Benemax

This blog has highlighted several successful Private Sector innovations in the health care arena…and we plan to do more of that in the near future. But today we want to showcase an innovative program that has emerged form the Public Sector. We are indebted to Grace Marie Turner of the Galen Institute for this heads-up; she writes in part:

“The State of Utah has created a health exchange to facilitate access to health insurance for small business employees, proving that 1) state flexibility is vital in health reform, and 2) that we absolutely, positively don’t need the new federal “public plan” that Speaker Pelosi continues to demand…

The exchange is run by just two (that’s right, two) Utah officials, with almost no new taxpayer money. It is basically an Internet-based ’switching station’ that allows employers to offer a defined contribution for health insurance to their workers. Employees can then use the money to choose from a range of private coverage options, from HSAs to HMOs, which they can purchase with pre-tax dollars and combine with money from a spouse’s employer or other funds…

My big fear is that innovative ideas like this would be annihilated by the heavy-handed, top-down, legislative monstrosity making its way through Congress. The Utah exchange is a market-based solution to help small businesses offer more affordable health insurance, and public and private officials have been working together for several years to get it right. The nuances and complexities of developing this program are significant and take into account the resources and challenges unique to Utah. There is absolutely no way Washington could come up with this.”

Senator Kennedy was undoubtedly a man of great ability as well as great affability. He had a long and distinguished carrier and put his imprint on innumerable pieces of legislation that have helped shape the fabric of our society.

Undoubtedly, he believed that the policies he advocated were good for his contituents, for his country and for the world as a whole. But he was, in the main, wrong.

“He was wrong?” Shouldn’t I say, “In my opinion he was wrong?” Well, of course, it IS my opinion but I feel comfortable sticking with my original version. Here’s why?

When the various so-called “Progressive” political movements sprung up in the latter half of the 19th and the first half of the 20th centuries, there were good reasons for well informed and well intentioned people to adopt these ideologies. The Industrial Revolution had centralized economic power in the hands of a few large corporate enterprises. Big seemed better and, if not always better, at least more efficient. Why shouldn’t the same prescription work for government?

For more than 100 years, this argument remained powerfully attractive. But in recent years, three things happened that change everything. First, it is manifestly obvious now that big government simply doesn’t work…all the way from the Soviet experiment to “Cash for Clunkers”. 

Second, advances in engineering and social sciences have demonstrated that genuine order evolves from the ground up, not from the top down. Attempts to regulate any system, any entity too tightly will always result in inefficiency and often in total breakdown.

Third, the days of economic centralization are long since over. Even the largest companies have found that big isn’t always better. They have adopted decentralizing strategies ranging from profit center accounting to outright divestment. The coup de grace for central planning is the internet. Today, everything from manufacturing to retail to information to research is decentralized.

In the real world, the individual and the community are sovereign once again. But for some reason, many of our politicians, including (sadly) Senator Kennedy, did not and do not get the message. If government is to play a positive role in our social future, it must redefine itself in terms of individual choice and free association. Otherwise, we are headed toward an era when government’s aspiration for power clashes head-on with the economic reality that underlies society as a whole. Such conflicts are the stuff of history. At best, they are immensely wasteful; at worst they can tear the social fabric of a society apart. And in the end, political power (no matter how great) always gives way to economic reality (e.g. Eastern Europe, c. 1990).

And so we are brought back to Health Care Reform. Those advocating that the U.S. move toward a centralized health care system at a time when all central planning models have failed (other countries are trying to move away from them) and at a time when the rest of the economic world is moving quickly toward the empowerment of individuals and small groups are tragically out-of-touch with the underlying economic reality and social order of our time.

Phil Kerpen of Americans for Prosperity echoes the concerns expressed in this blog, saying that the “public option” is a distraction from the real threat in the current bills: mandatory coverage! He states, “Mandates–either an employer mandate that requires all employers to provide health insurance (or) an individual mandate requiring all Americans to have health insurance…are, in my view, now the biggest threat we face.”

He continues, “The insurance companies will insist on, and probably receive, an individual health insurance mandate that will make it illegal not to buy their products.”

He adds, “The big insurance companies will spend tens if not hundreds of millions of dollars supporting a mandates bill, because their smaller competitors will be regulated out of business while they can mint huge profits from all of the new customers now required by law to buy their products.”

The problem, in our opinion, is NOT that people will be mandated to have coverage; the problem is that the details of that coverage…and where you can buy it…will be micro-managed by the government. The bills before Congress today contain provisions that would require all Americans to purchase coverage richer than what the median American has today. And these bills would restrict employers from using creative methods to finance those benefits. These provisions alone could increase the cost of pre-retirment health benefits in the U.S. by as much as 33%. Plus, they would rob employees of all incentive to get fit, stay healthy and consume health care wisely and they would likewise rob employers of the incentive to promote health & fitness and encourage consumerism.

There is NO SOLUTION to the health care problem in the U.S. that does not include a greatly increased emphasis on fitness, healthy lifestyles and consumerism. Fortunately, this is precisely what the marketplace is starting to deliver. Tragically, Health Care Reform threatens to abort this process, thereby killing the last, best hope we have for a satisfactory resolution of this issue.

Once we’ve moved past the Public Plan Option, the next crucial Health Reform topic will be so-called “mandates” — a mandate that every individual purchase some sort of health coverage and/or a mandate that every employer (or most employers) offer and contribute toward some sort of health coverage for their employees. 

Benemax takes no position on mandates per se. Our concern is not the form of the mandate but the content of what is mandated. Many in Congress would like to use mandates to define “The Great American Health Plan” with detailed prescriptions for everything from co-pays to deductibles to covered services. This is the worst possible thing that we could do.

Intelligent health benefit design varies from year to year, from company to company and even from member to member. It takes account of the unique needs and values of each person and each group. Plus benefit designs can include powerful incentives:

> for members to get fit, stay healthy and consume health care wisely; and        > for employers to promote fitness, offer education and empower quality care.

Policy wonks tend to look for “the one right answer” to any social problem (e.g. the problem of health benefits). In fact, the one right answer is that there is NO ONE right answer. Groups are different, people are individuals and times change!

The one right answer is ALL of the unique answers that are right for specific groups, for individual members and for certain time periods. In future posts we will set out a framework that would permit meaningful mandates but not destroy incentives, discourage innovation or outlaw customization.

“Health Care Reform” covers a wide range of issues and proposals. Basically though, they can be divided into three piles:

In Pile #1 put Medicare payment reform, Medicaid expansion and Health Insurance underwriting reform. These constitute the low hanging fruit in this debate. While people disagree about the details, most people agree that action should be taken in these three areas. Such action by itself could go a LONG way toward solving the problem of the uninsured.

In Pile #3 put the Public Plan Option…all by itself and  deservedly so. (Sometimes it’s ok to put “Baby in a corner”.) This idea had been discussed ad nauseum in this blog and elsewhere. In our view, it is time to declare the Public Option “DOA” (previous post) and move on to other matters.

That leaves Pile #2. And this is where we should be focusing our attention right now! Pile #2 consists of the individual mandate and the employer mandate. Unlike the Public Option, what’s important here is not whether we have a mandate but what sort of mandate we have.

Historically, Congress loves to micro-manage and it will be tempted to use the mandates to define every single detail of health care coverage in the US: maximum co-pays, maximum deductible, out-of-pocket maximum, Rx drug benefits, covered services, etc… Congress also may choose to limit the ways an individual or an employer can meet these requirements (e.g. via a fully insured contract purchased through an insurance exchange).

Mandates of this sort would be just as disasterous for the future of health care in the U.S. as the public option would have been. They will drive costs through the roof, put an end to private sector innovation in health plan design and eliminate incentives for employers and individuals to pursue fitness and practice consumerism.

Look for more on this topic in subsequent posts!

Everyone knows the patient is on life support. Last week we were called bed side to say our last good-byes. But the patient rallied, albeit weakly. Today, the patient lives on…but with no real hope of recovery.

Isn’t this the very patient health care reformers want to let die? They apply that logic to Granny…but apparently not their own legislative off-spring.  Isn’t it time to invoke the logic of the so-called “Death Panels” and let the Public Plan Option enjoy “death with dignity?”

The Public Option has become a distraction in the debate over health care reform. There are serious issues that deserve the spot light of public attention: Medicare payment reform, the expansion of Medicaid, insurance underwriting reform, an individual health insurance mandate and an employer health insurance mandate.

These topics deserve the same public scrutiny that the Public Option received…but they won’t get it so long as the Public Option hogs everyone’s attention. But wait! Could THAT be the very reason Obama & Pilosi won’t let it pass away? Or is that too cynical?

The Beltway was abuzz this weekend with talk that the White House had backed away from its insistance that Health Care Reform include a Public Plan. Faced with plummeting poll numbers, the administration seems to be taking the possibility of outright defeat seriously for the first time. Talk has turned from blitzing a total overhaul through Congress to salvaging whatever can be saved of the original proposals.

On the other side, left-of-center Democrats are already reacting angrily to this talk of compromise. There’s nothing official yet, but here’s some of what CNN had to say this morning:

The administration stepped back from its insistence on such an (public) option over the weekend, with Obama saying it is “not the entirety of health care reform.”

His spokesman, Robert Gibbs, said the president could be “satisfied” without it. And Health and Human Services Secretary Kathleen Sebelius told CNN’s “State of the Union” that a public insurance plan is “not the essential element.”

(However), former Democratic Party Chairman Howard Dean, a doctor and one-time presidential candidate, told NBC’s “Today Show” on Monday that he believes a public option “is the entirety of health care reform…” (and)
a petition on his Web site reads, “A public option is the only way to guarantee health care for all Americans and its inclusion is non-negotiable.”

Democratic Sen. Kent Conrad, one of six Senate Finance Committee members who have been trying to hammer out the first bipartisan compromise bill, said Sunday a public option simply won’t make it through Congress.

“The fact of the matter is there are not the votes in the United States Senate for a public option. There never have been,” Conrad told “FOX News Sunday.”

Instead of a public option, the negotiators are considering a plan proposed by Conrad to create nonprofit health insurance cooperatives that could negotiate coverage as a collective for their members.

We started our blog a couple of months ago in an effort to keep members of the Benemax Community informed on developments in the Health Care Reform debate. But now the nightly newscasts are doing our job for us! Some commentators say they haven’t seen the electorate this aroused…or this divided…since the Vietnam War.

Amid crashing poll numbers (details below), Democrats are struggling to find a way to reverse the momentum. Nothing seems to be working. Neither Obama’s Town Meeting “soft sell” nor Nancy Pilosi’s “hard sell” is resonating. In fact, Pilosi’s tactics may be backfiring.

Here’s the latest:

53% of American voters now oppose the Health Care Reform legislation currently under consideration; 42% favor it.

Even more significantly, 44% “strongly oppose” the legislation while only 26% “strongly favor it”. That’s almost a 2 to 1 margin among people with strong opinions on the subject.

Disturbing to moderate Democrats from “swing districts”, the public now trusts Republicans more than Democrats on Health Care (44% to 41%) and plans to vote for Republicans over Deomcrats in the next Congressional election (41% to 38%).

Perhaps most telling of all, 62% of self-desribed “Independent Voters” oppose Obama’s plan.

President Obama has detailed a list of eight consumer protections that he believes need to be included in any health care reform legislation:
1) individuals must not be refused coverage because of their medical history, 2) there must be an annual limit on how much can be charged for out-of-pocket expenses,
3) insurance must fully cover regular checkups and tests that help prevent illness,
4) insurance coverage must not be dropped or reduced for individuals who become seriously ill,
5) individuals must not be charged higher premiums because of their gender,
6) there must not be an annual or lifetime limit on insurance coverage,
7) children must be eligible for family coverage through the age of 26, and individuals must be allowed to renew any health insurance policy as long as they pay their premium in full.

In principle at least, we have no objection to any of these points and, I suspect, many of the individuals and groups that have been critical of the legislation currently before Congress would be willing, even eager, to sign on to a compromise built around these policies.

One caveat, however: it is important that the out-of-pocket limit referred to in #2 (above) not be set too low. We would recommend following the current guidleines for Health Savings Account compatible policies. It is also essential that individuals and employers be permitted to satisfy this requirement using any combination of insurance, self-insurance and equity accounts.

The Kaiser Family Foundation has generated this comparion between the Tri-Committee House Plan and the HELP Committee Senate Plan. Click here:

 http://www.kff.org/healthreform/upload/healthreform_tri_full.pdf

Of course, we expect to have a third plan on the table by mid-September. This Plan from the Senate Finance Committee may be very different from the other two and may have some Republican support. Stay tuned.