Washington Post Discussion on America’s New Health Care Law

Kaiser Foundation
May 10, 1010
Jackie Judd, vice president and senior advisor for communications, Kaiser Family Foundation:
“You wrote the… opening, overview chapter (of “Landmark” – a new book by the reporting staff of the Washington Post on the new health care law), and in there you said that while the law is complex, it’s also moderate and incremental, and it’s that very moderation that makes it complicated. What do you mean?”
Alec MacGillis, reporter for the Washington Post:
“Well, it’s something I tried to say often during this whole debate. When people complained about the length of the bill – a two thousand page monstrosity, so complicated – and I wrote a piece back in the Fall that tried to address that argument and pointed out that, you know, if you really wanted a simple bill, then you could just blow this whole thing up.
“And, you know, single payer is very simple. You just, you know – government-run health insurance – get rid of all the health insurance companies, and there are a lot fewer rules to write. That’s simpler, but, obviously, we were not going to do that.
“We were going to take a much more moderate, market-based approach to this. And that means preserving the foundations of our existing system. And that means ending up with something with a law that’s much more complex, because you’re sort of tweaking here and there. You’re not just – it’s not tabula rasa – you’re not starting over.
“But in its main elements it really is a quite moderate and incremental approach. We are preserving the private health insurance system. It’s modeled – no matter what Mitt Romney tells you now – this is modeled on the plan that he passed in 2006 as a Republican governor of Massachusetts; it’s modeled on the Republican alternative to the Clinton plan in the early nineties; it’s modeled on Richard Nixon’s plan in the seventies; it’s modeled on the idea put forward by the Heritage Foundation early last decade, although they’re trying to distance themselves right now from that; but it really is an attempt to build on what we have now, and because you’re doing it that way, you end up with this messy thing. But it’s really not that… but the main elements are not that complicated.
“What we basically have – the best way to think of it is kind of a three legged stool. We are expanding coverage by requiring that everyone get coverage. We’re also telling the insurance companies that they have to provide everyone coverage who comes and asks for it. So they have to take you; you have to get it. That way you get the healthy people into the pool so that they can afford to take the sick people as well. And then to help people afford to get the coverage that they’re required to get, you provide subsidies. But that’s it, and you need all three legs of that stool. That’s why you need have a mandate.”
http://www.c-span.org/Watch/Media/2010/05/10/HP/A/32795/Washington+Post+Discussion+on+Americas+New+Health+Care+Law.aspx

So by pursuing a moderate, market-based, Republican-based approach, the health care law was made much more complicated. But the greater tragedy is that it wasn’t only made more complicated, it failed in our goals of covering everyone with a financing system that we could afford. The complicated reform proposal that is now law is the most expensive model of reform ever devised, not to mention being one of the least effective.
As Alec MacGillis states, “… single payer is very simple. You just, you know – government-run health insurance – get rid of all the health insurance companies, and there are a lot fewer rules to write.”
We still can “blow this whole thing up,” and enact single payer. Not only would there be fewer rules, everyone would have the health care that they need, and we would be able to pay for it. That will never happen under the new law.

Washington Post Discussion on America’s New Health Care Law

Kaiser Foundation
May 10, 1010

Jackie Judd, vice president and senior advisor for communications, Kaiser Family Foundation:

“You wrote the… opening, overview chapter (of “Landmark” – a new book by the reporting staff of the Washington Post on the new health care law), and in there you said that while the law is complex, it’s also moderate and incremental, and it’s that very moderation that makes it complicated. What do you mean?”

Alec MacGillis, reporter for the Washington Post:

“Well, it’s something I tried to say often during this whole debate. When people complained about the length of the bill – a two thousand page monstrosity, so complicated – and I wrote a piece back in the Fall that tried to address that argument and pointed out that, you know, if you really wanted a simple bill, then you could just blow this whole thing up.

“And, you know, single payer is very simple. You just, you know – government-run health insurance – get rid of all the health insurance companies, and there are a lot fewer rules to write. That’s simpler, but, obviously, we were not going to do that.

“We were going to take a much more moderate, market-based approach to this. And that means preserving the foundations of our existing system. And that means ending up with something with a law that’s much more complex, because you’re sort of tweaking here and there. You’re not just – it’s not tabula rasa – you’re not starting over.

“But in its main elements it really is a quite moderate and incremental approach. We are preserving the private health insurance system. It’s modeled – no matter what Mitt Romney tells you now – this is modeled on the plan that he passed in 2006 as a Republican governor of Massachusetts; it’s modeled on the Republican alternative to the Clinton plan in the early nineties; it’s modeled on Richard Nixon’s plan in the seventies; it’s modeled on the idea put forward by the Heritage Foundation early last decade, although they’re trying to distance themselves right now from that; but it really is an attempt to build on what we have now, and because you’re doing it that way, you end up with this messy thing. But it’s really not that… but the main elements are not that complicated.

“What we basically have – the best way to think of it is kind of a three legged stool. We are expanding coverage by requiring that everyone get coverage. We’re also telling the insurance companies that they have to provide everyone coverage who comes and asks for it. So they have to take you; you have to get it. That way you get the healthy people into the pool so that they can afford to take the sick people as well. And then to help people afford to get the coverage that they’re required to get, you provide subsidies. But that’s it, and you need all three legs of that stool. That’s why you need have a mandate.”

http://www.c-span.org/Watch/Media/2010/05/10/HP/A/32795/Washington+Post+Discussion+on+Americas+New+Health+Care+Law.aspx

So by pursuing a moderate, market-based, Republican-based approach, the health care law was made much more complicated. But the greater tragedy is that it wasn’t only made more complicated, it failed in our goals of covering everyone with a financing system that we could afford. The complicated reform proposal that is now law is the most expensive model of reform ever devised, not to mention being one of the least effective.

As Alec MacGillis states, “… single payer is very simple. You just, you know – government-run health insurance – get rid of all the health insurance companies, and there are a lot fewer rules to write.”

We still can “blow this whole thing up,” and enact single payer. Not only would there be fewer rules, everyone would have the health care that they need, and we would be able to pay for it. That will never happen under the new law.

By Rebecca Vesely
ModernHealthcare.com
May 10, 2010

The biggest test of how well behavioral economics can be applied to healthcare is the new federal health reform law, which contains in its more than 1,000 pages many opportunities to nudge people toward better health choices.

“There’s definitely a general fascination about this area,” said Alan Garber, an internal medicine physician and professor of medicine and economics at Stanford University. “In healthcare, for years and years and years there’s been an interest in changing provider and consumer behavior.”

But some worry that behavioral economics could exacerbate health disparities, or inadvertently punish the elderly or people who suffer from chronic diseases.

Meanwhile, some employers are moving full-force to apply behavioral economics to benefit-package design in order to cut healthcare costs.

The most obvious example of behavioral economics in the new healthcare law—and one that drew fire from chronic-disease groups—is a change in employer wellness program incentives. Starting in 2014, employers can offer workers rewards worth up to 30% to 50% of their cost of health coverage for participating in a wellness program and meeting health benchmarks. The law also sets up a 10-state pilot program for similar wellness initiatives on the individual insurance market.

The idea is to create more incentives for workers than is allowed by law today to improve their health, and thus lower medical costs for everyone. The large incentives were pioneered by the grocery chain Safeway.

But the American Diabetes Association, the AARP and other groups have criticized the enhanced incentives, saying that they could penalize those with chronic diseases by forcing them to pay more for healthcare.

“Our position hasn’t changed,” said Colleen Fogarty, spokeswoman for the American Diabetes Association, in an e-mail. “We remain opposed to the language, but it is now the law and we have to work to ensure that these provisions do not have a harmful or unfair impact on people with chronic diseases.”

Proponents of the provision say it is a good example of a component of behavioral economics called “choice architecture.” Essentially, choice architecture is organizing choices in such a way that influences people’s decisions. In theory, enhanced wellness program incentives allow employers to encourage workers to make the healthiest choices.

Choice architecture is sure to be hugely influential in how the government structures new health insurance exchanges, set to go online in 2014, Garber said. While the government won’t be able to pick favorites among insurers participating in the state-run exchanges, it will be able give customers information about the plans, using transparency measures. This has already been done through the Medicare Part D prescription drug program, which lets insurers compete on the Medicare website for business.

“Behavioral incentives can be powerful, but they are unlikely to overcome a powerful financial incentive,” Garber said. So, for some people, an expensive healthcare plan they have to pay for in monthly premiums could be less appealing than a once-a-year financial penalty.

The dangers of financial penalties in healthcare have been shown time and time again when examining prescription drug use. If copayments go up too high, then some people stop filling their prescriptions and wind up sicker.

On the other hand, financial incentives don’t always work to change behavior, as evidenced by the disappointing results in physician pay-for-performance programs.

“We’ll be seeing some interesting experiments unfolding over the next few years,” Garber said. “This will, in the end, play out in the market.”

Express Scripts, a St. Louis-based pharmacy benefit manager, in 2008 launched the Center for Cost-Effective Consumerism and hired experts in behavioral economics—including Garber at Stanford University—to its advisory board.

Lowe’s, the home-improvement retail chain, saved $5.2 million in 2009 by getting employees who take maintenance prescription medications to switch to home pharmacy delivery. It did it using behavioral economics. Bob Ihrie, senior vice president of employee rewards and services at Lowe’s Cos., describes the method as “carrot, carrot, stick, big stick.”

Lowe’s started by educating its 225,000 employees nationwide about home drug delivery, and the cost savings involved. After the third month, if workers hadn’t switched, they are notified at the pharmacy when picking up their prescription and told that if they don’t switch to home delivery, they would start paying the full price of the prescription. The next month, if they hadn’t signed on for home delivery, they paid full price at the in-store pharmacy.

Another carrot followed. Last September, about 22,000 employees who were not signed on for home delivery received a postcard from Lowe’s informing them that if they select home delivery, their prescription drug would be free the first month. About 10% responded to this incentive, Ihrie said.

At the end of 2009, nearly 38,000 workers had switched to home delivery, up about 160% from 14,500 in 2008. Then came the big stick. Starting in January, employees eligible for home delivery but not yet enrolled pay twice the retail price for the drug in store. “We are still waiting to see the outcome of this,” Ihrie said.

The program has worked by breaking the cycle of procrastination, Ihrie said. “We give them choices upfront and then gradually move them along a path that is more mandatory,” he said. Conducted in partnership with Express Scripts, the program cuts waste out of the system without affecting clinical outcomes, Ihrie said.

Several high-ranking officials in the Obama administration are strong proponents of behavioral economics. Cass Sunstein, co-author of Nudge, is now the administrator of the White House Office of Information and Regulatory Affairs. Peter Orszag, director of the White House Office of Management and Budget, has spoken about the promise of behavioral economics to control costs.

http://www.modernhealthcare.com/article/20100510/INFO/100509942#

Comment: 

By Don McCanne, MD

“Behavioral economics” and “choice architecture” are being used to shift health care spending from the healthy to the sick by directly or indirectly assessing financial penalties against those who are unfortunate enough to have greater health care needs. This is strictly another scheme by pro-market enthusiasts who support the flawed concept of consumer-directed health care.

As an example of the flaws, a scheme that requires patients to pay twice the usual retail price for a drug is a perverse scheme indeed. Another example is Safeway’s fraudulent claims of savings from their wellness programs when their savings were really only from shifting to high-deductible health plans.

Instead of jerking patients around with perverse market tools, we need to switch to a public system that simply helps patients get the care that they need – an improved Medicare for everyone.

For good behavior

By Rebecca Vesely
ModernHealthcare.com
May 10, 2010

The biggest test of how well behavioral economics can be applied to healthcare is the new federal health reform law, which contains in its more than 1,000 pages many opportunities to nudge people toward better health choices.

“There’s definitely a general fascination about this area,” said Alan Garber, an internal medicine physician and professor of medicine and economics at Stanford University. “In healthcare, for years and years and years there’s been an interest in changing provider and consumer behavior.”

But some worry that behavioral economics could exacerbate health disparities, or inadvertently punish the elderly or people who suffer from chronic diseases.

Meanwhile, some employers are moving full-force to apply behavioral economics to benefit-package design in order to cut healthcare costs.

The most obvious example of behavioral economics in the new healthcare law—and one that drew fire from chronic-disease groups—is a change in employer wellness program incentives. Starting in 2014, employers can offer workers rewards worth up to 30% to 50% of their cost of health coverage for participating in a wellness program and meeting health benchmarks. The law also sets up a 10-state pilot program for similar wellness initiatives on the individual insurance market.

The idea is to create more incentives for workers than is allowed by law today to improve their health, and thus lower medical costs for everyone. The large incentives were pioneered by the grocery chain Safeway.

But the American Diabetes Association, the AARP and other groups have criticized the enhanced incentives, saying that they could penalize those with chronic diseases by forcing them to pay more for healthcare.

“Our position hasn’t changed,” said Colleen Fogarty, spokeswoman for the American Diabetes Association, in an e-mail. “We remain opposed to the language, but it is now the law and we have to work to ensure that these provisions do not have a harmful or unfair impact on people with chronic diseases.”

Proponents of the provision say it is a good example of a component of behavioral economics called “choice architecture.” Essentially, choice architecture is organizing choices in such a way that influences people’s decisions. In theory, enhanced wellness program incentives allow employers to encourage workers to make the healthiest choices.

Choice architecture is sure to be hugely influential in how the government structures new health insurance exchanges, set to go online in 2014, Garber said. While the government won’t be able to pick favorites among insurers participating in the state-run exchanges, it will be able give customers information about the plans, using transparency measures. This has already been done through the Medicare Part D prescription drug program, which lets insurers compete on the Medicare website for business.

“Behavioral incentives can be powerful, but they are unlikely to overcome a powerful financial incentive,” Garber said. So, for some people, an expensive healthcare plan they have to pay for in monthly premiums could be less appealing than a once-a-year financial penalty.

The dangers of financial penalties in healthcare have been shown time and time again when examining prescription drug use. If copayments go up too high, then some people stop filling their prescriptions and wind up sicker.

On the other hand, financial incentives don’t always work to change behavior, as evidenced by the disappointing results in physician pay-for-performance programs.

“We’ll be seeing some interesting experiments unfolding over the next few years,” Garber said. “This will, in the end, play out in the market.”

Express Scripts, a St. Louis-based pharmacy benefit manager, in 2008 launched the Center for Cost-Effective Consumerism and hired experts in behavioral economics—including Garber at Stanford University—to its advisory board.

Lowe’s, the home-improvement retail chain, saved $5.2 million in 2009 by getting employees who take maintenance prescription medications to switch to home pharmacy delivery. It did it using behavioral economics. Bob Ihrie, senior vice president of employee rewards and services at Lowe’s Cos., describes the method as “carrot, carrot, stick, big stick.”

Lowe’s started by educating its 225,000 employees nationwide about home drug delivery, and the cost savings involved. After the third month, if workers hadn’t switched, they are notified at the pharmacy when picking up their prescription and told that if they don’t switch to home delivery, they would start paying the full price of the prescription. The next month, if they hadn’t signed on for home delivery, they paid full price at the in-store pharmacy.

Another carrot followed. Last September, about 22,000 employees who were not signed on for home delivery received a postcard from Lowe’s informing them that if they select home delivery, their prescription drug would be free the first month. About 10% responded to this incentive, Ihrie said.

At the end of 2009, nearly 38,000 workers had switched to home delivery, up about 160% from 14,500 in 2008. Then came the big stick. Starting in January, employees eligible for home delivery but not yet enrolled pay twice the retail price for the drug in store. “We are still waiting to see the outcome of this,” Ihrie said.

The program has worked by breaking the cycle of procrastination, Ihrie said. “We give them choices upfront and then gradually move them along a path that is more mandatory,” he said. Conducted in partnership with Express Scripts, the program cuts waste out of the system without affecting clinical outcomes, Ihrie said.

Several high-ranking officials in the Obama administration are strong proponents of behavioral economics. Cass Sunstein, co-author of Nudge, is now the administrator of the White House Office of Information and Regulatory Affairs. Peter Orszag, director of the White House Office of Management and Budget, has spoken about the promise of behavioral economics to control costs.

http://www.modernhealthcare.com/article/20100510/INFO/100509942#

Comment: 

By Don McCanne, MD

“Behavioral economics” and “choice architecture” are being used to shift health care spending from the healthy to the sick by directly or indirectly assessing financial penalties against those who are unfortunate enough to have greater health care needs. This is strictly another scheme by pro-market enthusiasts who support the flawed concept of consumer-directed health care.

As an example of the flaws, a scheme that requires patients to pay twice the usual retail price for a drug is a perverse scheme indeed. Another example is Safeway’s fraudulent claims of savings from their wellness programs when their savings were really only from shifting to high-deductible health plans.

Instead of jerking patients around with perverse market tools, we need to switch to a public system that simply helps patients get the care that they need – an improved Medicare for everyone.

For good behavior

By Rebecca Vesely
ModernHealthcare.com
May 10, 2010
The biggest test of how well behavioral economics can be applied to healthcare is the new federal health reform law, which contains in its more than 1,000 pages many opportunities to nudge people toward better health choices.
“There’s definitely a general fascination about this area,” said Alan Garber, an internal medicine physician and professor of medicine and economics at Stanford University. “In healthcare, for years and years and years there’s been an interest in changing provider and consumer behavior.”
But some worry that behavioral economics could exacerbate health disparities, or inadvertently punish the elderly or people who suffer from chronic diseases.
Meanwhile, some employers are moving full-force to apply behavioral economics to benefit-package design in order to cut healthcare costs.
The most obvious example of behavioral economics in the new healthcare law—and one that drew fire from chronic-disease groups—is a change in employer wellness program incentives. Starting in 2014, employers can offer workers rewards worth up to 30% to 50% of their cost of health coverage for participating in a wellness program and meeting health benchmarks. The law also sets up a 10-state pilot program for similar wellness initiatives on the individual insurance market.
The idea is to create more incentives for workers than is allowed by law today to improve their health, and thus lower medical costs for everyone. The large incentives were pioneered by the grocery chain Safeway.
But the American Diabetes Association, the AARP and other groups have criticized the enhanced incentives, saying that they could penalize those with chronic diseases by forcing them to pay more for healthcare.
“Our position hasn’t changed,” said Colleen Fogarty, spokeswoman for the American Diabetes Association, in an e-mail. “We remain opposed to the language, but it is now the law and we have to work to ensure that these provisions do not have a harmful or unfair impact on people with chronic diseases.”
Proponents of the provision say it is a good example of a component of behavioral economics called “choice architecture.” Essentially, choice architecture is organizing choices in such a way that influences people’s decisions. In theory, enhanced wellness program incentives allow employers to encourage workers to make the healthiest choices.
Choice architecture is sure to be hugely influential in how the government structures new health insurance exchanges, set to go online in 2014, Garber said. While the government won’t be able to pick favorites among insurers participating in the state-run exchanges, it will be able give customers information about the plans, using transparency measures. This has already been done through the Medicare Part D prescription drug program, which lets insurers compete on the Medicare website for business.
“Behavioral incentives can be powerful, but they are unlikely to overcome a powerful financial incentive,” Garber said. So, for some people, an expensive healthcare plan they have to pay for in monthly premiums could be less appealing than a once-a-year financial penalty.
The dangers of financial penalties in healthcare have been shown time and time again when examining prescription drug use. If copayments go up too high, then some people stop filling their prescriptions and wind up sicker.
On the other hand, financial incentives don’t always work to change behavior, as evidenced by the disappointing results in physician pay-for-performance programs.
“We’ll be seeing some interesting experiments unfolding over the next few years,” Garber said. “This will, in the end, play out in the market.”
Express Scripts, a St. Louis-based pharmacy benefit manager, in 2008 launched the Center for Cost-Effective Consumerism and hired experts in behavioral economics—including Garber at Stanford University—to its advisory board.
Lowe’s, the home-improvement retail chain, saved $5.2 million in 2009 by getting employees who take maintenance prescription medications to switch to home pharmacy delivery. It did it using behavioral economics. Bob Ihrie, senior vice president of employee rewards and services at Lowe’s Cos., describes the method as “carrot, carrot, stick, big stick.”
Lowe’s started by educating its 225,000 employees nationwide about home drug delivery, and the cost savings involved. After the third month, if workers hadn’t switched, they are notified at the pharmacy when picking up their prescription and told that if they don’t switch to home delivery, they would start paying the full price of the prescription. The next month, if they hadn’t signed on for home delivery, they paid full price at the in-store pharmacy.
Another carrot followed. Last September, about 22,000 employees who were not signed on for home delivery received a postcard from Lowe’s informing them that if they select home delivery, their prescription drug would be free the first month. About 10% responded to this incentive, Ihrie said.
At the end of 2009, nearly 38,000 workers had switched to home delivery, up about 160% from 14,500 in 2008. Then came the big stick. Starting in January, employees eligible for home delivery but not yet enrolled pay twice the retail price for the drug in store. “We are still waiting to see the outcome of this,” Ihrie said.
The program has worked by breaking the cycle of procrastination, Ihrie said. “We give them choices upfront and then gradually move them along a path that is more mandatory,” he said. Conducted in partnership with Express Scripts, the program cuts waste out of the system without affecting clinical outcomes, Ihrie said.
Several high-ranking officials in the Obama administration are strong proponents of behavioral economics. Cass Sunstein, co-author of Nudge, is now the administrator of the White House Office of Information and Regulatory Affairs. Peter Orszag, director of the White House Office of Management and Budget, has spoken about the promise of behavioral economics to control costs.
http://www.modernhealthcare.com/article/20100510/INFO/100509942#

“Behavioral economics” and “choice architecture” are being used to shift health care spending from the healthy to the sick by directly or indirectly assessing financial penalties against those who are unfortunate enough to have greater health care needs. This is strictly another scheme by pro-market enthusiasts who support the flawed concept of consumer-directed health care.
As an example of the flaws, a scheme that requires patients to pay twice the usual retail price for a drug is a perverse scheme indeed. Another example is Safeway’s fraudulent claims of savings from their wellness programs when their savings were really only from shifting to high-deductible health plans.
Instead of jerking patients around with perverse market tools, we need to switch to a public system that simply helps patients get the care that they need – an improved Medicare for everyone.

For good behavior

By Rebecca Vesely
ModernHealthcare.com
May 10, 2010

The biggest test of how well behavioral economics can be applied to healthcare is the new federal health reform law, which contains in its more than 1,000 pages many opportunities to nudge people toward better health choices.

“There’s definitely a general fascination about this area,” said Alan Garber, an internal medicine physician and professor of medicine and economics at Stanford University. “In healthcare, for years and years and years there’s been an interest in changing provider and consumer behavior.”

But some worry that behavioral economics could exacerbate health disparities, or inadvertently punish the elderly or people who suffer from chronic diseases.

Meanwhile, some employers are moving full-force to apply behavioral economics to benefit-package design in order to cut healthcare costs.

The most obvious example of behavioral economics in the new healthcare law—and one that drew fire from chronic-disease groups—is a change in employer wellness program incentives. Starting in 2014, employers can offer workers rewards worth up to 30% to 50% of their cost of health coverage for participating in a wellness program and meeting health benchmarks. The law also sets up a 10-state pilot program for similar wellness initiatives on the individual insurance market.

The idea is to create more incentives for workers than is allowed by law today to improve their health, and thus lower medical costs for everyone. The large incentives were pioneered by the grocery chain Safeway.

But the American Diabetes Association, the AARP and other groups have criticized the enhanced incentives, saying that they could penalize those with chronic diseases by forcing them to pay more for healthcare.

“Our position hasn’t changed,” said Colleen Fogarty, spokeswoman for the American Diabetes Association, in an e-mail. “We remain opposed to the language, but it is now the law and we have to work to ensure that these provisions do not have a harmful or unfair impact on people with chronic diseases.”

Proponents of the provision say it is a good example of a component of behavioral economics called “choice architecture.” Essentially, choice architecture is organizing choices in such a way that influences people’s decisions. In theory, enhanced wellness program incentives allow employers to encourage workers to make the healthiest choices.

Choice architecture is sure to be hugely influential in how the government structures new health insurance exchanges, set to go online in 2014, Garber said. While the government won’t be able to pick favorites among insurers participating in the state-run exchanges, it will be able give customers information about the plans, using transparency measures. This has already been done through the Medicare Part D prescription drug program, which lets insurers compete on the Medicare website for business.

“Behavioral incentives can be powerful, but they are unlikely to overcome a powerful financial incentive,” Garber said. So, for some people, an expensive healthcare plan they have to pay for in monthly premiums could be less appealing than a once-a-year financial penalty.

The dangers of financial penalties in healthcare have been shown time and time again when examining prescription drug use. If copayments go up too high, then some people stop filling their prescriptions and wind up sicker.

On the other hand, financial incentives don’t always work to change behavior, as evidenced by the disappointing results in physician pay-for-performance programs.

“We’ll be seeing some interesting experiments unfolding over the next few years,” Garber said. “This will, in the end, play out in the market.”

Express Scripts, a St. Louis-based pharmacy benefit manager, in 2008 launched the Center for Cost-Effective Consumerism and hired experts in behavioral economics—including Garber at Stanford University—to its advisory board.

Lowe’s, the home-improvement retail chain, saved $5.2 million in 2009 by getting employees who take maintenance prescription medications to switch to home pharmacy delivery. It did it using behavioral economics. Bob Ihrie, senior vice president of employee rewards and services at Lowe’s Cos., describes the method as “carrot, carrot, stick, big stick.”

Lowe’s started by educating its 225,000 employees nationwide about home drug delivery, and the cost savings involved. After the third month, if workers hadn’t switched, they are notified at the pharmacy when picking up their prescription and told that if they don’t switch to home delivery, they would start paying the full price of the prescription. The next month, if they hadn’t signed on for home delivery, they paid full price at the in-store pharmacy.

Another carrot followed. Last September, about 22,000 employees who were not signed on for home delivery received a postcard from Lowe’s informing them that if they select home delivery, their prescription drug would be free the first month. About 10% responded to this incentive, Ihrie said.

At the end of 2009, nearly 38,000 workers had switched to home delivery, up about 160% from 14,500 in 2008. Then came the big stick. Starting in January, employees eligible for home delivery but not yet enrolled pay twice the retail price for the drug in store. “We are still waiting to see the outcome of this,” Ihrie said.

The program has worked by breaking the cycle of procrastination, Ihrie said. “We give them choices upfront and then gradually move them along a path that is more mandatory,” he said. Conducted in partnership with Express Scripts, the program cuts waste out of the system without affecting clinical outcomes, Ihrie said.

Several high-ranking officials in the Obama administration are strong proponents of behavioral economics. Cass Sunstein, co-author of Nudge, is now the administrator of the White House Office of Information and Regulatory Affairs. Peter Orszag, director of the White House Office of Management and Budget, has spoken about the promise of behavioral economics to control costs.

http://www.modernhealthcare.com/article/20100510/INFO/100509942#

“Behavioral economics” and “choice architecture” are being used to shift health care spending from the healthy to the sick by directly or indirectly assessing financial penalties against those who are unfortunate enough to have greater health care needs. This is strictly another scheme by pro-market enthusiasts who support the flawed concept of consumer-directed health care.

As an example of the flaws, a scheme that requires patients to pay twice the usual retail price for a drug is a perverse scheme indeed. Another example is Safeway’s fraudulent claims of savings from their wellness programs when their savings were really only from shifting to high-deductible health plans.

Instead of jerking patients around with perverse market tools, we need to switch to a public system that simply helps patients get the care that they need – an improved Medicare for everyone.

By Paul Armstrong
CNN
May 5, 2010

After weeks of feverish election campaigning, Britain’s political parties have fought over every issue, from the economy to the country’s nuclear deterrent, with one exception: the National Health Service.

To many Republican politicians in the United States, a publicly-funded national health system like the NHS is the embodiment of austere, Soviet-era style medical care, but in the UK it is viewed as sacrosanct.

Centrally-funded through taxation, pressure to respond to growing demand has seen record levels of investment in the past decade.

Ruth Thorlby, a research fellow at the King’s Fund, told CNN that all the major parties appreciate the NHS strikes an emotive chord with the public and that it is a price worth paying. She said: “We have this extraordinary political consensus now that the funding structure of the NHS is sound.”

Conservative leader David Cameron seems as committed to the NHS as Labour, despite his party’s ideological disposition to the private sector.

He recently acknowledged its value on his party’s Web site. “Millions of people are grateful for the care they have received from the NHS — including my own family,” he said.

“One of the wonderful things about living in this country is that the moment you’re injured or fall ill — no matter who you are, where you are from, or how much money you’ve got — you know that the NHS will look after you.”

Cameron’s words were reinforced by the party’s election manifesto, in which it calls itself “the party of the NHS” and pledges “never to change at the idea at its heart that healthcare in this country is free at the point of use and available to everyone based on need and not ability to pay.”

http://edition.cnn.com/2010/WORLD/europe/04/23/britain.nhs/?hpt=C2

Comment: 

By Don McCanne, MD

The United Kingdom has the ultimate system of socialized medicine: a government-owned and government-administered National Health Service (NHS). Though their system is much less expensive than ours in the United States, it is viewed as sacrosanct by the British citizens.

The system was launched in 1948 by a left-wing Labour government, but its appeal has become so universal that the right-wing Conservative party now claims to be “the party of the NHS.”

In the United States we have chosen a right-wing solution over which we remain politically divided because of its serious flaws. Since we spend far more on health care than any other nation, we should be able to use those funds to craft a system with such intense universal support that we would consider ours sacrosanct as well.

Of course we can. Try to convince senior Tea Baggers to relinquish their Medicare, even though it is a government program. Medicare is a right that they have earned merely by being American taxpayers. Just imagine improving Medicare and providing it to everyone. After people experienced the benefits of an improved Medicare for all, can you imagine a major political party campaigning against the program? In fact, it’s the Republicans who are now expressing outrage over the fact that PPACA includes some reductions in Medicare funding.

Now that the Republican party seems to be presenting itself as “the party of Medicare,” wouldn’t you think that the Democrats would want to trump them by becoming “the party of an improved Medicare for all”?

Documents reveal AT&T, Verizon, others, thought about dropping employer-sponsored benefits

By Shawn Tully

Fortune
May 6, 2010

The great mystery surrounding the historic health care bill is how the corporations that provide coverage for most Americans — coverage they know and prize — will react to the new law’s radically different regime of subsidies, penalties, and taxes. Now, we’re getting a remarkable inside look at the options AT&T, Deere, and other big companies are weighing to deal with the new legislation.

Internal documents recently reviewed by Fortune, originally requested by Congress, show what the bill’s critics predicted, and what its champions dreaded: many large companies are examining a course that was heretofore unthinkable, dumping the health care coverage they provide to their workers in exchange for paying penalty fees to the government.

That would dismantle the employer-based system that has reigned since World War II. It would also seem to contradict President Obama’s statements that Americans who like their current plans could keep them.

AT&T produced a PowerPoint slide entitled “Medical Cost Versus No Coverage Penalty.”

A document prepared for Verizon by consulting firm Hewitt Resources stated, “Even though the proposed assessments [on companies that do not provide health care] are material, they are modest when compared to the average cost of health care,” and that to avoid costs and regulations, “employers may consider exiting the health care market and send employees to the Exchanges.”

Kenneth Huhn, vice president of labor relations at Deere, said in an internal email that his company should look at the alternatives to providing health benefits, which “would amount to denying coverage and just paying the penalty,” and that he felt he already had the ability to make this change under his company’s labor agreement.

Caterpillar felt it would have to give “serious consideration” to the penalty option.

AT&T revealed that it spends $2.4 billion a year on coverage for its almost 300,000 active employees, a number that would fall to $600 million if AT&T stopped providing health care coverage and paid the penalty option instead.

(Caterpillar) could reduce its bill by over 70%, by Fortune’s estimate.

It’s these analyses — which show it’s a lot cheaper to “pay” than to “play” — that threaten to overthrow the traditional architecture of health care.

The full article contains links to documents supporting some of these assertions:
http://money.cnn.com/2010/05/05/news/companies/dropping_benefits.fortune/index.htm

Comment

By Don McCanne, M.D.

Yesterday’s qotd message described measures in the Patient Protection and Affordable Care Act (PPACA) that would motivate employers to downgrade their health benefit programs to an actuarial value of 60 percent (the employees would pay an average of 40 percent of actual health care costs, in addition to their share of the insurance premium). Today’s message reveals that major employers are considering the option of dumping their health benefit programs altogether.

The government subsidies for plans purchased in the state exchanges are large enough to shift a major portion of the costs of the health benefit programs from the employers/employees to the taxpayers. Further, the subsidized Silver-tier plans in the exchanges provide an actuarial value of 70 percent, resulting in greater benefits than the downgraded plans would have, at a net lower cost for the employers.

Unfortunately, neither is a great deal for the employees and their families. Employer-sponsored plans currently have a typical actuarial value of 80 percent, and sometimes as high as 90 or 95 percent. PPACA exchange plans will shift more costs to those who need health care by reducing the effective actuarial value to 70 percent for those with incomes over 250% FPL (federal poverty level), and those with incomes over 400% FPL would have no out-of-pocket limits to protect them.

Regardless, the complex structure of PPACA will result in worse coverage for employees than many of them currently have. This was the result of Congress and the Obama administration insisting that reform be built on our existing employer-based system, while facing the complex logistical problems of balancing the flow of money between individuals, employers, the government, the insurers, and the providers of health care.

It would have been far simpler, less expensive, and much more effective to establish a single financing pool, equitably-funded through the tax system, while providing significantly greater value in health care purchasing for all of us through a publicly-owned, publicly-administered, beneficent monopsony – an improved Medicare for all. We can still do it.

Socialized healthcare: The ‘untouchable’ of UK politics

By Paul Armstrong
CNN
May 5, 2010
After weeks of feverish election campaigning, Britain’s political parties have fought over every issue, from the economy to the country’s nuclear deterrent, with one exception: the National Health Service.
To many Republican politicians in the United States, a publicly-funded national health system like the NHS is the embodiment of austere, Soviet-era style medical care, but in the UK it is viewed as sacrosanct.
Centrally-funded through taxation, pressure to respond to growing demand has seen record levels of investment in the past decade.
Ruth Thorlby, a research fellow at the King’s Fund, told CNN that all the major parties appreciate the NHS strikes an emotive chord with the public and that it is a price worth paying. She said: “We have this extraordinary political consensus now that the funding structure of the NHS is sound.”
Conservative leader David Cameron seems as committed to the NHS as Labour, despite his party’s ideological disposition to the private sector.
He recently acknowledged its value on his party’s Web site. “Millions of people are grateful for the care they have received from the NHS — including my own family,” he said.
“One of the wonderful things about living in this country is that the moment you’re injured or fall ill — no matter who you are, where you are from, or how much money you’ve got — you know that the NHS will look after you.”
Cameron’s words were reinforced by the party’s election manifesto, in which it calls itself “the party of the NHS” and pledges “never to change at the idea at its heart that healthcare in this country is free at the point of use and available to everyone based on need and not ability to pay.”
http://edition.cnn.com/2010/WORLD/europe/04/23/britain.nhs/?hpt=C2

The United Kingdom has the ultimate system of socialized medicine: a government-owned and government-administered National Health Service (NHS). Though their system is much less expensive than ours in the United States, it is viewed as sacrosanct by the British citizens.
The system was launched in 1948 by a left-wing Labour government, but its appeal has become so universal that the right-wing Conservative party now claims to be “the party of the NHS.”
In the United States we have chosen a right-wing solution over which we remain politically divided because of its serious flaws. Since we spend far more on health care than any other nation, we should be able to use those funds to craft a system with such intense universal support that we would consider ours sacrosanct as well.
Of course we can. Try to convince senior Tea Baggers to relinquish their Medicare, even though it is a government program. Medicare is a right that they have earned merely by being American taxpayers. Just imagine improving Medicare and providing it to everyone. After people experienced the benefits of an improved Medicare for all, can you imagine a major political party campaigning against the program? In fact, it’s the Republicans who are now expressing outrage over the fact that PPACA includes some reductions in Medicare funding.
Now that the Republican party seems to be presenting itself as “the party of Medicare,” wouldn’t you think that the Democrats would want to trump them by becoming “the party of an improved Medicare for all”?