Consumer Power Report #163

Published February 2, 2009

I’ve been compiling a lot of good stuff on consumer-driven health, but I ran out of room for it this week. The horror stories coming out of Washington continue to mount–and will continue for months to come. But we’ll make a point to share the good news with you as well. Stay tuned.



Jamie Robinson and Paul Ginsberg have paired up in Health Affairs to take another shot at consumer-driven health care. This is one of the most peculiar articles I’ve read on the subject. You can tell which author wrote which part of the piece. Ginsberg, of the Center for Health System Change, has long been a skeptic, but he’s also been willing to look at the evidence. Robinson, of UC Berkeley, on the other hand, has been foaming-at-the-mouth hostile to all of this stuff. About a year-and-a-half ago he gave a speech to the Consumer Driven Summit where he declared the death of CDHC in favor of what he termed “managed consumerism.” He had a list of about 10 particulars, but as we wrote at the time, he was wrong on every single one. He just hadn’t bothered to look at the evidence.

This article continues in that vein. It does a fairly good job of describing the vision of the advocates of CDHC and concedes that we are addressing the right problems. For instance, in their conclusion the authors agree that, “When in possession of adequate information and faced with appropriate incentives, consumers make better choices for their own health than does any third party, be that third party motivated by the most praiseworthy of intentions. Moreover, as a matter of ethics, it is the patient and consumer, not the physician or insurer or employer or regulator, who should be vested with the right to make trade-offs in the emotionally and sometimes spiritually charged domain of health care.”

But they object to what they deem “The obdurate insistence on a la carte choice and retail purchasing pushed the theorists of consumerism into positing organizational and market dynamics that have not been observed in the real world.” They are hoping against hope that insurance companies will continue to be the Big Daddies of the health care system.

My bigger objection to the article is the way the authors cherry-pick and mischaracterize the available evidence. They try to make the case that CDHC adoption has been “anemic,” but they do so by purposefully overlooking the available data. They acknowledge that, “The HDHP represents the most important product innovation in health insurance since the point-of-service (POS) product, (but) the HDHP has been a disappointment in terms of actual sales.” To support that idea they cite AHIP’s census of HSA-qualified health plans. But AHIP counts ONLY plans that are HSA-qualified. It does not count HRA plans or stand-alone HDHPs. In fact, the CDC’s annual NHIS survey found that more than 20 percent of the under-65 population were enrolled in HDHPs as of the middle of 2008. Ain’t nuthin’ “anemic” about that.

This finding was confirmed by the KFF/HRET annual survey of employers that found 18 percent of workers are in HDHPs. The authors had the KFF/HRET survey right in front of them and cited it in arguing that only 8 percent of workers are in “HDHPs with a savings option!” But they didn’t say that “savings options” are “the most important product innovation,” they said HDHPs are. As critics have rightly pointed out, there is no advantage in having a tax-favored savings account for a person who pays no taxes. But the behavioral impact of the HDHP applies with or without the savings option.

Even more astonishing is the authors’ complete disregard of those behavioral changes, which have been well documented by the parties best positioned to measure it. Just in the past few months reports have been released by the Mercer Company, WellPoint, CIGNA, the Blue Cross Blue Shield Association, United Healthcare, Aon Consulting, and even the chronically skeptical EBRI, all showing that people in CDHPs pay more attention, seek out information, participate in wellness and prevention programs, choose lower-cost treatments, and save substantial amounts of money for themselves and their employers.

If Messrs. Ginsburg and Robinson are what passes for scholarship these days, no wonder the country is in trouble.

SOURCE: Health Affairs; CDC’s NHIS Survey; KFF/HRET Survey


Here’s the ol’ foot-in-the-door tactic at work. With large layoffs, many workers would like to continue their employer coverage by exercising their COBRA continuation privileges. But, man, paying 102 percent of what your employer was paying is expensive–especially if you have just lost your job. So, our benevolent Congress included a 65 percent subsidy of COBRA premiums in the stimulus package. The subsidy will be available only for COBRA coverage, not if the employees would prefer to buy their own coverage in the individual market.

While it was looking at COBRA, the Ways and Means Committee also decided it was a handy vehicle for getting people from employer-based coverage to Medicare. It decided to allow workers who are age 55 or older or who have been with the company for 10 years or more to continue their coverage until they become eligible for Medicare at age 65. So, now an employee who leaves a company at age 35 after working for 10 years may stay on the employer’s health plan for 30 more years.

According to Business Insurance, people who choose to stay on COBRA incur 150 percent of the costs of regular workers, but pay 102 percent of the premium. So employers end up subsidizing one-third of their costs. And now they will get to do that for decades. If there were any employers who opposed National Health Insurance before, there will be a whole lot fewer of them after this bill takes effect.

SOURCE: Business Insurance


But public employers are not worried. A recent survey by the International Foundation of Employee Benefit Plans (IFEBP) finds that public employers are far more likely to adopt disease management (69 percent) and wellness programs (65 percent) than they are to adopt consumer-driven health care (17 percent). The reasons they give are that CDHPs “are not a good fit” for their organization (35 percent), they “don’t favor cost shifting” (20 percent), and they are “waiting until CDHPs are proven effective (18 percent).

The press release continues, “In addition, nearly three-quarters, 74 percent, believe that there is a lack of good data about the cost-effectiveness of CDHPs and 79 percent stated that wide acceptance of CDHPs is unlikely until they become simpler to navigate.” I guess they missed last week’s newsletter that included an article showing that “disease management” programs have been proven ineffective, to the point that CMS has dropped its pilot program because there was no return on investment. But that’s okay. It’s only taxpayer money being flushed down the toilet.

SOURCE: International Foundation


We got a lot of feedback on my comments that were critical of the new Cato Institute paper, “Does the Doctor Need a Boss?” Apparently, so did Cato. Now Michael Cannon has invited me to participate in a blog discussion of these issues. I’m not sure when that is supposed to begin, but we’ll keep you posted. Meanwhile, here are some of the comments we received:

From Jane Orient, MD, of Tucson, Arizona and head of AAPS:

So just who should be my boss? What credentials? What oversight of the boss? Who gets sued if there’s a problem?

The “project manager” in cases like Mr. Kling’s used to be called “doctor.” Seeing to all those details used to be my job when I was the attending internist rounding on my private patients in the hospital, calling the consultants but doing all the medical work outside of the specialty procedures, always looking for trouble.

I don’t do that any more; very few doctors do. They rely on hospitalists. Reasons: (1) They don’t get paid. (2) They do get hassled constantly by managers with clipboards, not to mention Medicare bureaucrats. They have to cope with increasingly complex although largely pointless, legalistic hospital procedures and impossible Medicare billing requirements (and threats of draconian fines and prison terms for errors). Probably worst is the lack of experienced, well-trained nurses who know their patients and are familiar with the hospital unit because they work there all the time.

A job that interns used to be able to do, with the help of a good nursing staff, is now probably impossible for any human being, thanks to all the bosses, supervisors, overseers, committees, risk management, quality assurers, teams, team leaders, managers, utilization reviewers, etc.

Pretty soon you won’t be talking about bosses for doctors, because there won’t be any doctors. Who needs them anyway? If the project manager is capable of bossing the doctor, and if he’s a hospital employee who gets paid even if the doctor doesn’t, why doesn’t he just do the doctor’s job?

From Peter Nelson, with the Center of the American Experiment in Minneapolis:

As someone who works almost entirely on health care issues at a state-based think tank, I find incredible value in your regular emails. However, I must say that I was a bit put off by your recent assessment of the Cato paper by Michael Cannon and Arnold Kling. Writing “YIKES!” and calling it “one of the most offensive papers I’ve ever read” were unwarranted.

As you recommended, I did read the paper and I did draw my own conclusions. Permit me to share.

First off, asserting that the authors arrive at their conclusions primarily from an emotional reaction versus logical contemplation was quite unfair. Almost everyone in health care has an emotional health care story that in some way colors their view. I know I do and I suspect that you do too. …

Second, the paper presents a vision for how health care could be delivered if people were given more control over health care dollars. Importantly, it doesn’t say this is what needs to happen, it just describes possibilities. While I might disagree with a number of the points made by Cannon and Kling, the paper delivers a more imaginative and thought provoking vision than we’re used to seeing from think tanks.

Finally, the paper attempts to address a mind boggling question: How can we improve the way we pay for health care? Whether you agree with them or not, anyone who enters this thicket deserves significant leeway.

From Kirby Neilsen, a retired insurance agent in Ohio:

Greg, your Consumer Power Report #162 seemed especially well timed and well written this week although I think your writing is good every week.

Over the weekend I had a chance to read “Does the Doctor Need a Boss?” and I am left wondering really why they think Corporate Medicine will solve all the problems we have in health today? In fact in one section they talk about “Corporate Competence,” while I thought the phrase to be an oxymoron. Give me my individual MD’s any day. Not that corporations can’t do things well. Like the authors said, corporations can build houses and cars and space ships, but that model doesn’t easily translate into health care.

Although I am living a chronic and complex disease process and can certainly say more needs to be done at refining interdisciplinary care, I just can’t see any way to do that other than through a consumer centric model of care. Not a corporate model of care.

The authors’ perception of physicians as worker bees in a beehive run by managers and ultimately queen bees leaves one with a perfect reminder of bureaucratic complacency and the manager clocking out at 5:02 pm while the poor patient has to wait until the morning to learn whether or not they are going to get the treatment the MD ordered. Going on, they insist that case management be replaced by something called “senior management” which doesn’t sound like there is room for any consumer input. It sounds like bureaucratic power struggles to me.

The way they denigrated physicians was shameful and unnecessary. I know a lot of doctors both as an agent and as a patient and not one has exhibited the old “I am God” syndrome to which they referred. Plus, who do they think is going to care for all those folks out in rural Minnesota, Montana, and North Dakota?

There are other areas I reacted to, including the National licensing of physicians and other health care providers (talk about your Federal Control of medicine), and the notion that corporate competition using their model will really bring about better health care results. So they said would happen if we only had more big privately owned hospital chains. I recall that specifically from Columbia, the corporation once owned by the Frist family and who ended up with huge Medicare or Medicaid (or both) fraud convictions. They bought up hospitals all over the country and were going to drive down the cost of health care. Right.

I also compliment you on your calling out the use of personal experiences as a basis for a position statement. My reaction was, aren’t families supposed to put a stop to too much chaos in health care for their parents? Don’t blame MD’s for doing their job, convince them that you are not going to allow any more moves and advocate for prioritized care.

Another person who blames MD’s for the death of a parent is the world famous prognosticator and management guru Tom Peters in his blog If you hunt around some of the archived issues you will find out he believes MD’s in a hospital killed his 97-year old mother while at the same time admitting she had multiple serious health problems.

The link above takes you to the current posting on his blog where he wants to seek out all obese Doctors, School Principals, and Teachers and remove them from addressing obesity because they are no long credible in talking about obesity. Mr. Peters is in the same camp as a lot of folks these days and feels that we do need more regulation to protect people from themselves. So get ready docs, you may have to weigh in before you are allowed to counsel patients.