Critical: What We Can Do About the Health-Care Crisis

By Senator Tom Daschle, with Scott S. Greenberger and Jeanne M. Lambrew
Thomas Dunne Books, February 2008

The key question for any health-care reform plan is, “How will it cover people?” Most of the world’s highest-ranking health-care systems employ some kind of “single-payer” strategy – that is, the government, directly or through insurers, is responsible for paying doctors, hospitals, and other health-care providers. Supporters say single-payer is brilliantly simple, ensures equity by providing all people with the same benefits, and saves billions of dollars by creating economies of scale and streamlining administration. But pure single-payer system is politically problematic in the United States, at least right now. Even though polls show that seniors are happier with Medicare than younger people are with their private insurance, opponents of reform have demonized government-run systems as “socialized medicine.”

I have strong views on what an “ideal” system would look like. But I’m not willing to sacrifice worthy improvements on the altar of perfection. I find it encouraging that the leading Democratic presidential contenders appear to share this attitude. The proposals that Obama, Clinton, and Edwards put forward would improve our current system rather than scrapping it, using the Massachusetts reform plan as a model.

The Federal Health Board

I believe a Federal Health Board should be charged with establishing the system’s framework and filling in most of the details. This independent board would be insulated from political pressure and, at the same time, accountable to elected officials and the American people.

First, it would set the rules for the expanded FEHBP, placing conditions on the private insurers wishing to participate.

Second, the Federal Health Board would promote “high-value” medical care by recommending coverage of those drugs and procedures backed by solid evidence.

A third function of the Federal Health Board would be to align incentives with high-quality care.

Finally, the Federal Health Board might also play a role in rationalizing our health-care infrastructure.

http://us.macmillan.com/critical

Comment:

By Don McCanne, MD

When it was announced that Tom Daschle was Barack Obama’s choice to be Secretary of Health and Human Services, it was also announced that he would not only be an administrator, but also he would lead the team that is crafting the definitive health care reform proposal for the Obama administration. That is why Sen. Daschle’s book, “Critical,” is important to us. It provides us with the views of the person who will be working with Congress to reform our health care system.

The fundamentals of his proposal are essentially the same as those proposed by Barack Obama, Max Baucus, and most of the other Democrats who have been advocating for reform. He would continue employer-sponsored coverage, expand public programs, and provide an FEHBP-type program, including a Medicare-like option. He would attempt to achieve universal coverage through an individual mandate with financial assistance for lower-income individuals.

Daschle also includes other concepts that are making the political rounds, such as information systems, community health centers, quality measurements, and “shared responsibility.”

One essential reform that seems to be missing from his proposal is the need to reinforce our primary care infrastructure, providing everyone with a medical home. Maybe that could be extrapolated from his call for rationalizing our health care infrastructure, but, if so, it is of such great importance that he should advocate for it explicitly.

What is relatively unique in Daschle’s proposal is the recommendation for a Federal Health Board, based on a model similar to the Federal Reserve System. One of the more important functions would be to provide oversight of the private insurance industry in his multi-payer system, a role that would be unnecessary in a single payer system. The other functions he describes can easily be or already are provided by existing agencies, though introduction of a single payer system would certainly be accompanied with appropriate bureaucratic reform.

Although he recommends that this board be quasi-independent, insulated from political influence, there is still risk that ideological extremists could gain control. Think of the failure of the Federal Reserve System to provide adequate oversight of our financial system, contributing to our current financial meltdown. That might not have occurred if free-market ideologues such as Alan Greenspan had not been in charge of the Federal Reserve. The Supreme Court is also insulated from political interference, yet obviously it too is controlled by ideologues, over whom we have no control. Imagine if we had a Federal Health Board composed of those individuals who, through the Medicare Modernization Act, damaged our public Medicare program. If they had been in control of such a board, we could have been much further down the road toward their goal of a totally privatized Medicare system.

Most troubling is Sen. Daschle’s conclusions on single payer. He describes it as the model used by the “world’s highest-ranking health care systems.” He acknowledges, without dispute, that supporters say that it is “brilliantly simple, ensures equity by providing all people with the same benefits, and saves billions of dollars by creating economies of scale and streamlining administration.” Yet he rejects it merely because it is “politically problematic.” He would sacrifice the “ideal” system because he is “not willing to sacrifice worthy improvements on the altar of perfection.”

It certainly is true that opportunities for enacting beneficial policies can be missed when the politics are not in alignment. But it is also true that bringing the politics into alignment can eliminate the opportunity to enact ideal policies. For success in achieving a high-performance health care system, we shouldn’t sacrifice policy; we should change the politics.

Surprise Health Bills Make People See Red

By Anna Wilde Mathews
The Wall Street Journal
December 4, 2008
Insured patients are sometimes hit with unforeseen charges after emergencies, when they are taken to the closest hospital regardless of whether the facility accepts their insurance. Consumers also may be billed after visiting in-network hospitals if they received treatment from medical providers who work there but don’t participate in the same health plans. When that happens, insurers often pay part of the doctors’ fees, and the physicians bill patients for the difference. This is the practice known as balance billing, and it can leave consumers battling both the insurer and the medical provider to get the charge reduced.
California regulators recently made it illegal for people covered by health-maintenance organizations to be balance-billed for out-of-network emergency services.
Physician groups say doctors have the right to refuse to sign up with insurers’ networks, and regulators shouldn’t bar doctors who don’t participate in health plans from billing insured patients. They say that insurers’ payments to out-of-network health providers are often unfairly small. “You can’t turn it around and say it’s the doctor’s fault,” says Nancy Nielsen, president of the American Medical Association.
Insurers counter that they shouldn’t be forced to pay whatever fee out-of-network health-care providers demand. “You have a set of specialists who won’t contract with health plans, and they want to bill whatever they choose,” says Robert Zirkelbach, a spokesman for America’s Health Insurance Plans.
http://online.wsj.com/article/SB122834911902477643.html

Balance billing is a payment required by physicians that is in excess of the benefits covered by the patient’s insurer. It is a prime example of the unfairness that permeates our system of health care financing. It can be unfair for all parties.
Balance billing is certainly unfair for patients who purchased insurance in good faith only to find that they receive large bills for services that their insurance should have covered. Denying physicians the right to bill full fees for services that the patient’s insurer should have covered, but didn’t, is unfair to the physicians who have no contract with the insurer. Physicians who hold out for exorbitant fee schedules are unfair to the insurers who are trying to put together a reasonable list of in-network physicians to serve their beneficiaries.
Let’s step back and see if we can make some sense out of this.
Let’s agree that the goal of our health care financing system should be to be sure that everyone can receive the health care that they need without exposure to financial hardship. Not only are financial barriers removed for the patient, but also enough funds are allocated for the delivery system to be sure that it will be there when needed. Obviously that means that physicians should be adequately compensated.
Should physicians have the right to unilaterally dictate the fees that the third party payer must pay? When Medicare was introduced, we saw what happened. Fees skyrocketed. Medicare had to adopt payment policies that would ensure that compensation was reasonable. That has been and always will be a work in progress, but an effort continues to be made to provide a reasonable balance that would advance the public good: fair fees for physicians without an excess burden on taxpayers.
It is very rare to see balance billing for a patient enrolled in the traditional Medicare program (except maybe by error) since very few physicians totally opt out of the Medicare program. Those physicians who do not sign Medicare contracts are still required to adhere to a payment schedule unless they establish what amounts to a private contract with every Medicare patient they see.
What is the role of private insurers in setting fees? They establish a contract with patients to pay for services, but only under the terms of the contract. The only reason that private insurers still exist is that they also establish contracts with selected physicians and other providers who agree to the discounted reimbursement rates dictated by the insurer. Physicians who decline to sign contracts to become providers under these plans are free to charge any patient, whether or not covered by these plans, their usual fees. That is, until now.
California has made it illegal, in emergency situations, for physicians to bill the patient for balances not covered by the patient’s own insurance plan, even though the insurer has no contract with the physician. Think about that. The only contract is between the patient and the insurer, yet the state has given the insurer the authority to enforce upon physicians the terms of a contract that doesn’t even exist!
We’ve seen what’s unfair about balance billing, so how could we introduce fairness? If we had an improved Medicare program that covered everyone, the patient would never have to worry about being billed for balances that are not defined by the program. That’s fair. Under a universal Medicare program, reimbursement would be negotiated with physicians to be sure that rates were adequate to cover legitimate expenses and still provide reasonable profits. That’s fair.
And the private insurers who are extorting physicians with whom they have no contractual relationship, while they burn up resources on egregiously wasteful administrative excesses? With our own improved Medicare system we wouldn’t even need them, and we would show them the door. Now that’s really fair!

By Anna Wilde Mathews
The Wall Street Journal
December 4, 2008

Insured patients are sometimes hit with unforeseen charges after emergencies, when they are taken to the closest hospital regardless of whether the facility accepts their insurance. Consumers also may be billed after visiting in-network hospitals if they received treatment from medical providers who work there but don’t participate in the same health plans. When that happens, insurers often pay part of the doctors’ fees, and the physicians bill patients for the difference. This is the practice known as balance billing, and it can leave consumers battling both the insurer and the medical provider to get the charge reduced.

California regulators recently made it illegal for people covered by health-maintenance organizations to be balance-billed for out-of-network emergency services.

Physician groups say doctors have the right to refuse to sign up with insurers’ networks, and regulators shouldn’t bar doctors who don’t participate in health plans from billing insured patients. They say that insurers’ payments to out-of-network health providers are often unfairly small. “You can’t turn it around and say it’s the doctor’s fault,” says Nancy Nielsen, president of the American Medical Association.

Insurers counter that they shouldn’t be forced to pay whatever fee out-of-network health-care providers demand. “You have a set of specialists who won’t contract with health plans, and they want to bill whatever they choose,” says Robert Zirkelbach, a spokesman for America’s Health Insurance Plans.

http://online.wsj.com/article/SB122834911902477643.html

Comment:

By Don McCanne, MD

Balance billing is a payment required by physicians that is in excess of the benefits covered by the patient’s insurer. It is a prime example of the unfairness that permeates our system of health care financing. It can be unfair for all parties.

Balance billing is certainly unfair for patients who purchased insurance in good faith only to find that they receive large bills for services that their insurance should have covered. Denying physicians the right to bill full fees for services that the patient’s insurer should have covered, but didn’t, is unfair to the physicians who have no contract with the insurer. Physicians who hold out for exorbitant fee schedules are unfair to the insurers who are trying to put together a reasonable list of in-network physicians to serve their beneficiaries.

Let’s step back and see if we can make some sense out of this.

Let’s agree that the goal of our health care financing system should be to be sure that everyone can receive the health care that they need without exposure to financial hardship. Not only are financial barriers removed for the patient, but also enough funds are allocated for the delivery system to be sure that it will be there when needed. Obviously that means that physicians should be adequately compensated.

Should physicians have the right to unilaterally dictate the fees that the third party payer must pay? When Medicare was introduced, we saw what happened. Fees skyrocketed. Medicare had to adopt payment policies that would ensure that compensation was reasonable. That has been and always will be a work in progress, but an effort continues to be made to provide a reasonable balance that would advance the public good: fair fees for physicians without an excess burden on taxpayers.

It is very rare to see balance billing for a patient enrolled in the traditional Medicare program (except maybe by error) since very few physicians totally opt out of the Medicare program. Those physicians who do not sign Medicare contracts are still required to adhere to a payment schedule unless they establish what amounts to a private contract with every Medicare patient they see.

What is the role of private insurers in setting fees? They establish a contract with patients to pay for services, but only under the terms of the contract. The only reason that private insurers still exist is that they also establish contracts with selected physicians and other providers who agree to the discounted reimbursement rates dictated by the insurer. Physicians who decline to sign contracts to become providers under these plans are free to charge any patient, whether or not covered by these plans, their usual fees. That is, until now.

California has made it illegal, in emergency situations, for physicians to bill the patient for balances not covered by the patient’s own insurance plan, even though the insurer has no contract with the physician. Think about that. The only contract is between the patient and the insurer, yet the state has given the insurer the authority to enforce upon physicians the terms of a contract that doesn’t even exist!

We’ve seen what’s unfair about balance billing, so how could we introduce fairness? If we had an improved Medicare program that covered everyone, the patient would never have to worry about being billed for balances that are not defined by the program. That’s fair. Under a universal Medicare program, reimbursement would be negotiated with physicians to be sure that rates were adequate to cover legitimate expenses and still provide reasonable profits. That’s fair.

And the private insurers who are extorting physicians with whom they have no contractual relationship, while they burn up resources on egregiously wasteful administrative excesses? With our own improved Medicare system we wouldn’t even need them, and we would show them the door. Now that’s really fair!

Now is the Time for Health Care Reform: A Proposal to Achieve Universal Coverage, Affordability, Quality Improvement and Market Reform

AHIP (America’s Health Insurance Plans)
Board of Directors’ Statement
December 2008
… the Board of Directors of America’s Health Insurance Plans (AHIP) is offering a new set of proposals aimed at moving the nation toward a restructured health care system in which no one falls through the cracks, all Americans have high quality, affordable coverage, and the efficiency and effectiveness of the system are greatly improved.
Soaring Health Care Costs Need To Be Brought Under Control
3. Streamline administrative processes to increase efficiency, make the system easier for patients and providers to navigate, and reduce costs.
Administrative processes should be streamlined across the health care system. In advancing this recommendation, we recognize the need for our industry to come to the table with proposals for how we can do our part. We have committed to develop a multi-payer online portal to give providers a uniform method to communicate with health plans and afford them access to current information on eligibility and benefits. This will ease the administrative challenges that physicians and other providers face, and will help them and their patients better understand coverage and predict out-of-pocket costs. We are also working with providers on a standard data aggregation approach with the goal of giving providers and consumers useful performance information. Administrative streamlining should be viewed through the eyes of consumers, with the goal of making the health care system easier to navigate and more consumer friendly. A key part of this effort is our focus on the reform of market rules to enhance access for consumers and provide them with clear, useable information on coverage and care options.
http://www.americanhealthsolution.org/assets/Uploads/healthcarereformproposal.pdf

As the momentum for reform builds in our nation’s capitol, the board of directors of AHIP has made the wise decision to provide a definitive statement of their concepts of reform. Very soon the future role of their industry in the financing of health care in America may well be defined by political policy makers. Obviously the industry wants policies that will ensure a robust market for their products.
Although there are many important concepts presented in their report, only the statement on administrative efficiency was selected for this message. The reason is that the private insurance industry has been a major contributor to the profound administrative waste that characterizes our dysfunctional, fragmented system of financing health care. If the private insurers are to have a legitimate role in the future of our health care system, the first requirement that we should demand of them is administrative efficiency.
Reading their proposal to “streamline administrative processes,” you have to ask yourself, what is the substance of their proposal? They are recommending a continuation of the same inefficient, fragmented structure that we now have, except that it is expanded to include everyone. Their call for a token online portal will not provide the structural reform that we need, and may actually increase the administrative burden of our financing system. The fact that they have failed to seriously address this administrative waste, largely of their own making, in and of itself should disqualify them from further participation in the reform process.
This is not to say that this report has no redeeming value. There are some worthwhile proposals. They have stressed the importance of improving our primary care infrastructure. They also have recommended an expansion of our public health infrastructure. These are much needed investments that have been neglected far too long. But the last thing that we would want to do is to superimpose private insurer administrative functions on these crucial programs. The report states “health plans are uniquely positioned to assist in this effort,” but what we need is for the insurance industry to get out of our way as we introduce these repairs to our health care delivery system.
If you still believe that the private insurers have a legitimate role in health care financing, all you need to do is read the relatively detailed section on insurance markets, public programs, and regulation. You could not possibly describe a proposal that would better serve the interests of the private insurance industry. They would create a standard of underinsurance, require all of us to purchase their products, and pretend to address affordability issues through tax credits. The private insurance industry wins the jackpot, while patients and taxpayers lose.
The AHIP board of directors must feel quite smug in having foisted off on us this con job. But wait. This is only their vision; it is not yet our reality. We can do something. We can demand reform that benefits patients and taxpayers. Do you think Washington can hear us?

AHIP (America’s Health Insurance Plans)
Board of Directors’ Statement
December 2008

… the Board of Directors of America’s Health Insurance Plans (AHIP) is offering a new set of proposals aimed at moving the nation toward a restructured health care system in which no one falls through the cracks, all Americans have high quality, affordable coverage, and the efficiency and effectiveness of the system are greatly improved.

Soaring Health Care Costs Need To Be Brought Under Control

3. Streamline administrative processes to increase efficiency, make the system easier for patients and providers to navigate, and reduce costs.

Administrative processes should be streamlined across the health care system. In advancing this recommendation, we recognize the need for our industry to come to the table with proposals for how we can do our part. We have committed to develop a multi-payer online portal to give providers a uniform method to communicate with health plans and afford them access to current information on eligibility and benefits. This will ease the administrative challenges that physicians and other providers face, and will help them and their patients better understand coverage and predict out-of-pocket costs. We are also working with providers on a standard data aggregation approach with the goal of giving providers and consumers useful performance information. Administrative streamlining should be viewed through the eyes of consumers, with the goal of making the health care system easier to navigate and more consumer friendly. A key part of this effort is our focus on the reform of market rules to enhance access for consumers and provide them with clear, useable information on coverage and care options.

http://www.americanhealthsolution.org/assets/Uploads/healthcarereformproposal.pdf

Comment:

By Don McCanne, MD

As the momentum for reform builds in our nation’s capitol, the board of directors of AHIP has made the wise decision to provide a definitive statement of their concepts of reform. Very soon the future role of their industry in the financing of health care in America may well be defined by political policy makers. Obviously the industry wants policies that will ensure a robust market for their products.

Although there are many important concepts presented in their report, only the statement on administrative efficiency was selected for this message. The reason is that the private insurance industry has been a major contributor to the profound administrative waste that characterizes our dysfunctional, fragmented system of financing health care. If the private insurers are to have a legitimate role in the future of our health care system, the first requirement that we should demand of them is administrative efficiency.

Reading their proposal to “streamline administrative processes,” you have to ask yourself, what is the substance of their proposal? They are recommending a continuation of the same inefficient, fragmented structure that we now have, except that it is expanded to include everyone. Their call for a token online portal will not provide the structural reform that we need, and may actually increase the administrative burden of our financing system. The fact that they have failed to seriously address this administrative waste, largely of their own making, in and of itself should disqualify them from further participation in the reform process.

This is not to say that this report has no redeeming value. There are some worthwhile proposals. They have stressed the importance of improving our primary care infrastructure. They also have recommended an expansion of our public health infrastructure. These are much needed investments that have been neglected far too long. But the last thing that we would want to do is to superimpose private insurer administrative functions on these crucial programs. The report states “health plans are uniquely positioned to assist in this effort,” but what we need is for the insurance industry to get out of our way as we introduce these repairs to our health care delivery system.

If you still believe that the private insurers have a legitimate role in health care financing, all you need to do is read the relatively detailed section on insurance markets, public programs, and regulation. You could not possibly describe a proposal that would better serve the interests of the private insurance industry. They would create a standard of underinsurance, require all of us to purchase their products, and pretend to address affordability issues through tax credits. The private insurance industry wins the jackpot, while patients and taxpayers lose.

The AHIP board of directors must feel quite smug in having foisted off on us this con job. But wait. This is only their vision; it is not yet our reality. We can do something. We can demand reform that benefits patients and taxpayers. Do you think Washington can hear us?