Tag Archive: health care reform

Health care crisis is socio-economic problem

The state Legislative Analyst’s Office has issued a report on how the Patient Protection and Affordable Care Act will affect California, which decades ago was the birthplace of the notion that a superior health care payment scheme is prepaid health maintenance rather than post-care health insurance.  The Golden State and more specifically Kaiser Permanente pioneered the health maintenance organization (HMO) as an alternative to indemnity “major medical” insurance designed to cover hospitalizations and other major unforseen health care costs.

The rapid rise in health care costs over the past decade has turned the principle that preventative care costs less than “insured” care on its head.  Since about 2003, California HMO premiums have ironically gone up faster than those for indemnity-based catastropic and preferred provider organization (PPO) plans, sending more people into the latter category and paying higher deductibles and cost shares than previously.

The LAO report suggests the HMO’s health maintenance objective has been stymied by a fragmentation of services and a lack of care coordination among providers and treating diseases but not necessarily focusing on improving the overall health of patients.  Another cost driver identified in the LAO report is financial incentives that reward the quantity of services provided rather than the quality of that care.  Services more accurately described not so much as health maintenance but sick care. 

I believe America’s health insurance crisis is fundamentally due to the growing commercialization of health care and pharmaceuticals combined with a post-industrial service economy in which many people spend most of their sleep deprived waking hours commuting to and working at sedentary jobs.  Too little time for exercise, sleep and nutritious “slow” food exacts a major toll on the nation’s overall health status.  This is a socio-economic problem that no amount of health reform can solve. 

The Obama administration and Congress can rightly claim to have made history by enacting health care reform after multiple failed attempts dating back to the administration of Frankin Delano Roosevelt.  But unless Americans change how they work and live and value their health, it will be a hollow accomplishment.  Health care costs will continue to go up as Americans get older and sicker, less fit and fatter.  If current trends continue, by the time most of the reform provisions take effect in 2014, it will become actuarially evident that no system of paying for health care — pre or post reform — can be affordable.  The health insurance crisis will be subsumed by a overarching health crisis.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Reform legislation seeks to buttress individual market as employer-based coverage erodes

When President Obama took office last year and declared health insurance reform as a top domestic priority of his administration, he affirmed it would preserve employer-based coverage.  He rejected calls for a Canadian-style single payer system, branding it too radical and disruptive.

Nevertheless, the reform legislation that could come up for a final vote this month in Congress implicitly acknowledges an erosion of employer paid health care coverage in the United States.  It does with a focus on buttressing the individual market as an alternative for those who don’t get coverage through their jobs.  While this market segment currently covers only about five percent of the working age population, that number is likely to grow as more small employers stop providing health coverage to their employees.  The legislation lacks an “employer mandate” requiring small employers — defined as those with 50 and fewer employees — to slow that trend.

Instead, the reform bill appears designed to prop up the individual market, buttressing it as an alternative for those without employer-based coverage.  It does so by expanding the risk pool with a mandate that everyone but the very poor have coverage and requiring individual insurers to take all applicants including those with pre-existing medical conditions.

Individual insurers will have a larger number of insureds to share the risk and generate premiums. But they will also have sicker people in the pool with costly chronic conditions like diabetes they can no longer turn away.  The question going forward if the reform bill is signed into law is whether that approach is actuarially sustainable given continued projected increases in medical care expenditures and whether premiums can remain affordable even with subsidies.  It’s a critical question given the Obama administration’s reliance on the individual market to fill the coverage gap created by a shrinking small employer group insurance market.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

California’s individual market: the tail wagging the health care reform dog

The firestorm over Anthem Blue Cross’s sharp premium increases for individual policies in California has reignited the debate over health insurance reform in Washington that had bogged down amid uncertainly after the holidays.    It demonstrates how one event can alter the course of a major policy debate that seemed suddenly without direction.  It also shows how the individual market — which covers only a small percentage of all Americans but a larger proprotion of Californians — is now the tail wagging the national health care reform dog.

Update 3/7/10:  Los Angeles Times reporter Duke Helfand, who broke the story of the Anthem rate increases a month ago, has a piece in today’s paper co-written by LA Times reporter Mark Z. Barabak laying out the chronology that began early last November of how Anthem’s filing for individual policy rate increases averaging 25 percent breathed new life into the Obama administration’s health care reform agenda.  You can read the story here.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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