Health Care and Insurance Reform -- Syllabus and Homework

By Hootsbuddy
aka John Ballard

Zenpundit's comment of a few hours ago drives home a world of wisdom.

The problem for every administration regardless of party is that "the base" is not the country. "The base" is not even a majority of the minority of Americans who bother to vote. Some of the "the base" can also be counted on to use inopportune moments to be completely unreasonable and make statements/gestures that make their whole party look temporarily insane.

The past three weeks have delivered these realities in headlines, soundbites and gasbag snips. Television journalism flourishes on If it bleeds, it leads. And when they can't show blood, outrageous behavior is the next best attention-getter. 

If reform can�t be fought using facts,

Simply give civil discourse the ax.

Block discussion with mobs

Packed with morons like Dobbs.

That�s the path of Republican hacks.

That, from Mad Kane's Political Madness, is one of many links furnished by today's post by David Williams Health Business Blog, . Madeline Kane' s genre is fresh political poetry, new to me but every bit as clever as SNL or Capitol Steps. Thanks to Magie Mahar for the pointer. Williams' blog is hosting the "Health Wonk Review" carnival linking other blogs focusing on subjects vital to health care and insurance reform.

This is a rich repository of reading for anyone wanting to examine arguments being distorted by ignorant screaming at public meetings. Not all are pro-administration, incidentally. But the first link I checked, arguing in favor of Medicare Advantage, was refreshingly civil in content and comments. Back to that later.

One link from a comments thread was to Co-op, Co-opt, Cop-Out: Conjugating Health Reform which includes this observation of the much discussed (and misunderstood) health care cooperatives idea.

Sen. Conrad also said this in the NPR interview: �There are large cooperatives all across this country. Land O�Lakes is a $12 billion club functioning all across America. There are rural electric co-ops in 47 states. Ace Hardware is a cooperative.�

But healthcare is not a �commodity� like a kilowatt of power or a stick of margarine. Insurance is an amalgamation of predictions backed by financial instruments, and medical delivery is an economy in which the seller (who is frequently the physician) often controls the demand. Ace Hardware and Land O�Lakes may be fine companies, but they aren�t working models for a competitive and efficient healthcare system.

Worker's Comp Insider takes a look at a "Fat Tax."

Back in December of 2006 we blogged the story of Scott Rodrigues, a new hire of the Scotts lawn care company, who was fired after failing a drug test. No news here, perhaps, except that the drug in his system, nicotine is perfectly legal. Scott's is self-insured for health benefits, so they have a vested interest in making sure that employees follow basic wellness practices.

On his way to a pre-placement drug test, Mr. Rodrigues chewed on Nicorette gum. He was trying to kick the habit. Ironically, the Nicorette may have triggered the positive finding for nicotine. Rodrigues was hired provisionally and then abruptly terminated once the test results were released.

Rodrigues brought suit in federal court for violation of privacy and civil rights. Judge George O'Toole has ruled in favor of the company. The judge found no violation of privacy laws, as Rodrigues smoked while walking down the street and in a restaurant parking lot. His supervisor spotted a pack of cigarettes on the dashboard of his truck. Would the judge have ruled for Rodrigues if the employer had peeked through a window to see him smoking at home?

...Is Obesity Next?
We all know that smoking increases the risk of illness and the cost of medical coverage. The same goes for obesity. So the next front in the battle to control the business side of medical costs may well be the bathroom scale. The New York Times magazine profiles the Cleveland Clinic, which has been upheld as a model for medical cost control. Two years ago, they stopped hiring smokers. Delos M. Cosgrove, the heart surgeon who is the clinic�s chief executive, would like to expand the hiring ban to include applicants who are obese.

Cosgrove is interested in an idea that some economists favor: charging higher health-insurance premiums to anyone with a certain body-mass index. Call it the Fat Tax. Another alternative might be taxing the calorie-rich foods that lead to obesity: just imagine paying a little surcharge for your large order of fries, your jumbo soda and your two-for-one pizza. That would be interesting, indeed! Just as smokers pay a tax-driven premium for their cigarettes, eaters would be taxed for their food addictions.

This is simply not going to happen. To be sure, fundamental wellness is the cornerstone of any plan to contain health care costs. But when the public good collides with the rights of freedom and privacy, individual rights will win out. Policy wonks may not like it, but citizens can eat whatever they damn well please. Lighting up after that supersized meal? Well, that's one area where the public good pretty much trumps the private right.

This sharp rebuke came from a commenter:

I am surprised at your take on this. Where is your head at?

Insurance is a pool sharing risk. Each person in the pool pays in according to his/her risk. As actuarial science has improved so as the ability to assign costs to certain risks. The smoker should pay more for health insurance just as those coming into the pool with preexisting conditions.

Otherwise a 94 year old syphilitic, diabetic, cancer ridden alcoholic existing in the pauper ward of a public hospital in rural Mississippi would pay as much health insurance or life insurance premium as a 10 year old boy living in the suburbs of Madison Wisconsin who had all his vaccinations for the same coverage.

A fire trap in the ghetto 20 miles away from a fire department that won't answer calls in that neighborhood would pay the same fire insurance premium per dollar of value as a 100% fire proof building built next to the fire station.

The E&O premium ["Errors & Omissions," an insurance acronym] would be the same for a known and previously convicted crook known to be participation in another scam as for an upstanding stock broker in a firm with perfect compliance.

Of course fat people should pay higher premiums. Otherwise the whole concept of insurance deteriorates to socialism like Obama Care.

Again, where is your head at?

I am an enthusiastic backer of the president, the much-maligned public option and all the rest. But as you can see, my intention here is to provoke intelligent discussion in time for Congressional voting, hoping that enough rational voices will be heard that elected representatives find the courage to do what is right, even if it means risking the disappointment of constituents literally too ignorant for their own good. At this late date I have a sinking feeling that it's too late for pebbles to vote but I'm still doing all that one individual can do to keep discussions civil.

Back now to a personal partisan complaint referred to earlier, about that so-called Medicare Advantage insurance.

Since my wife and I graduated to Medicare in April we have done more than the average amount of studying choices. Unlike private insurance, incidentally, we are no longer required to have the same plan. After a working lifetime of seeing health insurance through the lens of private plans, the idea of shopping for separate plans comes slowly. All our married life we have bought everything from cars to appliances as a couple. From vacations to haircuts we have consulted together in our decision-making. So discovering that when you reach sixty-five it's not only okay but perhaps to your advantage (excuse the word) to have separate arrangements. 

The first big document one gets going into Medicare is a fat book from the government called "Medicare and You." There in plain language is the starting point for what you need to know. The book is user-friendly and filled with valuable information, including a link to a searchable data base comparing long term care facilities, searchable by ZIP code and mileage radius, which I found informative since my mother had to be in a nursing home last year. I just checked, by the way, and someone has cleaned up the site since I last looked making Medicare Dot Gov even more user-friendly. Wonder who?

Prior to this year my only knowledge of how insurance and Medicare go together was my mother's AARP "medigap" policy. She and Dad had that coverage and swore by it for years. It would have been out of the question for anyone to ask them to change, even if it meant they would be paid to go to the doctor instead of the other way around. That's how we tend to think as we get older, no?

It turns out that those old policies, the so-called "alphabet" policies, were not that bad after all although the industry has done such a good job of hiding them from consumers that a Google search for "alphabet policies and medigap" only returned five hits. This snip from one of them, a NY Times piece from 1996, may be a clue

What is especially painful about the sudden upward spiral in Medigap premiums [*remember, 1996] is that most elderly people had no clue it was coming.

The Federal Government overhauled the Medigap insurance program less than four years ago, in July 1992,  [*G.H.W. Bush, president]  by creating a system of 10 standardized plans, labeled A through J. That ended a scandalous period marked by a hodgepodge of densely written plans whose features were virtually impossible to understand. [*Reagan was president 1981-1989] Unscrupulous agents capitalized on this confusion, persuading many elderly people that they needed two or three policies to be safe. But even after paying for policies that overlapped in places, people could be left with large gaps in their coverage.

THE new system [*Clinton 1993-2001] makes it much easier to comparison-shop, with the level of benefits increasing as policies go up the alphabet. Policies labeled A and B, for example, pay Medicare's basic gaps -- the deductible and daily co-insurance for hospital care. Plans H, I and J -- known as the Cadillacs of the system -- cover far more, including drugs and routine physicals. The premiums rise accordingly: in New York, for example, they now range from $474 annually for an A plan to $2,832 for a J.

The oil in the Federal machine is that the benefits in each category must be the same from one carrier to the next. Plan B policies at Empire Blue Cross and Blue Shield and at Mutual of Omaha must offer identical coverage, for example.

"If you want to talk about Federal legislation that worked, the Medigap standardization did," said Geraldine Dallek, director of health policy for Families USA, a health care consumer advocacy group in Washington. "Medicare beneficiaries can look at a Medigap policy and know what they're buying. Before, seniors were throwing money down the drain on policies that offered benefits they already had or didn't need." [*Data added]

That's from the third screen of a long article appearing over a decade ago. And no, I didn't read the rest. It would be like looking at the instructions for operating an Edison Victrola. 

During the five years I worked in a retirement community and was privileged to take part in a continuing education course in gerontology at a local university I got a close view of what my wife and I could expect as we get older. Part of what I learned was summed up in a sentence or two from a sharp resident. I asked him how medigap insurance worked and he said," You have that insurance to pay for what Medicare doesn't pay. Medicare only pays part of your bills and the insurance company gets the rest."
"Does it pay everything?" I asked.
"Oh, no. Sometimes the insurance company sends a bill saying they don't cover this or that. Bills come in from all kinds of places. Everyone who does anything sends you a bill."
"So you have to pay that?"
"Nah. I just send it all to the insurance company and they work it out."
"Everything?"
"Well, no. But if you just throw all that stuff into the trash they either work it out, write it off or forget about it. It's not bad, you know."

Now reader, that's neither science nor accounting talking there. That's reality at its best. And that's why today's seniors are scared shitless. That's how most seniors manage their business and that's how the insurance companies manage them. The companies know that in the end that they cannot cut off one senior without cutting them all because the situation I just outlined is not the exception. It is the rule. Providers routinely charge whatever they can with full knowledge of what Medicare can be expected to pay. Though variable from place to place (Medicare is a pork item, in case you didn't know, but that is another topic) the Medicare reimbursement rates are not secret. The game is to get insurance to pay the difference, hoping that the patient (Remember him? That's supposedly what this is all about.) will pay what remains.

Never mind that Medicare Part A (hospital) and Part B (services) are paid, in part or completely, by some combination of payroll taxes from currently working Americans and premium deductions from Social Security beneficiaries -- and that additional premiums are being paid for private insurance. The way the system works, the patient not only gets to pay a token "co-pay" with every visit or procedure but whatever added charges may later filter through the net as well. Some safety net, this.

Now to the so-called Medicare Advantage plans.

The president has said on more than one occasion that these plans are costing billions more to the system than is necessary and the reason is too complicated for him to explain in a sound-bite or two. That is unfortunate, because the reason is relatively simple. Medicare Advantage is an arrangement whereby private insurance kidnaps Medicare beneficiaries from the government in return for a "capitation" rate. This is a smoke and mirrors game not very different from others by which the private sector has learned to game a government system to the advantage of private profits. 

The old HMO model (which brought us the original "death panel" concept -- a private insurance idea) was a blunt instrument compared with Medicare Advantage.

Before going on it is important to note that at sixty-five we are NOT obliged to stay in the "government-controlled" system. The insurance business is more than happy to have you sign on with one of the many Medicare Advantage plans they sell. In fact, before you can join, you will have to have a face-to-face meeting with a living, licensed insurance company representative who will guide you through the numerous forms to be signed. These will be followed by more forms and follow-up phone calls all with one purpose: they want you to know and understand in unmistakable terms that you are no longer a Medicare beneficiary. Your Medicare ID card is of no benefit to you as long as you are in a Medicare Advantage plan. Your rights to appeal to Medicare are voluntarily surrendered (no doubt without any purpose of evasion) and all future appeals will be to your insurance company, not your local elected representative. 

Got that? You better.

My wife and I do not have the same insurance. She, at the suggestion of more than one insurance agent, has one of the alphabet policies mentioned earlier. They are not easy to find or understand and the Medicare and You book we got from the government, which comes across as a sales piece for private insurance selling Medicare Advantage plans, only mentions them briefly. Finding an agent to halp you get one of the old-fashioned medigap plans is like purchasing term life insurance twenty years ago. The commision must be very poor because the pitch is always for a Medicare Advantage plan. The only time someone is guided toward one of the old-fashioned plans is when the expectation for medical expenses is high. With a family history of cancer and having outlived both her parents, my wife elected to remain with Medicare and pay a fairly high premium for one of the old-fashioned medigap policies.

I, however, am enrolled in one of the multitude of Medicare Advantage plans. By special arrangement with Medicare, my benefits can be expected to be "the same" as those provided by Medicare. I have no reason to expect otherwise as long as I remain in good health. And I'm sure if I get into trouble there is still no reason to panic thanks to the HMO industry learning curve.

But here is a mystery...

What do you think my premium is for enrolling in Medicare Advantage plan? ZERO!

How can that be? The "advantage" to me is obvious, but what is the "advantage" to the company? What's going on?

I still don't have an answer, but after asking that question to several agents, including a very smart man who sold me a hot-fudge sundae of a universal-life flex-plan years ago, I found that no one seems to know. Actually, why should they care as long as they make a commission? And why should I care as long as I am getting the benefit?

This is why. Because I don't live twenty-five miles to the South, my premium is zero. But if I lived in another county my premium would be several hundred dollars a year for exactly the same plan. The only difference I could imagine was that my county has fewer enrollees and the company is trying to penetrate this market ahead of competition. But my life insurance agent (no skin in this game... he leaves health insurance sales to others) mentioned something interesting. The more providers there are in an area the more likely people are to use them. My area, being more rural, has one hospital and a few clinics, but further South there are several hospitals in easy driving distance,. all surrounded by veritable office parks full of doctors, clinics and other medical service providers. In several cases these providers occupy multi-story buildings with parking decks to serve their clients. 

I have come to the end of this post, but not to the end of my quest to change the system to something better and more sensible.

I dream of a day when I can sign my name once or twice, furnishing my address and other important information that one time. Thereafter as my tired old body comes to pieces, I want that one occasion, together with my instructions in the form a final directive, to serve me through an increasing number of occasions leading to that final visit before the angel of death takes me away.

As it stands, I can expect the opposite. As my ability to cope with age decreases my need to cope with insurance increases. I'm working hard to fix that problem before I get there.