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Eight Quick Reactions to the President’s Speech

Thursday, September 10th, 2009

By Evan Falchuk

Eight quick reactions to the President’s speech:

1. It was a good speech. Reaction around the blogosphere and elsewhere seems to be dependent on how you felt about reform plans going in. If you were in favor, you thought it was terrific (warning strong language at the link); if you were against, you thought it was disingenuous.

2. The interesting question is how people who weren’t sure will react. By this I mean people who are anxious that reform will affect their health care in ways they don’t like. There is still the mixed message that created this anxiety in the first place. On the one hand, the President repeated “Nothing in this plan will require you to change what you have. “ Sounds like no big deal. On the other hand, he quoted Ted Kennedy as saying the plan “is above all a moral issue; at stake are not just the details of policy, but fundamental principles of social justice and the character of our country.” Sounds like a very big deal. Which is it?

3. The boorish Congressman who screamed “you lie!” at Obama during the address must have been confused and thought he was at a town hall meeting. But I’ve always thought it would be cool if we had a “Question Time” like they do in the UK. Presidents would have to face much more interesting and uncomfortable questions than they otherwise get, and it would make for a terrific spectacle. Obviously this wasn’t the time or place for that sort of thing. And if we ever do get an American Question Time, representatives will have to come up with better questions than “you lie,” too.

4. The President talked about “30 million American citizens who cannot get coverage.” This is different from the 46 million “uninsured” he usually talks about. The Associated Press thinks the other 16 million are people who could buy or otherwise get coverage but choose not to, as compared to those who want coverage but can’t afford it.

5. I was surprised to hear the President give more than just a nod to the Facebook health care status update meme. I mean he quoted it directly: “in the United States of America, no one should go broke because they get sick.” This must be the first time a President has ever quoted something from Facebook in an address to Congress – it’s some kind of a milestone for social media. Thoughts on that meme are here.

6. The President talked about the uncompetitive insurance market, noting that “in 34 states, 75 percent of the insurance market is controlled by five or fewer companies.” It sounds like he’s not just talking about the “public option” when he talks about creating competition in these markets. His idea of insurance exchanges and a federal health insurance regulator seem to be direct challenges to the state-by-state system of insurance regulation. It will be interesting to see the reaction of state insurance regulators to this speech.

7. I was right: the President didn’t talk about the three things I said he wouldn’t talk about. In fact, he said almost nothing about the delivery of care- it was all about how to pay for it.

8. The President got some laughs with his comment that he thinks “there remain some significant details to be ironed out.” He’s right, and there’s the rub. Whether and how that ironing out happens was the question before the President’s speech, and it’s still the question today.

Tags: Healthcare Reform, President Obama, US Health Care System
Posted in Health Insurance, Healthcare Reform | 1 Comment »

Reform Federalism?

Tuesday, September 8th, 2009

By Evan Falchuk

In America, insurance is regulated by the states, not the federal government.

Each of the 50 states decides who can sell insurance, mandates coverages, and sometimes even premiums. For some products, like auto insurance, states have made it mandatory for everyone to buy coverage. Massachusetts has taken this a step further and applied this kind of a mandate to health insurance.

The nearly complete authority of state governments over these issues is clear.

Which makes the press release issued earlier today by Pennsylvania Insurance Commissioner Joel Ario rather curious, and revealing.

(more…)

Tags: Health Care Insurance, Health Insurance, Healthcare Reform, The Gathering Storm, US Health Care System
Posted in Health Insurance, Healthcare Reform | 5 Comments »

How Government Insurers are a Little Different

Thursday, August 20th, 2009

By Evan Falchuk

There has been a lot of talk about the way in which a public health insurer would compete against private ones. As the President put it recently:

People say, well, how can a private company compete against the government? And my answer is that if the private insurance companies are providing a good bargain, and if the public option has to be self-sustaining — meaning taxpayers aren’t subsidizing it, but it has to run on charging premiums and providing good services and a good network of doctors, just like any other private insurer would do — then I think private insurers should be able to compete. They do it all the time.

He makes a good point. But we don’t have to talk about this in theory – we can look at existing state insurance programs to see how they operate.

(more…)

Tags: Health Insurance, Healthcare Reform, US Health Care System
Posted in Health Insurance, Healthcare Reform | 1 Comment »

Wait, Another New Sales Pitch for Reform?

Wednesday, August 19th, 2009

By Evan Falchuk

Today’s Wall Street Journal reports that President Obama has another new sales pitch for reform, which he will roll out today in a call with religious groups. The theme is expected to be about the “moral imperative” for reform:

“This is such a technical issue, it’s easy to get bogged down in the weeds,” said Dan Nejfelt, a spokesman for Faith in Public Life, one of the groups scheduled for the Wednesday call. “It’s important to have a voice saying, ‘This is about right and wrong. This is about honoring faith.’”

So reform is a sort of “faith-based initiative”? Well, it’s an idea.

But could it work?

I don’t think so. Shifting messages won’t calm the fears of those who are wondering what reform is all about. First, it was about “the most important fiscal issue we face as a country.” Then, it was not that big of a deal: just some simple reforms to insurance law. Now, it seems, it is about right and wrong:

A Democratic strategist said, “If you are going to sell something as big and monumental and transformative as health care, you cannot get small with it. You’ve got to be bigger. You’ve got to call on the better angels out there.”

But this is a mistake. The major trouble for reformers is the anxiety that there is something big and transformative planned, and that we’re trying to do it fast, now, right away. Changing the sales pitch to emphasize how much the reform proposals will transform American health care may be more honest, but it will only create more of the worry it is trying to lessen.

Tags: Healthcare Reform, President Obama
Posted in Health Insurance, Healthcare Reform | 1 Comment »

What is a Health Care Co-Operative?

Monday, August 17th, 2009

By Evan Falchuk

Health care cooperatives: It’s suddenly the hot topic in reform. But what do Congressional and Administration leaders mean when they use that word?

We don’t really know – there is no legislation describing it. But based on news reports, it sounds like a kind of mutual insurance company.

So, what is a mutual insurance company?

In general, a mutual insurer is a non-profit company in which each insured is also a part-owner. So you buy not just an insurance policy but also an ownership interest in the insurer. With a co-op, you probably wouldn’t have to actually buy an ownership interest – it would just come with your policy (in a traditional mutual insurer, you would have to pay an extra fee for this). From the strands of discussion about the government providing start-up money for these co-ops, it seems like that will the the source of capital.

The policyholders have major influence on how the business is run, even though there is a professional management team. Normally, if a mutual insurer makes a profit, all of the money is either kept as part of its reserves, or given back to the owners as a dividend. By linking ownership with insurance, you create incentives for lower costs and lower premiums and create a mechanism for making sure that the plan provides good benefits.

It’s hardly revolutionary – this type of insurance has its origins in the ancient world. And the rural cooperatives from which the idea of the health care cooperative springs came into being largely around the time of the New Deal.

But old ideas can be good. There are existing health care cooperatives that are doing good and interesting things. For example, Seattle’s Group Health Cooperative (founded in 1947) runs an entire health system around its membership, and is highly thought of for its innovative approaches to providing coordinated, high quality medical care. Still, while I don’t doubt that Group Health’s financial structure helps it do the very good things it does, I suspect their success has as much to do with the culture of their organization as it does with the way in which care is financed.

Stepping back to the bigger picture, then, it seems like the idea is to create new mutual insurers that could compete with existing players in the market. It might add some new competition to under-served markets for individual and small group coverage.

I’m sure we will be hearing much more on this new avenue for reform in the coming weeks.

Tags: Benefits, Health Care Insurance, Healthcare Benefits, Healthcare Reform, Quality Care, US Health Care System
Posted in Health Insurance, Healthcare Benefits, Healthcare Reform | No Comments »

Why Health Insurance is So Expensive, Continued

Sunday, August 16th, 2009

By Evan Falchuk

One of the less talked about reasons why health insurance is so expensive in America is our system of insurance regulation. It’s a system that dates back to the 19th century, and hasn’t changed very much since.

Here’s how it works. There are 50 insurance commissioners. They set the rules for insurance in their states, and they have a major impact.

What it means is that if you want to sell an insurance product in the United States, you have to pick a state in which to start. You would have to comply with that state’s rules about financial stability and management. Then, you would have to comply with the state’s mandates as to what needs to be in the product, and, depending on the state, you may have to change your price to fit what the state says you have to charge. Its a process that can take many months or years.

Now, if you wanted to sell your product across the country, you have to go through this process 50 different times. It’s why when you see a brochure for an insurance product you can read on the back of the brochure all kinds of notes about how the product differs in different states. It’s a process that adds significant administrative cost to any insurer who wants to sell a new product. And it’s an important contributor to why the US insurance market is much less dynamic and competitive than perhaps any other market in America.

Imagine if our market for cell phones worked this way. We’d have 50 different cell phone networks, and 50 wireless device commissioners who would decide who can sell phones, and at what price. They would mandate what features a phone had to have and couldn’t have in their state. Apple could design an iPhone, but why bother – they would have to make 50 different versions of it. They could only sell it in one state at a time, and they would have to change features and price every time they went into a new market.

So when you hear people talking about health “insurance” reform, think that maybe it shouldn’t be about trying to curtail specific bad things that some insurers do. Instead, think that maybe we should be talking about having a regulatory system that meets the needs of a modern economy. We should be thinking of opening up our insurance markets to actual competition – not one new, giant, lumbering government insurer, but rather dozens of new, dynamic entrants into the insurance market.

Tags: Health Care Insurance, Healthcare Benefits, Healthcare Reform, US Health Care System
Posted in Health Insurance, Healthcare Reform, Why Insurance is So Expensive | 10 Comments »

Obama’s Risky Reform Gambit

Saturday, August 15th, 2009

By Evan Falchuk

At yesterday’s town hall meeting in Montana (I live-tweeted it on my twitter feed), President Obama continued to roll out his new pitch for reform: calling it health “insurance” reform, rather than health “care” reform.

The President’s point was this:

It’s not about fundamentally changing to our health care system, or bending the cost curve, it’s really only about consumer protections in the insurance market. It doesn’t cost $1 trillion or more, it’s really only $30 billion a year, and we can pay for that with small changes to the way wealthier people itemize their tax deductions. It’s not really contentious, because 80% is already agreed to, and there are only a few details left to work out.

As a sales pitch, it’s appealing and soothing. If this is all reform is about, why all the ruckus?

Well, if this was what reform was all about, there probably wouldn’t be such a ruckus. I mean, sure, federalizing vast swaths of American insurance regulation is a big deal, but it’s not the kind of thing that creates much excitement one way or the other (speaking of which, where are the state insurance commissioners on this?).

The President’s focus on these less controversial areas of reform is a clever strategy. He is hoping that the controversial ways in which reform proposals would impact the way health care is actually delivered will get through as some kind of a no-big-deal add-on.

It’s a risky gambit.

Anxiety about reform is based on worries that the government wants to mess with people’s health care in ways that are unclear, but meant to be very important. The anxiety is heightened by a sense that leaders aren’t leveling with us about what they plan to do.

Unless he is going to come out with his own proposal that really is just focused on insurance market reforms, the President runs the risk of falling into this trap. Opponents will point to all the ways that proposed reforms are about much more than just changes to insurance regulation. It will be hard to blame ordinary Americans for thinking that here is yet another politician not leveling with them on a very important issue.

Tags: Healthcare Reform, President Obama, US Health Care System
Posted in Health Insurance, Healthcare Reform, Patients | 1 Comment »

Why Reform is Going So Badly, Continued

Thursday, August 13th, 2009

By Evan Falchuk

As I’ve blogged about before (here, here, here and here), a big reason reform is going so badly is this: Reformers don’t understand how people react when you try to make changes to their health benefits.

Companies across America have been making changes to health benefits for years.

Reformers seem to have ignored the lessons of their experience.

(more…)

Tags: Benefits, Benefits Survey, Doctor Patient Relationship, Health Care Benefits, Healthcare Benefits, Healthcare Reform, Patient Dissatisfaction, President Obama, Quality Care, US Health Care System
Posted in Health Insurance, Healthcare Benefits, Healthcare Reform | 2 Comments »

Probably Not the Best Analogy

Tuesday, August 11th, 2009

By Evan Falchuk

President Obama held a town hall meeting today, which seems to have gone well.

Except he decided to use an analogy to dispute the idea that a government-run health insurer would drive private insurers out of business:

“As long as they have a good product and the government plan has to sustain itself through premiums and other non-tax revenue, private insurers should be able to compete with the government plan,” Obama said. “They do it all the time,” he said. “UPS and Fedex are doing just fine. . . . it’s the Post Office that’s always having problems.”

This is probably not the best analogy.

The US Postal Service has a monopoly on first-class mail, and is staffed pretty much completely by government workers. As good as these workers are, the idea of the Post Office evokes images of waiting on line, and the rising cost of stamps.

And as for the villainous health insurers, are they now UPS and Fedex?

It is all very hard to follow. It’s no wonder even people paying close attention to this issue are left wondering what these plans are all about.

Tags: Bad Analogies, Health Care Benefits, Health Care Insurance, Healthcare Benefits, Healthcare Reform, President Obama, US Health Care System
Posted in Health Insurance, Healthcare Benefits, Healthcare Reform | No Comments »

Archive for the ‘Health Insurance’ Category

Eight Quick Reactions to the President’s Speech

Reform Federalism?

How Government Insurers are a Little Different

Wait, Another New Sales Pitch for Reform?

What is a Health Care Co-Operative?

Why Health Insurance is So Expensive, Continued

Obama’s Risky Reform Gambit

Why Reform is Going So Badly, Continued

Probably Not the Best Analogy

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