Insurance Coverage & Costs
Medicaid and SCHIP
Access to Care
Quality & Care Delivery
Health Care Markets
Design and Methods
Final Questions and Comments from the Audience
GINSBURG: Do you want to come to the microphone?
QUESTION: I am writing this up for the Health System Center.
Helen Darling, you mentioned,
and a couple of the panelists this morning mentioned, what a good idea it would
be if people could carry over their unused health benefits. In the next breath,
you mentioned your concern for families with chronic children. Isnt it the
money that went into the system that wasnt tapped for health care needs that
really subsidizes now those chronic and serious health needs?
As far as I am concerned, as long as everybody is protected for the higher cost
and more extensive, we are really talking about like in the medical savings
account model where everybody has a certain amount of money for visiting the
doctor and doing things like that, the sort of very low end.
If, for example, you are a lower
user, then, yes, I think letting them carry it over, that is different from
letting them have it at all, but if they have it at all, which we have in the
current model, then it makes no sense to not let it be carried over.
He is right. Every year in December,
I buy seven new contact lens because I never use up my money. That soret of
stuff is silly.
Can I comment briefly?
I think it was one of the groups this morning talked about having the episodic
allowance, and in a system in which chronic disease gets taken care of with
some kind of a capitated model where it is based on a diagnosed condition and
you kick into then that kind of managed care, in that environment, in that context--and
then, of course, you have to deal with risk adjustment--the medical savings
account makes great sense as a way to handle the front end of the cost up to
some dollar level. That is one way of dealing with it.
The other thing is that I think
some people view the medical savings account as more of a lifetime accumulation
approach, which is that by retaining it over some period of time, you build
up a fair amount that then becomes available to you when you hit a period in
your life when you are more likely to have higher medical costs.
I do not know if we have the
capacity in this country to go to a lifetime model or not, but I think that
is some of the thinking.
Good. We have a few questioners. We will start with Greg.
Greg Scandlen with NCPA.
I have just a couple of quick
points. On the tight labor market issue, you all seem to assume that this will
be perceived as a take-away benefits rather than an enhancement. I would suggest
for a lot of the community, that is not the case, particularly for mid-sized
employers, employees who may be in an HMO they do not like. With the current
disgruntlement, widespread disgruntlement with managed care, a lot of people
may see this as a huge enhancement of their benefits program, not a take-away.
The other thing, just generally
in the discussion, Helen alluded to this, and I appreciate that, but there is
too much talk about employers like this, employers like that, workers can do
this, workers cannot do that. That is kind of like Washington government program
thinking where whatever you do has to apply to everybody.
In this case, we are talking
about a market. The majority of employers may not like this. Eighty percent
of employers may not like this, but that leaves 20 percent, which is a hell
of a business for some companies. That is not to be dismissed.
Alan Wilde with The Urban Institute.
I have a question about sort
of the value of choice which is a theme here. We just had an issue in health
affairs talking about Medicare competitive bidding demonstration falling apart
because of the gap between the theoretical value of rules of competition and
the practical reality that in markets some people actually lose.
It seems to me that if we are
thinking about defined contribution as more than just outsourcing the administrative
tasks of a benefits office, but really moving to a defined contribution, and
we know that people are very, very price-sensitive, it seems like a likely outcome
here is a large majority of middle-wage workers moving into low-cost plans and
entrepreneurs being willing to offer on a defined contribution model some low-cost
I am trying to imagine the politics
of that and why they are any different from what we have just been through.
Employers, for price reasons, moved their employees into managed plans and the
employees bristled at the restrictions on those plans.
Now, employees empowered, I
suppose, presumably will make identical decisions and feel just as frustrated
as they did when it was their employers. It seems to me, there is a lot of power
to be harnessed in the market, but I am worried about the political endpoint
being the same as the one we just went through. How is it that by calling this
choice, we really think that in the end, the employees will be more satisfied?
For one thing, I am not sure we are ever going to be able to get away from the
fact that the employees or the patients are going to become increasingly frustrated
with the costs that they are going to have to bear in a much more expensive
I think the idea of choice is
the employees or patients, whatever, have to take more responsibility for the
consequences of their own actions in wanting health care because I think the
employers started out by trying to create a system in which they would have
decisions made for them. They would get things that people felt were medically
necessary, and they wouldnt get things that people felt werent medically necessary.
The difficulty with that is it makes somebody else responsible for the decision.
So I think people are exploring
ways to get employees to be more involved in that decision themselves, and I
think the feeling is that if you begin to see what the impact of what choice
is on cost, hopefully you become more of a partner than an opponent in terms
of managing health care cost, but who knows?
Can I make one point. I think this is important. We keep hearing cost, cost,
cost. It is value. The issue is value.
Cable TV costs more, but we
buy it because it has value, okay? If people want easier cell phones, they will
go for 7 cents a minute. They understand it, but it might cost more. I think
you have to think of it broader than just cost, and when you get to things at
an individual level--I will go to a narrow network insurance product, not one
that my employer would ever pick, because that is imposing it on people, but
if it meets my criteria and the price is right, I am willing to do that. It
is a good value.
So I think you have got to get
out of the cost mantra and think about value, and once you start thinking about
value, then you will see that markets work.
Well, I just want to add to that. In our focus groups, we found out that about
two-thirds of the people there wanted to spend more to get providers they thought
had value, and they couldnt get to them because their health plan wouldnt
sign them up. They were more expensive.
I think the questioners assumption
is not necessarily proven in the marketplace.
I would like to address that. We have point-of-service plans, and you have a
$200 deductible and 80-percent coverage to go out of network on a plan that
only costs $10 a month to participate, and 90 percent of the utilization is
in network. I spend all of my time lately dealing with Pennsylvania because
hospitals are dropping out of that network. When I tell people for $200, you
can go out of network, they say, "You expect me to pay that?" So there is the
marketplace and your shelf, you know, the grocery store concept. It is based
on the premise that consumers have information, and the information is validated
by organization, Food and Drug Administration, Agriculture Department. There
is information on that box. So you know what you are buying.
Unfortunately, in this marketplace,
there is no information on cost that is readily available to consumers, and
there is even poorer information on quality. People just make decisions based
on reputation of the hospital that they want to go without any information on
the outcomes of those procedures.
So I love Regina Hertzlingers
book, and we move to a market-driven system, but in 2 years at Lucent, I have
not been able to put cost data up. I have not been able to put reasonable quality
data up. So, I mean, we would love to be in a market, but a market has to provide
Larry and then Helen.
I would just say there is a great danger that in the absence of really good
information on providers that does distinguish on the basis of quality and outcomes
that the higher price that a provider charges will be seen as a proxy for higher
quality. So people will just buy more expensive providers because, gee, they
must be better, and I think there is a danger of that if we do not get good
I think there is also always the danger of judging the future on the past, although
that is sort of the only thing we have, but most people will put into model
types that they do not like and they did not have choice. So a lot of the frustration
is that they sort of think that there is "managed care," and that is kind of
in their minds that sort of everything that they dont like.
So what we do not know--well,
maybe some of us do know because we have offered multiple options--how different
it would be if you had the wide range and you did, indeed, have at least more
information than we have got now and you pay a difference.
My experience is very similar
to Pams. I was always astonished at how little money it took for even wildly
well-paid people to nitpick about reimbursement, and I never understood why
they cared. It was less than you would pay in a taxi to go to National Airport,
and these were people with lots of money. So there is something about the mentality
or people coming in and saying why dont we pay for something. I say, "We could
take your money in a premium. We could pass it through, add 25-percent administrative
cost, and send it back to you as 80-percent reimbursement. Would you really
rather do that, or why not just pay for it yourself out of your flexible spending
account?," and they would have the same look of horror, "You mean to get my
mammogram, I might have to pay for it?," even though it is their lives.
So I think we have to be realistic,
and people probably will never be happy with all the solutions. I guess the
one point Larry made and others have made, which I think is really important,
the worse news is still ahead. The kinds of increases we have had in the last
4 years are terrible, basically, especially this last year, depending on whose
numbers you look at, 9 to 13 percent in one year alone.
Everything about what we have
got in the system today would suggest that that is going to continue to explode.
There is nothing. Nobody is managing care out there anymore. They are not even
watching the store anymore. They are certainly not doing case management. We
audit these places. So we know that.
So what we have had for the
last couple of years, we will have many times over, and I think if there is
a level of unhappiness, we got it in the next 2 years and it is going to be
That would be a good time to
close the meeting, but I would like one last question, though.
I have been standing here a long time.
I know. I want to hear the question.
I am Stacy Varney, and I am with Choicelinx. My question is with regard to consumers
having access to more medical information now than ever before. Do you see any
kind of a shift or a trend toward employees wanting more options around alternative
care that may not be covered under a traditional health plan, and if so, do
your current plans provide for that? Would you have any plans to offer those
options in the future?
Or, actually, if I could modify, whether defined contribution would make a difference
in offering alternative care.
At Lucent, we do offer acupuncture and chiropractors care, and we have looked
at alternative medicine networks. We are waiting for them to be more fully developed
in terms of credentialing and breadth of providers because, in certain geographic
areas, we do not have very good coverage, but with that model, again, having
information to be able to discriminate when you are depressed, should I be taking
St. Johns Wort and what is the cost of that versus a therapy appointment versus
a massage. So, again, we would like to see more alternative medicine treatments
available to consumers because they do value it, I believe. They spend a lot
of money on it outside of the plan.
I guess that is why I have been
also struggling with a lot of this competition model. I think we have worked
a lot on trying to provide integrated models around health and welfare and alternative
medicine, the psycho-social support with illness. As we look at some of these
models, we are really looking at competition on price with providers and value,
and I get a little nervous that we are kind of fragmenting the care, mind-body
care concept around some of these talks. I am still struggling with how to package
products that would be more comprehensive versus purchasing just a gall bladder
operation or cardiac care without purchasing the rehabilitative services and
other services involved.
Any others? Steve.
I just would like to make one comment on alternative medicine and some of the
options that will exist. When you actually move to episode-based payment, which
we did at Oxford for 30 episodes--we have 80 now in this new program--we got
lots of providers moving into it. We had tens of thousands of patients going
through them. We had more money for alternative medicine, and people in an episode-based
allowance system can make that tradeoff. They can say, "I would rather spend
maybe one day less in the hospital out of a 7-day stay. I would rather use those
incremental resources for acupuncture." It might be something as esoteric as
chi gung or some other type of alternative therapy that could be used when you
have control of the resources.
It is too bad that we really
didnt get a chance to go into this model deeper because so many of these issues
are so easily addressed with more explanation.
I appreciate your staying longer.
I think we had some great discussion. I want to thank all of the panelists,
Sally Trude, Jon Christianson for his moderating. Please fill out the evaluations
before we go. We need them.
I want to thank you, the audience, for providing such provocative
questions, and The Robert Wood Johnson Foundation for its support of this meeting.
[Whereupon, at 12:10 p.m., the conference concluded.]
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