By Robert Kuttner
The American Prospect, November 7, 2011
The New York hotel workers’ plan provides comprehensive coverage at its own health centers, including full dental and optical care, with no deductibles or co-pays and a core philosophy that emphasizes primary care, wellness, and prevention.
In the office of Dr. Robert Greenspan, who has headed the plan for 12 years, hangs the official charter signed by New York Governor Thomas E. Dewey in 1949 authorizing Local 6 to operate the nation’s first medical practice run by a union.
The plan may well be the best in the nation at providing so much coverage while effectively constraining costs. All doctors are salaried, with general practitioners being paid slightly more than specialists, in order to reward primary care.
From a small clinic on Manhattan’s West Side, the plan has grown into five comprehensive health centers, serving approximately 88,000 hotel workers, their family members, and union retirees. Even those who’ve been laid off keep their health coverage. The plan boasts New York’s highest rate of patient satisfaction.
The plan’s sole out-of-pocket charge is for drugs. While ordinary prescriptions require a modest co-pay of $5 or $15 for non-generics, the charge is eliminated for patients on long-term treatments, such as for high blood pressure. “Bob [Greenspan] experimented with free drugs for patients who are chronically ill,” says union president Peter Ward. “He found that this dramatically reduced visits to the ER; there were fewer catastrophic events. So now, we waive all co-pays for patients on long-term drug therapy.”
“The difference isn’t just financial – it’s philosophical,” Greenspan says. “We want you to come in. We want unlimited access to primary care. It pays off over the long term. All of the co-pays and deductibles do the opposite of what is claimed. They donāt assure that scarce medical resources are used as efficiently as possible or deter excessive use. They are simply barriers to care. People say, ‘Maybe it will clear up by itself, so I won’t see the doctor,’ or ‘I’ll stretch out the medicine supply by taking less than the prescribed dose.’ All you are doing is inducing people not to be compliant with the medical program. Then you wonder why costs keep going up – it’s because people get sicker, and their eventual treatment is more expensive. We do just the opposite.”
Last year, the hotel workers’ health plan cost $411.24 a month for an individual and $1,027.56 for an average family. By comparison, Healthfirst, the cheapest HMO in New York City, cost roughly three times as much – $1,116 a month for an individual and $3,316 for a family – while it excluded many services offered by the union such as dental and optical care and piled on deductibles and co-pays. Factoring in benefits not provided by other plans, the typical commercial insurance package costs about four times as much as the hotel workers’ plan.
So why is the plan virtually unknown in the health-policy debate? For one thing, the union has emphasized publicizing the plan among New York hotel workers, and Greenspan has focused on improving care for members, not crusading for national reform.
Except for single-payer advocates, reformers have pursued cost-effective care within the context of an insurance-dominated system – something of a fool’s errand – whereas the hotel workers’ plan begins by dispensing with third-party insurers. To review all the ways that the hotel workers’ plan delivers better care more cost-effectively is to appreciate the vast inefficiency in the rest of America’s health system – and to see that cost-containment gurus are mostly looking in the wrong places for efficiencies.
For starters, by dispensing with insurance-company middlemen, the plan eliminates a whole layer of costs. A doctor treats the patient according to his or her best medical judgment. There is no army of staffers dealing with patient billing, claims, and insurance reimbursement; no arguing with insurance-company case reviewers.
Second, doctors are all on salary. So there is no incentive to undertreat or overtreat.
Further, the plan’s core principle is unlimited access to primary care, with all of the prevention and early-detection benefits that approach brings. In most systems, specialists drive costs. “We don’t waste specialists on routine cases,” Greenspan says. “We do want specialists to see appropriate cases, which is both more cost effective and more professionally challenging to the physician.”
The union, which knows something about negotiating, engages in hard bargaining with all of its vendors, from drug manufacturers to hospitals, and is relentless about eliminating middlemen. Most conventional health plans use “pharmacy benefit managers” who negotiate with drug companies on the plan’s behalf and, of course, take a cut for themselves. The union negotiates directly. It also dispenses with cadres of consultants, from human-resource departments to utilization reviewers and behavioral-health companies, all of which add costs under the guise of shaving costs.
In New York, some medical specialists in high demand have market power to raise prices. “Have you heard the term, RAPER?” Greenspan asks. “It stands for Radiologists, Anesthesiologists, Pathologists, and ER doctors.” Most New York hospitals now contract out these services to specialists’ groups who charge whatever the market will bear. In recent bargaining with one of its hospitals over a proposed rate increase, the hotel workers were told that the increase partly reflected higher charges billed by anesthesiologists. Greenspan requested the hospital to push back. Not our problem, the hospital contended; we donāt control these costs. “We told them, OK, next week our members stop using your hospital,” Greenspan says. The costs came down.
At some point, the public must realize that the choice is drastic reform or drastic cuts. More than any other in America, the hotel workers’ plan points the way to an efficient and humane system of health care.
http://prospect.org/article/model-health
Comment:
By Don McCanne, MD
New York’s Local 6 has achieved many of the goals of single payer reform by working from the bottom up. They are providing very comprehensive health care services at only about one-third of the costs of other New York plans, and with the highest patient satisfaction ratings.
The key is that they have been able to to create a health care delivery infrastructure dedicated to optimal patient care that is removed from our current dysfunctional system dominated by insurer middlemen. This was all about patients, not insurers.
One important example of the difference is that they recognized that co-pays and deductibles were barriers to care. As Dr. Greenspan says, “They do the opposite of what is claimed.” People should have unlimited access to primary care. To show how wrong the policy community is in their support of cost sharing, Dr. Greenspan’s group has eliminated these barriers, yet their costs are far less than New York’s least expensive HMO. You do not need deductibles and co-pays to control health care spending.
Although this was a bottom up success, it is improbable that it could be used as an insurance model for the rest of the nation. Their success was dependent on the unique efforts of a local union. Also their members have no coverage outside of their system. Our health care delivery systems and our health care financing systems are too fragmented to permit the creation of a nation of Local 6-type institutions, especially when the solidarity characteristic of unions is lacking in most other environments.
Although a top down approach contrasts sharply with what Local 6 has done, nevertheless, a well designed single payer model can accompli
sh the same results, with the added benefit of ensuring patient choice of their health care professionals and institutions. But we’ll have to get the private insurers out of the way. They would never accept a system with so little money in it.