attention – it’s now clear several carriers have levied double-digit premium increases in multiple states in both the individual and small business market segments. Many political observers believe that these rating actions breathed new life into flagging reform efforts.

But the 24-hour news channels and other media along with their innumerable pundits need fresh meat. Their job is to keep people watching (or reading) so the commercials don’t run together. There’s only so many ways you can use “insurance company” and “venal” in the same story before it gets old. Insurance company bashing will continue, but there are signs that serious attention may be given to aspects of America’s health care system reform beyond insurance markets.

Consider: Daniel Weintraub is one of California’s most respected journalists. In addition to reporting for and providing opinion pieces to the Sacramento Bee he maintains an excellent blog on health care issues, HealthyCal.org. In the past, Mr. Weintraub has been hard on insurance carriers. Nor is he a fan of the health care status quo in this country. So it must have been a surprise to even him when he wrote a post that makes clear that bashing health insurance companies is not the same as enacting meaningful health care reform.

Mr. Weintraub begins his post citing the political travails California insurance companies face in the state today, ranging from separate investigations by Attorney General Jerry Brown and Insurance Commissioner Steve Poizner to a host of legislative hearings led by lawmakers who, like the Attorney General and Insurance Commissioner, are seeking higher office in this election year.

While noting the entertainment value of this spectacle and recognizing that “it might actually produce information relevant to the health care debate,” Mr. Weintraub makes clear that “health insurance company profits and administrative costs remain a relatively small factor in driving the cost of coverage skyward. The biggest reason that health insurance is getting more expensive,” he continues, ”is that health care is getting more expensive.”

The post includes a useful pie chart describing national health expenditures as broken down by the US Centers for Medicare and Medicaid Services. Of the $2.3 trillion on health care Americans spent in 2008, $159 billion (approximately seven percent) “went to private insurers after deducting all the costs they pass through to the doctors, hospitals and other health care providers.” Put another way: “health care costs nearly doubled between 1998 and 2008, increasing by 96 percent. If we had eliminated private insurance companies in 1998, and assuming they provide no benefit in managing costs, health spending still would have increased by 83 percent during that decade.”

None of this means that health insurance companies and their behavior should be ignored nor their misdeeds forgiven. But as Mr. Weintraub notes, “when this election year is over and the current political bash-fest comes to an end, the core costs of health care will still be there, and chances are they will still be rising.”

That a respected journalist is noting that attacks on health insurance companies are diverting attention from other serious issues with America’s health care system is significant. But he’s not alone. According to Politico.com, Warren Buffett is advising President Obama “to scrap the health care bill and start over” because the legislation “does not focus on controlling costs.” (He went on to say that he’d vote for the Senate bill as opposed to maintaining the status quo).

President Obama and his allies will argue that their legislation does attack rising costs – and they have some evidence to back their claim. But few could honestly say it goes far enough. And while good starts are important, the question is whether the Administration and Congress have the political will to follow-up with meaningful cost containment measures.

Attacks on the health insurance industry will continue. Every drama needs a villain and in this particular theater, carriers are the bad guys. But that folks like Mr. Weintraub and Mr. Buffet are calling out politicians for failing to more fully address the most critical issue undermining America’s health care system – runaway medical costs – is an encouraging sign.

More on the Likely Special Session/Initiative

It all does seem to be coming together. Not having seen the details of the deal, it’s tough to know how much is good and how much isn’t, but a deal seems to be coming.

Daniel Weintraub of the Sacramento Bee has a great summary of what’s shaping up. It describes a deal pretty much along the lines of what I wrote about yesterday. The Democrats pass bills. The Governor vetos them. In a special session they produce compromise legislation which is contingent on an initiative passing in 2008 to fund the reforms. (The initiative is important for two reasons: it sidesteps the need for a two-thirds majority in the legislature and it allows the Governor to declare it is a post-partisan compromise because ordinary Republicans — not necessarily elected ones — will vote for it).

What we’ll be looking for this week is the details. Will it still empower the Managed Risk Medical Insurance Board to impose a health care fee on all businesses in the state without legislative oversight? Will the requirement for all individuals to buy coverage really be enforceable? Will it segregate individuals receiving premium subsidies into a state-run pool or will it allow them the same freedom of choice that their non-subsidized neighbors will enjoy?

Ideally, a draft of compromise legislative language will circulate this week while the vote/veto dance waltzes on. Since I’m on a role, prediction wise, I’m guessing the special session would be scheduled to start on September 24th. This has two benefits: staff will have more time to flesh out and fine-tune the detailed language of the compromise and its after Yom Kippur.  As an added bonus it will hopefully give the public some time to digest the compromise and offer ways to improve it. Whether lawmakers will be open to suggestions on how to improve their compromise remains to be seen. Being a glass-half-full kind of guy, I’m hopeful.

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”