Friday, July 27, 2007

Questioning "Illinois Covered"

Let me start by saying I'm a strong supporter of universal health care. The lack of universal health care is one of the most serious challenges - and serious disgraces - facing our nation.

How big of a problem is it? Well, we all know thanks to the Governor's incessant talking points that 1.4 million Illinoisans lack insurance coverage.

What many folks are unaware of is that health care costs currently eat up 16% of the U.S. Gross Domestic Product (GDP), and federal experts estimate that health care costs will consume 18.4% of the U.S. GDP by 2013.

For comparison, the 29 other developed nations in the OECD (Organisation for Economic Co-Operation and Development) spend an average of 8.3 percent of their GDP on health care. Oh yeah, and they live longer on average too.

Those inefficiencies in health care spending sap other consumer spending and constrain our ability to invest in education, infrastructure, and the other resources America needs to compete in the global economy.

Why Illinois Covered Doesn't Work
Clearly, the problem isn't that we aren't spending enough on health care, which is why I have a problem with "Illinois Covered." Illinois Covered does nothing to address the underlying problems that are driving up the cost of health care in Illinois and across the U.S. Instead, it just throws more money at the problem.

And whether "Illinois Covered" raises taxes through a Gross Receipts Tax, a payroll tax, a cigarette tax, or a tax on people who can't do math (aka gambling), it still represents the largest transfer of public dollars to the already profitable private insurance industry in Illinois history.

It's no wonder the insurance companies support Illinois Covered.

So, if throwing more money at these highly profitable insurance companies isn't the answer, what is?

Well, for starters, let's finish the job that we started on HMO reform a few years ago.

Let's ban insurance companies from basing their compensation for utilization review doctors based on the percentage of claims they deny. Rewarding insurance companies for denying coverage doesn't make sense.

Let's implement the same reforms that we implemented a few years ago to end price-gouging by malpractice insurance companies, requiring them to make their rate-setting data available to other companies, requiring rate increases to be approved by the Dept. of Insurance, giving the Dept. of Insurance the authority to order rebates to the folks they insure when price-gouging is discovered, and making sure that the hearings regarding rate-setting are transparent and open to the public.

For the long-term, let's recognize that health care shouldn't be treated as a commodity, like bubblegum for example. Several years ago Illinois enacted the most sweeping reforms of adoption in the country because it recognized that adoption shouldn't be treated like a commodity. Some of those reforms would be well-applied to health insurance, like limiting executive compensation and ultimately banning for-profit companies from engaging in the health insurance business.

The folks in the health insurance business aren't all bad people, but the health insurance industry has become a rigged racket throughout the years. In days of yore, health insurance worked alot like roulette. Everybody put their money on the table, the ball would spin, and when it dropped randomly, insurance companies would pay out claims to some people and pocket the premiums from the rest.

As any actuary worth a grain of salt will tell you, it no longer works that way. Health insurance companies have amassed so much data on us, they know who the ball is going to drop on. They know, but we don't.

To make matters worse, they've become so efficient at limiting, delaying and denying payouts, that just because your number comes up doesn't mean they're going to pay out, at least not in full or any time soon.

Don't get me wrong, I don't blame the insurance companies or folks who work for them, many of who I believe privately wish we'd adopt a better way. It's not their fault that they're the House and the odds are stacked in their favor, its not their fault that they're making big profits because that's what for-profit companies are supposed to do. We're the ones who've chosen to gamble on health care, we're the ones to blame, and we're te ones who have to fix it.

Health Insurance Companies Aside

All the blame for skyrocketing health care costs doesn't lie with the insurance industry.

Medical Information Systems
With all of the advances in medical diagnostic and care technology, the health care industry lags behind every other economic sector when it comes to the application of information technology. That's pretty stupid when you consider just how important getting the right information and getting it fast is to health care.

The answer is electronic medical records, which would create a seamless web connecting insurance companies, doctors and hospitals, while at the same time protecting patient confidentiality and ensuring information was shared on a need-to-know basis only.

According to none other than Newt Gingrich, Electronic Medical Records have the potential to cut $140 million a year in waste from our health care system. At the urging of State Rep. Julie Hamos, Gov. Blagojevich's "Illinois Covered" proposal included an EMR initiative. However, that EMR initiative was a mere task force, and contained no future funding mechanism for funding EMR. That doesn't go far enough in my book, and I'd recommend that any health care proposal include an EMR funding mechanism. One potential revenue source is to seek a waiver from the federal government to use a portion of the state's Medicaid reimbursement to implement EMR at hospitals that have the highest number of Medicaid patients (perhaps requiring matching funding from hospitals on a sliding scale). The cost savings reaped from implementing EMR at those hospitals could then be used to roll out EMR at additional hospitals, and then doctor's clinics, all the way down the line.

Doctor and Nurse Shortages
High labor costs are part of the reason for skyrocketing health care costs, and a shortage of doctors and nurses is partly to blame. Blagojevich and lawmakers should be commended for investing more in nursing training, because increasing the supply of nurses will eventually bring costs down. However, very little is being done to increase the supply of doctors, and the federal government predicts that the U.S. will face a shortage of 85,000 to 200,000 doctors by 2020 unless action is taken soon.

Contrary to claims by the Illinois State Medical Society, the American Medical Association claims that the doctor shortage in Illinois is no worse than the rest of the nation, with 2.6 doctors per 1,000 residents. That's little comfort though, because according to OECD data, the rest of the developed world averages 3.1 doctors per 1,000 residents. The U.S. also has one less nurse and one less hospital bed per 1,000 patients, according to the OECD.

The answer is for Blagojevich and lawmakers to match their commitment to training more nurses with a commitment to training more doctors. Putting insurance companies in their place - a top reason doctors are leaving the profession and new doctors aren't entering - is part of the answer. But increasing scholarships for current college students to encourage them to pursue an M.D., and eventually rethinking our entire education system from high school through college should also be on the table.

Invest more in Public Health
Illinois spending on public health programs is woefully inadequate. Public health programs bring relatively low-cost prevention, early diagnosis and early treatment to the masses which provide astronomical cost savings to the entire health care system, not to mention the cost savings for employers from reduced employee health costs and sick days which reduce productivity. Illinois should ramp up public health spending - doubling it over the next ten years would be a great start. Before everyone faints from sticker shock, the Governor's FY '07 proposed budget for the Illinois Department of Public Health was $397 million. Increasing that budget $40 million a year over the next ten years is more than within reach.

Some Unsolicited Advice for the Governor
The Governor is in desperate political need of some major face-saving. Yet even his latest "Illinois Covered" proposal, with a scaled back budget and less ambitious launch date, is meeting stiff resistance. Part of that resistance comes from those who are loath to launch a new government mandate whose future costs are nearly impossible to predict, creating future obligations for lawmakers down the road. Contrary to the Governor's thinking, the problem isn't that lawmakers don't care about rising health care costs. They do. But they're also concerned about the state's ability to respond to future needs, and locking the state into big, unforeseeable obligations down the road robs the state of the flexibility to respond to future needs.

My unsolicited advice to the Governor: look at these ideas, and bring everyone in your administration back to the drawing board. Take the lawmakers concerns into account and come up with a new plan that comes at health care from a different angle. That doesn't mean you have to give up on "Illinois Covered", you can hold onto that possibility for the future, promising "not to give up the fight," while still making significant progress for Illinoisans and snatching some victory from the jaws of defeat.


Anonymous,  4:19 PM  

The central problem with your article here is that you haven’t really suggested a health care plan. You just gave a list of a couple initiatives that will improve health care delivery.

That’s great, and some of those should probably be done. But it isn’t a health care plan.

It doesn’t do anything to provide coverage to more people.

It doesn’t do anything to make health care affordable.

Small businesses will still be screwed. People who don’t have employer coverage will still be screwed. People who can’t afford their current employer coverage will still be screwed.

How would YOU create a plan that would do all that stuff? Maybe I just don’t know what the other ways are to accomplish these end goals?

Yellow Dog Democrat 5:04 PM  

mark -

Reducing the overall cost of delivering health care does make health care more affordable, and thereby enable more people to purchase coverage.

I'll agree its not a "health care program", but it certainly is a "health care plan." Not every problem facing society requires the creation of new "programs", although old school liberals often confuse the two.

We just raised the minimum wage and the incomes of tens of millions of Americans without creating a new "program."

Anonymous,  5:49 PM  

ideas that reduce the cost of health care should be explored. I still believe that health care needs to be done at the national level.

Yellow Dog Democrat 5:53 PM  

fed up -

Your view comports with the view of most voters in Illinois, which is why the gov is having a tough time drumming up support from lawmakers. While health care affordability is one of the top concerns of voters, two-thirds think its a problem for the federal government to address.

The top concerns that voters want state lawmakers to address are education and transportation, which they see as state responsibilities. Here, I think lawmakers have their finger on the pulse of voters, while the governor is out touch.

Out of touch, or still more interested in establishing a national platform to run for the White House than working on state problems, you be the judge.

Anonymous,  6:56 PM  

I'm not sure why you think insursance companies are wanting this new plan. I can only name one and they are not a major player. Next, only a third of the 1.4 million are in dire need. The neediest already qualify for an existing plan, another third have the means but choose to not purchase a policy. Leaving the tweeners. ICHIP, if funded at a higher rate by the state could and would prove to be a managable option. No start up cost, it uses BCBSIL networks, Make it affordable for those with preexisting uninsurable conditions. It's just not sexy enough for our Governor to go that route. YDD, insurance protects the unknown. That's how it works. If you need treatment and are without a plan, you need cash, charity, or welfare. Cold, maybe, but we are at a point in Illinois where we need to continue on a path where less and less are productive or get on the path of creating more jobs. This will drive up competition and force employers to offer benefits or lose their work force. I won't even start on medical cost transparency, Rx, Medical Mal, or the lack of a long term plan to increase medical professionals. Nice blog, but don't be convinced that you 100 percent accurate, you're not.

Anonymous,  7:42 PM  


Just your proposals are good. But they won't lower healthcare costs.

They may keep them from rising at 10-20% a year (maybe 5-10%), but they won't lower any costs.

It just isn't comprehensive enough.

And it doesn't need to be a new program. I never said that.

It needs to be a plan - it could be regulatory, it could be programmatic, it could be investments, it could be bureacratic, etc.

But, again, the stuff you mention wouldn't really make a change. And you claiming it is a start, or that it is a national problem, is just an excuse so that you don't have to make a hard choice.

steve schnorf 1:06 AM  

Dog, I'm interested in the comment on the 1.4m uninsured. How does it size up with your understanding of the scope of the problem?

I remember from my days in government that we always knew that there was a sizeable number who were eligible for existing programs but not enrolled. Are they only technically "uninsured"? How many of them are there? Rauschenberger used to argue that we shouldn't count those people, because if they had a medical need, they simply enrolled, or were enrolled by a provider.

And it's my recollection that some number of the uninsured were believed to be there, effectively, voluntarily, especially unmarried young adults, in the 20-30 age range.

How many people are there who are really uninsured because of their inability to either qualify for
or afford insurance? What percent of those might be eligible for the current CHIP program if the premium was affordable?

Inquiring minds want to know.

Anonymous,  9:41 AM  

An easy way for the state to increase the number of phyisicians is to allow Phyisicians from Puerto Rico to be licenced in our state.They would come to Chicago and other parts of the state and would improve quality and access to more patients.But the state and IMS would'nt do it because they can't think out of the box!!

Anonymous,  12:25 PM  

Areas for vast improvement:

Surgical procedures. The all in cost of equivalent procedures in India is less than 20% of that in the United States. Cheaper to fly to an accrdited location on the subcontinent Business Class round trip by a good bit. Insurance companies should consider using this vehicle to increase supply and drive prices down.

Surgical procedures, inpatient and nursing home care. Time to consider using a government agency to buy blocks of care in advance, securitize them and sell them off to insurance companies, etc.

Outpatient care. We have to go storefront cor this with PA, technicians and nurses computer connected to a specialist who can observe the CAT, ultra sound and guide the lower cost people doing the work. The standard out to be that anything a battlefield medical corpsman can do can be done in a neighborhood outpatient facility.

Now you have significant savings.

Extreme Wisdom 10:41 PM  

Our system is floundering for the same reason single payer is floundering across the globe.

Third Payer (insurance) and Single Payer disconnect the consumer from the provider. That is why the fail.

We need to bring healthcare back into the hands of the individuals and out of the hands of Ins. Ind. and Gov. bureaucrats.

At the national level, Sens. Wyden and Bennett have proposed an exellent idea that FINALLY starts to address the issue.

As for the debate on whether go go off the single payer cliff, by all means, let's have it.

We spend more on health care here because we CAN! We are getting older, and the aged are pretty damn well off.

Do Europeans spend less as a %age of GDP? Sure. They ration like heck to do so.

Brits love the NHS? Ask the 462,000 Scots who died due to poor care over the last 20 or so years (recent study).

If Single Payer is so great, why are Canada and Britain running away from it? When the US goes to Single Payer, where do the world's sick go as our Pharmacueticals and facilities become as ossified as Europe's.

These are all questions that need to asked and answered. If the debate remains rational, we can find ways to provide health care to Americans without Single Payer.

We simply need to get back to consumers knowing the cost and benefit of every procedure, and we need to build clinics, not bureaucratically heavy "Insurance Schemes." We also need to kill the idiotic idea that healthcare needs to be tied to employment.

Yellow Dog Democrat 9:04 AM  

Steve -

You raise excellent questions (as always), and it is precisely because we have more good questions than good answers that I recommend a circumspect approach.

One of my concerns around the governor's proposal is that it builds on an old, failed model.

Linking insurance and employment may have made sense in an economy where people worked 23-35 years for the same company.

But in today's economy, the average worker will change careers -- yes, careers -- five times.

Given the viscosity of the modern economy, tying health care to your job makes no sense.


And given the state of things in Illinois and across the nation, I find it a little ironic that the Bush administration is prosecuting Michael Moore for helping 9-11 emergency workers get the health care they need.

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