Consumer Power Report #153

Published November 14, 2008

We had a terrific time at our third annual Awards Banquet. I will report more on it next week. Stay tuned.

On Saturday, November 8, I went to Orlando to receive the Ed Annis Award from Doctors for Patient Freedom. The group is made up largely of physicians who have been in leadership positions with organized medicine. There are far too many to name here, but they tend to be past presidents, trustees, and delegates to the AMA and leaders of state medical societies and specialty societies.

It was a great honor to be in their company, but the pleasure was tempered by the great frustration these folks have with their own AMA. Many of them feel they are being sold out and that the joy of practicing medicine is about to be killed off by bureaucrats who want only to control what they are allowed to do.

What is happening to medicine in America is a tragedy, not just for us but for our children and grandchildren who will be forced to suffer for our indifference.



WellPoint has been slow to put out data on CDHP experience, but when it does, it is a doozy. A report was released last week that finds employers who adopted a CDHP in 2006 had a negative cost trend (that is, spending went down from one year to the next), while the trend for non-CDHP plans was up between 7 percent and 10 percent. The report also shows that people in a CDHP were more likely to have a choice of plan than people in other types of plans, and that the CDHP was more likely to be chosen by families with children.

The report also found that people enrolled in CDHPs were more likely to use preventative care than people in non-CDHPs. Preventive utilization was 3.1 percent higher for women in a CDHP and a whopping 8.8 percent higher for men.

The report cautions on the importance of communication and education for effective use of the program. It says, “Because consumer-driven plans will be a new concept to some employees, communication during the enrollment period and a well-planned implementation are essential. Communications about the CDHP need to begin earlier and occur more frequently than communications from traditional plans, giving employees an opportunity to hear about the plan multiple times and through various avenues. Once the plan is in effect, continued communications about the unique aspects of the plan can help employees become engaged health care consumers.”

The study looked at the experience of 7,977 employer groups in eight states–Connecticut, Indiana, Kentucky, Maine, Missouri, New Hampshire, Ohio, and Wisconsin.

SOURCE: WellPoint Study

An article by Phillip Bretbeze in HealthLeaders Media references the WellPoint information in concluding, “CDHPs Aren’t Going Away.” The article says some studies have been negative, but “many more have shown that consumer-directed health care is doing what its proponents said it would–decreasing the cost of care.” The article adds that too many employers are not sharing the savings with employees, but it concludes that with the kind of results we are seeing, HSAs will prosper even under an Obama-type mandate.

SOURCE: HealthLeaders Media

Writing in the Milwaukee Journal Sentinel, John Torinus says, “Just as the governmentalists–my word–lick their chops at the prospect of Democrat-controlled Wisconsin and federal governments taking more control of health care, companies that put their employees at the center as consumers are producing astounding results.”

Astounding, indeed. He cites a company with 500 employees and four years of experience with an HSA-type plan, but based on an HRA combined with a VEBA (voluntary employee benefit association), that has had annual increases of 1.5 percent per year after a first-year savings of 12 percent. The employer gives each family a $3,000 debit card to offset a $1,500 per-person deductible.

He contrasts that with the Milwaukee Public Schools, which has done nothing to reform its benefits. So, “The medical and dental bill for active and retired employees is a whopping $210 million, or almost $20,000 per active employee. That is more than twice the private-sector average in the state.” Wow!

He concludes the school district could save $50 million a year by switching to a CDHP, with no change in coverage.

In fact, even if Congress should repeal the HSA law, VEBAs will still be around, as they have since the 1920s. Now that employers and benefit consultants have learned how to structure consumer-driven plans, VEBAs could remain a way of doing it.

SOURCE: Journal Sentinel


At our Consumer Education Workshop in Austin, Sharon Alt distributed an excellent article called “8 Mistakes to Avoid When Selecting a Health Plan,” by Dr. Eric Bricker, the chief medical officer for Compass Health in Dallas. The article is of course a promotion for Compass, but the lessons apply to all employers.

Dr. Bricker says to avoid:

1. Low deductibles, because they “separate employees from the true cost of care.”

2. Underutilizing co-insurance because co-insurance is “the perfect way to incentivize employees to make value-based decisions without a huge out-of-pocket expense.”

3. Using co-pays because “they separate employees from the true cost of care.”

4. Failing to take advantage of the health care marketplace. There are in fact a wide variety of providers with an equally wide variety of prices in almost every market. Learn the differences and incentivize employees to use lower-cost providers who are of excellent quality.

5. Failing to publicize price information. While price transparency is not yet where it needs to be, there is some solid information available that can be packaged to benefit employees.

6. Failing to provide cost comparisons for medications. Physicians are not yet very sensitive to the costs of the drugs they prescribe, so patients need to be.

7. Expecting employees to coordinate their own care. “Receiving health care is complex and confusing.” Patients would do better with a “medical home” that could help them work through all aspects of their treatment.

8. Failing to provide specific quality information. Again, this information is not easy to come by, but employers can do a lot to help employees access it.

SOURCE: Compass Health


I got a lot of feedback from my essay in the last issue. Many readers thought that with the budget deficit, there isn’t enough money available to do anything big. They think Congress will settle for SCHIP expansion. One person, who is involved in the secret negotiations with Kennedy, resented that I was alarming her constituents. She felt she was working to protect their interests. Other people were more concerned about the future of HSAs. And some people thought I was too hard on McCain–“threw him under the bus,” was how one put it.

On McCain, I responded that I hardly have the power to throw anyone under anything. I have no power over John McCain, but he has plenty of power over me. And he has already exercised that power by depriving me of some of my First Amendment rights. And that is really the point of all of this. Those of us who believe in free markets, and freedom generally, are not in the business of forcing other people to do anything. We believe in persuasion, not force. But Washington is all about force. Washington is a quest for power, and power is defined as the ability to force others to do what you want them to. People who are entrusted with that power had damned well better be cautious in how they use it.

On the prospect of big health reform, last week I did not provide any support for my views. They were based on what I am hearing from the grapevine with a bit of my own hard-earned experience thrown in. Since then, I have been collecting some published information that seems to confirm my instincts. Some particulars:

  • We are already facing a ONE TRILLION dollar deficit for FY ’09. Advocates will argue that if we can afford all that to “bail out Wall Street, surely we can afford $100 billion to bail out the uninsured.” And in fact even the Blue Dog Democrats who are supposed to be fiscally responsible are saying publicly that the days of “pay-as-you-go” are over. The Wall Street Journal quotes Rep. Jim Cooper (D-TN), the leader of the Blue Dogs, as saying. “It would be unfair to the new President to put him in a budget straitjacket.”

SOURCE: Wall Street Journal

  • David Kendall of the Progressive Policy Institute sees health reform as being painless and cost free–if it includes lots of restrictions on providers such as pay-for-performance, mandatory use of health information technology, case management, and forcing physicians into group practices. He argues that we currently waste $700 billion a year on needless care due to our fragmented system.

SOURCE: Progressive Policy Institute

  • MedPage Today is quoting Michael Myers, staff director of Kennedy’s Senate HELP Committee, as saying, “With the Obama victory, the question is no longer whether we’ll pursue comprehensive health care reform, but when and in what form.” It reports that Ron Pollack of Families USA briefed reporters to explain Mr. Kennedy has brought in NFIB, AHIP, and other “stakeholders” to “nail down specifics.” The article acknowledges there are competing efforts, especially from Sens. Ron Wyden (D-OR) and Max Baucus (D-MT), but Families USA says it is “really troubled” by Wyden’s approach, and Sen. Baucus is quoted as saying, “there’s just no time to waste in tackling health care reform.” Mr. Myers says he wants a “unified bloc of support behind a single bill.”

SOURCE: MedPage Today

  • The Los Angeles Times reports that the Divided We Fail coalition, made up of AARP, SEIU, the Business Roundtable, and NFIB, is spending $1 million to advertise the need “to enact comprehensive health care reform, upping the pressure on the president-elect to tackle the issue quickly after he takes office.” The article goes on to say, “The Service Employees International Union is mobilizing millions of people nationwide to press Washington for aggressive action on healthcare.” And “(John) Castellani of the Business Roundtable said he hoped a comprehensive overhaul bill could be on the floor of the House and Senate within 100 days of Obama’s inauguration on Jan. 20.”

SOURCE: Los Angeles Times

  • Meanwhile, Mr. Kennedy himself had an op-ed in Sunday’s Washington Post headlined, “Health Care Can’t Wait.” He writes, “despite the current economic downturn, we must forge ahead with this urgent priority.” He explains what a wonderful model Massachusetts has been and concludes, “The cost will be substantial, but the need for reform is too great to be deflected or delayed.”

SOURCE: Washington Post

  • But the Wahington Times had all this nailed a couple of weeks ago. An article by Jeffery Birnbaum begins with, “From his sickbed, Sen. Edward M. Kennedy has secretly been orchestrating meetings with lobbyists and lawmakers from both parties to craft legislation that would greet the new president with a plan to provide affordable medical coverage to all Americans, a measure he has called ‘the cause of my life.'”

It goes on, “Mr. Kennedy’s goal, his aides say, is to introduce a universal health care bill as soon as the new Congress convenes next year and to push quickly for its passage–a much-accelerated timetable compared with the last time that a health care overhaul was on the agenda, at the start of the Clinton administration.”

The article explains that secret meetings have been taking place since June and have included “the AFL-CIO, the Business Roundtable, the U.S. Chamber of Commerce, the National Federation of Independent Business, the National Retail Federation, the Federation of American Hospitals, the American Medical Association, America’s Health Insurance Plans, Families USA, AARP and the Consumers Union.”

SOURCE: Washington Times

So, the elite has gotten together to divvy up the health care pie. Everyone is at the table–except the average consumer who is the source of all the money in health care and for whose benefit health care is supposed to be. Everyone is confident that Joe the Plumber will pay the taxes demanded, comply with mandated purchase of insurance, accept only rationed services, go to monopoly providers, all without complaint because, in Bill Clinton’s terminology, “we are giving him health care.”

Note: The ideas presented in this newsletter represent the views of the authors. They are not intended to influence the passage of pending legislation and do not necessarily reflect the policies and positions of The Heartland Institute or the members of Consumers for Health Care Choices.