Future of Health Care Reform, by Glen Hiemstra, Futurist, Keynote Speaker
By Glen Hiemstra, August 27, 2009
Future of Health Care – Reform in U.S. hangs by a thread, written August 28, 2009
Twenty-two years ago I left a career in academia and set up a small consulting business as sole proprietor. I began purchasing health insurance on the private market, my only option. This was medical only, without dental or vision coverage, which was too expensive to add.
Since then, my wife (who has also been self-employed during this time) and I have paid $280,000 in insurance premiums, and another $110,000 for co-pays and the vision and dental care not covered in our basic medical policy. We have seen our costs rise about twenty percent a year, and have never been able to purchase health insurance for our few employees.
Meanwhile, as these costs have been rising steadily, I have had occasion to provide futurist consulting to various sectors of the medical and health care industries.
I was first invited to work with health care related enterprises in 1993, the last time “health care reformâ€ was on the U.S. agenda during the Clinton presidency. Since then I have worked with providers, insurers, and professional associations. In 1993, health care providers in particular assumed that reform was on the way, and while some wanted to derail it, most just wanted to be prepared.
As we know, the planned reforms of the day mostly failed to be approved, and while there were some later adjustments to Medicare and Medicaid reimbursement schedules, and even later the Medicare drug benefit adjustments, in fact the status quo in medical services in the U.S. has been mostly maintained for the last 16 years.
Now, in the current debate, many of those opposing health care reform also seem willing to maintain this status quo.
The nature of the status quo is well known. The U.S. medical system provides some of the most advanced care in the world, and along with the pharmaceutical industry conducts some excellent research and development. After a lull in cost increases in the mid-1990’s expenditures have soared since, from about 12% of GDP in the early 1990’s to 16% in 2005, and are on track to reach 18% this year. About 47,000 people lose their health insurance each week, usually because their have lost their job or their employer has dropped coverage, or because the insurance industry has canceled them.* The total number of U.S. citizens without health insurance hovers at around 47 million on any given day, while there is continual churn in who is covered and who is not. About 17,500 people file for bankruptcy each week because they can’t pay their medical bills,** and an estimated 400 people die each week because they lack coverage.***
Despite the oft-repeated mantra that we have the “best health care in the world,â€ basic facts suggest otherwise, as we rank poorly compared to other advanced countries in average life span, infant mortality, immunizations, and other standard measures of a healthy society. Most European countries and Canada rank better on quality measures while spending about half as much. They are criticized for long waits for certain things, but the evidence suggests that the waits there are not much different from the U.S., and these countries somehow manage to cover all of their citizens.
It is this last point that I fear gets lost in the debate over health care reform in the U.S., that the most fundamental goal should be to get everyone covered. If that goal is not met, then the details matter less. Opposition to this and other reforms seems driven by three primary motivations – satisfaction with the current system, a desire to wound the president, or a philosophical belief that the best health care system is a profit-driven one.
A couple of personal consulting experiences with health care insurers brought home this last issue to me. After consulting with health care providers and being impressed with their deep caring for patients, when I was invited to lead large insurance companies in strategic planning sessions, I expected to find the same concern for customers. To my surprise then, but understanding in retrospect, I found the insurance company boards and management to be concerned foremost about the bottom line, and secondarily about healthy outcomes. Whether all people were covered, whether sick people got well, or whether well people stayed well was of concern mostly in terms of whether the answer generated greater revenue to the insurance company.
The same basic philosophy was true even at a large “non-profitâ€ that I worked with, which sought to maximize “net revenueâ€ rather than “profit.â€ Later when I was speaking to a convention of a national health insurance company, I was discouraged to hear their medical director give a lengthy dissertation not on how to make Americans healthier, but on all of the legal means then available by which the regional companies could limit the medical procedures they had to cover, and minimize the cost of any procedures they could not avoid covering. That is the current U.S. health care insurance game in a nutshell.
So as a small business owner I am one who supports health care reform. The U.S. system needs four fundamental changes:
1. Insurers must be required to cover everyone, regardless of health or pre-existing conditions. Private insurers are currently incented to avoid paying for care, and to avoid sick people. That is one reason administrative costs are so high – it takes lots of people and lots of time to weed out sick applicants, and even more to deny claims over and over until those making a claim (whether patient or provider) give up.
2. Insurers must be required to maintain coverage of everyone even when they change jobs, set up their own businesses, or even if they get sick or have made small errors on applications and the like.
Consider these first two as major insurance reforms. The next two deal both with insurance and the more systemic health care system.
3. A means must be created by which prices can be better negotiated, by using the largest pool of insured people and the clout provided by law. The reason that health care is not like other consumer products (meals in restaurants, for example, or shoes or food) is that the important expenses cannot be anticipated, not to mention that they can be huge. Reform opponents often say the free market is the answer, but free market principles do not apply very well to health care. Yes, most everyone, if required, could afford to pay out-of-pocket for their annual physical exam. But only a few of the most wealthy can afford a sudden coronary bypass that costs $50,000 or the unexpected cancer that costs $500,000. That is why insurance is needed and also why it works. Through everyone cooperating to pay something, those who have a sudden need can be cared for. When the Congress forbade negotiations for better drug prices as they “reformedâ€ Medicare a couple of years ago, they effectively ignored a chance to bring down costs. That has to be a primary goal, and only collective action can accomplish it.
4. Finally, a public option is needed. Many people blanch at the idea of “government taking over health care.â€ But note that what is being called for, which I personally endorse, is a public “option.â€ No one will have to choose it, but it will be available to those who want it. A new government insurance entity that, like Medicare, is not concerned with profit or net revenue will act as a competitive brake. Like Medicare, administrative costs are likely to be substantially lower. Like Medicare a public option program will likely struggle with what to reimburse and how much. Yet, again like Medicare it is likely to be mostly satisfactory to users and health care providers alike, who appreciate the certainty of the Medicare system. Ask around and you will find few elders who would choose to drop Medicare, given a choice. Finally, like Medicare (if allowed by law) a public option would provide greater bargaining power over things like the cost of drugs. Ideally going forward people would be able to choose a public option, plus supplemental private insurance for luxury items if they wish and can afford it. This would unfortunately keep some “two-tierâ€ characteristics of what we have now, but at least would be a vast improvement.
Health care reform with all four of the features I list will pass the House and the Senate. The House version will have a stronge public option, the Senate version a weaker one. The President will be forced to indicate his preference and he will side with a stronger public option, which will come out of conference committee. The house will pass it in a party line vote, the Senate will pass it in a near party line vote after parliamentary maneuvers allow a majority rather than a super majority vote. It may take until November but more likely will be done sooner.
By finally dealing with health care reform successfully, if not perfectly, and despite partisan and industry objections, we will be on the road to a healthier society. We will also be on the road to a far more favorable business climate for enterprises of all sizes, especially the tiny companies like mine. Employers and employees will fight less or perhaps not at all over health care benefits come contract time. Individuals will fear losing their job less, be more willing to attempt the entrepreneurial life knowing their health care is secure, and also be more mobile as they know that changing jobs will not jeopardize their health insurance. Getting sick will not put even insured people on the road to bankruptcy. This is a desirable legacy to leave, no matter where you stand on the political spectrum.
* “Clock is Ticking,â€ report from Families USA, July 2009
** “Medical bills prompt more than 60% of U.S. bankruptcies,â€ CNN Health, June 5, 2009
***â€Dying for Coverage: New State Reports,â€ Families USA, March-April 2008
Glen Hiemstra, futurist speaker, is the author of Turning the Future Into Revenue: What Businesses and Individuals Need to Know to Shape Their Futures, from John Wiley & Sons, publisher, 2006. Glen is the Founder and Owner of Futurist.com, a website in the public interest, a blogger, consultant, and Internet video host. He lives and works in Kirkland, Washington, providing presentation, consultation, and research services. For more information contact Futurist.com.