By Brenda Gazzar
Code Wack Podcast, July 26, 2021
Featuring Dr. Stephen Kemble, psychiatrist, board member of Physicians for a National Health Program and member of One Payer States, discussing tricks health insurers use to increase profits â at our expense â and a common âTrojan horseâ found in state single- payer legislation.
Transcript
Welcome to Code WACK!, your podcast on Americaâs broken healthcare system and how Medicare for All could help. Iâm your host, Brenda Gazzar.
How do managed care groups cherry pick and lemon drop their patients? What are the insurance industryâs Trojan horses when it comes to single-payer healthcare proposals? To find out, we spoke to Dr. Stephen Kemble, who practices at a hospital-based primary clinic in Honolulu. Kemble is also past president of the Hawaii Psychiatric Medical Association and the Hawaii Medical Association.
(5-second stinger)
Welcome to Code WACK!, Dr. Kemble!
Kemble: Thank you.
Q: So you recently collaborated on a paper called âBeware of Insurance Industry âTrojan horsesâ in âSingle-Payerâ proposals.â What does this mean in laymanâs terms?
Kemble: The Trojan horses are ways of organizing health care that turn a supposedly single-payer proposal into a multipayer proposal and sabotage it from achieving any administrative savings, and where this came from, in the single-payer movement, is mainly in California because they have a very large presence of Kaiser and Kaiser is, they get capitated money. You know theyâre paid per member, either through premiums from an employer or by the state, if theyâre serving the Medicaid or Medicare population. Theyâre given money per person, and then they have to deliver care within that amount of money so they are the ones taking insurance risk. They then have an incentive to cherry pick and lemon drop. In other words, to hang on to healthy people and get rid of sick people.
So they try to select a healthier than average patient population in order to make ends meet financially. But when youâre in Kaiser, it works pretty well, and itâs popular, so they didnât want to eliminate Kaiser⊠Because Kaiser is an integrated system thatâs capitated, their proposal is to say, Okay, weâll pay Kaiser by capitation because thatâs what theyâre used to, but then you canât pay their hospital with a global budget because youâve already paid for it through their capitation budget. You canât duplicate the payments so you canât do hospital budgeting if you use capitation payments.
So you have these single payer bills that instead of budgeting hospitals they budget these multi-hospital, physician hospital organizations like Kaiser, with a separate budget. Now, you have multiple risk-bearing entities competing with each other, trying to avoid sick people and capture healthy people and claim that healthy people are sicker than they are to beat risk adjustment formulasâŠSo you canât do risk adjustment effectively. So you have all of these problems that are reintroduced into the system that add administrative costs and complexity and prevent you from achieving and saving single payer should achieve.
Q: Uh-uh. Got it. And this sounds like it has an impact on patients who might be denied care. Is that right?
Kemble: Yes, I mean one way a risk-bearing entity like an insurance company weeds out sick people by restricting their formulary and not offering the drugs needed for expensive conditions. So if you have those conditions you get hassled every time you fill your prescription so you quit that plan and go to whatever the public like traditional Medicare that has fewer restrictions or you switch to a different Medicaid Managed Care plan hoping that youâll do better there but all of them are playing the same game because, you know, itâs musical chairs. Who wants to be stuck with the sick people? They keep trying to find a ways to make it difficult for them, and the result is obstruction and denial of care.
Q: Got it. So why should average people care about this?
Kemble: These things, they directly affect someone whoâs got say Medicaid and a serious health condition thatâs expensive but they drive up costs for everyone because the cost of these things is spread across the whole population. So all of this makes for a far more expensive healthcare system. Our multi-payer, multiple gaps healthcare system costs twice as much as the average of other industrialized countries, and leaves a large percent of the population out, and itâs getting worse all the time and not better, and until we wake up and stop trying to have the system of competing insurance companies⊠financing healthcare, weâre not going to solve the problem.
You cannot solve it without taking on the whole insurance business model, which is inappropriate to health care. You know if you have a risk like your house burning down which is presumably infrequent and unpredictable, then you might charge them more if they live in a forest than you would if they live in a city because you can see thatâs higher risk, but youâre pretty much spreading it across a whole bunch of people because the risk is unpredictable. In health care, the risk is largely predictable. Thereâs too many people with preexisting conditions where you know itâs going to be expensive so the whole idea of using the insurance system falls apart because all youâre doing is trying to avoid sick people, which defeats the whole purpose of insurance.
Q: I see. How else do these organizations cherry pick patients? How are they allowed to do that?
Kemble: Well, they market to healthy people. I donât know about California but in Hawaii Kaiser ads are all about âthriveâ and people jogging and they offer fitness clubs as bonuses. If youâve got a chronic heart condition or dementia or renal failure, thatâs not going to appeal to you but if youâre healthy, it will so they market to healthy people, they have restricted formularies that are stacked against people with expensive conditions. They have more prior authorizations for people with complex problems. Thatâs how they do it, and theyâre very good at it. I mean thereâs studies that have shown there are big differences in the risk pool for Medicare Advantage Plans compared to traditional Medicare. The Medicare Advantage Plans collect healthy people and push out sick people and thereâs lots of evidence that thatâs the case. Thatâs actually happening.
(5-second stinger)
Thank you Dr. Stephen Kemble.
Learn more about One Payer States at OnePayerStates.org and Physicians for a National Health Program at PNHP.org.
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