New Geography

Author: Georganne Chapin

  • What To Look For In Healthcare Reform: Location, Location, Location

    A Reuters article that was widely picked up around the globe recently raised the question, Are Doctors What Ails US Healthcare? Comparing the New York suburb of White Plains to Bakersfield, California, the article uses the evergreen two-Americas paradigm to discuss disparities in health care. Drawing heavily on the Dartmouth Atlas of Healthcare, it highlights a sad but inescapable fact: doctors want to live in some places and not in others, giving the “have” populations more intensive medical care which they might or might not need, while have-nots, who tend to be older, sicker and poorer, get health care to match. The article asserts that there’s nothing in current health care reform legislation that will do anything to address the disparities.

    I agree. But then, what should we expect? The legislation, which I find marginally more desirable than doing nothing at all, is largely about insurance, not about health care. This is what happens when we emphasize how we pay for something, rather than what we are paying for. Are doctors what ails U.S. health care? Only in the sense that they are operating on the same basis as everyone else in the health care market: every man for himself.

    You don’t have to make bi-coastal comparisons to find the disparities highlighted in the Reuters article. My own Hudson Valley not-for-profit insurance company faces them every day. We cover the Medicaid populations from the aforementioned White Plains, NY, to the South, to the blighted economies of the Catskills to the North and West. The distance involved is only about 150 miles, but day in, day out it might as well be 1500. And socially, it might as well be 150 years. Sullivan County is still organized geographically the way it developed in the eighteenth and nineteenth centuries — farms, woods, and mills, only without the mill jobs.

    There was a brief shining moment (well, half a century) when urban Jews and other vacationers formed the basis of a thriving tourist trade in the “Borscht Belt” resorts of Monticello, Sullivan County’s hot spot. When they closed, they provided ideal settings for residential drug and alcohol rehab for poor people from New York City, but those aren’t exactly the foundation for high-quality community health care. When we initially started offering state-sponsored insurance to the poor of Sullivan County, the historical dearth of specialists made it a laboratory for what a free market looks like when there’s no competition. (Do I hear the words “strong public option”?) Because New York State requires us to have a decent network of contracted doctors for our enrollees, the sole cosmetic surgeon – for example – could extract pretty much any fee he wanted from us in exchange for seeing a patient who needed emergency reconstructive surgery.

    Your tax dollars meet supply and demand and a mandate to pay within a private market.

    I don’t blame the specialists. They are highly trained and skilled, and have paid their dues. If I blame anyone, it’s the system that sets the dues so high, in the form of college and medical school loans and years of fellowships that leave well-meaning doctors feeling that they deserve all that money, just like corporate farmers and hedge fund managers.

    It’s also not the doctors’ fault that they want good schools and cultural amenities. I haven’t seen much of Bakersfield, but I know that schools in and around White Plains have good reputations and are just twenty miles from Broadway and the Metropolitan Museum (and ten miles from my Tarrytown office). Maybe we can fix schools and reinvigorate the National Endowment for the Arts to make every remote locale more like Westchester, but that would be socialism.

    Dartmouth Atlas data is easily available online, and well worth spending some time with. You can use it to create all kinds of two-America scenarios that provide instant object lessons in our health care inequities. My personal favorite is that health care spending in Miami, Florida for Medicare patients in the last two years of life (highest in the nation) is exactly twice that in Portland, Oregon (lowest of the regions studied), with commensurate volumes of appointments, referrals, tests and hospitalizations, and no better outcomes. Here we see the same dynamics that make pawnshops spring up around gambling casinos and candy stores near public schools. Doctors go where the customers are, and once they arrive they maximize their revenues and measure success by volume, not outcomes.

    Why should we expect anything different, when reform legislation is captive to the same kind of have/have not dichotomy that shapes health care delivery itself? Senators Max Baucus of Montana and Kent Conrad of North Dakota are two of the pillars of the anti-public option caucus. They come from states with small populations, and both take barrels of money from the health insurance industry because they can’t raise it locally. If they play their cards right, who knows? They could leave Congress and become haves themselves, like Billy Tauzin, who is now Big Pharma’s man in Washington, having engineered the passage of Medicare Part D, or Tom Daschle, once a champion of single payer, who now plays both sides of the street with special interest money.

    Are Doctors What Ails US Healthcare? quotes David Goodman, Director of Health Policy Research at the Dartmouth Institute for Health Policy and Clinical Practice, who says there’s an “irrational distribution” of the most valuable and expensive U.S. health care resources. I would say that the distribution is entirely rational given the insanity of the larger situation.

    If we’re ever going to find our way out of this mess, we’re going to have to do for these health care backwaters, both rural and urban, what we used to do when private capital wouldn’t do the job. Set goals and build the infrastructure to serve them, because the market won’t do it. Want to electrify Appalachia? You need the TVA. Want to make the desert bloom? Build dams and aqueducts. Want to open up the interior of the country? Build an Interstate Highway system. Want doctors to practice in unattractive markets? Create an MD Bill for doctors like the old GI Bill for veterans, so that doctors emerge from training feeling more like public servants and less like indentured servants.

    I attended a discussion of health care reform not long ago at the Yale School of Public Health. The representative of the private health insurance industry put the issues in a compelling perspective, although not, perhaps, for the reasons he cited.

    His arguments were three: First, we require automobile owners to carry insurance, so requiring everyone to carry health insurance shouldn’t be a problem (I know that President Obama made this point, too, and I hated him for it). Second, do you want a health care system that runs like the Post Office, or one that runs like Federal Express? And third, the health insurance industry is really a jobs program, and do we really want to put all those people out of work?

    These are shallow arguments. Car insurance? There’s no law that says you have to own a car, but everyone needs health care. A health insurance mandate is more like forcing every American to buy a new car and giving them a choice between Ford or GM. Post Office and FedEx? A company that can’t send a package overnight from suburban Tarrytown into New York City without round-trip flights to Memphis and back is no model for health care delivery, and besides, I’d like to see what FedEx can do for the price of first class postage. Jobs? A dynamic economy finds ways of redeploying redundant workers in more significant jobs. Wouldn’t those actuaries make good math teachers?

    The arguments were so hollow that no one bothered to argue, and the insurance rep was undoubtedly relieved. A fellow panelist who practices medicine in Cambridge, Dr. David Himmelstein of Harvard, said simply, “My practice would have no trouble making money on Medicare, single-payer reimbursement rates if we didn’t have to pay so many people to argue with insurance companies.”

    Unfortunately, the larger discussion is still stuck on insurance, and as long as it is, the two health care Americas will never become one.

    Georganne Chapin is President and CEO of Hudson Health Plan, a not-for-profit Medicaid managed care organization, and the Hudson Center for Health Equity & Quality, an independent not-for-profit that promotes universal access and quality in health care through streamlining. Both organizations are based in Tarrytown, New York.

  • Daschle And State-by-State Healthcare Mistakes

    Tom Daschle appears before the Senate this week for confirmation as Secretary of Health and Human Services. While Daschle knows his stuff on health care (see his book, Critical: What We Can Do About the Health-Care Crisis), the discussion is likely to be sidetracked by those who champion a reliance on insurance companies, or on piecemeal reform starting with children. Or, as I’ll discuss here, on a wrong-headed impulse to depend on the states to create new health care models.

    Justice Louis Brandeis famously said, “It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”

    Brandeis’ elegant language has been distilled to the phrase, “laboratories of democracy,” and used as if that’s a good thing. However, the converse also holds: bad ideas can be legislated at the state level and spread nationwide. One idea that continues to threaten to boil over the boundaries of a single state is “universal health insurance” achieved one state at a time. Oregon, Tennessee, California, and most famously Massachusetts have all experimented with versions, and other states have tried variations, particularly with children.

    I’ll get to the more general notion of why I think states can’t go it alone. But for now, I’ll give a quick rundown on how states have tried and failed.

    Critical Mass: Despite recent claims of a 97-percent coverage rate, Commonwealth Care, the Massachusetts plan, is struggling. You remember the Massachusetts plan: Mitt Romney was for it as governor before he was against it as a presidential candidate.

    The plan is a patchwork of good intentions, political and practical exceptions, and as-yet deferred but heavy-handed enforcement. There’s an appeals system, waivers, and “creditability” (this has to do with the comprehensiveness of the policy and the out-of-network charges).

    The crux of the Massachusetts law is a model of administrative clarity. The goal of insuring the uninsured was to be achieved in a couple of ways. One was that if health insurance was “offered by” an employer, the employee had to take it.

    The problem is that “offered by” the employer isn’t a clean standard. Employers might have an insurance plan that’s technically available to employees, but it might be too expensive for them, or for their families. To square this circle, Massachusetts subsidized employment-based coverage if it cost more than a certain percent of the person’s income, and raised the eligibility limits for public insurance. Those without employers were required to buy private insurance, and insurers were regulated to make the policies “affordable.”

    And then there are the penalties: “To enforce the mandate, [Massachusetts will] establish state income tax penalties for adults who do not purchase affordable health insurance….”

    These stipulations raise obvious questions. What is “affordable”? Will residents be penalized for buying a policy too expensive for their family budget? Will insurance companies be punished for selling them such policies (do I hear the words “sub-prime mortgage”?). Will premium arrearages be counted as medical debt in bankruptcy court?

    Alan Sager and Deborah Socolar, directors of the Health Reform Program at the Boston University School of Public Health, damned the Massachusetts legislation with faint praise in the Boston Globe last July: “the best law that could be passed.”

    Calling it “a blessing to 350,000 newly insured people,” they pointed out that a similar number remained uninsured, and that the law often “can’t work” largely for reasons of cost. The mandates, they said, required huge subsidies, boosted payments to providers without controls, and redistributed funds committed to the most vulnerable.

    Not surprisingly, by summer 2008, the lousy economy had begun to take its toll. To shore up the “coverage” rate, Massachusetts has reduced funding to safety-net hospitals, and has even cut millions of dollars from subsidized immunization programs. Patients wait six months for a physical.

    With no plan for reducing medical costs, the state is effectively obligated to bankrupt itself.

    The Oregon Lucky Number:

    Oregon in March – for the first time in more than three years – will begin accepting new beneficiaries in its Oregon Health Plan […] The state will use a lottery system to enroll 2,000 eligible applicants per month for 11 months. Kaisernetwork.org, Jan. 10, 2008

    The Oregon plan had lost two-thirds of its participants since freezing enrollment in 2004 and a lottery was deemed to be the fairest way to apportion openings.

    Government lotteries have been used for everything from real estate in tax foreclosure to placement in magnet schools or, showing my age, the chance to serve in Vietnam.

    Still, why should anyone have to depend on a lucky number to be treated for diabetes or cancer without going broke? If the plan is funded for 32,000 participants out of a total of 100,000 eligible residents, why didn’t they keep topping up as the numbers diminished? Or was there a theoretical break-even point somewhere?

    California Pipe Dream: In early 2007, Governor Arnold Schwarzenegger announced a $14 billion program that supposedly mirrored the Massachusetts plan. The plan would have extended Medi-Cal, the state’s Medicaid program, to adults earning up to twice the federal poverty line, and to children, regardless of immigration status, who lived in homes with family incomes up to 300 percent above – about $60,000 a year for a family of four.

    One controversial element called for employers without health plans to contribute to a fund to help cover the working uninsured. Doctors were to pay two percent and hospitals four percent of their revenues to help cover higher reimbursements for those who treat patients enrolled in Medi-Cal.

    The ambitious program died in committee a year later, with legislators from both parties agreeing that it was unaffordable.

    Florida No Frills: A 2008 Florida package would allow insurers to offer “no-frills coverage to the state’s 3.8 million uninsured” residents. Residents ages 19 to 64 could purchase limited health coverage for as little as $150 per month; the policies would cover preventive care and office visits, but not care from specialists or long-term hospitalizations.

    “No frills” works better in airline travel than in health care. You can do without hot meals and pay extra for a headset or a Bloody Mary, but what Floridians will ultimately get for their $1800 a year and up are office visits and preventive care. It would probably be cheaper served à la carte and paid for in cash.

    Hawaii’s Keiki Care In October, 2008, Hawaii dissolved the only state universal child health care program in the nation after only seven months. Dr. Kenny Fink, the administrator at the Department of Human Services, told a reporter, “People who were already able to afford health care began to stop paying for it so they could get it for free. I don’t believe that was the intent of the program.”

    I should say not, but this disconnect between the intent of the program and its result makes perfect sense. Consumer behavior is supposed to be based on rational choices, and those parents who switched seem pretty rational. Hawaii’s solution seems simple and elegant, until you apply some basic laws of economics and behavior. Aloha, Keiki Care.

    Why States Can’t Do It Alone

    Why haven’t any of these state “universal health care” plans succeeded? Probably for the same reason that states can’t be self-sufficient in fossil fuels, or in banking. Most don’t produce their own fuels, and those that do can’t require their use within the state. They don’t print their own currencies. They have to compete with the rest of the world, public sector and private, for energy and capital.

    These are not minor issues with localized consequences. The decision-making alone requires resources that might not be available at the state level. We need national bodies to determine standards, to evaluate technology, and – remembering that Medicaid, Medicare, the VA, and the government employee system amount to around half of health care spending – to decide on the appropriate use of federal dollars.

    A final thought: Each additional set of rules, level of supervision, and geographic boundary may make sense initially. But when the lines drawn become indelible, and the bureaucracies created to enforce them calcify, we move further from the goal of providing health care. Jobs, and their budgets, become ends in themselves. We have to return to our original purpose and ask, “How can we get there?” One thing you can be sure of: it won’t be one state at a time. When it comes to health care, we need more unum and less e pluribus.

    Georganne Chapin is President and CEO of Hudson Health Plan, a not-for-profit Medicaid managed care organization, and the Hudson Center for Health Equity & Quality, an independent not-for-profit that promotes universal access and quality in health care through streamlining. Both organizations are based in Tarrytown, New York.

    Tom Daschle photo by: aaronmentele

  • Georganne Chapin