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Health Care Thoughts: Reform Status According to Really Smart People

by Tom aka Rusty Rustbelt

Health Care Thoughts: Reform Status According to Really Smart People

So after two days in rooms full of top notch front line experts, and two nights sleeping on a couch in a hospital waiting room, I offer a list of key take-aways.. This is reporting only, not advocacy. Some of my opinions may vary (not much). I avoid the nitty-grittiest of operational details. So…..

The amount and complexity of work to be done in the next 24 months is crushing and impossible – expect delays or sloppy rollouts.

Scale is everything, small providers will get crushed. Impacts on rural health care uncertain, so…

Consolidation and integration is the critical path. Some bad outcomes likely.

The Obama administration is incapable of producing regulations and guidance papers on time (in Washington a little late is considered on time).

Providers are preparing cuts both permenant and “cliff” cuts.

The amount and complexity of IT work through the system is staggering. Data is the new currency of health care.

Setting up the exchanges is a massive and messy task, even in the enthusiastic states. Letting the feds install “plug-and-play” may become a good option for many states.

Some large public companies are seriously considering dropping health insurance and paying the penalty (stunned me). No decisions yet known.

Winners, sorta in sequence:

Health IT – vendor companies and geeks
Health lawyers – transaction and regulatory
Health executives – the “talent wars” are going full blast
Health CPAs, finance officers and consultants
Physician executives
Nursing executives
Bureaucrats and regulatory

Losers

Physicians – mostly (depends on many factors)
Nurses – hands on care givers
Therapist and ancillary providers
Hospital support staff

Getting a child ready for college? Push them towards…..

IT, health emphasis
Health care administration
Medical records administration / health informatics
Medical coding (good jobs with 2 year degree)
Accounting and finance, health emphasis
Actuarial science

Private health insurers may be really big winners (oops). Some private health insurers are building primary care networks and ACOs.

There are some intesresting and even exciting geriatric care innovations morphing out of the Obama administration, academia and providers.

The “old elderly” are using huge amounts of Medicare resources, innovations may cut usage with the same or better care.

Hospital capital spending is going wild as a market share play, just what we don’t need.

So, now to plug through a thousand or so pages on operational and regulatory details. Did I mention the Obama administration writes a lot of long and largely incomprehensible regulations and guidance statements?

Interesting times ahead.

Tom aka Rusty

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Weekend Reflection Points

The lead article in the current AER is available here (gated, apparently, though the link isn’t working; h/t Tom Bozzo [on FB] and Brad DeLong; I was using the paper copy). The most interesting part so far: the authors only considered the documented costs of air pollution—not land, not water—in deriving the (embarrassingly negative) ROI figures for coal and oil.

As Cousin Lucia and Tom Zeller, Jr., note today, the cost of water pollution makes oil power plants an even worse option.

In such a context, Europe in general and Germany (the top maker of solar panels until China recently passed them) in particular rubs in our faces that they’re winning on the alternative-energy sources front (h/t Barry Ritholtz):

The 15 mile-per-hour winds that buffeted northern Germany on July 24 caused the nation’s 21,600 windmills to generate so much power that utilities such as EON AG and RWE AG (RWE) had to pay consumers to take it off the grid.

Rather than an anomaly, the event marked the 31st hour this year when power companies lost money on their electricity in the intraday market because of a torrent of supply from wind and solar parks. The phenomenon was unheard of five years ago.


Meanwhile, back in the U.S., it is no secret that Brad and Robert Waldmann are on one (affirmative) side of the TARP-was-a-success argument, and I’m on the other.* But even the Success crowd may pause to wonder if the short-term “profit” was a good long-term strategy:

Some large U.S. banks would have stronger capital bases to better deal with today’s market stresses had regulators not relaxed bailout repayment criteria in late 2009, a new government audit showed on Friday.

Bank of America (BAC.N) Citigroup (C.N), Wells Fargo (WFC.N) and PNC Financial (PNC.N) were allowed exit the Troubled Asset Relief Program without raising as much equity capital as initially prescribed by the Federal Reserve, the TARP Special Inspector General said in the report.

Following bank stress tests earlier in 2009, the Fed gave several banks guidance that they must raise $1 in common equity for every $2 in TARP bailout funds repaid — a formula meant to enable them to withstand future stresses.

But this standard — which was never previously made public — was quickly relaxed, allowing Bank of America, Citi and Wells Fargo to repay taxpayers nearly simultaneously in December 2009,** raising a combined $49.1 billion in equity capital.

Enforcement of the $1 in equity for every $2 repaid guidance would have required $57.5 billion in equity capital to be raised by the three institutions. PNC was later allowed to exit TARP under similar relaxed guidance. [emphasis mine]

The most recent SIGTARP report (28 July 2011), uses the word “Bailout” only once in its 304 pages—and that’s in the title of testimony by Sheila Bair, ““Statement of Sheila C. Bair, Chairman, Federal Deposit Insurance Corporation on The Changing Role of the FDIC before the Subcommittee on TARP, Financial Services, and Bailouts of Public and Private Programs; Committee on Oversight and Government Reform, U.S. House Of Representatives.”

Noted for the record: Patch uses the same article (with minor customization) in multiple locales, highlighting it as a “local” piece. I defer to Felix as to whether this is in keeping with the rest of their “business model.”

As Dan Becker can tell you, the small business “ownership society” is not for the faint of heart. Nor, as anyone who thinks about it for more than three seconds can tell you, is it a primary driver of employment growth. Yet when the most visible and successful Management Consultancy in the United States thinks about growth, its two primary points are “take monies from the government” and “expand small businesses.” But give them credit for recognizing a point that is often obscured by H1-B trolls technology firm leaders such as Meg Whitman:

[I]t’s not just the young who can help fill the skills gap; older, experienced workers can play a part, too. In the US aerospace sector, 60 percent of the workforce is over 45. A practical response would be for governments to remove barriers—particularly those related to the provision of health care and to benefits rules—that prevent older workers from staying in the workforce longer. Germany and the Netherlands raised the participation rate of the 55-to-64 age group by 21 and 24 percentage points, respectively, between 1990 and 2009. In the Netherlands, there were significant changes to pensions and welfare benefits to improve incentives to work longer, coupled with initiatives to change public perceptions, improve employability, and reduce discrimination against older workers. [emphasis mine]

It’s nice to see McKinsey endorsing Medicare For All.

*As a general rule, the Econ-first analysts are affirmatives, the finance-grounded ones are negative. If you have to think about why that would be: one group makes its living finding $100 bills on the sidewalk that the other one swears cannot exist. As the Mark Thomas of the world would note, the issue of priors might need to be addressed.

**The reason December 2009 is important is that it meant that monies that otherwise would have to have been used to shore up capital were instead paid out as bonuses by the now-uncontrolled banks, or, in Reuterspeak, “keen to escape executive compensation restrictions associated with the bailout funds.”

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Health Insurance, American Style

by Mike Kimel

Following a merger, a few months ago I took a severance package from my most recent employer. Put another way, I became unemployed. I started looking for another job but without much luck. In the last few weeks, I’ve also started doing some consulting work with two clients. Its been sporadic but lucrative, and I’m trying to figure out how to ramp that up quickly. Having been a consultant before for eight years, I know the tough thing is always maintaining a strong enough stable of clients. (FYI, the work I’ve been doing has been economic analysis, business analytics, and litigation support. If you or anyone needs that sort of a skillset, drop me a line at “mike” period “kimel” at “gmail.com.”) Fortunately, in addition to the consulting, we have some other income coming in and a fair amount saved up, so I don’t need to get 100 mph immediately.

One of the drawbacks of being unemployed or an independent consultant involves health insurance. When I left my employer, I became eligible for COBRA. Here’s my ongoing COBRA story. I’m going to change all names to protect the guilty and innocent alike. Call my former employer A, the COBRA administrator they use B, and my insurance company C.

A few weeks after I took the severance, A informed B that I was no longer with the company and thus eligible for COBRA. I had been checking B’s website religiously because I’m kind of paranoid about lacking health insurance. So one day, I logged on and found that I was eligible. But there was a small problem – somewhere along the line, I had lost my dependents. So I called B, B called A, some other stuff happened in the background, a day or two went by, and when I logged in, lo and behold, my wife was now listed as a dependent. But there was a small problem – I also happen to have a (at the time) thirteen month old son. So I called B, B called A, some other stuff happened in the background, a day or two went by, and when I logged in, lo and behold, my son was now listed as a dependent. But there was a small problem – neither of my dependents was listed as having been on my insurance policies when I was employed, thus making them ineligible for COBRA coverage. So I called B, B called A, some other stuff happened in the background, and when I logged in, lo and behold, my wife was listed as having been on my health insurance. But there was a small problem – my son was not listed as having had health insurance, making him ineligible for COBRA. So I called B, B called A, some other stuff happened in the background, and when I logged in, lo and behold, both my dependents were listed as having been on my health insurance policy when I was employed. But there was a small problem – it seems that the records provided indicated that I had two spouses and no son. One of my two spouses, interestingly enough, had the same name, birthday and gender as my now non-existent son. The records, in other words, indicated that I personally was violating a nontrivial number of laws. So I called B, B called A, some other stuff happened in the background, and when I logged in, lo and behold, well, I couldn’t find the mistake in the records. So I signed up for COBRA, and I put us on direct payment from my bank account.

All’s well that ends well, no matter how much time is wasted. But I did mention that my insurance company, C, was going to be a part of the story, right? Today a letter comes in the mail. My wife had gone to a dermatologist. The dermatologist submitted the bill to C. C informed the dermatologist that we no longer had coverage.

So I called B. It was a lovely conversation. I was informed that, yes, they have been withdrawing money from my account, and yes, I am paid in full, but nevertheless, C’s records do show us having no coverage. I was told B is calling C. I was told that in 24 to 48 hours I need to call C to see if they listed us as having the insurance coverage for which I have been paying. At some later point my wife or I will also have to call the dermatologist. Call me cynical, but I expect this is going to take a lot of time and interfere with my ability to generate income.

As an aside, in the past few weeks we’ve started looking at new insurance options. Interestingly enough, it seems that if everyone in the family is generally healthy, COBRA is generally not the best option.

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Topical thread…What is a good job?

I suggest these questions, but this is not a question about ideal jobs in imagination but real jobs that are attainable.

I think all of us have some notion of what elements constitute a ‘good’ job in the broad perspective (policy and macro), and given human nature varies according to personal goals, age, and circumstance. It has also varied widely in historical context. The term is used a lot in policy debates on employment and unemployment as well.

It is much easier to reach a consensus on the definition of a bad job than to agree on what constitutes a good job.

Is a good job one in a particular industry or sector?

The question of the length of employment contracts matters?

Is a good job one that comes with employer-provided benefits?

What is the relationship between wages and the definition of a good job?

A final question about the definition of a good job involves the relationship of the worker to the employer.

Personal satisfaction of some kind? Social status? Conscience?

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Public Option Opt Out and the Commerce Clause

by Bruce Webb

Well it looks like Harry Reid is going to introduce a bill that includes a Public Option with a state opt-out provision. Which I guess means the Tenthers won’t have to secede from the Union after all. But it raises some questions.

Let’s say I am from Washington State and have an individual plan through the Public Option and am visiting relatives in Indiana, an opt out state. And I fall down on the ice and break a bone. Under those circumstances I would think they would have to accept my insurance, opt out can’t mean that you just become uncovered every time you fly over Mississippi. That’s scenario one.

Scenario two. I move to Indiana temporarily for a contract job lasting more than a year. Surely I can maintain my coverage?

Scenario two A. I move to Indiana on that temporary contract and get engaged and marry my High School crush. (Hi LT!). Am I prevented from adding her to my plan?

Scenario three. I am an executive in Seattle for a company that buys insurance from the PO but maintain my full time residence in Coeur d’Alene Idaho (which as a live free or die red state opted out) and commute by plane. Is my Public Option plan affected?

Scenario four. I am a self-employed consultant based out of my lake front house in Coeur d’Alene but spend much of my time working for clients in Portland and Seattle. Whether or not I maintain a residence in either city what prevents me from stopping by the insurance office and signing up for the PO through the Exchange? Can one state actually prevent you from buying a perfectly legal product in another state and having your local doctor accept that product? What use then is the Commerce Clause?

Scenario five. I run a consulting shop incorporated in Idaho but with a small office in Portland and Billings and a larger one in Seattle. If Idaho has opted out I am actually prevented from buying a group plan on the Washington Exchange and including myself and my small Oregon and Montana staffs in it along with my larger Seattle group?

I could multiply scenarios endlessly but the question remains: how do individual states enforce an opt-out and under what circumstances? How much presence do you have to maintain in a state that offers the public option to be able to buy through their exchange?

Under our system states have a certain amount of freedom to decide what gets bought and sold within their state boundaries plus some rights to regulate what crosses those borders (for example fireworks). But I just don’t see how they can block medical providers from accepting health insurance policies written in another state or realistically how they can block their own citizens from purchasing such insurance. And certainly I can’t see setting up a system where tourists and part-time residents have their insurance honored but full time residents don’t.

Unless states can mandate that all individuals and employers purchase insurance in-state in addition to whatever coverage they may have through another state I just don’t see how opt-out does anything but prevent insurance sales on your own state exchange.

Which is why I don’t think supporters of the PO have much to worry about as concerns Opt-Out. It seems to just be a sop thrown to more conservative states who don’t want to get tinged with accusations of collaboration with socialism (or something). From a mechanical standpoint I just don’t see how you enforce this. Any ideas?

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Health Reform: does limiting the exclusion for employer-provided insurance make sense?

by Linda Beale

[also posted on ataxingmatter]

Both President Obama and Senator Max Baucus, key players in the health reform debate, have now indicated that one source of funding for health care reform on the table is a possible limitation in the exclusion from income of employer-provided insurance. See, e.g., Connolly, President Pivots on Taxing Benefits: Obama is Willing to Consider Move to Gain Health Reform, Washington Post, June 3, 2009.

The immediate reaction (seen in the comments section on the cited article) is rejection of this alternative. After all, many of us rely heavily on the fact that we have health insurance through work, and those of us in the lower income brackets probably would not be able to afford health insurance (at least, under the current privatized system) without that benefit.

But is the populist response the right one? We should not lose sight of the fact that the employer-provided insurance exclusion is the biggest tax expenditure in the Code that, like most tax expenditures, also tends to benefit most the highest income individuals. The Center on Budget and Policy Priorities has put out a new report titled Limiting the Tax Exclusion for Employer-Sponsored Insurance Can Help Pay for Health Reform that addresses this question directly. The Center notes that the tax expenditure is “poorly targeted” and benefits most the high income group who “least needs help paying for health insurance.” Lower-income taxpayers get less from the benefit because they may not have jobs, even if they have jobs they may choose to forego participation because of the cost of their share of the premium, and even if they participate, they get less of a benefit (in absolute dollar terms) because their tax rate is lower.

Here’s the graph showing the benefit relative to the income group.

CBPP suggests that the exclusion can be reformed without eliminating the value of employer-provided health insurance. One of the concerns is that employers will no longer provide the benefit if it becomes taxable, but a “play or pay” requirement could discourage that option and mitigate its effects. CBPP suggests that concerns about a rigid cap that would apply in all cases can be mitigated by adjusting the cap when a firm is relative small (so that more goes to administrative costs) or has more older and sicker workers (so that more health care costs must be covered) and for other, similar issues. The paper provides three specific alternatives for structuring the limitation in order to promote the goal of universal health coverage.

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