Dead Moose on the Table in Kentucky

Published December 1, 2004

Tom Underwood of the National Federation of Independent Business argues “there’s a dead moose on the table” that no one in Kentucky wants to deal with. It’s the cost and availability of health insurance coverage that Underwood, the state director of NFIB, is talking about.

He lists seven actions the state should take:

  • allow small businesses to band together to buy health insurance;
  • adopt HSAs to get rid of the co-pay mentality;
  • restore competition in the health insurance market;
  • reduce paperwork;
  • make claims data available to employers and consumers;
  • review mandated benefits; and
  • pass prescription drug rebates on to consumers.

Underwood concludes, “The time is past to act. The moose is starting to smell.”


AHA Issues Critique of Specialty Hospitals

The American Hospital Association has issued a “TrendWatch” paper critical of “limited service providers”–i.e., ambulatory surgery centers, specialty hospitals, and diagnostic testing facilities. The paper notes the number of such facilities is “growing rapidly,” especially in states with no Certificate of Need (CON) regulations.

The core of the AHA critique is that these facilities take the most profitable services away from community hospitals, making it difficult for traditional hospitals to maintain trauma centers and emergency departments. The paper further argues that when the specialty facilities are physician-owned, the doctors have a financial incentive to refer patients to their own facilities and over-treat them once they are there.

The paper doesn’t address the broader issues, such as whether internal cross-subsidies at traditional hospitals are appropriate. Is it really fair or rational to have maternity and cardiac patients singled out to pay for the costs of a trauma center? If trauma centers are a valued community service, shouldn’t the whole community subsidize the costs?

This question leads to the even more important issue of the lack of transparency in hospital pricing generally. If all hospital prices were set rationally and related to the cost of providing the service, the specialized facilities would no longer be able to cherry pick the over-priced services. Realistic prices might also discourage the inappropriate use of emergency departments.

It is also questionable that physicians are motivated by mere greed in referring their patients to facilities in which they have invested. Given the scandalous track record of hospitals in patient safety and care quality, it is entirely possible physicians invest in facilities in order to assure better quality, and naturally refer their patients to facilities in which they have some influence over the quality of the care provided.


MWE White Paper Summarizes FTC/DOJ Report

The giant law firm of McDermott, Will & Emery has issued a white paper summarizing key points of the recent 361-page report issued jointly by the Federal Trade Commission and Department of Justice, “Improving Health Care: A Dose of Competition.” At a mere eight pages, the law firm’s summary may be more accessible to the lay reader than the original report.

The summary notes the antitrust agencies will be vigorously pursuing anti-competitive behavior by provider networks, joint purchasing ventures, hospital mergers, insurance companies, and pharmaceutical companies.

The report also addresses federal and state regulatory policies that are anti-competitive: “The Report directs the federal and state governments to reexamine whether the use of health care subsidies and health benefits mandates may create inefficiencies or a potential to reduce competition, restrict consumer choice, raise the cost of health insurance, and increase the number of uninsured Americans.” Specifically, it “admonishes states” to reconsider CON, reject collective bargaining by physicians, broaden the membership of licensing boards, reduce barriers to telemedicine through reciprocity compacts, and promote pharmacy benefits management transparency.

A debate over those issues is long overdue. Unfortunately, it is likely to be conducted in the adversarial climates of the courtroom and the press rather than the more collegial atmosphere of the policy community.


Big Business Opponent Interviewed in HealthLeaders

Along with growing pressure on hospitals from the antitrust agencies comes private class-action litigation from Richard Scruggs and other affiliated attorneys.

HealthLeaders magazine has run an interesting interview with Scruggs, the Mississippi attorney known for taking on asbestos manufacturers and the tobacco industry. He is “leading the charge in 49 lawsuits accusing 370 nonprofit hospitals of overcharging the uninsured and using overly aggressive collection methods on poor patients.” Scruggs says, “A charity hospital charging charity patients more than they charge anyone else doesn’t sit right with folks. It’s hard to defend.”

He doesn’t see legislation coming out of Washington to correct the problem, and he doesn’t expect much to come from the regulatory agencies. “There ain’t anybody on this watch, that I can tell.”

Don’t let the folksy style fool you–this is a cagey advocate. He says, “I have developed at least a philosophy that national litigation against entrenched industries is a three-front war. You have to win in the courtroom, but there’s also the PR battle and the political battle. They’re all interrelated.”


Things to Consider When Choosing HSAs

The cost of health care is one of the biggest concerns on Main Street, and the business journals reflect that. Many articles are discussing whether health savings accounts (HSAs) and consumer-driven plans are having a positive effect on health care costs.

In an article in Business First of Columbus, Ohio, Thomas Brady, CEO of UnitedHealthcare of Ohio, contends HSAs are having a positive effect. He provides a checklist of questions employers should consider when thinking about choosing an HSA.

Brady notes, “consumer-driven health plans are among the most popular options this year,” and tells of internal research that compared 20,000 iPlan (a consumer-directed plan) enrollees with 25,000 who stayed with traditional coverage. “UnitedHealthcare’s audit of plan users showed more than a 90 percent satisfaction rating, increased use of preventative-care services, and reduced medical costs and claims.”


Are Workers “Steering Clear” of HSAs?

On the other hand, Jim Cole writes an article headlined, “Workers steer clear of consumer-driven plans,” in the East Bay (Oakland, California) Business Times. This is a very curious article. It cites Great-West Healthcare as “having surprising success with its new (consumer-driven) program” and quotes spokeswoman Victoria Mahoney as saying, “We’ve been quite surprised by the results,” with a third of employees opting for it.

The article also reports Hewitt Associates “expects companies to focus on employee-controlled accounts, including HSAs and HRAs.” And a local broker says, “This is the beginning of an aggressive campaign by some of our clients to begin behavior modification.”

So, where is the evidence workers are “steering clear” of consumer-driven plans? The article offers only the two-year-old limited survey by the Center for Studying Health System Change, which we have reported on before.

Amazing. Blow the dust off an old survey and some reporters will ignore the real evidence staring them in the face.


American Goes to India for Heart Surgery

If U.S. hospitals can’t do the job, there is a growing industry of off-shore facilities that will pick up the slack.

An article in the Times of India relates the story of Howard Staab, an uninsured carpenter from North Carolina who needed heart surgery. Rather than trying to pay the quoted $200,000 to have the procedure done in the U.S., Staab flew to India and got it done for less than $20,000.

The article says, “India is a relative newcomer to health care tourism from the U.S. Americans have been trickling into specialized hospitals in Thailand and Singapore.” Seattle-based cardiologist Dr. Vinay Malhotra is quoted as saying, “For a blue-collar worker earning just above minimum wages, what is the option? India will become the destination as more and more lay people know about this.”

The article includes a link to Staab’s experience at


Greg Scandlen ([email protected]) is director of the Galen Institute’s Center for Consumer Driven Health Care and assistant editor of Health Care News.