|
December 2007 — Vol. 85, No. 10
COVER STORY
The right (and wrong) way
to reform health care
Related articles:
Who wouldn’t favor health care coverage for all Connecticut residents? That’s one goal politicians, health care providers, business leaders and consumers all can — and do — support.
But some of the strategies state policymakers and others have been pushing to reach that goal would have devastating consequences for Connecticut’s economic health and would, in the long run, simply not work. Fixing the flaws in the current, mostly employer-based health care system makes far more sense.
That’s the message in a new video CBIA recently produced to educate lawmakers and the public about how to reform health care the right way.
The right way, according to the business and health care executives interviewed in the video, is to strengthen our employer-sponsored insurance system. Nearly two-thirds of the people in the state are already covered by that system.
“And surveys show that they like it,” says Bob Patricelli, chairman and CEO of Avon-based Women’s Health USA. “So why would you want to rip that up and start with something that would be disruptive for two-thirds of the population?”
Yet proposals to do just that received serious consideration at the legislature this year. Those proposals, including calls for a taxpayer-funded, government-run health care system, failed to pass. They are, however, among the reforms now being studied by a state task force whose recommendations are due to the legislature late next year.
In the CBIA video “Health Care Reform: A Common Sense Approach,” association President and CEO John Rathgeber says policymakers debating how to reform health care face two basic choices: “One is to work off the strengths of our current system” — that is, employer-sponsored health insurance and public-sector assistance for people who don’t have an attachment to the workforce. “The second choice,” he says, “is for state government to take over the administration of health care for everybody in Connecticut. We believe that doing some commonsense things to reform our current system makes a great deal of sense.”
Johnna Torsone, senior vice president and chief human resources officer at Stamford-based Pitney Bowes, agrees. In the video she says, “With the appropriate reforms ... the employer-based system, combined with government subsidies where needed ... is the best way to respond to this crisis.”
The crux of the crisis: costs
Few would dispute the need to reform our health care system, which is increasingly unaffordable for employers and individuals alike. As costs rise, so does the number of people without health insurance — either because their employers can’t afford to offer it, or because they themselves decline to participate in it. Nationwide, the number of uninsured Americans rose from 44.8 million in 2005 to 47 million in 2006, according to the U.S. Census Bureau.
The health care reform problem “is like a three-layer cake,” says Patricelli in the video. “There’s the health status of the population, which isn’t good enough. There are [the related issues of] cost and quality, which affect 100% of the people. And then, there is the issue of access to insurance.”
All three factors ultimately relate to the cost of health care. “Whether you’re insured or you’re not insured, you’re a victim to some extent of rapidly rising health care costs,” Patricelli says.
To bring costs under control and thereby make health care accessible to more people, any reform effort must do three things, according to CBIA’s Rathgeber:
- Address lifestyle issues to “avoid some preventable diseases, which obviously drive up the cost of health care coverage.”
- Reduce the cost and upgrade the quality of health care “so we can improve the value [of] the dollars that are being spent on health care.”
- Find a way to “cover the 9% of the [state] population which is currently not insured.”
Rathgeber also notes that health care providers will have to step up their efforts to avoid medical errors and unnecessary testing, and assure the best possible medical outcomes.
“There are critical improvements that hospitals need to make,” acknowledges Jennifer Jackson, president and CEO of the Connecticut Hospital Association (CHA). She says in the video, “They need to invest in infrastructure. They need to invest in technology and in people to improve quality and patient safety.”
Government lacks good track record
Who’s best equipped to make the needed improvements — the public sector or the private sector?
“The track record of the private sector far outpaces the public sector when it comes to innovative programs to drive the quality and reduce the costs of health care,” says Rathgeber.
According to Patricelli, when you look at government-run systems around the world, you see that “their costs are not going up any slower than ours, and they have acute problems in terms of access to care and innovation and quality.”
Torsone notes that people in those countries often go to places like India for health care services when they can’t get those services at home.
Americans “value access, choice, customer service,” says Mickey Herbert, CEO of ConnectiCare. “What you get in countries [with government-run systems] is altogether different. It’s rationing. It’s interminable waits. It’s really the denial of care. And frankly, we would never tolerate that in this country, nor should we,” says Herbert, who co-chairs the Connecticut Health Insurance Policy Council.
State underfunds Medicaid
Another red flag should give pause to supporters of a state-run health care system: The state hasn’t done a very good job in managing its current role in health care.
One area where the state falls short is Medicaid funding.
“Currently, the state is underfunding Medicaid to hospitals about $300 million a year,” says CHA’s Jackson. In order to remain solvent, hospitals have to charge higher fees to privately insured patients to make up for the unfunded Medicaid costs. Who bears the brunt of private insurance costs? Employers.
As Jackson notes, “Private employers are very concerned about the cost of health care. And a huge percentage of the increase in the cost of health care is [due to] the need for hospitals to cost-shift.”
When cost shifts for Medicaid are combined with those for uninsured patients, employers’ hospital bills are increased by approximately $400 million annually. That is in addition to any cost shifts for federal underfunding of Medicare.
Underfunding also affects patients’ ability to receive adequate care.
“I work with doctors, and our doctors see Medicaid patients,” says Patricelli, of Women’s Health USA. “But they can’t find specialists to refer Medicaid-eligibles to because the reimbursements are so low that many doctors simply won’t take any new Medicaid-eligible people.”
Unaffordable benefits for state employees
Besides failing to adequately fund Medicaid, the state has not been able to effectively manage health care costs for its own workforce. For one thing, the state has a $21 billion unfunded liability for retiree health benefits. And state employees’ very rich benefit package has caused the state’s health care costs to skyrocket.
“When you look at the state’s own workforce, Connecticut locked itself into a long-term contract which is very expensive and [would be] unaffordable by the private sector,” says Rathgeber. “If we were to duplicate that for everybody, taxes would have to go up dramatically.”
Huge price tag if state took over
Considering how the state has managed its own health care responsibilities, a state-run health care system would be a hugely expensive proposition, notes the video.
“I’m very concerned about the solution of a single-payer system in which the state of Connecticut would cover the costs of health care for residents under 65,” says CBIA Chair Meredith Reuben, CEO of Milford-based Eastern Bag & Paper Group. “Preliminary estimates that I’ve seen are $17 billion, which almost equates to the entire state budget. This would mean, to me, that [the state] would have to increase taxes,” Reuben says. “Connecticut already has one of the highest tax [burdens] in the United States. I’m very concerned that this would make our state even less competitive than it is today.”
Pooling not a panacea either
Another health care reform idea being considered at the State Capitol is pooling.
“You have to smile at that,” says Patricelli. “Some of the biggest employer pools in the country have the highest costs. Look at the automobile companies and their fabled, huge health care costs. “Pooling is useful in terms of lowering administrative costs,” he says. “But that’s only a small percentage of the dollars. Eighty-five percent of health care dollars are in the delivery [of health care], not in the administrative layer.”
Rathgeber notes that “only about 14 cents of every dollar of [health insurance] premium costs goes toward administration. Of that, about 6 cents goes toward regulatory costs and taxes. Another 5 cents or so goes toward the administration of customer service and quality initiatives.” He says, “Those kinds of costs [will] have to continue to be absorbed” regardless of who runs the health care system.
Insurance industry critical to health of state economy
Herbert points out another reason policymakers should reject proposals for the state to take over health care. “If we were to go toward some sort of a government-based system and health plans were reduced to some insignificant role in that system, that could prove devastating to our Connecticut economy.”
The health insurance industry directly or indirectly supports tens of thousands of jobs in Connecticut.
Promoting health of residents and economy
Everyone has a stake in the outcome of the health care reform debate, notes the CBIA video. Businesspeople must be engaged in the debate and urge policymakers to keep in mind Connecticut’s economic health as well as the health of state residents.
“As we move forward in this process, we need to strike a balance between providing health insurance for all residents of Connecticut with keeping a vibrant, competitive economy,” says Reuben.
Doing that will require encouraging people to take more responsibility for their health and lead healthier lifestyles, the video says. Any reform approach ultimately adopted must also improve the overall quality of the system, reduce its costs and make health insurance affordable for more people.
“We have a problem today that’s going to be a crisis tomorrow,” says CHA’s Jackson. “So we all need to work together. This has to be our priority, and it has to be addressed by our state.”
[back to top]
|
