Wednesday, December 30, 2009

News Alert- Sen. Kohl offered lean methodology amendment on Dec. 15th

Insuring Resources Commentary:
My apologies for getting this news to you all this late. Please call your Senators to have the language below reintroduced during the conference committee negotiations. We must, at the very least, get a pilot or demonstration in place illustrating the cost savings of the lean methodology. Thank you Senator Kohl for introducing this amendment.

The amendment introduced by Sen. Herb Kohl did not pass and is not contained within the Senate bill that was passed Dec. 24th.

Amendment language:

On page 731, between lines 16 and 17, insert the following:

‘‘(xix) Implementing the lean methodology through a network
of provider systems across the country in varying geographic
areas and across sites of care that offer a patient-centered
approach to improving quality, reducing medical errors, and
enhancing value to patients.

http://www.createhealthcarevalue.com/data/blog/ThedaCare%20amendment.pdf

Source: The Congressional Record- Dec. 15th

Saturday, December 26, 2009

Mayo Clinic wants payment reform

Insuring Resources Commentary:

It still baffles me how so many people, including Pres. Obama knows what health care reform should include and what models work best and yet they did very little to make it happen.



Mayo Clinic Supports Bill But Seeks More Action on How Care Is Paid For


By RON WINSLOW - Wall Street Journal

The Mayo Clinic, often cited by the Obama administration as a model for high-quality, cost-effective health care, generally supports key provisions of the legislation approved by the Senate, an official said Thursday, but he called for more aggressive steps to change how care in the U.S. is paid for.

"The concerns are whether the legislation will be strong enough to change the incentives in the system today, which are mostly around paying for volume" and not for "value" of care, said Jeffrey Korsmo, executive director of health policy center at the Rochester, Minn., clinic.

The dominant system of reimbursement in the health-care system, known as fee-for-service, pays doctors and hospitals for each test and procedure they perform or order, rewarding providers based on delivering more--rather than better--care, Mr. Korsmo said.

The Senate measure includes provisions for Medicare pilot programs to test the effect of bundling all of the care provided in such big ticket procedures as hip replacement surgery, where hospitals and doctors currently bill separately for their services. Paying a single "bundled" fee is intended to encourage doctors and hospitals to work together to provide more efficient care. Other pilots include treatment for, say, a year of care for a person with diabetes.

"These pilots need to go quickly beyond demonstration programs and become part of the way we pay for care," Mr. Korsmo said.

Led by Denis Cortese, its recently retired chief executive officer, the Mayo Clinic has taken an unusually activist stance in the health-overhaul debate, making arguments for expanding coverage, coordinating patient care and paying for better results rather than volume of care. The nonprofit clinic reported revenue of $7.22 billion in 2008, of which $6.14 billion came from medical services. In addition to its Rochester headquarters, it has operations in Jacksonville, Fla., and Scottsdale, Ariz.

Despite its reputation for treating patients with complex, big-ticket medical problems, the clinic is routinely included among the nation's most efficient health-care providers. One reason: Its doctors are all on salary so their incomes aren't based on the number of procedures they do. Another is the clinic's sophisticated electronic medical-record system, which helps improve coordination of care for its patients and reduces orders for duplicate tests.

That helps explain why President Barack Obama and a host of other political leaders and health-care experts extol Mayo as a model citizen in the health-care system.

That isn't to say Mayo officials and Democrats hammering out the health-care bill see eye-to-eye on all issues. The clinic opposes a government-run health plan, known as the public option, that is favored by many Democrats. That provision was cut from the Senate bill, but it is included in the House legislation and is one of several potentially thorny conflicts to be resolved as House and Senate negotiators seek to come up with a final, common version of the legislation.

The clinic also was against the proposal, raised and then scuttled in the Senate, to allow people aged 55 to 64 to buy into the federal Medicare plan for the elderly. "Medicare isn't the model we ought to be pursuing [to expand coverage]," Mr. Korsmo said. "It's been part of what's gotten us into the trouble we're in."

Mayo is also concerned about the potential for Medicare to impose across-the-board cuts in payments to health-care providers without differentiating for cost-effective doctors and hospitals. It worries that such Medicare cuts would punish the Mayo Clinic and other organizations known for delivering good care at reasonable prices.

Clinic leaders, however, do favor a mandate requiring people to purchase health coverage to make sure young and healthy people participate in the insurance system. And they like the idea of health-insurance exchanges, also a prominent feature of both the Senate and House bills, where consumers can shop for health plans.

"There is a role for government--it ought to create the exchanges and subsidize premiums where there is a financial need," Mr. Korsmo said.

Two other issues aren't getting sufficient attention in the current legislation, Mayo officials believe. Changes in medical malpractice policy are needed to encourage more open discussion of medical errors, Mr. Korsmo said. And with estimates that 40% of medical costs are the result of personal behavior such as smoking and diet habits, more attention needs to be focused on that problem, he added.

Tuesday, December 22, 2009

The Insurance Industry's Senate bill analysis

Insuring Resources Commentary:
Sometimes it takes a practical analysis from an insider who cares about getting reform right to set the record straight. For those who read this blog routinely that is what I have tried to achive. You'll see my viewpoints are largely the same as those from AHIP. Yes I do a lot of consulting and authoring/editing of insurance textbooks for them but I also share with them a practical approach to health care reform as you'll see by reading below.

These points are valid, insurance premiums will increase because there is no comprehensive cost containment (comprehensive provider efficiency incentives) in the bill. What the bill does include is cost-shifting as Medicare reimbursement is reduced and high value health plans like mine are taxed. When this is enacted I'd hate to be a small business owner -- even those who get a subsidy will most definitely pay more than they do today.

Its really sad what an opportunity we are missing. Yes I called Sen. Feingold's office today, again, and he's voting in favor of your premium increase.


-------------------- --------------------
AHIP Statement On Senate Health Care Reform Legislation
America's Health Insurance Plans (AHIP)
Karen Ignagni
December 22, 2009


Karen Ignagni, President and CEO of America’s Health Insurance Plans (AHIP), released the following statement today on the Senate health care reform legislation:

“The debate before us today is not whether insurance market reforms are needed. In fact, health plans proposed and support a complete overhaul of insurance market rules and new consumer protections to ensure all Americans have guaranteed access to affordable, portable coverage. The critical policy questions are whether the current legislation can bend the cost curve and result in a sustainable system. While the bill makes important improvements in access and takes steps towards cost-containment, it lacks accountability to ensure that costs are brought under control. Moreover, this bill includes provisions that will increase costs for families and small businesses and disrupt the quality coverage on which millions of Americans rely today.”

Barriers to affordability:
A new $70 billion premium tax that will increase the cost of health care coverage for millions of Americans and fall primarily on small businesses and those who purchase coverage in the individual market.

More cost shifting to patients with private coverage as providers are forced to make up for hundreds of billions in reduced Medicare payments.

New market and rating rules that will increase premiums for individuals and small businesses with coverage today.

Disruptions for current policyholders:
New regulatory requirements and benefit mandates that go into effect beginning next year – before access provisions go into effect – that will cause major disruption for millions who have already enrolled in their plan for next year.

A new federal plan that would preclude many high-quality plans from participating and increase complexity in the exchanges.

Arbitrary caps on administrative costs that will undermine essential health care services, such as disease management and care coordination programs, investments in health information technology, programs to root out fraud and abuse in the health care system, and new administrative simplification requirements.

Major cuts in Medicare Advantage benefits beginning next year that will ultimately result in millions of seniors losing their current coverage.

“These issues need to be resolved if the country is to make health care coverage more affordable and put the system on a sustainable path. Health plans will continue to work to solve the problems that have been identified.”

Monday, December 21, 2009

Health Care Reform Almost a Reality... but

Insuring Resources Commentary


So we are one big step closer to health care reform. But it includes special deals for key Senators in other states like Louisiana, Nebraska, etc.

So we're going to cut Medicare reimbursement. Hmmm.

To expand health insurance to 30 million more Americans we're going to set up non-profit health insurance exchanges. ----- Ok, that could be could good, as long as the health CARE portion is also non-profit because that will be more efficient. Does it include that?- doubt it.

I'll read the bill when its available and let you know what's in it as far as efficiency and lean processes. I assume we'll have voluntary, Medicare-only pilots again like in the original Reid/ Baucus bill.

Call me a cynic but this appears to be doomed to fail as far as reducing American's health care and health insurance costs.



----------------- ----------------------
Democrats’ health bill passes key Senate vote
Final outcome uncertain as measure must be harmonized with House bill


Senate Democrats won a crucial test vote on President Barack Obama's health care overhaul, putting them on track for passage before Christmas of the historic legislation to remake the nation's medical system and cover 30 million uninsured.

All 58 Democrats and the Senate's two independents held together early Monday against unanimous Republican opposition, providing the exact 60-40 margin needed to shut down a threatened GOP filibuster.

The vote came shortly after 1 a.m. with the nation's capital blanketed in snow, the unusual timing made necessary in order to get to a final vote by Christmas Eve presuming Republicans stretch out the debate as much as the rules allow. Despite the late hour and a harshly partisan atmosphere, Democrats' spirits were high.


"Today we are closer than we've ever been to making Sen. Ted Kennedy's dream of universal health insurance coverage a reality," Sen. Tom Harkin, D-Iowa, said ahead of the vote, alluding to the late Massachusetts senator who died of brain cancer in August.

"Vote your hopes, not your fears. Seize the moment," Harkin urged colleagues.

Kennedy's widow, Vicki, watched the vote from the visitor's gallery along with administration officials who have worked intensely on the issue. Senators cast their votes from their desks, a practice reserved for issues of particular importance.

Lieberman, Nelson won over
The outcome was preordained after Senate Majority Leader Harry Reid, D-Nev., wrangled his fractious caucus into line over the course of the past several months, culminating in a frenzy of last-minute deals and concessions to win over the final holdouts, independent Joe Lieberman of Connecticut and conservative Democrat Ben Nelson of Nebraska.

Obama's oft-stated goal of a bipartisan health bill was not met, despite the president's extensive courtship of moderate Sen. Olympia Snowe of Maine, the only Republican to support the bill in committee. Obama called Snowe to the White House for lengthy in-person meetings both before he left for climate talks in Copenhagen and after his return on Saturday. In the end Snowe said she was "extremely disappointed" in what she called a rushed process that left scant time for her to review, much less amend, the bill.

Even so, the vote represented a major victory for Democrats and Obama, who's now clearly in reach of passing legislation extending health coverage to nearly all Americans, a goal that's eluded a succession of past presidents. The legislation would make health insurance mandatory for the first time for nearly everyone, provide subsidies to help lower-income people buy it, and induce employers to provide it with tax breaks for small businesses and penalties for larger ones.

Click for related content
Winners and losers in the Senate bill
NYT analysis: Obama accepts 'pyrrhic victories'

Two more procedural votes await the Senate, each requiring 60 votes, the first of these set for Tuesday morning. Final passage of the bill requires a simple majority, and that vote could come as late as 7 p.m. on Thursday, Christmas Eve, or the day before if Republicans agree.

Although Democrats are expected to prevail in the votes over the next several days, the final outcome remains unpredictable, because the Senate measure must be harmonized with the health care bill passed by the House in November before final legislation can be sent to Obama's desk.

There are significant differences between the two measures, including stricter abortion language in the House bill, a new government-run insurance plan in the House bill that's missing from the Senate version, and a tax on high-value insurance plans embraced by the Senate but strongly opposed by many House Democrats.

After Monday's vote a number of Senate Democrats warned that the legislation could not change much and expect to maintain support from 60 senators. House Democrats are sure to want to alter it but may have to swallow it mostly whole.

"It took a lot of work to bring this 60 together and this 60 is delicately balanced," Lieberman said.

‘Day of accounting’
Republicans are determined to give Democrats no help, eager to deny Obama a political victory and speculating openly that the health care issue will hurt Democrats in the 2010 midterm elections.


At their core the bills passed by the House and pending in the Senate are similar. Each costs around $1 trillion over 10 years and is paid for by a combination of tax and fee increases and cuts in projected Medicare spending. Each sets up new insurance marketplaces called exchanges where uninsured or self-employed people and small businesses can compare prices and plans designed to meet some basic requirements. Unpopular insurance practices such as denying people coverage based on pre-existing conditions would be banned, and young adults could retain coverage longer under their parents' insurance plans — through age 25 in the Senate bill and through age 26 in the House version.

Reid cut numerous last-minute deals to get the votes he needed and powerful Democrats also inserted home-state provisions in a 383-page package of amendments Reid filed this weekend to the 2,074-page bill.

Among other items, Senate Finance Committee Chairman Max Baucus, D-Mont., included a provision allowing residents of the town of Libby, Mont., who are suffering asbestos-related illnesses from a mining operation to get Medicare benefits. Nelson won a list of benefits for Nebraska including a commitment for the federal government to pick up the full tab of an expansion of Medicaid. And Sen. Christopher Dodd, D-Conn., who faces a difficult re-election, inserted a $100 million item for construction of a university hospital that his spokesman said he hopes to claim for the University of Connecticut.

Tuesday, December 15, 2009

The End Game and Lasting Disappointment

Insuring Resources Opinion:

So how did the Obama Administration get here? Here's where we're at and my answers on how bipartisan support could have been achieved:

1) Virtually no discussion on reigning in health care costs has occurred.
This should have been discussion point #1 daily by every liberal and THE basis for all proposals. The Conservatives can't argue against this. Obama and the liberals gave up on this argument in the Spring. This is the greatest disappointment because it encompasses the greatest promise of true reform.... provider incentives to get lean and efficient. What we have now in the bill is a weak voluntary, Medicare only pilot that provides provider incentives of a 1% higher reimbursement to increase efficiency. I bet the paperwork required eats up more than the 1%.

2) Improper focus on the public option. Yes, it could be included for individuals and small busineeses under ten employees as competition for private insurers. There could be language added to make it impossible to expand it into a single payer system by capping enrollment at 20-30 million members or similar mechanisms until whatever year is chosen (2100?).

3) Individual mandate to purchase coverage through an Exchange... The Senate Bill does have this. This provision eliminates the concept of adverse selection-- i.e. people waiting to purchase coverage until they're ill. The industry needs the individual mandate to streamline medical adversity.

4) Eliminate pre-x conditions. What a hollow victory if none of the rest happens but these last two items.

5) Employer mandate- yeah they botched this one, it doesn't exist except in the house bill which has been dead since the day it was passed. The penalty was miniscule compared to the cost of group insurance.

6) Medicare buy-in... Yep that one appears to be dead too thanks to Sen. Lieberman-- for once I agree with him. So the current compromise expands Medicare (expect this to be pulled from the compromise package soon) for 55 and up when the program already doesn't reimburse doctors enough and is responsible for huge cost-shifting on to the private employer-sponsored coverage side?? Dumb idea unless we somehow raise Medicare reimbursement by 15-20%. Oops, the bill actually cuts some Medicare reimbursement.


My solution:We should have a Health Insurance Exchange with regional / private sector insurance contracts administered by the feds with efficiency mandates based on CURRENT best practices that exist in Wisconsin and numerous other places. See (www.healthcarevalueleaders.org) Start with an initial five year competitive contract period for health plans to implement Efficiencies. From then on we should have revolving Three year COMPETITIVE contracts with efficiency teeth. If health plans fail on efficiency in the first two years, the contract ends after the third year and its opened to competition again, except that insurer or health plan is barred for say, 10 years. Period.

Mandate employer coverage for businesses with 10 + employees. Provide graduated subsidies for businesses with 10-49 employees. For businesses with 9 or fewer employees they can access coverage through the Health Insurance Exchange where individuals are mandated to get coverage or pay a graduated penalty based on income. If there is a public plan option it should be housed within the regional HIEs as an option for coverage.

Premiums will be less because of the power of large purchasing pools spreading the risk and the mandated coverage of individuals means they're in the pool also. And all providers must meet efficiency standards to get preferred reimbursement rates above current Medicare levels. Keep the paperwork easy and give them enough incentive to make it worthwhile- 5% let's say as a guess but whatever the Actuaries come up with. Oh and add bonuses for quality health outcomes achieved by the top 10% of insurers. But the bonuses don't go to the CEOs. They should be split evenly between the insurers and the member employers and individual insureds.

Final Analysis- But none of that above will happen. Its hard to say what the final product will look like... I'm scared to fathom it at this point. We'll probably cut the uninsured from about 47 million to 25 million or so and costs will go up because of it for the INSURED because there are no legitimate cost restraints anywhere. Add 20+ million insured persons with no health care cost restraints/ efficiency standards in place.

You ain't seen premium increases like those to come folks.

Tuesday, December 8, 2009

Senate Dems Compromise- public plan is out

Insuring Resources Commentary

The Senate Dems reached a compromise today (the details of which I predicted three months ago on this blog). I said back then that the final bill would not have a gov't run public plan but instead would use private plans heavily regulated by the Feds much like Medicare Advantage.

In addition the Senate Bill now includes a Medicare buy-in program for persons age 55 and up to buy in to Medicare early. This particularly helps early retirees.

The bill also requires insurance companies to spend at least 90 percent of their premium income providing benefits. By the way, according to the Wisconsin Association of Health Plans (WAHP) their 16 member health plans pay out 91% of premium in benefits. I've long touted those companies (Dean, GHC, Gunderson and others) as models on which to build the foundation of health care reform. Perhaps this is the stick that incents plans to base reimbursement on quality outcomes and efficiency.

From WAHP's website: "In 2007, the Association-member health plans participating in the commercial health insurance market in Wisconsin paid out approximately 91 cents in health care services for every $1 of insurance premium taken in. They spent less than 10 cents on administration, and profits remained among the lowest in health care: less than 2 cents for every $1 in premium."
http://www.wihealthplans.org/inner.iml?mdl=about_us.mdl


So what does Sen. Feingold think about this compromise (copied from below). "I do not support proposals that would replace the public option in the bill with a purely private approach. We need to have some competition for the insurance industry to keep rates down and save taxpayer dollars," Feingold said.

Competition may reduce premiums 1-2% while waste reduction, payment reform and quality incentives could have ten times the impact.


Time for my FIFTH phone call to his office staff.


---------------------------------------------

Dems reach deal to drop gov't-run plan
Dec. 8, 2009

After days of secret talks, Senate Democrats tentatively agreed Tuesday night to drop a full-blown government-run insurance option from sweeping health care legislation, several officials said, a concession to party moderates whose votes are critical to passage of President Barack Obama's top domestic priority.

In its place, officials said Democrats had tentatively settled on a private insurance arrangement to be supervised by the federal agency that oversees the system through which lawmakers purchase coverage, with the possibility of greater government involvement if needed to ensure consumers of sufficient choices in coverage.

Additionally, the emerging agreement calls for Medicare to be opened to uninsured Americans beginning at age 55, a significant expansion of the large government health care program that currently serves the 65-and-over population.

At a hastily called evening news conference in the Capitol, Majority Leader Harry Reid, D-Nev., declined to provide details of what he described as a "broad agreement" between liberals and moderates on an issue that has plagued Democrats' efforts to pass health care legislation from the outset.

With it, he added with a smile, the end is in sight for passage of the legislation that Congress has labored over for months.

The officials who described the details of the closed-door negotiations did so on condition of anonymity, saying they were not authorized to discuss them publicly. Several officials stressed that so far, Democrats had technically agreed only on submitting proposals to the Congressional Budget Office for their impact on the bill's cost and other analysis.

At its core, the legislation would expand health care to millions who lack it, ban insurance companies from denying coverage on the basis of pre-existing medical conditions and rein in the rise of health care spending nationally.

The developments followed a vote on the Senate floor earlier in the day in which abortion opponents failed to inject tougher restrictions into sweeping health care bill, and Democratic leaders labored to make sure fallout from the issue didn't hamper the drive to enact legislation. The vote was 54-45.

Taken together, the day's developments underscored the complexity that confronts the administration and Reid as they seek the 60 votes needed to overcome Republican opposition and pass a bill by Christmas. Despite their reluctance, some senators had talked openly and in detail earlier in the day about the progress of the negotiations.

The provision in the legislation to be dropped under the emerging agreement provides for a government-run insurance option to be available to consumers, with individual states permitted to drop out. Liberals have long sought such as arrangement, as a means of forcing competition on insurance companies.

One participant in the talks, Sen. Tom Harkin, D-Iowa, referring to a deal among the negotiators, told reporters he didn't like it, but added, "I'm going to support it to the hilt" in hopes of securing passage of the health care bill.

Another senator involved, Sen. Russ Feingold, D-Wis., issued a statement saying, "I do not support proposals that would replace the public option in the bill with a purely private approach. We need to have some competition for the insurance industry to keep rates down and save taxpayer dollars." But he did not rule out voting for the measure.

The White House quickly applauded the developments. "Senators are making great progress and we're pleased that they're working together to find common ground toward options that increase choice and competition," said a spokesman, Reid Cherlin.

In his comments to reporters, Reid said the emerging compromise "includes a public option and will help ensure the American people win in two ways: one, insurance companies will face more competition, and two, the American people will have more choices."

It wasn't clear what he meant by a "public option," the Medicare expansion or a fallback in case private insurance companies declined to participate in the nationwide plan envisioned to be overseen by the Office of Personnel Management. One possibility was for the agency to set up a government-run plan, either national in scope or on a state-by-state basis.

Under the tentative agreement, liberals lost their bid to expand Medicaid, the federal-state program that provides health care for the poor, elderly and disabled. But they prevailed on the Medicare expansion, and the negotiators appeared ready to maintain a separate health care program for children until 2013, two years longer than the bill currently calls for, according to officials familiar with the details.

Additionally, there was consensus support for a requirement long backed by Sen. Jay Rockefeller, D-W.Va., and other liberals for insurance companies to spend at least 90 percent of their premium income providing benefits, a step that supporters argue effectively limits their spending on advertising, salaries, promotional efforts and profits.

Monday, December 7, 2009

Reaction from Insurance Industry to Current Bills

Insuring Resources Commentary:

Readers know I do not push the health insurance industry's agenda except when they are correct on an issue. In Wisconsin, we're very lucky to have several health insurance plans who focus on quality outcomes and effcient care -- Group Health Coop, Gunderson Lutheran, ThedaCare, Dean Health Plan and others. These plans have very low administrative costs and are very efficient in the care they provide. They have assessed the waste in their systems and make every attempt to extract it. The rest of the nation is not so lucky.

This is why AHIP is right and I said these same things that AHIP mentions in this space months ago. Voluntary pilot waste reduction programs do not go far enough, We need fundamental health CARE and PAYMENT reform.

Insurance reforms like eliminating pre-x conditions are vital to improving access and insurance for as many American;s as we can. A public plan option for those shut out of the system and for the smallest of employers would be great.

But, all the insurance reforms will matter very little if we do not CHANGE the WAY WE PAY for HEALTH CARE. In fact if health care reform does not change the financing of health care, insurance premiums will go up with 30-40 million more people seeking more care and Medicare will be in danger.

AHIP is right and the data from Mercer on health plans avoiding the tax that will help finance the expansion sends up a huge warning flag.

----------------------- ------------------------
Health insurers push back as debate heats up


Reuters) - The health insurance industry on Thursday struck back at provisions in Congress' healthcare proposals that it said would do little to curb the nation's spiraling costs or provide people more affordable coverage.

U.S. | Healthcare Reform

Congress is tip-toeing toward incremental healthcare reform that does not address what insurance companies see as the major issue -- containing costs, America's Health Insurance Plans president Karen Ignagni said in a speech in Detroit on Wednesday.

"The bills before Congress settle for timid pilot programs, rather than requiring major changes; creating incentives that apply only to Medicare, rather than across the board; and establishing a new oversight body, but severely limiting its scope of review," Ignagni, a top lobbyist for the health insurance industry, told the Detroit Economic Club.

The group represents 1300 insurers such as Aetna Inc, Cigna Corp, UnitedHealth Group Inc, among others.

Her comments come as the Democrats try to make good on President
Barack Obama's goal of expanding health insurance coverage to tens of millions of more Americans without adding to the nation's deficit. The Senate is debating an $849 billion bill that, if passed, must be merged with the House of Representatives' $1 trillion bill passed last month.

Ignagni visited Michigan, the state with the highest unemployment rate, as part of a national outreach to convince Americans of the need for lower medical costs.

Michigan, also home to the ailing U.S. auto industry, has more than 1 million people without healthcare insurance, or nearly 12 percent of its population, according to a Kaiser Family Foundation report. Nationally, about 46 million people, or about 15 percent, are uninsured in the United States where most working-age people get coverage through their employer.

True reform to cut healthcare costs has been sidetracked this year by too much emphasis on whether congressional bills will include a "public option," Ignagni said, echoing concerns heard from many others who both support and oppose the bill.

"Indeed, as far as cost containment is concerned, it's as though the house is on fire and the strategy is to rush to the scene with an eight-ounce glass of water," she said.

Democrats and other supporters acknowledge there are some areas that could be strengthened but argue the reform plans are a good first step toward reining in the nation's $2.5 trillion healthcare sector that is growing at a rate far surpassing inflation.

The Obama administration separately on Thursday blasted an industry analysis that said the Senate bill would raise health insurance premiums for individuals and small groups that try to buy policies.

The report, released by insurance network Blue Cross Blue Shield Association, said the bill will drive more sick people who need costly treatment into the system while not enticing younger, healthier customers into the insurance pool. It will also raise costs by requiring insurers to provide more minimum benefits, it said.

Whitehouse spokesman Dan Pfeiffer, in a blog posting on the White House's website, said the study did not take a number of the bill's provisions into account, including subsidies to help people afford insurance policies as well as protections included for people to keep their current insurance plan.


"We're closer than ever before to passing meaningful health insurance reform," Pfeiffer wrote. "And you can bet as we continue to make progress, the insurance industry will continue to try and distract and misinform because they know their very profitable status quo is in grave danger."

In a separate study on Thursday, employee benefit manager Mercer said nearly two-thirds of companies would trim the health benefits they offer if final legislation includes a tax on more generous, so-called "Cadillac" health insurance plans.

Mercer, a Marsh & McLennan Companies Inc company that serves many Fortune 500 companies, surveyed 465 employers of all sizes, with 63 percent saying they would reduce benefits to avoid the tax.

Thursday, December 3, 2009

Dear Orszag: Please come to Wisconsin

Insuring Resources Commentary:
Perhaps Peter Orszag should take a visit to Wisconsin and witness what is happening daily at ThedaCare, Gunderson Lutheran, Group Health Coop and others. If 20 some health plans are already doing it why is it sooo hard that it will take 20+ years for others to catch on.

Visit www.createhealthcarevalue.com
or
http://www.healthcarevalueleaders.org/


Orszag knows these exist so why is his head in the sand?

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Orszag: Health Care Efficiencies May Take Decades Associated Press
Charles Babington

December 03, 2009


The White House budget director said Wednesday that it may take decades for America to have an efficient health care system even if Congress passes a major overhaul this year.

"It will be years to decades" before the nation has a properly working health care system that rewards quality over quantity, Peter Orszag told reporters. He said improving the quality of health care "is more like a lifelong nutrition or diet, not studying for an exam," but he added that continuous progress is a crucial goal.

Orszag is one of President Barack Obama's top aides in urging Congress to overhaul the U.S. health care system in the coming weeks. He acknowledged that many key elements of the pending House and Senate bills would not take effect for several years, but he urged Americans to embrace a gradual process.

The House-passed bill would bar insurance companies from denying coverage to sick people starting in 2013. A bill being debated in the Senate would do so in 2014.

The bills would create new government subsidies for buying insurance starting in 2014. Fines for individuals who refuse to buy insurance would begin in 2014, and increase in later years. Other provisions, such as subsidizing long-term care, also would be years away.

Orszag noted that some improvements to the health care system are already in the works. The economic stimulus bill enacted early this year included money to modernize medical record-keeping and to identify the most effective ways to address various medical needs. Both efforts should lead to better care, he said.

Orszag said the nation must move away from its long tradition of fee-for-service health care that tends to reward the number of procedures performed rather than the quality of care. The pending legislation includes pilot projects meant to reduce the number of patients who are quickly readmitted to hospitals, and to restructure payments to hospitals to discourage unnecessary procedures.

Orszag said limits on medical malpractice awards -- which many Republicans favor, but are not in the bills -- would do little to reduce health care costs.

Thursday, November 19, 2009

Senate, House Democratic Health Bills Compared

Stay tuned for Insuring Resources Commentary soon.

.... in the meantime see an analysis below courtesy of the Associated Press


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Senate, House Democratic Health Bills ComparedAssociated Press
November 19, 2009
A comparison of the health care bills before Congress:
The Senate Democratic bill (Patient Protection and Affordable Care Act):

WHO'S COVERED: About 94 percent of legal residents under age 65 -- compared with 83 percent now. Government subsidies to help buy coverage start in 2014. Illegal immigrants would not receive assistance.

COST: Coverage provisions cost $849 billion over 10 years.

HOW IT'S PAID FOR: Fees on insurance companies, drugmakers, medical device manufacturers. Medicare payroll tax increased to 1.95 percent on income over $200,000a year for individuals; $250,000 for couples. New 5 percent tax on elective cosmetic surgery. Cuts to Medicare and Medicaid. Excise tax on insurance companies, keyed to premiums paid on health care plans costing more than $8,500 annually for individuals and $23,000 for families. Fees on employers whose workers receive government subsidies to help them pay premiums. Fines on people who fail to purchase coverage.

REQUIREMENTS FOR INDIVIDUALS: Almost everyone must get coverage through an employer, on their own or through a government plan. Exemptions for economic hardship. Those who are obligated to buy coverage and refuse to do so would pay a fine starting at $95 in 2014 and rising to $750.

REQUIREMENTS FOR EMPLOYERS: Not required to offer coverage, but medium and large companies would pay a fee if the government ends up subsidizing employees' coverage.
SUBSIDIES: Tax credits for individuals and families likely making up to 400 percent of the federal poverty level, which computes to $88,200 for a family of four. Tax credits for small employers.

BENEFITS PACKAGE: All plans sold to individuals and small businesses would have to cover basic benefits. The government would set four levels of coverage: The least generous would pay an estimated 60 percent of health care costs per year; the most generous would cover an estimated 90 percent.

INSURANCE INDUSTRY RESTRICTIONS: Starting in 2014: no denial of coverage based on pre-existing conditions. No higher premiums allowed for pre-existing conditions or gender. Limits on higher premiums based on age and family size. Starting upon enactment of legislation: children up to age 26 can stay on parents insurance; no lifetime limits on coverage.

GOVERNMENT-RUN PLAN: A new federal insurance plan would be offered to compete against private carriers. The government would negotiate -- not dictate -- payment rates for medical providers. Unlike the House bill, states could opt out of the plan. It's not clear the proposal commands enough votes to survive, and it could be replaced by a standby system pushed by moderates that would not go into effect until it was clear individual states were experiencing a lack of competition among private companies.

HOW YOU CHOOSE YOUR HEALTH INSURANCE: Self-employed people, uninsured individuals and small businesses could pick a plan offered through new state-based purchasing pools. Employees would be generally encouraged to keep their work-provided coverage.

DRUGS: Grants 12 years of market protection to high-tech drugs used to combat cancer, Parkinson's and other deadly diseases. Drug companies contribute $80 billion over 10 years with the majority of the money used to limit the prescription coverage gap in Medicare.

CHANGES TO MEDICAID: Income eligibility levels likely to be standardized to 133 percent of poverty, which is $29,327 a year for a family of four, for all parents, children and pregnant women. Federal government would pick up the full cost of the expansion during the first three years. States could negotiate with insurers to arrange coverage for people with incomes slightly higher than the cutoff for Medicaid.

LONG-TERM CARE: New voluntary long-term care insurance program would provide a basic benefit designed to help seniors and disabled people avoid going into nursing homes.

ANTITRUST: Amendment expected to be offered on the Senate floor to strip the health insurance industry of its antitrust exemption.
____
The House bill (Affordable Health Care for America Act):

WHO'S COVERED: About 96 percent of legal residents under age 65 -- compared with 83 percent now. Government subsidies to help buy coverage start in 2013. About one-third of the remaining 18 million people under age 65 left uninsured would be illegal immigrants.

COST: The Congressional Budget Office says the bill's cost of expanding insurance coverage over 10 years is $1.055 trillion. The net cost is $894 billion, factoring in penalties on individuals and employers who don't comply with new requirements. That's under President Barack Obama's $900 billion goal. However, those figures leave out a variety of new costs in the bill, including increased prescription drug coverage for seniors under Medicare, so the measure may be around $1.2 trillion.

HOW IT'S PAID FOR: $460 billion over the next decade from new income taxes on single people making more than $500,000 a year and couples making more than $1 million. The original House bill taxed individuals making $280,000 a year and couples making more than $350,000, but the threshold was increased in response to lawmakers' concerns that the taxes would hit too many people and small businesses.
There are also more than $400 billion in cuts to Medicare and Medicaid; a new $20 billion fee on medical device makers; $13 billion from limiting contributions to flexible spending accounts; sizable penalties paid by individuals and employers who don't obtain coverage; and a mix of other corporate taxes and fees.

REQUIREMENTS FOR INDIVIDUALS: Individuals must have insurance, enforced through a tax penalty of 2.5 percent of income. People can apply for hardship waivers if coverage is unaffordable.

REQUIREMENTS FOR EMPLOYERS: Employers must provide insurance to their employees or pay a penalty of 8 percent of payroll. Companies with payrolls under $500,000 annually are exempt -- a change from the original $250,000 level to accommodate concerns of moderate Democrats -- and the penalty is phased in for companies with
payrolls between $500,000 and $750,000.

Small businesses -- those with 10 or fewer workers -- get tax credits to help them provide coverage.

SUBSIDIES: Individuals and families with annual income up to 400 percent of poverty level, or $88,000 for a family of four, would get sliding-scale subsidies to help them buy coverage. The subsidies would begin in 2013.

HOW YOU CHOOSE YOUR HEALTH INSURANCE: Beginning in 2013 through a new Health Insurance Exchange open to individuals and, initially, small employers. It could be expanded to large employers over time. States could opt to operate their own exchanges in place of the national exchange if they follow federal rules.

BENEFITS PACKAGE: A committee would recommend a so-called essential benefits package including preventive services. Out-of pocket costs would be capped. The new benefit package would be the basic benefit package offered in the exchange.

INSURANCE INDUSTRY RESTRICTIONS: Starting in 2013, no denial of coverage based on pre-existing conditions. No higher premiums allowed for pre-existing conditions or gender. Limits on higher premiums based on age.

GOVERNMENT-RUN PLAN: A new public plan available through the insurance exchanges would be set up and run by the secretary of Health and Human Services. Democrats originally designed the plan to pay Medicare rates plus 5 percent to doctors. But the final version -- preferred by moderate lawmakers -- would let the HHS secretary negotiate rates with providers.

CHANGES TO MEDICAID: The federal-state insurance program for the poor would be expanded to cover all individuals under age 65 with incomes up to 150 percent of the federal poverty level, which is $33,075 per year for a family of four. The federal government would pick up the full cost of the expansion in 2013 and 2014; thereafter the federal government would pay 91 percent and states would pay 9 percent.

DRUGS: Grants 12 years of market protection to high-tech drugs used to combat cancer, Parkinson's and other deadly diseases. Phases out the gap in Medicare prescription drug coverage by 2019. Requires the HHS secretary to negotiate drug prices on behalf of Medicare beneficiaries.

LONG-TERM CARE: New voluntary long-term care insurance program would provide a basic benefit designed to help seniors and disabled people avoid going into nursing homes.

ANTITRUST: Would strip the health insurance industry of a long-standing exemption from antitrust laws covering market allocation, price-fixing and bid rigging. The bill also would give the Federal Trade Commission authority to look into the health insurance industry at its own initiative.

Wednesday, November 18, 2009

WI Firms Pay 22% More for Health Insurance- with Soultions Offered by Insuring Resources

Insuring Resources Commentary:

Wisconsin business is at a huge disadvantage in the national marketplace because we pay so much more for health insurance, according to new research by Mercer. Part of the reason, I believe, is because Wisconsin health care providers get paid less on average for treating people on Medicare so the costs are shifted on to the private sector side.

Now if health care reform includes a public plan option that covers small businesses and uses Medicare reimbursement rates the situation will get much worse for Wisconsin businesses.

Solution:
Health care reform must
1. level the Medicare reimbursement to bring Wisconsin up where it should be. Wisconsin providers are paid much less by Medicare than the national average.

2.if we have a public plan option that includes coverage for small businesses it must not use Medicare reimbursement rates UNLESS, Medicare can finally start to negotiate rates with providers. Right now, Medicare reimbursement rates are set by the feds, NOT negotiated in the marketplace. With the purchasing power of the federal government insuring tens of millions of people on Medicare this should be a no-brainer.

3. In addition, as I've said all along, providers need reimbursement incentives to make their care more efficient and reduce the waste. The Senate bill includes pilots for this but that doesn't go far enough, we need these efficiency incentives to be standard across the entire system.

4. And finally, Wisconsin cannot be penalized for having a higher rate of insured persons. There are incentives in the House bill that gives grant money to states with higher uninsured pct.s to help them along. This actually hurts states like Wisconsin that have been proactive. For instance- Wisconsin covers childless adults through BadgerCare up to 200% of FPL. Louisiana covers them up to 26% of FPL!!! If the House reform language passes Lousiana gets extra money to bring their insured numbers up to 150% while Wisconsin already surpasses that. By the way-- thanks to Wisconsin DHS Secretary Karen Timberlake for providing the Louisiana stat at a health care forum I attended in Madison yesterday.


----------------------- -----------------------
State firms pay 22% more for health insurance than U.S., survey shows By Rick Romell of the Journal Sentinel

Posted: Nov. 18, 2009 10:14 a.m.

Wisconsinites continue to pay more for health insurance than Americans generally, and the costs here have increased more rapidly, a new survey by benefits consulting firm Mercer shows.

Wisconsin companies and their employees paid an average of $10,888 per worker for health insurance in 2009 - nearly 22% above the national average of $8,945, Mercer found.

And the cost gap between Wisconsin and the rest of the country widened. Nationally, the cost of health benefits for active employees rose 5.5% for the year, the smallest annual increase in a decade. In Wisconsin, costs increased by 6.8%.

Mercer's findings are based on a late-summer survey of more than 2,900 employers with at least 10 employees each. Eighty-eight Wisconsin employers were surveyed.

Monday, November 16, 2009

Wisconsin Group Leads The Way on Efficiency Data

Insuring Resources Commentary:

This is how Wisconsin can lead the way to show how efficient health care can be delivered. Health care reform must include incentives to providers to share their costs and quality outcomes to drive competition to more cost effective and quality care.

The WHIO Health Analytics Exchange announced today the launch of a database to assess health care quality, costs.

For more information visit WHIP at http://www.wisconsinhealthinfo.org/


___________________ _________________________
from the Milwaukee Journal Sentinel
Nov. 16, 2009 3:10 p.m. |
A 4-year-old collaborative effort to collect data from Wisconsin's insurers, hospitals, major employers and others has launched a database that can be used to analyze health systems' performance.

The WHIO Health Analytics Exchange contains information from millions of insurance claims and is being used by large medical groups, state government, business groups and other members of the Wisconsin Health Information Organization, said Julie Bartels, the organization's executive director.

The database shows, for example, that treatment for congestive heart failure in the Fox Valley and Madison costs significantly less than the statewide average, meaning those areas are much more efficient at caring for that disease, Bartels said.

Treatment for congestive heart failure costs slightly more in the Milwaukee area than the statewide average, the data show.

"The breadth of information in our repository is astounding," said Bartels, who will discuss Wisconsin's experience building the database Tuesday at an American Health Insurance Plans conference in Chicago.

"To us, the real opportunity is to look across all the claims aggregated here and get a picture of where we have cost-effective health care being delivered in Wisconsin, and where we have an opportunity to improve the cost-effectiveness of health care," said Karen Timberlake, secretary of the state Department of Health Services and a WHIO board member.

It's difficult to see trends when comparing a few heart attack treatments. But when you can look at thousands of procedures around the state, "it's really powerful," Timberlake said. "You start to see there are real differences in the way medicine is practiced."

That kind of information will help medical providers improve their care, said John Toussaint, president and chief executive of the ThedaCare Center for Healthcare Value in Appleton. If a provider discovers it is expensive or less efficient in a certain area, it "can either say, 'I'm going to put resources into this, or maybe not do it anymore,' " Toussaint said.

Ten founding members contributed $3 million to WHIO to develop the database, and six more fee-paying members have joined. The state contributed $1.55 million.

WHIO has given a three-year, $4.5 million contract to Ingenix, a health care information and research company, to manage the data warehouse and analyze the information. Ingenix is part of UnitedHealth Group Inc.

"We all know there is waste going on in health care, and it contributes to higher health care premiums," Timberlake said. "This is one way we in Wisconsin can work to hold down the cost."

Saturday, November 14, 2009

Republican says House Dems Rejected Common Sense Reforms

Insuring Resources Commentary:

GOP Congressman Mark Kirk says House Democrats rejected several common sense Republican proposals in the debate on the House's Health Care reform bill.

He said some proposals sought to allow greater flexibility for state innovation. In not knowing the specifics I'd say state innovation should have been encouraged but the details are missing so on its face it seems like a missed opportunity to allow for some bi-partisanship.

On another issue Kirk says Dems rejected "allowing consumers to buy coverage from across state lines."

Let's analyze that one. Wisconsin insurance regulations are some of the strongest in the nation which also does add a bit of cost to our health insurance premiums. Health mandates requiring greater coverage do often add costs to health insurance premiums. BUT, we get better and more comprehensive coverage because of it. The old adage, "You get what you pay for" definitely applies here.

The wonderful state of Alabama however does not have a stellar reputation for its insurance regulations. Health insurance is cheaper there because insurers face less restrictions and mandates.

When faced with high health care premiums many businesses would seek cheaper coverage in Alabama wouldn't they, and they'd get what they paid for, wouldn't they?

What if your employer chose to purchase coverage from an Alabama-based insurer?


______________ ______________
Republican lawmaker says House Democrats rejected GOP proposals to improve health care bill

From JS Online 11/14/09

GOP Congressman Bashes Dems Health Care Proposals

In this week's Republican address Congressman Mark Kirk says he wants to see tort reform in health care improvements.

In this week's Republican address Congressman Mark Kirk criticizes the health care proposals pushed by Speaker of the House Nancy Pelosi.

In this week's Republican address, Congressman Mark Kirk says the Democrats' health care ideas are just too expensive.

In this week's Republican address Congressman Mark Kirk says the current health care proposals cost too much and take away too much.



WASHINGTON (AP) -- House Democrats missed opportunities to improve the House-passed health care bill when they rejected Republican ideas to limit lawsuits and give states more flexibility to enact innovative changes, a GOP lawmaker said Saturday.

Delivering the Republicans' weekly radio and Internet address, Rep. Mark Kirk of Illinois said health care costs could be lowered by "reining in lawsuits" and allowing consumers to buy coverage from across state lines. Kirk promoted several provisions in the House GOP health care bill, which was rejected a week ago when the House passed the Democratic plan.

"Unfortunately, all of these commonsense Republican reforms were rejected by Speaker (Nancy) Pelosi," Kirk said in the address. "The Pelosi health care bill has no significant lawsuit reforms and does not guarantee your medical rights from government waiting lines or restrictions."

Kirk, who is in his fifth House term representing the suburbs north of Chicago, is a candidate for the Republican nomination to run for the Senate seat that was held by President Barack Obama. He called the House Democrats' health plan "a new massive spending program, supported by heavy taxes and cuts to senior health care."

"In sum, the bill opens a new trillion-dollar entitlement just as our national debt tops $12 trillion," Kirk said.

Friday, November 13, 2009

Business Roundtable Wants Increased Emphasis on Cost-Effectiveness

This is an important article from the business/ employer perspective


_________________ _____________
By Donna Smith (Reuters)

WASHINGTON (Reuters) - An influential business group said on Thursday that its continued support for President Obama's healthcare overhaul hinges on whether it slows the soaring growth rate of healthcare costs.

The Business Roundtable, which represents some of the largest employers in the United States, released a report saying that "effective" healthcare reforms could save employers as much as $3,000 per worker by 2019.

"The report also shows that reform done wrong ... could make a bad situation much worse, in which case Business Roundtable could not support the bill," Eastman Kodak (EK.N) Company Chairman and Chief Executive Antonio Perez said in a statement accompanying the release of the report.

Obama said it was further evidence that the U.S. healthcare system is broken.

"If we don't pass comprehensive reform, the report finds, health care costs that are already squeezing our businesses will continue to rise, and in 10 years, employment-based spending on health care for large employers will be fully 166 percent higher per employee than it is today," the president said in a statement.

"The yearly health insurance costs for the average employee will rise to a staggering $28,530," he added, citing a finding by the report.

Companies represented by the Business Roundtable, which includes such giants as Verizon Communications Inc. (VZ.N), The Boeing Company (BA.N) and Exxon Mobil Corp. (XOM.N), provide health insurance to more than 35 million workers and their families. The group has been a major force behind the healthcare overhaul push.

The business group opposes the bill approved last week by the U.S. House of Representatives. It says the measure fails to control costs and that some provisions, including one that would create a new government insurance plan, could undermine employer-sponsored health coverage.

The report, written by Hewitt Associates for the Business Roundtable, favors some of the cost-containment reforms included in legislation passed by the Senate Finance Committee.

These include changes in the government Medicare health insurance program for the elderly that would reward quality of care and not the quantity of services and treatments performed.

The report said a strong requirement that individuals be responsible for obtaining health insurance would help ensure that premiums do not jump with a proposal that would bar insurers from rejecting people with pre-existing conditions.

The Finance Committee weakened enforcement measures of the individual mandate provision, raising concerns that healthier people will delay seeking insurance, increasing the costs for those who buy insurance.

Tuesday, November 10, 2009

Cost Control Measures Gain Some Traction

Insuring Resources Commentary

Finally, we may be getting somewhere. I've highlighted the primary issues in bold within the NY Times article below. It looks like the cost hawks in Congress and experts like myself are finally getting some to listen to the message. The current bills do not go far enough in reducing health care costs. We may yet get there.

Even in this article there is too much emphasis on cost controls in Medicare like the draft language authored by Dr. Cortese of Mayo. That doesn't go far enough. We need them nationwide through every payor method-- public and private.

It's time to call your Senator and drive this point home.
----------------------- ----------------------

Democrats Raise Alarms Over Health Bill Costs

By SHERYL GAY STOLBERG-- New York Times
Published: November 9, 2009

WASHINGTON — As health care legislation moves toward a crucial airing in the Senate, the White House is facing a growing revolt from some Democrats and analysts who say the bills Congress is considering do not fulfill President Obama’s promise to slow the runaway rise in health care spending.

Mr. Obama has made cost containment a centerpiece of his health reform agenda, and in May he stood up at the White House with industry groups who pledged voluntary efforts to trim the growth of health care spending by 1.5 percent, or $2 trillion, over the next decade.

But health economists say it is impossible to know whether the bills, including one passed by the House on Saturday night, would meet that goal, and many are skeptical that they even come close.

Experts — including some who have consulted closely with the White House, like Dr. Denis A. Cortese, chief executive of the Mayo Clinic — say the measures take only baby steps toward revamping the current fee-for-service system, which drives up costs by paying health providers for each visit or procedure performed. Some senators are also dissatisfied.

“My assessment at this point,” said Senator Ron Wyden, Democrat of Oregon and a member of the Finance Committee, “is that the legislation is heavy on health and light on reform.”

There are a variety of ideas for attacking cost increases more aggressively, including setting Medicare reimbursement rates for doctors and hospitals more rigorously and discouraging workers and employers from buying expensive health insurance policies that mask the true costs of treatment.

Among other innovations being considered is a cost-cutting method known as bundling, in which health providers receive a lump sum to care for a patient with a particular medical condition, say, diabetes or heart disease. The House bill calls for the administration to develop a plan for bundling, while the Senate Finance Committee version of the bill gives it until 2013 to create a pilot program.

Some experts would like to see such changes adopted more quickly, and senators of both parties say they will press for more aggressive cost-cutting measures when the bill comes up for debate. But drastic changes in the health care reimbursement system could cost the White House the support of doctors and hospital groups, who have signed onto the legislation and are lobbying hard to keep the current fee-for-service system from being phased out too quickly.

The debate underscores a fundamental tension inside the White House between cost-containment idealists and pragmatists.

The first group includes officials like Peter R. Orszag, the budget director, and Dr. Ezekiel J. Emanuel, the medical ethicist whose brother Rahm is the chief of staff. The second includes Rahm Emanuel and Nancy-Ann DeParle, the director of the Office of Health Reform, who must contend with the realities of getting legislation passed.

“Let’s be honest,” Rahm Emanuel said in a recent interview. “The goal isn’t to see whether I can pass this through the executive board of the Brookings Institution. I’m passing it through the United States Congress with people who represent constituents.”

He went on: “I’m sure there are a lot of people sitting in the shade at the Aspen Institute — my brother being one of them — who will tell you what the ideal plan is. Great, fascinating. You have the art of the possible measured against the ideal.”

Mr. Orszag would not be interviewed. But in an e-mail message sent through a spokesman, he said the current legislation “lays the foundation” for cost-cutting over the long-term, adding: “Will more need to be done in the future? Absolutely.”

Senator Susan Collins, the Maine Republican whose vote the administration is courting, convened a news conference on Monday with Senator Lamar Alexander of Tennessee, a member of the Republican leadership, to spotlight her concerns over cost containment. Ms. Collins said she had been meeting with a group of moderate Democrats who shared her views.

I don’t believe we need more pilot projects to show us that health care delivery reforms are necessary,” she said in an interview. She added, “I think people are much more upset over the cost of care than the administration is acknowledging.”

Both the House and the Senate are proposing cost-saving measures. The House bill projects $440 billion in Medicare savings over 10 years; the Senate Finance Committee bill projects about $420 billion. White House officials say there will be additional, substantial savings in the private sector, as well. But how much is not clear.

Still, it is one thing to wring savings out of a bloated system, quite another to change the way that system does business.

Experts agree that the Senate Finance bill does more to put systemic changes in place. That is because the bill includes two measures that health economists favor: a tax on high-value “Cadillac” health plans, and an independent commission that would make binding recommendations on how to cut Medicare costs.

House Democrats strongly oppose the Cadillac tax, which would hurt, among other people, union workers with generous benefit plans. But Ms. DeParle said in an interview that she sensed fresh interest in the House in adopting the Medicare commission idea. “There is a lot of support for cost containment,” she said.

Dr. Cortese, of the Mayo Clinic, said the bills could do more to reward quality care over quantity. He said he had met with Mr. Orszag and others at the White House and had proposed legislative language that would give Medicare three years to begin rewarding hospitals that are delivering better care at lower cost.

“Our position has been focusing on paying for value,” he said, adding, “My take is there are people in the White House who understand exactly what I’m saying.”

Yet a deal the White House made with the hospital industry could make it difficult to cut costs too deeply.

The White House and the Senate Finance Committee chairman, Max Baucus of Montana, agreed to limit hospitals’ payment reductions to $155 billion over 10 years. Those savings will come almost exclusively from “an agreement to squeeze the prices a little bit across the board, rather than reforming the way payments work,” said Mark McClellan, who ran Medicare under President George W. Bush.

Thursday, November 5, 2009

They call this "Reform"

Insuring Resources Commentary

Details on the Republican's "Health care reform" bill. I put that in quotes because calling this reform is a slam on the english language.

The assessment from the Cngressional Budget Office conculdes that the proposal would barely dent the ranks of the uninsured.

The measure would cover 3 million additional people at a cost of $60billion through 2019, according to an analysis by the nonpartisan Congressional Budget Office. The Democrats' bill, by comparison, would cover far more -- 36million additional Americans -- at a much higher cost -- $1.055 trillion through 2019, the CBO has said, while adding nothing to the deficit.

The bill leaves out a number of the key features of the Democrats' 1,990-page legislation, such as new requirements for employers to insure their employees and for nearly all Americans to purchase insurance. It also doesn't block insurers from denying coverage to people with pre-existing health conditions, as Democrats would do.

Instead, Cong. Boehner, the bills author, said the Republicans would encourage creation of insurance pools for high-risk individuals and take other steps to ease their access to coverage. By the way, on average those pools charge premiums equal to 130% in the individual market. Gee thanks, Cong. Boehner that'll help!

Many of the most respected health care voices in the GOP have historically treated the idea of eliminating pre-existing condition exclusions as an obvious plank in any reform effort. Apparently there's a little dissension on this issue. Here aere three examples:

Rep. Paul Ryan (R-Wisc.), who is widely regarded as one of the sharpest health care policy wonks in Republican circles, told MSNBC back in May that consumers needed to have "access to affordable coverage, regardless of [their] pre-existing condition." Representative Dave Camp (R-Mich), meanwhile, has insisted that Republicans "must address" the issue of pre-existing conditions. Rep. Joe Barton (R-Tex.) has called for the creation of a "straightforward national plan that covers pre-existing conditions."

Instead, the Republican plan increases incentives for people to use health savings accounts, caps non-economic jury awards in medical malpractice cases at $250,000, provides various incentives to states with the aim of driving down premium costs and allows health insurance to be sold across state lines.

By enhancing HSAs the GOP is putting more health care costs on the backs of its citizens. Since the bill is still in hiding and not viewable by the public its hard to assess the details.


**** This material was compiled from several sources including CNN, the AP, the Huffington Post and others.****

Wednesday, November 4, 2009

Health Bills too Timid on Cutting Costs, Experts say

Insuring Resources Commentary

More evidence from the experts that we are potentially headed for disaster. We must address health care costs aggressively while expanding coverage of the uninsured or we risk exploding the system.

I'm not talking about price controls or rationing. We need to eliminate waste and reimburse services based on episodes of care and quality outcomes. Our current system does neither.

Yesterday I had my third conversation with staff from Sen. Feingold's office and have yet to make any sort of headway. I won't give up, but I need your help. Its time to call your senator or representative.


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Proposals make only trims where broader changes are needed, critics argue

By Ceci Connolly
Washington Post Staff Writer
Wednesday, November 4, 2009

Democrats in Congress are embracing the spirit of President Obama's call to slow the runaway rise of health-care costs but are shying away from some of the most aggressive techniques for achieving that.

"The bills are directionally correct, but they're not going far enough," said George Halvorson, chairman and chief executive of Kaiser Permanente and the author of "Health Care Will Not Reform Itself."

In years past, policymakers tried taming health-care growth with price controls -- in government reimbursements and through managed care. The Obama administration has advocated a third way: moving away from fee-for-service payments, which reward providers for doing more procedures, to a coordinated system that pays doctors and hospitals for doing better.

Under that vision, providers would be given a few years to move to performance-based medicine, in which fees and results are published, money is directed to evidence-based therapies, and harmful errors such as preventable infections are reduced. In short, the goal is to save money by modernizing and improving.

Now, as the debate reaches a critical juncture, many are worried that the president's ambitious hopes to constrain costs could result in tepid half-measures on Capitol Hill. Among the concerns:

-- A Senate plan to tax high-priced insurance policies saves far less money -- and is less likely to change medical consumption -- than eliminating the tax exemption for employer-sponsored coverage.

-- Proposals on comparative-effectiveness research and a new Medicare cost-cutting commission have been watered down.

-- An array of Medicare pilot projects aimed at paying doctors and hospitals for quality rather than quantity would take years to be implemented nationally -- if they ever were.

-- None of the bills addresses medical liability, even though the Congressional Budget Office has concluded that tort reform could save $54 billion over the next decade.

'Tried and true'

Overall, Democratic lawmakers have turned to "tried and true" strategies for reducing spending that merely ratchet down payments rather than fundamentally changing how the health-care system operates, said Drew Altman, head of the nonpartisan Kaiser Family Foundation.

More than $110 billion worth of Medicare "savings," for example, simply comes from a cut in reimbursements to insurers that run the private Medicare Advantage program, and much of the $80 billion extracted from drug companies is in the form of higher Medicaid rebates to the government. Both proposals would reduce costs but have little to do with fundamentally refashioning health care.

Unlike past reform efforts that barely gave a nod to tackling double-digit medical inflation, the bills this year "have some of the right rhetoric," but they fall short of real-world applicability, said Jack Lewin, chief executive of the American College of Cardiology. Without significant financial incentives and strict deadlines, he predicted, few doctors would rush to move toward the coordinated-care models reformers say are needed to save money and maintain high quality.

Ralph Neas, head of the nonpartisan National Coalition on Health Care, noted that "these bills do very little in terms of reining in long-term cost growth," adding: "There is not enough in the public sector and virtually none in the private sector."

Neas called on Congress to adopt up to $2 trillion worth of potential savings trumpeted by Obama and industry leaders at a White House event in May. Only a few of the specific ideas, such as streamlining insurance claims forms, have been included in the legislation.

"Voluntary efforts are never enough," Neas said. "There has to be some way to make it enforceable."

Richard Foster, the chief actuary of the federal Centers for Medicare and Medicaid Services, said lawmakers could achieve far greater savings in the health system if they aggressively pursued research that identifies the best, most cost-effective treatments.

"If you did comparative effectiveness in a way that looked at whether to approve a new therapy because it is cost effective and is an improvement, then you'd have a fighting chance of slowing down the rate of growth," he said in an interview. "Nobody's proposing that."

Taxing benefits


White House budget chief Peter Orszag said in an interview that changing the tax treatment of employer-sponsored health benefits "is among the most important single things that could be done to constrain costs and improve quality."


Employees currently do not pay taxes on insurance purchased through the workplace. Lifting the exemption would be likely to make workers more price sensitive and prompt insurance companies to market more affordable policies, according to most economists.

Eliminating the exemption could raise $250 billion a year and more than pay for the enormous expansion of coverage envisioned by Obama and Democrats. But the Senate compromised, with a proposal to tax only high-priced "Cadillac" plans. That approach is estimated to save $200 billion over a decade, and House Democrats have opposed the idea, raising concerns that it may be dropped.

Orszag also bragged that a set of Medicare pilot projects could dramatically reshape how medicine is practiced in this country. The proposals include reducing reimbursements to hospitals that have unnecessarily high readmission rates, "bundling" payments to medical teams that coordinate patient care and providing bonuses to doctors who meet quality standards.

"We're creating incentives for a more efficient system," he said. Because lawmakers are still negotiating and the proposals could change, Orszag said, it is impossible to quantify the eventual savings.

While Orszag says a go-slow approach will help determine the best course, others say the ideas are promising enough to pursue aggressively now.

"I wish they had the courage of their convictions," said Douglas Holtz-Eakin, a former Congressional Budget Office director and adviser to Sen. John McCain (R-Ariz.). "Just do it."
Mark McClellan, a physician who ran two health agencies in the Bush administration, endorsed the ideas in the legislation but warned that pilot projects take too long to adopt broadly and that not enough emphasis is being placed on financial rewards and penalties based on health outcomes.

Orszag has high hopes for a proposed Medicare cost commission as well, suggesting that the panel of independent experts would guide the government program to deliver more efficient care. But the hospital industry has already struck a deal exempting it from any suggested cuts for 10 years, and Congress is likely to limit the panel's power to recommendations that do not touch eligibility or benefits.

Many remain skeptical that Congress will let stand spending reductions included in this year's comprehensive reform initiative, particularly $400 billion in Medicare trims. They point to 1997's Balanced Budget Act, in which Congress set a Medicare fee schedule that would squeeze physician payments if costs rose too steeply. But nearly every year, at the behest of the American Medical Association, lawmakers override the scheduled reductions.

That history "teaches us that single provisions that can be easily lobbied against tend not to survive the political process," said Helen Darling, president of the National Business Group on Health.

But for Orszag, the cost-control efforts on Capitol Hill represent significant progress.

"There's always the potential to do more," he said. "When you look at the details in the legislation, it is a substantial step, especially within the realm of the politically viable and realistic, as opposed to a think tank or academic ideal."

Monday, November 2, 2009

Charlie Wilson's War and Health Care Reform- can we ever get it completely right?

Insuring Resources Commentary

I finally just watched the movie, Charlie Wilson's War, the story of a renegade Congressman, a rich socialite and a rogue CIA agent who began the end of the Soviet Empire with the help of well-armed Afghan freedom fighters through a covert war.

The analogy to the battle for health care reform is apt as we inch closer and closer this fall to a reform package that could forever change the landscape of the American healthcare system. Or, like Charlie Wilson's War in Afghanistan it could come close and ultimately fail.

"These things happened. They were glorious and they changed the world... and then we screwed up the endgame"- U.S. Cong. Charlie Wilson.

Through the covert war in Afghanistan Congress spent over $1 Billion to oust the Soviets but failed to establish a sustainable infrastructure to support a democracy. As Charlie Wilson tried and failed to get just $1 million in funding to build Afghani schools and sustain the momentum from the war viewers are suddenly jolted into the present in our own minds with visions of Al Queda, the Taliban and our own futile overt war.

Full Circle

So what's all this mean for health care reform? Like rebuilding Afghani schools we need to ensure that health care reform brings us a sustainable health care future with incentives for quality care, reduction of waste through lean processes, and payment reform that incents quality and not quantity.

Let's get this right, THIS TIME, let's not do it halfway and leave the outcome unsustainable.

So this is a Gov't Takeover- 2% of the Market

Insuring Resources Commentary:

So after all the debate about the public plan option and all the skewed debate the actual numbers are in. The public plan will likely cover about TWO PERCENT.

Don't get me wrong the public plan will do wonders for those relegated to discriminatory coverage in the independent market and those abandoned and uninsured in our 35th best health care system.

Drew Altman from the Kaiser Family Foundation has it mostly correct. See below in italics. He says we need more discussion on "affordable coverage" , but even that doesn't get at the biggest issue of reducing HEALTH CARE costs.

While nearly the entire debate (as I've said all along) has focused attention on the public plan issue, we've all missed the boat. What about cost, waste elimination and PAYMENT REFORM?????

Debate on the public plan option has been the focus of 90% of the national discussion, yet in the end it will cover 2% of the population? Health Care reform should be about re-prioritizing our health care system.... shouldn't it?

Shouldn't we be focusing on the real issues, health CARE reform... not insurance reform? Maybe now we can set aside the issue of the 2% public plan and focus on cost and quality- i.e. the real issues that affect the vast majority of Americans. But I'm too cynical to believe that we'll actually start having a real discussion, afterall the GOP finally gave us their proposal. Tune in tomorrow for a gallow's analaysis of what that would do to our health care system. At this very late hour, we must refocus on eliminating waste, and emhasizing quality--- the most important issues we face. The public plan will help, but there are other important issues that will play a much bigger role in reforming the system that are being completely ignored.


--------------------------- From the Associated Press

After all the fuss, public health plan covers few

By RICARDO ALONSO-ZALDIVAR
The Associated Press
Sunday, November 1, 2009 7:35 AM

WASHINGTON -- What's all the fuss about? After all the noise over Democrats' push for a government insurance plan to compete with private carriers, coverage numbers are finally in: Two percent.

That's the estimated share of Americans younger than 65 who'd sign up for the public option plan under the health care bill that Speaker Nancy Pelosi, D-Calif., is steering toward House approval.

The underwhelming statistic is raising questions about whether the government plan will be the iron-fisted competitor that private insurers warn will shut them down or a niche operator that becomes a haven for patients with health insurance horror stories.

Some experts are wondering if lawmakers have wasted too much time arguing about the public plan, giving short shrift to basics such as ensuring that new coverage will be affordable.

"The public option is a significant issue, but its place in the debate is completely out of proportion to its actual importance to consumers," said Drew Altman, president of the nonpartisan Kaiser Family Foundation. "It has sucked all the oxygen out of the room and diverted attention from bread-and-butter consumer issues, such as affordable coverage and comprehensive benefits."

The Democratic health care bills would extend coverage to the uninsured by providing government help with premiums and prohibiting insurers from excluding people in poor health or charging them more. But to keep from piling more on the federal deficit, most of the uninsured will have to wait until 2013 for help. Even then, many will have to pay a significant share of their own health care costs.

The latest look at the public option comes from the Congressional Budget Office, the nonpartisan economic analysts for lawmakers.

It found that the scaled back government plan in the House bill wouldn't overtake private health insurance. To the contrary, it might help the insurers a little.
The budget office estimated that about 6 million people would sign up for the public option in 2019, when the House bill is fully phased in. That represents about 2 percent of a total of 282 million Americans under age 65. (Older people are covered through Medicare.)

The overwhelming majority of the population would remain in private health insurance plans sponsored by employers. Others, mainly low-income people, would be covered through an expanded Medicaid program.

To be fair, most people would not have access to the new public plan. Under the House bill, it would be offered through new insurance exchanges open only to those who buy coverage on their own or work for small companies. Yet even within that pool of 30 million people, only 1-in-5 would take the public option.

Who's likely to sign up?

The budget office said "a less healthy pool of enrollees" would probably be attracted to the public option, drawn by the prospect of looser rules on access to specialists and medical services.

As a result, premiums in the public plan would be higher than the average for private plans. That could nudge healthy middle-class workers and their families to sign up for private plans.

"The concern was that the public option would destabilize the bulk of private insurance, but in fact what Congress has fashioned is very targeted," said economist Karen Davis, president of the Commonwealth Fund. "It's not going to be taking away the insurance industry's core business."

It's unclear whether there are enough votes in the Senate for a public plan. The version that Majority Leader Harry Reid, D-Nev., has offered would let states opt out, probably leaving a smaller plan that the House would want.

Insurers aren't buying the budget office analysis. Asked if it might soften that opposition, industry spokesman Robert Zirkelbach of America's Health Insurance Plans responded with a curt "No."

While a government plan might start out modestly, insurers fear that Congress could change the rules later, opening it up to all people and setting take-it-or-leave payments for hospitals and medical providers, instead of negotiating, as the House bill calls for.

For the same reason, employer groups also remain wary. Big companies don't want to lose control of their health care budgets and instead have the government send them a tax bill.

"That cost is going to come back to you one way or another ... and it's coming back in the way of taxes and liabilities," said Eastman Kodak's chief executive, Antonio M. Perez, speaking for the Business Roundtable. "We just don't believe that there are miracles out there."

If Congress passes a public plan that's not much of a sensation, Democrats might have reason to regret all the time and energy they invested in it.

Friday, October 30, 2009

The House Health Care Reform Bill

We now have health care reform bill sfrom both the House and the Senate. They will be debated over the next few weeks and then come to a final vote in each House. Then a conference committee will negotiate a final bill to be voted on by each House of congress. Its projected that the final bill could be signed by President Obama in time for Christmas.

Coverage Highlights-**Provides coverage for 96% of legally residing Americans.

** Subidizes coverage for the poorest Americans

** Caps annual out-of-pocket costs

** Eliminates Pre-x condition exclusions

Fiscal and Cost Issues
** Cuts federal deficit by $30 mill over ten years according to the CBO

** Individuals with annual incomes over $500,000, as well as families earning more than $1 million, would face a 5.4 percent income tax surcharge.

** Cuts Medicare expenditures by 1.3% annually

** The House bill imposes a fine of up to 2.5 percent of an individual's income. Both versions include a hardship exemption for poorer Americans.

** Requires larger companies to provide employee insurance for everyone or pay a penalty of up to 8 percent of total revenue.

CNN, conforming with the rest of our wonderful media, ignores the question of whether true cost controls and waste reduction strategies exist within this bill.

I'll get a copy of the bill and research those questions.



--------------------------------- ----------------------------
From CNN, October 31, 2009

The battle over health care reform reached another milestone Thursday as top House Democrats unveiled sweeping legislation that includes a highly controversial public health insurance option.

The nearly 2,000-page bill -- a combination of three versions passed by House committees -- would cost $894 billion over 10 years to extend insurance coverage to 36 million uncovered Americans, according to House Speaker Nancy Pelosi.

However, the bill's total cost, including Medicare changes, is expected to be higher and could push the price tag over $1 trillion, according to an initial CNN analysis.

The bill guarantees that 96 percent of Americans have coverage, Pelosi stated. The claim is based on an analysis by the non-partisan Congressional Budget Office.

Among other things, the bill would subsidize insurance for poorer Americans and create health insurance exchanges to make it easier for small groups and individuals to purchase coverage. It would also cap annual out-of-pocket expenses and prevent insurance companies from denying coverage for pre-existing conditions.

Pelosi's office said the bill would cut the federal deficit by roughly $30 billion over the next decade. The measure is financed through a combination of a tax surcharge on wealthy Americans and spending constraints in Medicare and Medicaid.

Specifically, individuals with annual incomes over $500,000, as well as families earning more than $1 million, would face a 5.4 percent income tax surcharge. Medicare expenditures would be cut by 1.3 percent annually.

"Today, we are ... laying the foundation for a brighter future for generations to come," Pelosi said on Capitol Hill.

"For Americans struggling with the cost of health care, this is an urgently needed bill," said House Majority Leader Steny Hoyer, D-Maryland. "This is an idea whose time has come."

President Obama praised House Democrats for forging "a strong consensus that represents a historic step forward."

Republicans tore into the bill, characterizing it as a series of tax increases and new regulations that would destroy jobs while doing little to stop spiraling health care costs.

"This really is a government takeover of health care in America," said Rep. Mike Pence, R-Indiana. "It appears for all of the world like a massive government-run insurance plan paid for with a freight train of mandates and taxes and bureaucracy."

Critics argue that the Democrats' $894 billion price tag excludes the cost associated with closing the Medicare "donut hole" prescription drug coverage gap.

The donut hole refers to some drug costs left uncovered by Medicare before catastrophic coverage kicks in. Pelosi highlighted plans to close the gap while discussing the bill Thursday.

Under the public option in the House plan, health care providers would be allowed to negotiate reimbursement rates with the federal government, according to Democratic leadership aides.

Pelosi and other liberal Democrats had argued for a more "robust" public option that ties reimbursement rates for providers and hospitals to Medicare rates plus a 5 percent increase. Several Democrats representing rural areas, however, complained that doctors and hospitals in their districts would be shortchanged under such a formula.

The Democratic leadership "pushed as hard as they could" for the robust option but couldn't win majority support for it, said liberal New York Rep. Jerrold Nadler. "There is no point crying over spilt milk."

The House bill differs from legislation now being considered by the Senate in a number of critical ways. Senate Majority Leader Harry Reid, D-Nevada, also favors a public option but would allow individual states to opt out of the plan. Reid would allow for the creation of nonprofit health care cooperatives; the House bill does not include such a measure.

A bill recently passed by the Senate Finance Committee does not include a tax surcharge on the wealthy but would instead impose a new tax on high-end health care policies, dubbed "Cadillac plans" by critics. A large number of House Democrats are adamantly opposed to taxing such policies, arguing that such a move would hurt union members who traded higher salaries for more generous benefits.

Individuals under the $829 billion Senate Finance Committee plan would be required to purchase health insurance coverage or face a fine of up to $750. The House bill imposes a more stringent fine of up to 2.5 percent of an individual's income. Both versions include a hardship exemption for poorer Americans.

The Senate Finance Committee bill would require large companies to contribute to the health care costs of lower income workers if those workers receive a government subsidy for insurance. The House legislation would require larger companies to provide employee insurance for everyone or pay a penalty of up to 8 percent of total revenue.

Democratic leaders in both chambers agree on establishing nonprofit health care cooperatives and stripping insurance companies of an antitrust exemption that has been in place since the end of World War II.

Moderate House Democrats, whose votes are needed to pass the bill, appeared to be cautiously optimistic. They didn't, however, offer any definitive judgments.

"I'm not leaning one way or the other right now, but I just have to get into the bill and read it for myself," said Rep. Baron Hill, D-Indiana. "I'm hoping to be able to vote for it."

The House Democratic leadership posted the bill online Thursday and agreed to give members at least 72 hours to read it before a vote. Under that timetable, the full House could begin debating the bill next week.

Any bill passed by the House of Representatives will eventually have to be merged with legislation passed by the Senate. Both chambers would then have to pass a revised measure before sending it to Obama to be signed into law.

One thorny issue remaining to be resolved among House Democrats is the final abortion language in the bill. Rep. Bart Stupak, D-Michigan, has been pushing leaders to add stronger language prohibiting the use of federal money to pay for abortions under new health care reforms.

Stupak has vowed that if he isn't allowed a vote on the issue, a group of 40 anti-abortion Democrats will work to block the bill from getting to the House floor.

Leadership aides admit that they need to find compromise wording on abortion but say they are confident the issue will be resolved by the time the bill gets to the floor.

Wednesday, October 28, 2009

Examples of Lean Processes

The following appeared in the Oshkosh Northwestern:
by Lakshmi U. Tatikonda • for The Northwestern • October 27, 2009

The healthcare industry is in a mess, riddled with haphazard and outdated management systems, inefficiencies and waste, excess bureaucracy and costs, and greedy insurance companies. Waste is rewarded while innovation is ignored or penalized says Dr. John Toussaint, president and CEO of ThedaCare Center for Healthcare Value.

Lean methods (Toyota Production Systems) helped organizations reduce costs, improve quality and customer satisfaction. Critics say that healthcare is different from automobile industry, patients are not cars, and Lean methods don't apply to healthcare. This is not true. According to Dr. W. Edwards Deming, 80 percent of problems are process (system) related. Healthcare, like automobile industry, is a collection of processes and can gain from lean applications.

The causes of waste in healthcare are numerous:

Bureaucracy. Rigid adherence to policies and procedures costs U.S. residents $294.3 billion in healthcare and accounts for at least 31 percent of total U.S. health spending in 1999.

Overhead cost.
Between the years 1970 and 2000 physician costs increased about 250 percent, whereas healthcare administrative costs increased by a whopping 2,500 percent.

Errors. The Institute of Medicine estimates that medical errors cost the United States $39.7 billion a year. Dr. Toussaint of ThedaCare, says that quality waste could be as high as 40 percent to 50 percent of costs. It is estimated that 44,000 to 95,000 people die every year from medical errors. Every year more than one million people in the United States suffer from preventable injuries caused by medical errors.

Excesses. One hospital found that 25 percent of the surgical supplies picked for use in operating rooms were never used and returned to the shelf requiring unnecessary re-sterilization.

Complexity. Medical billings cost hospitals $487 per person, and $561 for physicians. In my opinion, medical billings are not just complex, they are incomprehensible and unconscionable.

Overdoing.
Ordering unnecessary tests, procedures and unnecessary brand name prescriptions, using many forms that are only slightly different, pharmaceutical companies spending more money on advertising than on R&D are like cracking a nut with sledgehammer.

Band-Aids. Failure to understand and identify root causes of waste, applying Band-Aid solutions, treating onetime special issues as normal occurrence.

Use of personnel
. Using highly skilled and highly paid personnel such as an M.D. doing routine low level tasks that can be done by a qualified nurse practitioner.

Despite the many wastes there are success stories using Lean management methods:

Schaumburg, Ill.,-based Cancer Treatment Centers of America reduced the number of chemotherapy process steps from 32 to 16 and the amount of walking from the pharmacy to the chemo lab from 3,570 feet to 608 and increased the in chemotherapies delivered by 30 percent.

New York City Health and Hospitals Corp.
, once carried $10.2 million in inventory which included expired and useless items and 20 varieties of gloves. By reducing glove variety to two, they negotiated price per case from $58 to $28, saved about $4 millions a year, and realized a one-time gain of $5 million.

By improving its Cardiovascular Health Clinic, Mayo Clinic in Rochester, Minn., reduced process steps from 16 to six and wait time from 33 days to three.

EVirginia Mason Medical Center of Seattle, Wash., reduced staff walking distance by 60 miles per day.

St. Vincent Indianapolis Hospital
reduced number of walking steps for emergency department nurses by 78 percent.

By implementing in-room devices for physicians in exam rooms, Virginia Mason reduced errors, lead time for documentation and cost of transcription per patient from $2.56 to $0.24.

ThedaCare
cut cost of its in-patient care by 25 percent. "If all hospitals achieve similar results, $400 billion could be saved in Medicare and another $1.3 trillion on the non-Medicare side," says Dr. Dean Gruner, CEO of ThedaCare.

Healthcare cost is not just a political issue, it is also economic, competitive and moral issue. A 10 percent reduction in the $2.4 trillion spent on health care saves $240 billion, which can be used for improving schools, rebuilding roads, retraining unemployed workers and regaining our global competitiveness. Unfortunately, in today's convoluted political environment, the voices of reform are drowned by meaningless chatter.

The U.S. auto industry failed to accept deficiencies and make improvements to gain competitiveness. They acted like spoiled brats crying for candy and got government imposed sanctions, tariffs, quotas and domestic content requirements. You know what happened. Trying to reduce costs without eliminating root causes is like rearranging chairs on the deck of Titanic. Next bailout may be the healthcare industry.