The Boston Globe published a laudatory write-up on June 8 about a new essay in the June issue of Harvard Business Review, by Michael Porter of the Harvard Business School and Elizabeth Olmsted Teisberg of the University of Virginia.
According to the Globe, Porter and Teisberg “call for collecting and disseminating information about the outcomes of medical procedures, so patients can make intelligent choices about physicians and hospitals.” The Globe adds, “They also recommend transparency in billing and pricing to reduce cost shifting, discrimination, and other inefficiencies.”
The Globe notes, “Porter and Teisberg both anticipate pushback from the parties invested in the current system.”
The Porter and Teisberg article in Harvard Business Review was published as part of an OnPoint collection along with related essays, “Will Disruptive Innovations Cure Health Care?” by Clayton M. Christensen, Richard Bohmer, and John Kenagy, and “Let’s Put Consumers in Charge of Health Care,” by Regina E. Herzlinger.
To see the entire collection, go to http://harvardbusinessonline.hbsp.harvard.edu/b02/en/common/item_detail.jhtml?id=6956.
To read the Boston Globe article, visit http://www.boston.com/dailyglobe2/160/business/A_prescription_for_healthcare+.shtml.
Charging the Uninsured
The “pushback” predicted by Porter is already taking place in the hospital industry, as Business Week reported in a June 7 article detailing a dispute over hospital price transparency.
The article, by Lorraine Woellert, discusses the efforts of Medical Savings Insurance (MSI) and K.B. Forbes of the Consejo de Latinos Unidos to make hospitals charge reasonable prices to self-paying patients. The article is very strange, however, in calling Forbes a “Republican strategist” and Pat Rooney “one of the most powerful voices on the Right,” as if what hospitals charge patients is somehow a political issue.
In fact, Consejo has been very effective in bringing attention to the plight of the uninsured, who are often charged three to four times what someone in a PPO is charged for the same service.
Nonetheless, Linda Quick (party affiliation not mentioned), the president of the South Florida Hospital Association, is quoted in the article as saying, “Forbes presents himself as an advocate of the consumer, [but his organization] seems to be initiated and financed by Rooney and others selling individual insurance.” Quick’s assertion doesn’t make any sense, however, given that what Forbes is objecting to is the ability of insurance companies to obtain these discounts.
The article goes on to say hospitals feel threatened by Health Savings Accounts (HSAs), because of their own mounting bad debt. It says, “In April, HCA [a hospital chain] blamed a rising tide of unpaid bills for its first soft quarter.” But that doesn’t make sense, either: HSAs didn’t go into effect until January, hence they can hardly be the cause of a hospital’s poor performance in the first quarter of 2004.
Source: The article was in the June 7 edition of Business Week.
Consejo to Testify
I met with K.B. Forbes to ask him about some of these charges. He said Consejo is completely independent from Pat Rooney and gets no money from insurance companies or labor unions. The organization is scheduled to present a new report to the U.S. House Energy and Commerce Committee on the problems the uninsured face in paying for hospital care.
The report will be made available on the Committee’s Web site after the hearing. Forbes said the report will cover the woes of more than 100 patients who have been ill-served by HCA facilities in Florida and Colorado. He is also forming a legal aid program to defend uninsured people who have been sued by hospitals in Florida and to monitor their collection procedures to ensure they follow the law.
Forbes also said Consejo has a brochure available for people facing unreasonable hospital charges and collection efforts.
Source: To reach Consejo, go to http://www.consejohelp.org.
Kuttner’s False Facts
Robert Kuttner has been ubiquitous lately. The editor of American Prospect is also a frequent contributor to Business Week and the Boston Globe. He is welcome, of course, to express his own views wherever he likes, but he really ought to get his facts right.
On May 24, for instance, Kuttner had an article in Business Week criticizing President Bush’s health care ideas. He wrote, “Bush’s proposed health tax credit would cover only $1,000 of the cost of a decent family policy ($6,000 to $9,000). … His health savings account requires insurance plans with high deductibles, which undermines the goal of preventive care.” This is all dead wrong.
The family tax credit would be $3,000, not $1,000, and HSAs allow for first-dollar coverage of preventive care.
Three days later, on May 27, Kuttner had another opinion piece, called “Bush’s Health Care Scam” in the Boston Globe, in which he cited an entirely different set of mistaken facts. In this piece he conceded the family tax credit is $3,000, but no longer said coverage could be purchased for $6,000, now claiming that it would have to cost $9,000.
In the same article, Kuttner claimed the problem with tax credits is that “about half of the uninsured have histories of serious medical problems.” (Wrong again, Bob!) He further assumed low-income workers would get the tax credit even if their employer was already paying for their coverage (wrong), and he argued the President’s Association Health Plan idea “would exempt such associations from regulations that currently prohibit discrimination against individuals based on health status.”
I wish this were true, but Kuttner’s wrong again. About all that AHPs would pre-empt are state-mandated benefits. Finally Kuttner says, “Bush wants to expand [HSAs] so they can also be used to pay premiums.” Alas, again I wish he were right, but he isn’t. There is no such proposal coming out of the administration or before Congress.
Source: The Business Week article was published on May 24, 2004, and the Boston Globe article was dated May 27, 2004.
Honest Look at the Individual Market
Tom Musco and Tom Wildsmith wrote an important but so far unheralded article for the Jan./Feb. 2004 issue of Healthplan magazine about the individual insurance market. The authors address the charges that individual coverage costs too much, provides lousy benefits, and cherry-picks the healthiest applicants. Musco is director of research statistics and Wildsmith is a policy research actuary for the Health Insurance Association of America (HIAA).
In October 2002, the authors surveyed insurance carriers about real-world experience in the individual markets in those states that allow underwriting; they received information on 502,000 applications received and processed in 2001. Of the 466,000 applications that were complete and could be processed, 88.2 percent of the applicants were offered coverage, 71.2 percent at standard rates. Of the remaining applicants, 5.9 percent were rated up, 13.5 percent were issued coverage with riders, and 2.8 percent received coverage with both riders and extra premiums.
The coverage was quite affordable, with the average annual premium for single coverage at $2,070, and $4,009 for family coverage (less than half of Kuttner’s alleged $9,000 price tag). Benefits were good, too, with PPO deductibles for singles ranging from $750 to $2,000, POP limits from $3,000 to $7,500, and lifetime maximums of $2 to $5 million.
The policies typically allowed applicants to purchase additional coverage for prescription drugs, wellness, and routine maternity. Mental health, substance abuse, and complications of pregnancy are built into the core benefits.
More than three-fifths (61.2 percent) of the uninsured are under age 35 and could be covered for less than $120 a month. If the president’s tax credit of $1,000 per year were adopted, it would cover most of the premium for most of the currently uninsured.
Source: Available through The Heartland Institute’s PolicyBot™ database at http://www.heartland.org/Article.cfm?artId=15320.
Greg Scandlen is director of the Galen Institute’s Center for Consumer Driven Health Care and assistant editor of Health Care News. His email address is [email protected].