Planning the Patient-Centered Health Plan for America
Portability – Part III
Creating Personal and Portable Health Insurance. Just because employers pay all or most of the premium does not mean that health insurance must necessarily be employer-specific. As an alternative, why can’t employees enroll in health plans that meet their needs and stay in those plans as they travel from job to job? Personal and portable health insurance would solve many of these problems.
Employers should be able to buy personal and portable insurance for their employees. Even though employers initially would pay the premiums (as they do today), this insurance would be owned by the employees and would travel with them as they move through the labor market. Thus employees would get portable insurance (a characteristic of individual insurance), but they would get it at premiums that are closer to the norms of group insurance.
Although it is envisioned that employers initially will buy all their employees into the same health plan, with the passage of time some of those employees will leave and go to work for other firms. Employers will also hire new employees who are members of other plans. And, in most cases, the employer’s initial group of employees will be able to switch to other plans after a transition period. The typical employer, therefore, can eventually expect to have employees in different plans. Indeed, it is possible that every employee will be in a different plan.
Advantages of Portable Insurance. Portable health insurance promises a continuing relationship with an insurer and, therefore, a continuing relationship with doctors and health facilities. It also means that people can find a health plan they like and stay in it, without worrying whether they will be forced out of the plan by an employer’s decision or by a change in employment.
For employers, portable health insurance means that small groups are no longer treated as a self-contained pool and rated each year based on changes in health status of their employees. Instead, their employees will be members of very large pools in which no one can be singled out because of a sudden large medical expense, and premium increases are the same for all. Under this system, employees can be in a plan of their own choosing and employers can limit their contribution to a fixed dollar amount. New hires will know how much the employer is going to contribute to health insurance, just as they know the amount of their salary. Because the employer’s role is largely financial, in a real sense employers will get out of the “business” of health insurance.
Portability – Part II
Problem: Younger Spouses and Retirees on Medicare. The lack of individually owned, portable insurance is particularly burdensome for many women who are married to older men. When a husband retires and enrolls in Medicare, wives may be left without any coverage – and often at vulnerable times in their lives. At the same time, Medicare won’t allow members to sign up underage spouses. Until the wife reaches 65 and can also enroll in Medicare, the couple will have to purchase her insurance with after-tax dollars. She’ll also be at a time in her life when she’s charged higher premiums for health insurance, since health risks tend to rise with age. And she’ll pay even more (or possibly even be denied insurance altogether) if she already has an expensive health problem or is recovering from a disease such a breast cancer.
Problem: Federal Laws Designed to Encourage Portability Have Actually Outlawed It. Under the current system, employers cannot buy individually-owned insurance for their employees. Specifically, lawyers interpret the Health Insurance Portability and Accountability Act of 1996 (HIPAA) to say that if employers purchase employee health insurance with untaxed dollars, the insurance must be group insurance. A better alternative would allow employers to purchase individually-owned, personal and portable insurance for their employees. Even though employers would pay some or all of the premiums, employees could take the insurance with them as they move from job to job.
Source of the Problem: Tax Penalties for Portable Insurance. Tax law is the main reason companies provide their workers with health insurance rather than pay higher wages with which employees could buy their own insurance.
People receiving employer-based health insurance enjoy an enormous tax advantage. Employer-paid premiums avoid federal, state and local income taxes, as well as the (FICA) payroll tax. By contrast, people who buy their own insurance get no tax break unless their medical costs exceed 7.5 percent of their adjusted gross income. Even then they get only a simple deduction and must itemize on their tax return. As a result, genuinely portable insurance is actually penalized under the tax law.
For a typical middle class family, government is effectively paying for half the cost of employer-provided health insurance. To see what this means, suppose that insurance for the family costs $6,000. If the insurance is purchased by an employer, it can be purchased with pretax dollars. This implies that the employee must produce and earn $6,000 that will be set aside as pretax payment for insurance rather than as taxable wages. However, if the insurance were to be purchased directly by the family, the employee must earn $12,000 in order to have enough left over after the payment of taxes to pay for the insurance. In terms of the amount of pretax income needed to purchase insurance, insurance purchased directly with after-tax dollars costs the family twice as much!
To be continued in Section 8 in October 2014
Making Health Insurance Portable
One of the strange features of the U.S. health care system is that the health plan most of us have is not a plan that we chose; rather, it was selected by our employer. Even if we like our health plan, we could easily lose coverage because of the loss of a job, a change in employment or a decision by our employer. These problems affect all Americans, but lack of individually owned, personal and portable health insurance has its greatest impact on older workers, who are more likely to have health problems.
Problem: Lack of Continuity of Insurance. Virtually all employer health insurance contracts last only 12 months. At the end of the year, the employer – in search of ways to reduce costs – may choose a different health plan or cease providing health insurance altogether. Strangely, the only people with private health insurance guaranteed to last longer than one year are people who purchase insurance on their own.
Problem: Lack of Continuity of Care. Employer-sponsored health care largely evolved at a time when most health insurance was fee-for-service. Fee-for-service means an employee can see any doctor or enter any hospital and insurance paid all or most of the bills. As a result, a change of jobs usually did not cause undue disruption, provided that both the new and old employer had health insurance plans.
Things changed after the introduction of managed care. Today, as in the fee-for-service era, employees who switch jobs must also switch health plans. All too often, that means changing doctors as well, since each health plan tends to have its own network. For example, if an employee (or a member of the employee’s family) has a health problem, there may be an interruption in the continuity of care. Additionally, different employer plans have different benefit packages. Thus, coverage for some services, like mental health, may be covered under one employer’s plan but not under the next employer’s plan.
These disruptions affect some families more than others. For people who are healthy, they may amount to minor inconveniences, but for others the problems can be severe. One study of chronically ill workers found that relying on one’s employer for health coverage reduces job mobility by 40 percent compared to similar workers who obtain their health coverage elsewhere.
Problem: Perverse Incentives for Employers and Employees. Most employees view health insurance as a fringe benefit. When they enter the job market, they primarily search for employment opportunities that reward them for their skills and abilities. But a growing minority of workers approaches the job market very differently. These are individuals with a family member (often a spouse or child) who has very high health care costs. When these workers compare job opportunities, they are primarily comparing health plans. For them, health insurance is the main attraction, rather than the job or the pay.
Clearly it is not in the financial self-interest of employers to attract workers whose primary motivation is to get their medical bills paid. So, to protect themselves from such potential hires, employers are increasingly altering their health plans to attract the healthy and avoid the sick. Having small copayments for routine office visits and higher deductibles for hospitalization is one technique. Having long waiting periods before employees become eligible for the company’s health plan is another.
These reactions on the part of employers are rational responses to a labor market that increasingly is looking like a game of musical chairs. But what is good for the employer is not necessarily good for society as a whole.
Are Medical Scribes an innovation that improves healthcare and the doctor/patient relationship?
In the early 2,000s as we were being pushed to see more patients as health maintenance organizations (HMOs) were exerting their control of private practice in the United States, I began writing this Journal on a Quarterly basis. I utilized international conferences as one mechanism to gain a world perspective of health care.
I attended a large number of the International Conferences of my specialty organization. Our meetings were scheduled alternately on an East Coast city such as Boston or Atlanta or a West Coast city such as San Francisco or Seattle. It was attracting colleagues from more than 40 countries. The meetings in the East attracted large numbers of European, African, and Mid-East and the meetings in the West attracted large numbers of Asian, Australian, and South American colleagues. The physicians from the UK, who were on salaries, were sponsored by Pharmaceutical firms. They usually sponsored three plane loads of physicians which comprised a significant contingent of Pulmonologist. We have been known at various times by the five names which designated our specialty. Thoracic, Pulmonary, Lung, Chest, and Respiratory.
As the quality of the meetings continually improved, the attendance from around the world matured. Foreign attendance approached the domestic attendance. Although started by the pulmonologist, it attracted colleagues in related specialties. There were increasing numbers of pulmonary Pediatricians, Thoracic (Pulmonary) Surgeons, Lung pathologists, and Pulmonary Radiologist.
At these International Pulmonary Conferences, I had informal meetings with a large number of foreign colleagues. I first became aware of “Medical Scribes,” at a luncheon attended by Korean Pulmonologists. They were seeing patients much faster than American doctors. While we were complaining that we could not provide optimal health care seeing 4 or 5 patients per hour, they said they saw at least 10 and at times 12 patients an hour. They had a “scribe” with them at all times. The patients were prepared and previously interviewed by a Nurse who presented the medical problem to the physician. The physician began examining the patient as the nurse was presenting. The scribe was writing down what the physician was describing about his findings and his recommendations. The physician would then sign the scribe’s notes, the prescriptions that were written, and they then moved to the next exam room. The South Korean said the large number of patients required this speed. Did he ever have a personal relationship with the patient? He said the patient was essentially nameless after this five minute encounter. He would normally not recognize this patient on a return visit unless the nurse mentioned it. He said he had no choice in caring for his patients. In fact, he said he did not even consider these patients as his patients—they were patients of the state.
I determined that there was no end point in the state control of healthcare. It really was not healthcare for the ultimate benefit of the patient. It was bureaucratic control of the patient population for the benefit of the state. The patient was merely a commodity that was sold to the lowest bidder with an acceptable mortality rate that didn’t elicit serious public concern. At least not enough to cause political damage.
Are Innovations in Healthcare coming to an end in America?
Europeans come here for front-line cancer therapy. Where will they go after ObamaCare?
A Parable of Health-Care Rationing
BY ANNE JOLIS, WSJ Europe
Imagine you’re a Belgian industrialist with an idea for a device that treats certain cancers. You’re convinced it would be a huge improvement over the existing standard. But it would also be hideously expensive, at least initially, and your specialized contraption will put your country’s public-health accountants in a cold sweat. How to convince investors you’re not insane?
“The American dream,” says a grinning Olivier Legrain, the CEO of Belgian medical-device firm Ion Beam Applications, which was founded in 1986. “It is probably easier to sell innovative ideas in the U.S. than in the rest of the world.”
Ion Beam Applications is now the world’s leading purveyor of equipment for proton therapy, a form of particle radiation designed to treat tumors aggressively while sparing more healthy tissue than in other forms of radiation. The U.S. has 11 such centers in operation—more than any other country. Eight of them were designed, built and installed by IBA.
But Mr. Legrain’s American dream is in doubt, particularly as it relates to high-cost medical innovation. Before meeting him for breakfast last week, I called his biggest customer, a private, Indiana-based firm that runs several proton-treatment centers in the U.S. Asked how the 2010 health-care reform law might affect the market, ProCure CEO Hadley Ford was candid: “My general view is that it’s 900 pages of unintended consequences.” . . .
When the author put that to Mr. Legrain, he shrugged and doubled down. “If you have a good idea, if you have energy, you can make it happen in the States.”
The good idea is zapping localized tumors with charged protons, which scatter less radiation than gamma or x-rays, was born in postwar laboratories of Harvard and Berkeley. The technology was refined by IBA’s engineers, making the technology feasible for market –driven players which made it affordable beyond large research centers. Mr. Ford’s ProCure now runs facilities in Oklahoma, new Jersey and Illinois with another planned for Washington state. IBS also treats patients in Japan, Korea and France. One country notably absent from its client list? Belgium. . .
The result is that the Belgian government ships patients abroad for proton therapy. Most of them go to Massachusetts since the centers in Germany and Switzerland are fully loaded with waiting lists. . .
When ObamaCare takes effect in January, IBA will face a fresh challenge: a 2.3% tax on medical device sales. . .
“I sleep well at night knowing protons are fundamentally better to treat cancer than X-rays,” said Mr. Ford . . .
As for whether America will remain the first destination for medical advances in the age of ObamaCare, Mr Ford cautions: “Anything that moves toward one of anything, you’re going to have less innovation—one provider, one payer, one manufacturer.”
But Mr. Legrain’s faith in the American market seems unshakable. “Even though they’re moving toward a more social system,” he says, “the entrepreneurial spirit—it’s almost, to me, part of the DNA of America.”
Read the entire article . . .
Miss Jolis is an editorial page writer for The Wall Street Journal Europe.
5 steps to consider for making the most of Telehealth
Michelle McNickle | Web Content Producer | January 20, 2012
Telehealth services offer substantial opportunities for healthcare cost savings, as well as a proven effectiveness with improving patient care, particularly in rural areas. However, to get the most bang for the buck, there is still much work that needs to be done.
“With the widespread adoption of EMRs, digital health records provide physicians/clinicians with the remote monitoring capabilities to communicate with their patients,” said Fred Pennic, founder of HIT Consultant and senior advisor at Aspen Advisors.
This remote access to care saves time and money by allowing physicians to work with more patients and by cutting out travel expenses for people in rural areas — many of whom find travel to be a financial and physical hardship.
Pennic believes there are some key endeavors that need to take place for the full positive effects of telehealth medicine to be felt. He offers this food for thought: Read food for thought. . .
1. Establish an incentive-based program. According to Pennic, sustainable funding is vital to the successful, widespread adoption of telehealth. “Creating more incentive-based programs or grants will provide agencies and other organizations with the funding necessary to overcome the start-up costs associated with implementing such initiatives,” he said. Recent research has proven the potential cost savings of such initiatives can be substantial, making the case for incentive-based programs to get telehealth initiatives up and running that much stronger. For example, after evaluating a telehealth program, researchers at Stanford University, found spending reductions of approximately 7.7 percent to 13.3 percent, or $312 to $542 per person per quarter.
2. Develop the infrastructure. “Having adequate infrastructures [in place] to support these initiatives are imperative,” said Pennic. Infrastructure is the “heart of telehealth,” he said, and includes investing in equipment such as fiber optics, broadband/wireless coverage, video, computer, voice and imaging.
3. Improve telehealth reimbursements. As it stands legislatively, said Pennic, there’s no universal reimbursement policy among public and private sectors governing the reimbursement of telehealth services — something he believes is imperative to its widespread adoption and success. “Current payment for telemedicine services, such as offsite reading of medical images, includes Medicaid, Medicare, employers and private insurers,” he said. “However, payment is limited for interactive consultations and chronic-care patients.”
[See also: Telehealth services make business sense.]
4. Foster user acceptance and confidence in telehealth. “Perhaps the greatest challenge in telehealth is increasing the user acceptance of technology, for both clinicians and patients who aren’t tech savvy,” said Pennic. Ideally, he said, successful telehealth programs must be able to easily integrate the telehealth process into healthcare and patient environments seamlessly. And although we know the federal Medicare program for seniors and disabled Americans doesn’t currently reimburse for telehealth and home monitoring services, a recent article is saying that could quickly change due to the upswing and acceptance of telehealth programs In fact, according to Dr. Joseph Kvedar, director of the Center for Connected Health at Partners Healthcare in Boston, the future is “quite bright” for payment and reimbursement programs. Statics have proven telehealth’s effectiveness, the article states, with confidence in its ability to reduce readmission rates growing.
5. Allocate resources and time. In addition to meeting technology requirements, said Pennic, successful telehealth programs must have the proper allocated resources and time necessary to ensure its widespread adoption. “People and processes are the key components to effective telehealth utilization,” he said. Agreeing with Pennic is Laurence C. Baker, PhD, a professor of health research and policy at Stanford. After studying a Healthy Buddy telehealth program, which was used by Medicare patients in the Northwest, he found two main aspects played most into its success: the first being the “tight” integration of information and care management, and the second was the device itself, which was patient-friendly and easy to use.
How to become an Entrepreneur?
I understand why the top students in America study physics, chemistry, calculus and classic literature. The kids in this brainy group are the future professors, scientists, thinkers and engineers who will propel civilization forward. But why do we make B students sit through these same classes? That’s like trying to train your cat to do your taxes—a waste of time and money. Wouldn’t it make more sense to teach B students something useful, like entrepreneurship?
I speak from experience because I majored in entrepreneurship at Hartwick College in Oneonta, N.Y. Technically, my major was economics. But the unsung advantage of attending a small college is that you can mold your experience any way you want.
There was a small business on our campus called The Coffee House. It served beer and snacks, and featured live entertainment. It was managed by students, and it was a money-losing mess, subsidized by the college. I thought I could make a difference, so I applied for an opening as the so-called Minister of Finance. I landed the job, thanks to my impressive interviewing skills, my can-do attitude and the fact that everyone else in the solar system had more interesting plans.
The drinking age in those days was 18, and the entire compensation package for the managers of The Coffee House was free beer. That goes a long way toward explaining why the accounting system consisted of seven students trying to remember where all the money went. I thought we could do better. So I proposed to my accounting professor that for three course credits I would build and operate a proper accounting system for the business. And so I did. It was a great experience. Meanwhile, some of my peers were taking courses in art history so they’d be prepared to remember what art looked like just in case anyone asked.
One day the managers of The Coffee House had a meeting to discuss two topics. First, our Minister of Employment was recommending that we fire a bartender, who happened to be one of my best friends. Second, we needed to choose a leader for our group. On the first question, there was a general consensus that my friend lacked both the will and the potential to master the bartending arts. I reluctantly voted with the majority to fire him.
But when it came to discussing who should be our new leader, I pointed out that my friend—the soon-to-be-fired bartender—was tall, good-looking and so gifted at b.s. that he’d be the perfect leader. By the end of the meeting I had persuaded the group to fire the worst bartender that any of us had ever seen…and ask him if he would consider being our leader. My friend nailed the interview and became our Commissioner. He went on to do a terrific job. That was the year I learned everything I know about management.
At about the same time, this same friend, along with my roommate and me, hatched a plan to become the student managers of our dormitory and to get paid to do it. The idea involved replacing all of the professional staff, including the resident assistant, security guard and even the cleaning crew, with students who would be paid to do the work. We imagined forming a dorm government to manage elections for various jobs, set out penalties for misbehavior and generally take care of business. And we imagined that the three of us, being the visionaries for this scheme, would run the show.
We pitched our entrepreneurial idea to the dean and his staff. To our surprise, the dean said that if we could get a majority of next year’s dorm residents to agree to our scheme, the college would back it.
It was a high hurdle, but a loophole made it easier to clear. We only needed a majority of students who said they planned to live in the dorm next year. And we had plenty of friends who were happy to plan just about anything so long as they could later change their minds. That’s the year I learned that if there’s a loophole, someone’s going to drive a truck through it, and the people in the truck will get paid better than the people under it. . .
“Why do we make B students sit through the same classes as their brainy peers? That’s like trying to train your cat to do your taxes—a waste of time and money. Wouldn’t it make sense to teach them something useful instead?”
Healthcare needs more innovative Entrepreneurs.