healthsignals new york

Long lapse about to end

Pardon the absence. I'll be back with a vengeance in the next couple days.

Labor and labor

Matt Miller, who's written previously about the tenuous grasp that many have on their health insurance wrote today in the Times about labor and health benefit costs. He wrote that the perspective of some union leaders is becoming more sophisticated, indeed becoming more sophisticated than some business leaders:

But to many business leaders, their union counterpart's view of soaring health costs remains a mystery. Given union readiness to strike in the face of even modest efforts to slim generous health plans, these costs almost certainly doom unionized workers to few if any real wage increases for years to come. Do union leaders get this trade-off? Are they hamstrung by political dynamics that make it hard to approve even sensible health plan changes that can be cast as "givebacks"? And what is their answer?

Recent conversations with Morton Bahr of the Communications Workers of America and Andrew Stern of the Service Employees International Union suggest that at least some union leaders think about the health system in ways more sophisticated and businesslike than many chief executives do - and that they are eager to be partners in a national reform dialog that's overdue.

"There's really one economic pot, and you argue essentially over the size of that economic pot and how it gets distributed," Mr. Bahr said of the growing trade-off between health care and wages.

Well, finally! Labor representative stating in the open what rising health benefit costs really mean to workers - reduced wages. I suspect, that for many years the trade-off was health benefits for other benefits, most notably retirement benefits. That was probably one of the drivers in the move from defined benefit to defined contribution pensions. But eventually, there was no slack left there. So rising health benefit costs led to stagnating cash wages.

From an employer's economic perspective, what really counts is the total cost of compensation. Wages cost. Health benefits cost. So paying more for health benefits inevitably comes out of wages. It's still true after you take into account the differences in tax treatments.

Miller goes on, noting that Bahr and Stern are aware of the inefficiencies of the healthcare system:

Mr. Bahr and Mr. Stern add that forcing a debate about what decent health coverage should mean isn't inconsistent with the drive to bring efficiencies to today's byzantine system. They rattle off the initiatives with which they've been involved, arguing that labor comes to this table with clean hands - and with a greater commitment to systemic reform than the typical chief executive has begun to consider. Mr. Bahr and the Communications Workers of America, for example, helped pioneer managed care networks with AT&T starting in 1989. Mr. Stern talks about "right sizing" hospital capacity and complains that special interests with a stake in excess costs are blocking needed changes. "It's the only industry that's huge with no efficiency to it," he said. When these men talk about pooling back-office functions and contracting out food services and laundries, you might think you were listening to business leaders.

Interesting that Stern talks about "rightsizing." Given that that's just the word that is central to the current New York debate about a "hospital closure commission," it must have come up in discussions with Dennis Rivera, head of SEIU's District 1199.

How are healthcare worker's unions going to reconcile this conflict. Other unions, especially those that manage their own benefit funds have been quietly annoyed for years about the increasing costs of hospital care. How is Stern, in particular, going to solve this?

Given the intense relationship between labor leadership in New York and rising healthcare expenses, one has to ask is New York different? Well yes, somewhat, at least at the very low end of the income scale.

At the very bottom of the healthcare worker wage scale, many of the lowest paid healthcare workers, those providing home healthcare do take the cash instead. At least, they do in New York. Why might that be?

• Pure survival to start with. Their wages are so low that any extra cash comprises a very large proportion of their income. When you're sweating paying the rent or putting food on the table every week, it's often the only decision you can make. (Been there, done that.)
• They are contingent workers. For many, if there are patients this week, they get work. If  not, they don't. For example, it sometimes takes a while when the patient of a worker who has been caring for that patient dies to be assigned to another patient. Often, that means the worker is out of work. They would lose the coverage anyway and not have any cash reserve.
• Medicaid is the fallback and well known to everyone in this realm.
• In New York City, there's another fallback. The Health and Hospitals Corporation or the emergency room of virtually any hospital in the state. New York is so institution-centric and they have been so heavily subsidized for indigent care for so long, that everyone takes it for granted. It's a perverse system, but in a personal crunch, it works.

Any health benefit cost that moves away from employers is a relief for them. But, it's an increasing problem for unions and their leadership. So, let's hope that union leaders like Bahr and Stern (and Dennis Rivera) can figure out how to lead on this issue without getting their heads handed to them.

Historical footnote: In the late 1960's, then Governor Rockefeller proposed mandating employment based health insurance. It was part of a larger package of healthcare reforms proposed by a Commission headed by the then Comptroller of Eastman Kodak. All the other proposals became law and foundation for New York's healthcare regulatory system. Mandatory health insurance was defeated by an alliance of business and the New York AFL-CIO. The State AFL-CIO leadership was quite proud of that victory. Their rationale, whose lineage can be traced all the way back to Samuel Gompers, was that health benefits was one of the key things that distinguished unionized from non-unionized workers. It was something you bargained for collectively. Oh my, have things changed.

Tired of Spam?

As someone who:

• Increasingly uses RSS (including in this site) because it enables me to get standardized information when I want it rather than receiving e-mails based on someone else's schedule and without e-mails piling up in my inbox
• Spends way too much time filtering for and cleaning up spam

I say Amen.

Contrary to what I said yesterday?

I'm a big believer in the notion that the structure of a system determines its behavior. That's why I might have appeared yesterday to condone the behavior of organizations (like Wal-Mart) that cut costs by reducing or restricting benefits.

Today I read this. It's a classic story of a poor person finding riches accidentally left behind by another and the dilemma the finder faces. We read such stories often. What caught my eye this time was the following question and discussion in Jonathan Rowe's blog in On the Commons:

Which comes first, prosperity or virtue? Jack Kemp, then a vice-presidential candidate, argued in a debate with Al Gore that material wealth comes first. Enact “supply side” tax cuts, boost the churn of money through the economy, and virtue will follow as heat follows flame.

There actually is a lineage to this line of thought. It goes back to an American economist by the name of Simon Patten, who was prominent around the turn of the last century. Patten tried to reconcile the burgeoning consumer culture with the traditional values of probity, hard work and thrift. It was the old virtues, Patten said, that had to go. The new economy would usher in a new and finer form of humanity, with more discerning tastes and more philanthropic views.

System structure still determine their behaviors. Yes, there are individual exceptions and randomness built around those behaviors, but those exceptions do not undermine the basic point. The story is about an individual. Yesterday's posting was about systems.

But the question, "which comes first, prosperity or virtue?" is one that I had never considered before. Does the frame make any sense? Is either one dependent on the other? I have both doubts and qualms. (Does one form the foundation of the other or instead do they conflict with one another?)

But if implicitly there are a lot of people out there who think, as apparently Jack Kemp does, that this is a central question, and that prosperity is the foundation of virtue then it may well be an important philosophical driver in today's nasty and contentious political environment.

Me? Ever the optimist, I'll keep on looking for system designs that are both prosperous and virtuous.

More Wal-Mart & Medicaid

Remember last Spring when we talked about Wal-Mart and Medicaid? (Yes, folks, you heard it here first.)

Take a look at this Business Week article. I guess Wal-Mart's getting sensitive. But then maybe it's just the gameplaying that the current system encourages. The incentives to offload costs are built into the structure of the current health insurance system. Why should we be surprised? Why should we wring our hands? Why shore up a failing system?

When there is no next big thing, the next big thing

Having at least started the argument on behalf of universal coverage, why should we abandon our current system that relies on employment-based coverage and a grab-bag of governmental programs? Let's start with employment-based coverage.

Failing to find the next big thing to control their healthcare costs, employers are steadily and often stealthily reducing their role in providing health coverage. This trend will accelerate. Good!

Rather than trying to patch it up, much less use it as a foundation for universal coverage, let employment-based coverage die:

• The result of a historical accident, it's terribly inefficient. It requires every employer offering coverage to not only pay for the coverage but to pay for the administrative overhead of selecting coverage and enrolling and dis-enrolling employees.
• It creates rigidity and economic friction in the labor market.
• It constantly creates discontinuities in coverage and they often create discontinuities in care.
• Employment-based coverage disadvantages American employers in increasingly important international economic competition.
• It masks the true costs of employee compensation.
• It's a barrier to universal coverage.

It's going anyway. Instead of resisting that trend, we should embrace it.

From the Washington Post, A Health Care Cost Shift.

This has been coming a long time. It's been coming at least a half dozen years (registration may be required).

For cost control, first, there was regulation. Then, there was managed care. Since Helen Hunt's devastating 1998 moment disparaging managed care in "As Good as it Gets," there's been no "next big thing" to control employer health care costs. Things have been downhill since.

So the only outlet for the building financial pressure has been and will be for employers to (mostly) quietly walk away. They do this by increasing deductibles, co-payments, employee shares of premiums, dropping coverage and shifting from defined benefit to defined contribution plans. Even without current efforts to push health savings accounts, the end of employment-based coverage is coming and that's fine.

Many (most?) of those who support universal coverage (mostly Democrats) hide their heads and fantasize about "single-payer," the ultimate non-employer based system. But, when employers reduce their contributions to coverage, these folks are often the first to complain. And they are often the ones who are first to try to force employer contributions (witness, California's Prop 72 employer mandate. Some advocates, of course, are more nuanced). It's an easy trap to fall into. Twenty-five years ago, when I first started examining these issues, we learned for the first time that the uninsured are primarily workers or the members of families in which at least one adult works. So it was a simple, even magical, step to then think that mandated employment based coverage would mostly solve the problem of the uninsured. But it doesn't completely solve the problem (not even close) and it creates many other administrative complexities and economic disadvantages that just aren't worth the trouble.

Thus, those who seek universal coverage should embrace, rather than fight, diminished employment-based coverage and figure out how to use it.

Among coverage proponents, this strategy will create confusion and anxiety because many of those on the other side of the debate are those who don't support universal coverage (mostly Republicans) are also those who are concerned about the employer costs of the current system and welcome diminished employer roles and contributions.

But my opponent's unconcern should not be the cause of mine. Employment as today's foundation for coverage is awkward, antiquated, and expensive. It's barely adequate for today, much for the future.

Why universal coverage?

Implicit in much of what I've written here is my strong preference for universal health coverage. It's time to make my assumptions and preferences explicit. Let's consider this a first draft, one that I'll tinker with over time.

For now, I choose those words, "universal coverage" deliberately because they do not suggest the nature or form of the coverage, merely the goal of universality. They do not imply support or preference for a "single payer" or any other form of coverage. We'll return to those questions later. Nor should readers infer that I'm using the phrase "universal coverage" to suggest any preference for any individual, group, or organizational rights or obligations. We'll explore those later as well.

So let's start with the basics. Why would some form of universal coverage be desirable? Put more pointedly, why would coverage of person A be good not just for person A, but also for person B and for person C?

1. A healthy population is a more economically capable population. To the extent that there are relationships between coverage and care (imperfect, but there are) and care and health (also imperfect, but there are), then it makes economic sense for all of us to be part of a society in which we optimize the health of all its members.
2. There appears to me to be a substantial, if not broad, social consensus, one that I concur with, that those who are ill or injured should not be ignored or abandoned by the medical system. I'm not going to track down public opinion polls on the issue and certainly consensus does not imply unanimity. The polls are usually too superficial or wonky on these issues. Instead, ask yourself and your neighbors questions like, "if 100 people are seriously injured in a train crash, should hospitals be expected to take care of all of them or just the 85 who have health insurance?" I'm convinced that the vast majority of Americans would answer "all of them" and would horrified at the prospect of turning out the 15. Include me among them. That being the case, the only question that remains is is how to design a system to take care of all 100 in the most efficient and effective way possible.
3. The absence of universal coverage has its own costs. No one, regardless of where they are on the political spectrum should delude themselves into thinking that a system without universal coverage is cost free. Indeed, much of the expense and inefficiency of our current healthcare system is the direct result of the lack of universal coverage. Although expanded coverage would certainly involve direct outlays, the lack of such coverage certainly involves hidden outlays, which we are paying now and will continue to pay until the problem is resolved. For example,
   
   • Because we take the half-step of expecting the healthcare system to provide care to all (see number 2 above), but don't go all the way, we have instead a hidden and half-baked system. The lack of universal coverage provides an ever-ready excuse for institutional healthcare providers, most notably hospitals, for inefficient operations. Losing money? It's bad debt and charity care. Locally, governing boards are more challenged in holding management responsible. More broadly, the numerous social systems that we have created to indirectly subsidize care have weak or no means of holding the healthcare system accountable for the money spent. Indeed, most of that spending is hidden in the inflated prices paid for those insured.
   • The absence of universal coverage dooms us to a system where immense amounts of resources are spent on determining which individuals have coverage and those who do not and to determining when an individual has coverage and when they do not. This spending spent leads to employment for some and, as a result, it shows up in national statistics on gross domestic product, but it's pure administrative overhead. It produces nothing of real value.
   • The current system, particularly with its employment base generates much economic rigidity and friction. Individuals suffer from "health insurance job-lock," tying themselves to jobs they would otherwise leave for another. I suspect that diminished income is less important in holding back potential new business start-ups than is the loss of employment based coverage.
4. Infectious diseases do not discriminate based on insurance status. The potential of any significant infectious disease makes it vital for all of us that we are all protected. Until the beginning of the 20th century, infectious diseases were the primary cause of death. With the advent of antibiotics and other scientific and medical advances, the primary causes of death changed during the past century. But new biological threats are emerging. Hesitation in seeking care due to lack of coverage threatens not just the individual, but us all. In this case, individualism threatens all individuals.

For many, ethics and equity are the primary arguments for universal coverage. I have my own biases, but do not subscribe to the "healthcare is a right" argument. But even without such arguments, I'm convinced that there are compelling economic, social and  public health arguments for universal coverage.

 

Frivolous?

Emotional reaction to the charges that medical lawsuites are frivolous. (Quicktime movie.) Thanks for the tip to Paul Waldman at Gadflyer.

Pizza privacy

From the ACLU, by way of Talk Left, check out the Pizza Movie. Very funny ... until you think about it. Then it's terrifying.

Anonymous Viagra response

So I got a fair amount of e-mail following yesterday's Viagra post. Lots of shy people out there who'll send an e-mail, but not post a comment. Here's one of them:

I personally think the $20 million is a ripoff by both the recipients and our friends at Pfizer. What proportion of all Viagra sales would you say are, by any reasonable standard, truly medically necessary? (Assuming that *any* use is medically necessary, which I'm willing to stipulate only because I retain some of the mindless liberal thinking I developed in the 60s...)  And even if it is medically necessary - don't even sensible Democrats say that we have to use our limited health - care dollars more efficiently, to get the best bang for the buck where the need is greatest? That $20 million could buy health insurance for a couple thousand working families, or an outreach campaign to help prevent poor kids from getting fat and therefore sick, or any number of other things. (Feel free to put that screed on your blog and explain why it's wrong, but only anonymously!)

(By the way, here are the rules for the rare anonymous comment that I'll post directly on behalf of someone else.)

We got into a little e-mail back-and-forth and the writer added:

If no one should decide what's a reasonable number of times per month, isn't that an argument for healthcare vouchers so we can all make those decisions ourselves?  Otherwise the "need" will always far outstrip available resources, no matter what they are.

Here's my response: