Well, thank God THAT'S over
Our long national stimulus for political consultants and media companies has finally ended. What do we have to show for it? An electoral map that is still nearly identical to the national schism during the Civil War, a lot of BuzzFeed slide shows, a "theater of the absurd" moment as Karl Rove blew up Fox's coverage and Megyn Kelly's legs literally ran away… and for some, a hangover of epic proportions.
In my view, while a little morning-after gloating can be expected, any talk of a mandate for the Dems' philosophy of government is overstated. Tell your friends as much. The President barely won the popular vote. The composition of Congress didn't change much. As noted by the New York Times this morning, most counties actually shifted right in 2012. Moreover, thirty statehouses are occupied by GOP governors. That's not the result you get when you win decisively on the issues.
More interesting to me than the talk of mandate is the coalition that the President has put together. Lindsey Graham, the GOP Senator from South Carolina, famously remarked this summer, "We're not generating enough angry white guys to stay in business for the long term." Or as Matt Lewis reported GOP strategist Chuck Warren said to him "To be frank, we're a Mad Men party in a Modern Family world." That proved true last night. The coalition that elected Obama in 2008 re-elected him in 2012. The GOP's erosion among non-elderly, non-white constituencies concerns them deeply, as it should. The way out is not clear. But that's not the news, in my view. The news to me is that our quadrennial national debate continues to substitute identity politics for an actual discussion at great cost to the system. That's what a coalition is, of course. And coalitions are much more important to the "ground game" at get-out-the-vote time. We're not unique as a country in this regard. What is unique (and ironic) for a nation such as ours, is that this appears to be so because we will seem to do anything to not talk about class, even by reducing our elections to generalizations about race and gender. Our elections become about mobilizing the Hispanic vote, or about "soccer moms---" as if the issue of providing day care to the Gomez family so that mom can work doesn't impact dad too.
Even more concerning to me is that once again the election was still one giant pander to the actively voting middle class. The only mention of the 45 million Americans who live under the poverty line was to blame them for crimes of dependence perpetrated against the rich. Too much Medicaid. Not enough bootstraps. It begs the question: what would a campaign that was genuinely about "the least among us" even sound like these days? We used to have them. But that language would be stale and borrowed now. For an ex-political wordsmith, it's a serious question even if it is also a rhetorical one. Our politics are only ugly because we have forgotten how to be beautiful. It is beautiful to have cares for others beyond yourself because empathy is part of what makes us human, as is weeping at a piece of music or leaping to cheer a touchdown. These are things that belong in politics.
As a result, this election was the triumph of tactics over inspiration. Given the very lack of mandate, what can be said is that the Republicans got out-smarted and out-worked in the battle ground states. (Let's also not forget outspent, despite the idiot's tax levied on Sheldon Adelson and others thanks to Citizens United.) I don't think laypeople understand just how sophisticated the Obama operation was. (A primer here). What they experimented with in 2008 leapt forward in 2012. Once again, the man made history. Only this time, he didn't do so with the color of his skin but with the content in his databases. The only comparison one can make from recent years is what Google did to the advertising industry--- destroying 100 years of clichés and assumptions while creating a new, superior reality for matching people with their material desires. There was advertising before AdSense and after AdSense. The Obama operation took trillions of pieces of consumer data, a la Google, and then married it to behavioral economics to create engagement strategies that left the GOP looking positively… 2004. One couldn't help note it when listening to Romney Ohio Chair Ted Strickland proudly talk about the "many thousands of doors" the GOP's Ohio teams had knocked on. The Obama crew did too, but when you opened the door, they already knew what magazines you read and whether you liked to Supersize your value meals. If that spooks you out, turn off your computer. Because it's the way the world works now.
A final first note: speaking of 2004, my friends with whom I served on John Kerry's campaign have noted just how similar this campaign was to that one. An embattled incumbent (is there any other kind?) A challenger emerges from a fractious field because he "looks good on paper." He is charismatically challenged. By spring, he emerges cash poor from a hard-fought primary. The money starts to come in, but not before the incumbent's surrogates label him with a devastating critique that neutralizes his natural advantage: "Swift-boating" in the case of Kerry, "Bain" in the case of Romney. The 47% comment would come later, but it stuck in part because of how effective the early critique had been.
So, while I am glad to get back to the work of reforming health care, today is not a day of celebration for me. I want to finish what we have started with the ACA, flawed as it may be. But the far bigger project is to finish reforming our politics. I sense we'll be done with Health Reform first.
What's at Stake When Death Gets a Makeover
A terrific interview with Dr. Tom Smith of Johns Hopkins on end-of-life care and discussion: well worth 3.5 minutes to see what's at stake when death gets a makeover: "hope for the best, plan for the worst." Advancing a frank and open discussion about last wishes is "not so much about saving money but honoring peoples' choices." Amen.
Obama, Ryan, and the Myth of Competition
Both the exchanges at the heart of ObamaCare, and the competing plans in the Ryan Medicare reform proposal rely on competition among health insurance plans to reduce the upward trend in the costs of health care. But health insurance isn't health care.
With the consolidation of health care providers that is happening throughout the US, more and more health care is being purchased in non-competitive markets. Health insurers are faced with large systems that must be included in the carriers' networks if they, the insurers, are to offer a competitive product in the market. Consumers expect access to the big systems, and insurers must include them. That is the description of an oligopolistic market for health care. Nothing that happens in the exchanges or among the Ryan-esque Medicare plans will change that dynamic. Eighty to eighty-five percent of the cost of health insurance is driven by the cost of health care. Costs determined by the health care oligopolists will inexorably drive up the costs of health insurance.
A 2011 RAND study found that "hospital markets are much less competitive than health plan markets nationally and, importantly for consumers, that hospitals operating with little competition are able to charge health plans much higher prices, which are passed on to consumers in the form of higher insurance premiums."
Anna Wilde Mathews, writing in the August 27, 2012 Wall Street Journal cites hospital acquisition of physician practices as another cost driver that is immune to health insurance competition. She notes that prices for procedures can double after an acquisition, sometimes even when the procedure is performed by the same people in the same facility with the same equipment.
The Health Care Cost Institute published a study of health care costs in May of 2012, based on an analysis of commercial insurance claims from over 33 million beneficiaries of several large carriers. The Institute found that "the increase in per capita health care expenditures from 2009 to 2010 was primarily driven by higher unit prices and not by the utilization (amount) or intensity (mix) of services." This was in the wake of the Great Recession, when competitive pressure should have been driving prices down, as in other markets. But competition among the major carriers who provided the data for this study had no apparent effect on prices charged for care.
In this study, increases in the cost of care determine increases in the cost of health insurance, in a way that competition, even among major insurance carriers, could not alter.
The policies of both parties regarding affordability of health care are built on a myth. Expecting competition among health insurers to control the cost of health care is akin to expecting competition among auto manufacturers to control the price of gasoline.
Join us Thursday for First in New Webinar series: Risk adjustment in the exchanges
On Thursday July 26th at 1pm ET we'll kick off our new webinar series, "Lessons from Medicare Advantage and Part D", a monthly webinar series around what we've learned in Medicare that can be applied to the exchanges and other aspects of health reform. We'll begin with a deep dive on risk adjustment in the exchanges.
Risk adjustment is the defining health care finance issue of the decade, and MA and Part D represent the largest experiments in risk adjustment on the planet. MA and Part D's risk adjustment system is the blueprint for ACOs, the exchanges, and a growing number of state Medicaid programs as well. We'll explore the risk adjustment provisions in the ACA and the final regulation, and apply what we've learned in the last 7 years to the future of health plan payment, with our partner Dr. Jack McCallum, CEO of GHG sister firm CenseoHealth. Bring your CFO, Chief Strategy Officer, CMO,Chief Marketing Officer, and your actuaries for a geektastic discussion on how to follow the money post-2013. In the coming months we'll examine other reform topics where the Medicare, Part D and Medicaid Dual Eligible experience shines a light: In early September: Distribution In and Around the Exchanges: Lessons from MA and Part D. We'll explore how individuals with subsidies and small groups will be sold the "metal" plans, especially in the Exchanges through Navigators and other impartial facilitators, to the deployment of brokers and sales management. Our focus will be on the Federally-Facilitated Exchange, which could operate in as many as 40 states, with updates on specific states as applicable. In late September: we'll explore the Nuts and Bolts of the Federal Exchange: Lessons from MA and Part D. We'll focus on how the Federal Exchange will function from a 10,000-foot level perspective, where the plan interfaces are and the broad strokes of anticipated reporting requirements. In late October: Product Strategy in the Exchanges: Lessons from MA and Part D. How subsidies will work based on income determinations; a landscape view of where states are on accepting ACA Medicaid expansion dollars in the wake of the SCOTUS ruling. For Red States: what the new "near-Medicaid coverage gap" means in those states that refuse the ACA funds. We'll examine how to segment the market for Platinum, Gold, Silver, and Bronze plans, and the allowability of supplemental insurance products (like dental) in the exchanges. What existing commercial and government programs provider networks mean to product pricing and strategy. The imperative for a database of local individual claims to wargame product designs on. More to come. The scars on our collective backsides in Medicare the last 16 years provide some great "teachable moments" for the new world post-ACA. We look forward to the discussion.
Careful: You might get what you wish for
My friend Will Wilkinson has a nice post over at the Economist regarding the politics of the ACA being overturned by the SCOTUS next week. Increasingly, the legal community thinks the law will be upheld, and that it will be the Chief himself who casts the swing vote. Who knows. As many have noted over the last few weeks, few expected the case to make it to the Court in the first place. Will's most interesting point is an ironic one: that the repeal of Obamacare, which famously implements a GOP-designed system piloted in a GOP-led state, may lead to a more successful case for a single-payer system.
I am not a good constitutional scholar but I am a scholar with a good constitution, and I've been reading everything I can on legal blogs supporting both the overturn and uphold perspectives. As has been widely reported, the core constitutional argument against the mandate is that the Government can't regulate the inactivity of not buying insurance, to which the retort is that the Government can regulate interstate commerce and so it has not exceeded its authority. A fringe idea is that the penalties levied by the Feds against those who don't buy is really a tax by another name--- and the Government sure can do that.
A more interesting question to me is whether one can be "inactive" at all in a health market. We all use these services eventually, even those who are not insured by choice. And is anyone actually uninsured by choice, the same way I wear adidas by choice or chose a salad for lunch today? They're uninsured because they can't afford it. It's a little like saying that your 5-star hotel is open to everyone. Who can pay.
Some choice.
Don't waste your travel budget
We're less than three months from the GHG Forum. This is NOT your usual conference. We've developed a unique educational retreat for management teams working in government programs. I'm thrilled at the presentations our faculty are preparing: we're putting our senior consultants on the stage to deliver case studies, war stories and tales of best practices. But just as importantly, we're building in time for you to react to these sessions with your team--- to develop questions for your track faculty, compare notes, discuss implementing the best practices you've learned about.
We know it's a new concept in an industry that's become accustomed to sales people masquerading as subject matter experts. But we think that's it's badly needed. Many management teams we work with bemoan the lack of time and space to learn, collaborate and plan for success. In this environment, it's easy to simply react. But no one has ever reacted their way to excellence.
No doubt, if you send one to two people they will benefit individually. But isn't the isolation of our departments from each other central to our basic challenge of reforming our plans? We invite you to join other plans (some are sending as many as a dozen attendees) in making the GHG Forum your travel investment for the year. Send a team. We'll show you around.
The End of Health Insurance?
Writing in the January 30 New York Times, Zeke Emanuel and Jeffrey Lieberman predict that accountable care organizations will totally replace health insurance within the next eight years.
They credit the health care reform act with establishing this revolutionary new form of care, in which claim processing is unnecessary, and ACOs will perform the risk-pooling function of insurance. This is uninformed twaddle raised to breathtaking heights.
First of all, the affordable care act did not create accountable care organizations. They have been around, under different names such as capitated physician groups and independent practice associations, since the San Joaquin Foundation for Medical Care pioneered the concept in the 1950s. If the notion of capitated groups of physicians hasn't supplanted health insurance over the past sixty years, it's hard to understand how the affordable care act will suddenly cause that effect now.
What the ACA did do was authorize a variant of ACO as an adjunct to the fee-for-service Medicare program (and set up a largely ignored demonstration program for pediatric ACOs under Medicaid). Unlike the imaginary ACO that Emanuel and Lieberman conjure up, the Affordable Care Act version is based on fee for service payments, not capitation. While the Pioneer demo program will experiment with capitation, the vanilla ACO version authorized under health care reform requires that all healthcare providers continue to submit claims and receive fee payments from Medicare. How does this threaten health insurance? It doesn't touch the non-Medicare world at all, and it consciously avoids changing benefits or payment mechanisms in the nation's largest health insurance scheme, Medicare itself.
Emanuel and Lieberman assume that ACOs will be paid on a per capita basis, and that the capitation will somehow flow from the ACO to individual practitioners. In practice, this process requires the enrollment and claim processing functions of an insurance company. From whom, if not insurance companies, will payment be received? They rightly note that about 60% of people who receive coverage from employers are actually insured by the employer, who contracts with an insurance company to perform the tasks of determining eligibility, paying claims, maintaining networks of health care providers (including ACOs of various descriptions), and providing insurance to protect the employer from unusually large claims. How would a Medicare program designed to reward efficiency have any impact on these employer programs?
They envision ACOs pooling risk for populations of 15,000 or more beneficiaries, as insurance companies do now. Any that do so will come under state insurance statues, and will either have to become insurance companies themselves, or contract with insurance companies as risk-bearing provider organizations. Someone, either the ACO or an upstream carrier, will have to carry the reserves and comply with state mandates.
With the advent of health insurance exchanges, it is probably that local provider organizations will be able to develop and market their own insurance plans in competition with the national giants. The exchanges will create a retail marketplace in which the advantages enjoyed by the large carriers in marketing wholesale to employers will be diluted. But make no mistake, these new entrants will still be insurance companies, and will still need to operate in compliance with both the statutory requirements and economic realities that govern the business of health insurance.
Enjoy Some LOLZ with Jon Stewart's "Intervention 2012"
I love me some Daily Show and this week Jon Stewart offered up one of their best commentaries on the state of the Republican Presidential nomination. Having had the office next door to former House Speaker Newt Gingrich's when I worked for US Rep. John Conyers, I can heartily agree with the assessments of Senator Tom Coburn (R-OK), John Sununu, Susan Molinari, and Joe Scarborough herein. The rise of "The Gingrich" requires an Intervention. Enjoy.
The Air of Inevitability Around Romney
I can't remember the last time I had more fun watching electoral politics. Obama suffers an open-mic gaffe and is losing White House staff like he's losing his hair. Herman Cain's sexual harassment fiasco deepened in its second week. Rick Perry suffered an excruciating 45-second brain-fart in a GOP debate where he couldn't remember one of 3 Federal agencies he wants to abolish. Which was the worst primary-ending gaffe: Cain's ongoing trouble with the ladies, Perry's "oops", or Howard Dean's primal scream?
As fun as watching all this is (and it's DC's only spectator sport worth watching these days as our Redskins flush another season down the toilet) its result is an air of inevitability that Mitt Romney will emerge as the GOP nominee for President. Pawlenty, Trump, Bachmann, Christie, Perry, Cain...all surged and flamed out in the face of Romney's rock-steady support at about one-quarter of likely GOP primary voters.
Next to surge as "anyone but Romney" is former House Speaker Newt Gingrich...and he's sure to wither under media scrutiny of the many unpalatable items in his personal and professional lives. As smart as he is, his arrogance is legendary and he is just not a likeable guy. You need to be likeable or at least inspiring to win a nomination, and Gingrich is neither. My guess is he runs out of money right after the Iowa caucuses.
So it still looks like Romney v. Obama next year. The futures markets -- great predictors of uncertain outcomes -- agree, showing Romney futures spiked folllowing Perry's "oops" and Obama holding steady with about 52% of investors saying he'll win reelection. Lack of enthusiasm will likely be the defining characteristic of the 2012 campaign -- the GOP will be only "in like" with Romney and many Democrats will be feeling the same for Obama -- which lends itself to "Advantage -- Incumbent".
I am LOVING this primary season! So much great comedy fodder! I can't wait to see what Saturday Night Live does this weekend.
I still think we're looking at a narrow Obama reelection, and implementation of the ACA in 2014 right on schedule.
Surgery in the last year of life
Lancet recently published a fascinating study of surgery in the last year of life in Medicare members. During 2008, 1,802,029 Medicare beneficiaries over 65 years of age died; one of every three of those had a surgical procedure during his or her last year of life. The study did not sort out the reasons the procedures were done, but there is a short list of possibilities. Some are likely valid, and some are less so. Surgery in the elderly can be done to relieve pain, to improve function, or to prolong life. You might point out that prolonging life or improving function in the last year of life doesn't make much sense, but remember, no one actually knew at the time that it was the last year of life. Other reasons for doing these procedures are harder to support and include doing things just because you know how to do them (the "everything looks like a nail if you are a hammer" argument), family pressure ("You have to do everything to save her."), and money ("There is an opening in the surgery schedule and a bed in the ICU.").
There was one other interesting part of the study—geographical variation. These late life surgeries were 1/3 as common in Honolulu as in Gary, Indiana. The rates were especially high around the southern end of Lake Michigan and in the Rio Grande Valley in south Texas. Geographic variations are much more consistent with decisions made for cultural and financial reasons than with decisions based on clinical factors.
Most of the rhetoric surrounding the Medicare financial crisis has concentrated on cutting plan profits and decreasing provider reimbursements. There has also been a push for preventive care with the tacit (and unproven) assumption that prevention will improve health and decrease expense in the elderly. There has been some discussion (albeit hesitant) of increasing the contribution from beneficiaries or increasing the age of eligibility. What has not been emphasized is spending what is in the system more effectively. The high rate of surgery in the last year of life is one of several examples of spending a great deal of money with questionable impact of either quality or length of life. Until we have the political and societal will to have those discussions, Medicare's financial dilemma will remain unsolved.