Health care makes strange bedfellows, and there is perhaps no odder combination than UAW Pres. Ron Gettelfinger and Sen Orrin Hatch (R-Utah). Especially when both agree that health care is a national crisis, and both are affiliated with organizations that agree the feds should guarantee health care access to all.
In a landmark speech a couple days ago, UAW President Ron Gettelfinger acknowledged the cost of health care benefits is one of the key problems facing the declining US auto industry, and called for the union’s 600,000 members to be part of the solution. In his hour-long speech, Gettelfinger mentioned health care a dozen times, paying special attention to national health care policy. He blamed Pres. Bush for a failure to address the problem, and specifically called for a national single payer approach. But readers who only absorb that sound bite miss Gettelfinger’s core message; without a rational approach to health care, the US will not survive economically. Here are a few quotes…
“U.S. automakers (are) at a severe competitive disadvantage…It’s time to level the playing field. Health care is another area where we are at a competitive disadvantage…”
“In the 2003 national auto negotiations we were successful at preserving health care. However, last year the financial situation at GM and Ford was such that our retiree’s health care was at risk and I made the difficult decision to negotiate an agreement to address the huge and growing retirees’ health care liability carried by these companies.”
The UAW knows that economic survival depends on a competitive automobile industry, and with health care costs at Ford and GM totaling $9 billion, that survival is in doubt.
“Assuring health care is a shared social responsibility.” No, that’s not another line from Gettelfinger’s speech, but rather from the interim report of the Citizens’ Health Care Working Group, a non-partisan Congressionally-funded research project started by Sens. Orrin Hatch (R-UT) and Ron Wyden (D-OR). This statement came out in the group’s preliminary report, along with a recommendation that the federal government guarantee access to health care for all Americans.
Sure, there are differences in approach, but there are a lot more similarities than differences. Could it be that we’re getting closer to addressing the health care problem?

National health care will be reality within five years. All the theory, intellectual debate, politicking, lobbying, trips to Scottish golf resorts and campaign contributions funded by lobbyists, insurers, providers, and big pharma will come up against two overwhelming forces – demographics and the weight of bad decisions in the past.
As of the last Medicare trustee report, Medicare’s long term debt is $32.4 trillion. Part D alone is responsible for a quarter of that amount, or $8 billion. In comparison, the entire Social Security debt is $4 trillion.
In the face of that incomprehensibly huge figure, we have a Congress that is incapable of doing anything that might alienate seniors, doctors, pharmaceutical manufacturers or hospitals. We have an administration seeking to cut provider reimbursement and increase seniors’ costs by $36 billion over 4 years. That’s about 1% of the total medicare deficit. And we have the Bush tax cuts set to expire by 2011, which just happens to be the same time the Medicare trust fund cash flow turns from black to red as the Baby Boomer generation starts cashing in.
This will force change. The only question is will there be a single payer system, universal coverage via private insurers, some form of hybrid, or a new and as-yet unformed model. Given the recent transgressions of the major national health plans, I wouldn’t go too long on Aetna, United Healthcare, or CIGNA stock.
If you are looking for what it may look like and the features thereof, see here and here.
What does this mean for you?
Your decision – part of the solution or part of the problem?

GM’s health care costs are over $1500 per car. Chrysler’s are $1400, Ford $1100. Honda, Toyota, et al are a fraction of these figures. That disparity crystalizes the economic problem facing US industry (subscription required) competing in a world economy.
There are ample posts and many sources describing how GM got to this point, and all of them are interesting and serve as an excellent object lesson for executives and public policy folk. But the real question is what do we do about this now?
First, let’s stop the health care problem from getting any worse. To do that, we have to address the current health care delivery system, pricing, access, and eligibility.

Continue reading Solving legacy health care costs

I’ll admit to being somewhat ambivalent about the recent action by the Tennessee state senate to eliminate the state’s assumption of risk in Gov. Phil Bredesen’s CoverTennessee plan. The Plan, designed to help provide health insurance to lower-income ciitizens (among other goals) relies in part on the assumption of risk by the State for losses above a set limit.
While I strongly believe in the centrality of universal coverage to any meaningful health care reform, I’m also leery of taxpayers’ subsidization of big business. Unfortunately, it may be difficult to get health plans to step up to the CoverTennessee plate without some way of protecting them against “excessive” losses.
While the Feds constructed a rather intricate risk-share program for Part D, my reading of that effort is that it is too complex, and potentially too generous, by far. Instead, perhaps the State should set up a reinsurance pool, funded in part by the commercial health plans participating in the CoverTennessee Plan and in part by the State (i.e. taxpayers). This pool might have two components; one to cover losses of any plans that go bankrupt, and another providing, on a quota-share basis, a mechanism to mitigate losses for specific health plans.

The California Health Care Foundation has published its annual Health Care Costs 101 report, providing a wealth of data on cost trends, cost drivers and health care funding sources. Here are a few highlights.
1. Health care costs in the US topped $2 trillion in 2005, over $6500 per person.
2. Hospital care accounted for 30% of the total, and physician and clinical services 21%.
3. The cost of drugs has gone from $20 per person in 1984 to $188 in 2004.
4. Governments fund 39%of health care spending with 22% from the feds and 17% state and local.
5. The overall health care inflation rate in 2004 was 7.9% . This marks the 24th consecutive year health care inflation has exceeded the overall inflation rate.
And the kicker – in 2015, health care costs will comprise 20% of US GDP.

In baseball parlance, sometimes its the trades you don’t make that are the best ones. And it looks like the much-ballyhooed Health Week has ended with the trade deadline slated to pass with no blockbuster moves. As discouraging as that might be for those really interested in health care reform, at least Washington won’t screw it up any more.
That’s because once again, politicians are focusing on the fringes, ignoring the real cost drivers in health care, playing politics with statistics, and getting nowhere in the process. Health Week was supposed to be Congressional Republicans’ public policy win, a series of bills that would show the nation they were serious about health care reform. Were they serious?
To quote Hertz ads, “Not exactly.”
Let’s look at medical malpractice reform and the Association Health Plan Bill.

Continue reading “Health Week” ends with a whimper

One of the more common complaints about insurance for small businesses, and actually for businesses of all sizes, but here we’re talking small ones, is the cost of administration. Premium billing, eligibility, enrollment, card and plan booklet issuance, underwriting and sales all add significant cost to the smaller employers’ already-pricey health insurance tab.
And that’s the main reason fewer and fewer small employers are offering health insurance, and fewer and fewer of their employees are signing up for insurance. As healthy employees decline coverage because they think they won’t need it, the sicker ones stick around, driving up claims costs and furthering the vicious circle that is today’s insurance cycle.
Costco has stepped into the fray, offering its “executive members” on the West Coast slightly cheaper health insurance through its stores. While the rates won’t make you think you’ve entered a time machine and been transported back to the sixties (or 2002, for that matter), the program does seem to be catching on. Over the last three years, membership in the big retailer’s plans has increased by 40% to 15,500 members in Nevada, California, Hawaii, Oregon and Washington.
Considering only 52% of small employers in Oregon offer health insurance to employees (and only 38% of those offer dependents and spouses coverage), Costco’s efforts won’t solve the health insurance coverage crisis any time soon. It does represent an interesting alternative, as the program reduces adminstrative expenses through automated underwriting, enrollment, and eligibility processes.
I tried out the enrollment process, and it is pretty simple and relatively quick. Rates don’t look too bad, if $541.00 per person for a company with an average age of 44 for single coverage aren’t “too bad”. (I can’t believe I just wrote that; we’re talking $6500 in annual premiums for single coverage!!)
What does this mean for you?
A smart business move by CostCo, which will be quite overmatched by macro factors making health insurance increasingly unaffordable for more and more small employers.
Fierce Healthcare gets the nod for tipping me off to the story.