Consumer Power Report #147

Published October 6, 2008

Our latest Consumer Education workshop was held on Wednesday, October 1, in Chicago. The presentations by Doug Andrews of Argus Financial, Glenn Stokes of HSA Bank, Bob Hamilton, MD, and Doug O’Brien of the state Chamber of Commerce were just terrific.

Next, it is on to Austin on October 17. There our presenters will be Sharon Alt of Alt Benefits, Michael Olaiz of HSA Bank, Donna Kinney of the Texas Medical Association, Ben Cutler of US HealthGroup, and Devon Herrick of NCPA. The registration fee for these events is only $25 — talk about getting your money’s worth! For more information or to register, please go to, or contact Robin Knox at 312/377-4000.


One of the few upsides of the current turmoil in the financial markets and the housing meltdown is that they are likely to put the kibosh on any major expansion of government health programs. State tax revenues will be way, way down, and the Feds will have their hands full dealing with $700 billion plus in new obligations.

Increases in joblessness will raise spending on Medicaid and unemployment insurance, and coping with all this chaos will occupy the energies of most elected representatives.

Plus, consumer confidence in major institutions has tanked. People will be less inclined to trust their futures to gigantic organizations, public or private. People will want to have more control over their own lives and their own fortunes.

This should all be very good news for consumer-driven health care. People will want to take more responsibility for their own spending rather than trusting major institutions to do it for them. This is a golden opportunity to expand market share and establish CDHPs as a primary way of financing heath care.


The Brookings Institution’s Henry Aaron is calling on Barack Obama and Congressional Democrats to drop their ambitions for “universal health care.”

Aaron writes in The New Republic, “Covering all Americans has been a goal of the Democratic Party for at least seventy years (but) it would be a serious mistake for a President Obama to make sweeping reform an early first-term priority.” He lists four reasons why it would be “unwise.”

1. The chances of success are small. No consensus exists on how best to achieve universal coverage. Recall that Democrats held 258 seats in the House (25 more than now and more than they are likely to hold in 2009) and 57 seats in the Senate (five more than now) when President Clinton’s health plan imploded. Right now, Democratic support is wobbly.

2. The political fallout from failure would be devastating. The unsuccessful Clinton health plan was a political catastrophe for his party. That failure was a major factor in the massive Democratic Party loss in the 1994 congressional election. Were an Obama administration to fail similarly, the political consequences for the administration and the party could be equally serious.

3. Numerous other problems cannot wait. To the financial crisis, which is an obstacle more for the political energy that it will absorb than for its cost, add global warming, energy prices, Al Qaeda, Iraq, Iran, Afghanistan, the Arab-Israeli conflict, recession, income inequality, Social Security, rebuilding the U.S. military, and tax reform.

4. The ‘big bang’ approach to health reform is the wrong strategy. Congress is unlikely to change how the entire U.S. health care industry operates with one bill. And if it did so, it would probably make a hash of the job.

Aaron proposes instead four incremental steps to move the issue without the hazards of a massive takeover.

1. Expand SCHIP.

2. Set up a system to evaluate the effectiveness of medical treatments.

3. Encourage state experimentation like Massachusetts’.

4. Create a National Health Insurance Clearing House like the Insurance Exchange Obama has already proposed. Aaron says, “Eventually, the clearing house could regulate health insurance prices, narrowing the huge variations that now make individual private insurance unaffordable for high-risk enrollees–the elderly and those with preexisting conditions. Over time, it could become a channel through which all or most people get coverage and that administers the subsidies that make insurance affordable.”

He concludes, “Democrats should beware of once again approaching health care reform the way Charlie Brown always approached the football that Lucy held–heedless of experience, credulously hopeful, and flat on their backs.”

SOURCE: The New Republic


The Salem News reports from Massachusetts that “new regulations slated to take effect in January threaten all the progress and the burden on businesses could negate many of the gains the health care law has made.” The article says the new rules would require all plans to cover prescription drugs and disallow plans with high copays and deductibles. It argues these are exactly the kinds of plans that appeal to younger workers who make up a large portion of the 191,000 newly insured residents. It concludes, “If the state mandate eliminates these types of plans as inadequate, businesses could opt to drop the coverage and pay the $295 per worker penalty instead and those workers would then likely revert to their old ways of choosing no coverage rather than over-coverage.”

SOURCE: Salem News

Rhode Island is trying something interesting. According to Felice Freyer in the Providence Journal, the state wants to encourage greater use of electronic health records, but it also wants to protect patient privacy. So it is giving each patient the right to participate in an electronic network and to determine who may access their information. The article says, “The law, unique to Rhode Island, establishes the rules governing the exchange; it gives patients control over who sees their records, puts the Health Department in charge, requires a commission to oversee the exchange, and sets civil and criminal penalties for violating the law.”

It adds, “When you enroll, you can choose one of three levels of privacy: You can specify that your records go through the exchange only in an emergency. You can specify that only certain providers will have access to your records. Or you can say that anyone involved in your care can have access. You also can be notified every time someone looks at your medical records. You can change these designations, or withdraw from the system altogether, at any time.”

It’s an intriguing approach, but nothing is ever without controversy in this business. While patients can control who sees the information, they cannot control what information is in the record. The article notes some patients may not want to share their psychiatric history with a podiatrist. But one advocate argues doctors would not participate if patients could pick and choose what information the record contains. So we’ll see how this works out.

SOURCE: Providence Journal


The Ninth Circuit has issued another ruling that is certain to be overturned by the Supreme Court, keeping intact its record as the most-reversed appeals court in the United States.

A three-judge panel of the court ruled that San Francisco’s play-or-pay mandate on employers does not violate ERISA, “because it does not require the creation of an ’employee welfare benefit plan’ within the meaning of that federal law,” according to an article by Joanne Wojcik in Business Insurance.

But ERISA does not apply only to laws “creating” an employee welfare benefit plan, but laws “relating to” such a plan. There is no question that this law “relates to” such plans, and so it shall be overturned by the Supreme Court just as every other similar attempt has been over the past 30 years.

As Chris Reed put it in a San Diego Tribune blog, “The 9th is rewriting plainly written law. No employer mandate has ever withstood a federal court challenge until now. That’s because ERISA says states can’t tell employers what benefits to provide. I repeat my promise to eat a printout of this blog item if the Supreme Court upholds the San Francisco law. This is a slow-motion farce.”

SOURCE: Business Insurance; Sign On San Diego (includes a link to the actual opinion); New York Times


Hewitt issued a new report based on annual surveys of employers and employees and found some fundamental differences in perspective between the two groups. The report is called “Two Roads Diverged” and that characterizes the perspectives pretty well.

The emphasis is almost entirely on corporate wellness programs, arguing without support that “adoption rates for ‘silver bullet’ solutions such as consumer-driven health care have slowed.” There are two big problems with that statement. First, the adoption rate has not slowed at all as even the KFF survey we recently reported on indicated. Second, no one I know has ever described CDHPs as a “silver bullet solution.” We have all described it as merely a step in the right direction.

But the Hewitt report does find some interesting attitudes. It finds that the overwhelming majority of employers are committed to “improving the health and productivity of their workforce.” But, while employees may “want their employers to assist them in understanding how to maximize the value of their health plan coverage, they are less convinced about their employers’ role in influencing their personal lifestyle choices and health care decisions. Almost three-quarters (74 percent) of employees agree that their employer has a role in helping them understand how to use their health plan, but only 12 percent agree or strongly agree their employer has a role in helping them understand how to stay healthy.”

The survey also tested employer support for various health reform ideas and reported on the six ideas with the greatest support:

  • 81 percent support for — Utilizing health care data and measurement to drive your organization’s health care strategy.
  • 75 percent support for — Provide incentives in private and government-sponsored coverage that promote preventive care, wellness, and better health outcomes.
  • 67 percent support for — Tax deductibility for all medical expenses and insurance premiums, not just those through employer plans.
  • 67 percent support for — Overhaul current reimbursement system to enable doctors to spend more time with patients and better coordinate care.
  • 62 percent support for — Individual insurance market reform to increase availability and affordability of individual market.
  • 52 percent support for — Create a National Health Insurance Exchange for consumers to shop among private plans.

SOURCE: Hewitt Associates

Another Hewitt report advises employees how to make the most of their upcoming open enrollment period. An article in the Centre Daily Times of Pennsylvania says, “As this year’s benefits enrollment season approaches, employees will feel the pinch even more, facing health care cost increases that continue to significantly outpace inflation and pay raises. But according to Hewitt Associates employees who take time to do their homework, weigh their choices, and make smart trade-off decisions will be in the best position to make their benefits dollars stretch further this year, without having to sacrifice the quality of those benefits.”

The article goes on the summarize ways employees can become smart shoppers within the choices made available by their employers.

SOURCE: Centre Daily