Reforming US Health Care by cuiliqing


									―There are some things even God doesn’t understand.
         That’s why He created politicians.‖
         NPAG 2007
    Hyatt Regency Chicago
     September 23, 2007

Reform U.S. Health Care … Or Else!
                   Jeanne Scott
Jeanne Scott’s Not Very Sophisticated Guide to
  the Politics of the United States of America
      Liberals                                           Conservatives
                              The Great
•   Unions                ―Unwashed‖ Middle         •   Social Conservatives
•Hard working people                                •Hard working people
                          •Markets fuel growth
who believe in bad luck                             who don’t believe in
                          •Americans believe in     bad luck
• Rich People from
                          fairness not equity
Hollywood                                           •Rich People (Non-
                          •Inspire don’t conspire   Hollywood)
•Macrobiotics and
Vegans                    •Willingness to change    •Pro Life Advocates
                          and innovate
•Pro Choice Advocates                               •And assorted right
                          •A Call for Sacrifice     wing wackos, including
•And assorted left
                                                    but not limited to
wing wackos, including
                                                    xenophobic talk show
but not limited to:
                                                    hosts and their
hippie scum, tree-
                                                    followers and a small
huggers, philanderers,
                                                    number of powerful
reprobates, left
                                                    members of the NRA
leaning columnists, and
                                                    who exercise
outright communists.
                                                    disproportionate power
                  Change: As Viewed By Each

     Liberals                The Great              Conservatives
                         ―Unwashed‖ Middle
• Access is the                                     •Over-insurance is the
priority                                            problem
                         •Delivery system
• Cost control through   reform is the priority     •Increase HDHP
wrestling for            •Transparency of BOTH      • Expand Consumer
resources: top down      cost and quality           engagement
budgeted and even
price controls           •Value Purchasing to       •Hamster care
                         exploit the variation in
•Discounted FFS as                                  •Nothing wrong with
                         cost and quality
payment                                             the delivery system as
                         •Capitation/P4P/           long as consumers are
•Hamster Care that is    Reimbursement Reform       willing to pay for it
                         •Delivery system can
•Nothing wrong with      and should be
the delivery system      completely re-
just need to get         engineered
people access to it
                     Rising Health Insurance Costs
  20                                   Changes in Health Insurance Premiums
                                     Compared to General Inflation and Average
  18                                             Employee Earnings



  12                                                                             Premiums
  10                                                                             Inflation
   8                                                                             Earnings



























Source: Kaiser Family Foundation
   Outsourcing of Health Care ???
• Outsourcing is no longer limited to blue collar
  industrial and back-office white collar jobs
• Software development and programming
• Accounting and legal services
• Health care claims processing (Northern Ireland, the Philippines)
• And the latest new developments:
   – Medical transcription
   – Radiology and other telemedicine services
   – Sending patients to India and other Asian
     locations for surgeries and specialty services,
      (already an option under the British NHP)
   – Blue Cross-Blue Shield of South Carolina offering
     ―overseas‖ option to members and marketing
   – Blue Shield of California, HealthNet offering
     ―Mexican‖ HMOs
     I took the above masthead from a web site --
              Companion Global Healthcare –
a subsidiary of Blue Cross-Blue Shield of South Carolina.

        •Companion Global Healthcare in the News:
        •Overseas Option for S.C. BlueCross Members
        Featured on NBC Nightly News - May 16, 2007
        •Companion Global Healthcare, Doctors Care
        Reach Agreement for Aftercare Services - May
        10, 2007
        •BlueCross BlueShield of South Carolina and
        BlueChoice HealthPlan Pioneer Global
        Healthcare Alternative - February 8, 2007
        ―Rising medical costs are taking a toll
     on the auto industry’s bottom line and
     ultimately are threatening American
   manufacturers' ability to compete in the
 global marketplace. Congress needs to apply
some serious medicine to address the nation's
         severe health care problems.‖

         -- General Motors chairman and CEO
                     G. Richard Wagoner Jr.
                    Health care insurance,
                 once an employment benefit
                 taken virtually for granted,
                has become a bed-rock issue
                in today’s University of
   A new study from the American industrial
               labor-management environment.
Michigan indicates that 27% of employers
                  like employee share of the
 surveyed wouldAs theto eliminate health
                    for their employees
    care coverage cost has increased, people
                 said that to employee
  entirely. 85% are starting thebecome more
                    go up by 50% or more.
share will have to aware of the actual cost
               of health care – and increasingly
                    are seeing the cost of
                     health care insurance
                 as a critical political issue –
                      one upon which they
                  will make a voting decision.
                        "I fear that we may have
                    already committed more physical
                      resources to the baby-boom
                       generation in its retirement
                    years than our economy has the
                           capacity to deliver."

                      "Congress in the future will
                      have to weigh the benefits
                        of continued access, on
 Alan Greenspan:
November 25, 2005
                      current terms, to advances
                     in medical technology against
                        other fiscal initiatives."
Dire Warnings from the Comptroller General
                                            "I would argue that the most serious
                                             threat to the United States is not
                                           someone hiding in a cave in Afghanistan
                                                or Pakistan but our own fiscal
                                               "I'm going to show you some
                                                numbers…they’re all big and
David Walker, Comptroller General of the             they’re all bad."
              United States

       ―[Boomers will] be eligible for                        "You know the
         Medicare in just three years                       American people, I
        and when those boomers start                        tell you, they are
       retiring en masse, then that will
        be a tsunami of spending that                     absolutely starved for
       could swamp our ship of state if                   two things: the truth,
            we don't get serious."                           and leadership."
  "Any politician who tells you that we can solve our problem without
   reforming Social Security, Medicare, and Medicaid is not telling
                             you the truth."
Gosh Darn All Those
Pesky Uninsured
44.6 Million ―officially‖
uninsured in 2006
(9.5M of which are children)
2007 Consumers Report
60+ Million Underinsured
40% of Americans with no
or in adequate health
 Never Fear, the Answer is Simple:

                       - GEORGE W. BUSH, Cleveland, Ohio, August, 2007

  – 29 Industrialized Nations,
     28 With NHI
  – EMTALA-Driven Uncompensated
    Care/Emergency Room Crisis
  – 37th Ranking in World
  – 15.9% GDP
  – Movement Away From
    Employment-Based Coverage
• The States Aren’t Waiting:                        Oregon, Maine, New
 Hampshire, California I, Maryland, Massachusetts, California II,
 Pennsylvania, Illinois, California III, Wisconsin,
• Texas

•This month, the Senate Finance Committee Approved
5-Year $60 Billion Increase to be Financed by 61¢
Tobacco Tax Increase
  –Pay-Go Rules Apply
  –Importantly, GOP Senators Hatch and Grassley Took the
  Lead In pushing This Through Democratic-Controlled Finance
•Would Fund Care for Children (but no additional
adults) in Families Up to 400% of the Poverty-Level
  –(About $81,000)
•House Version Calls for $50 Billion Mostly Financed
Through a Smaller Tobacco Tax and Cuts in Payments
to Medicare Advantage Plans
•The White House Announced it Would Veto
any Such Increase
Caring for the
―uninsured‖ is
estimated to cost
$115 Billion in
Costs to other
Payers and Bad
Debt… how many
would that same
$115 Billion
cover in a better
                                        (52%)      This is
Medicaid/                                           How

                                                 Get Their
 (3%)                                            Healthcare
           (1%) Private    Employer
               Non-Employer Retiree
                  9.5M       3.3M
                   (3%)      (1%)
  Per Capita Health Expenditures,
U.S. and Selected Countries, 2003
Health Expenditures as a Share of GDP,
 U.S. and Selected Countries, 2003
Inflation-Adjusted Physician Income is
     Decreasing Across The Board

     SOURCE: Center For Studying Health System Change Community Tracking Study #15 June 2006
  Quality Shortfalls: Getting it Right 50% of the Time
                                    Adherence to Quality Indicators
                        Breast Cancer                                                    75.7%

                         Prenatal Care                                                  73.0%

                       Low Back Pain                                                68.5%

              Coronary Artery Disease                                               68.0%       Adults receive about
                         Hypertension                                             64.7%         half
             Congestive Heart Failure                                             63.9%
                                                                                                of recommended
                           Depression                                           57.7%

                Orthopedic Conditions                                        57.2%
                    Colorectal Cancer                                       53.9%                54.9% = Overall care
                               Asthma                                       53.5%                54.9% = Preventive care
         Benign Prostatic Hyperplasia                                       53.0%                53.5% = Acute care
                       Hyperlipidemia                                    48.6%                   56.1% = Chronic care
                     Diabetes Mellitus                                  45.4%

                            Headache                                    45.2%

                Urinary Tract Infection                             40.7%
                                                                                                            Not Getting
                                Ulcers                        32.7%
                                                                                                             the Right
                          Hip Fracture                    22.8%                                             Care at the
                 Alcohol Dependence               10.5%                                                     Right Time
                                          0%        20%           40%       60%         80%      100%
                                               Percentage of Recommended Care Received
Source: McGlynn EA, et al., ―The Quality of Health Care Delivered to Adults in the United States,‖ New England Journal of
Medicine, Vol. 348, No. 26, June 26, 2003, pp. 2635-2645
                              Quality of Care Today:
                       We are Worse than Shaq from the Line
                                                                                 IRS Phone-in Tax Advice

                                                                                                    Phil Mickelson putting from 6 feet
Defects per million

                       10,000   Overall healthcare
                                 Quality in U.S.                                                                Airline baggage handling
                                (Rand Study 2003)
                                                                                                                                   US Airline
                                                                                                                               flight fatalities/
                                     Shaq Free-throws                                                                         US Industry Best
                                                                                                                                    of Class
                                                        Fair Reliability                                  High Reliability



Sources: Courtesy A. Milstein modified from C. Buck, GE; Dr. Sam Nussb aum, Wellpoint; & Mark Sollek, Premera

                                              Reported October 30 that several hospitals have hired airline pilots to explain
                                               safety procedures and processes to their staff
        International Obesity 2003
Percent of Population over 15 with BMI >30
  United States

 United Kingdom





                                                                    BMI >30






                   0   5   10        15     20       25   30   35
                                Source: OECD, 2005
            Obesity Drivers
• We are eating more (duh!)
• We are eating out more (In 1970 34% of the food
  budget was consumed outside the home in late 1990s it
  was 47%)
• Everything is supersized at home and at McDonalds
• We stopped smoking
• We are all working too much especially women
• We don’t exercise enough because
  we are all working too much
• The only people who are exercising
  and eating right are people who
  were thin in the first place or bulimic
  celebrities or rich people who don’t
  work or French fashion models
Obesity is an Illness
The Future of Health Care

Fat People
Meet Skinny
           Consumer Responsibility:
          Arguments For and Against
           For                    Against
•   Consumers insulated      • The 5/55 Problem
    from the cost of care
                             • One day in an American
•   If they had to pay         hospital and consumers
    they would use it less     exceed maximum
•   If they had to pay         deductible, so
    they would take more     • Catastrophic coverage is
    responsibility             a green light for
•   Consumers should have
                             • Does it save money
    the right to choose
•   When consumers           • Poor people with chronic
    choose and pay the         illnesses will be
    market is working          disproportionately
     Across the board, HDHP consumers
       have more compliance problems
                                   Treatment compliance problems
                                                               All Privately     All
                                                                 Insured*      HDHP**
                                                                     %           %
                Had a specific medical problem but
                 did not visit a doctor
                                                                    17          33
                Took a medication less often than I
                 should have                                        14          29

                Did not fill a prescription                         15          28
                Did not receive a medical treatment
                 or follow up recommended by a                      17          28
                Did not get a physical or annual
                                                                    19          25
                Took a lower dose of a prescription
                 than my doctor recommended
                                                                    15          19

* Currently insured in employer-sponsored or self-purchased plan
** Currently enrolled in high deductible health plan
The Good, the Bad and the Ugly of

• The Good: Unnecessary care is
• The Bad: You don’t take the Lipitor
  and it hurts in the long run
• The Ugly: You don’t take the
  asthma medication you go to the ER
Internet Information is ALWAYS Helpful
         • "In clinic visits in which doctors
           did use and didn't use electronic
           health records, we didn't find
           clear evidence that EHR use was
           associated with better quality."
         • "There's nothing magical about
           electronic health records. You
           need to have tools in place that
           take advantage of technology to
           show improvements in quality. You
           need to do additional work instead
           of just turning on the computer."
          -- Dr. Jeffrey Linder, at Boston’s Brigham
              and Women’s Hospital, study co-author
         Voters View of Health Care
Will Health Care Be a Political Issue in 2008?

Dates    6/8-   5/31 5/18     4/26-   4/23-    4/20-    4/20-   4/13-     4/9-   3/9-4/1
         11     -6/5 -23      29      26       23       23      15        12

Org.     NBC/   KFF    CBS/   NPR     Gallup   Harris   NBC/    Gallup/   CBS    DIAGEO
         WSJ           NYT                              WSJ     USA
#1       Iraq   Iraq   Iraq    Iraq     Iraq    Iraq    Iraq     Iraq     Iraq    Iraq
Care      2      2      5       2        2       2        2        3        3      2

 Surveys included open-ended and list-style questions about priorities for
 government to address, issues for candidates to discuss, most important
    problems facing the nation, and most important issue to your vote.
   Thinking About the 2008 Presidential and
 Congressional Elections, Which Issues Do You
Most Want to Hear About From the Candidates?
     Four Scenarios for US Health Care
                          Tiering of Healthcare: ―Tiers Я’ Us‖
                                  Jeanne’s Odds: 3-2
Minor Delivery System
                        Disruptive Innovation: ―Wal-Martization‖
                                     of Health Care
                                  Jeanne’s Odds: 5-1

                            Bigger Government by Request:
Major Delivery System         ―Daughter of Single-Payer‖
                                  Jeanne’s Odds: 2-1

                        Mostly or Almost Universal Health Care
                                  Jeanne’s Odds: 4-1
   Scenario 1: Tiers Я’ Us
• SUVing of health care
• CDHC (Consumer-Directed Health
  Care) and HDHP (High-Deductible
  Health Plans)
• Continued disparities and tiers
• High end providers do well, low end

• Probability over 10 years: 40%
          The Bush SOTU 2007

• Using Tax Policy to Address the
 – Families buying individual insurance could
   deduct up to $15,000 of the costs,
   regardless of the cost to them
   • (thus encouraging people to buy low-cost, high-
     deductible coverage)
 – Families with employment-based insurance
   would be taxed on the value of that
   insurance in excess of $15,000
 – Amounts would be indexed to inflation but
   not to increases in health costs
President Bush Puts His Eggs in the
   Health Savings Account Basket
Expand Health/Medical Savings Accounts:
Allow Individuals and Families to Set Aside
as Much as $5,150 a Year, Tax Free

Bush’s FY2007 Budget would increase the
allowable amount to $10,300
        Scenario 1: Tiers Я’ Us:
      Impact on Health Care System
• Health Plans
  –   Move toward HDHP and CDHC
  –   Sell whatever anyone will buy
  –   But always experience rate
  –   Rising numbers of uninsured and underinsured
• Providers
  – Well-heeled, well situated, well run providers
    continue to thrive and distance themselves from the
    pack on quality, safety, and service (one third) aided
    by P4P
  – Basket cases that deal with the poor and the lower
    middle class
  – A health system for the top third
Scenario 2: Bigger Government by Request

• Baby-Boomer backlash against cost-
• Democrats run on shoring up and
  expanding Medicare for middle aged
  and elderly
• Government regulates health care even
• Slowing innovation, reducing provider
  payment, and limiting profiteering

• Probability over 10 years:   30%
Hillary-care; Giuliani-care; Obama-
    care; McCain-care; etc.; etc.

  Would-be, Wanna-be, Could-be, Might-be
2008 Presidents are falling over one another in
     proposing health plans for Americans
Democrats see this as ―their‖ issue
What the Democrats are Saying…

• Hillary Clinton:    ―I’m battle-scarred but ready to take on the issue.‖
  – Require employers who do not purchase private health
    insurance for their employees to pay into a pool for a
    Medicare-for-all-type plan
  – Emphasize computerized medical record-keeping
  – Implement ―purchasing initiatives‖ to reduce drug prices
  – Emphasize prevention of disease
  – Reform the private insurance market by prohibiting insurers
    from declining coverage based on pre-existing conditions
    (―guaranteed issue‖)
  – Reduce national health care spending by $120 billion/year
  – Universal coverage wouldn’t be achievable until near the end
    of her second term
  What the Democrats are Saying…

• Barack Obama: ―The public will   judge my presidency by what I do for healthcare.‖
    – Promises to deliver ―universal‖ healthcare by the end of his first term
    – Employer Mandate: ―Play or Pay,‖ provide employee health insurance or pay
      a tax
    – No individual mandate (unlike other Democrats and ―Romney as Governor‖
      and Schwarzenegger)
    – Creates a National Health Insurance Exchange to monitor insurance
      companies in offering the coverage. In essence, Obama's plan retains the
      private insurance system but injects additional money into the system to
      pay for the expanded coverage
    – Expand S-CHIP and require all children to be covered
    – Allow states to continue to experiment with health care reform initiatives
    – Reduce costs through computerized records, reimportation of drugs and
      greater use of generics, emphasizing prevention
    – Raise taxes on those making more than $250,000/year to pay for the
      estimated $50-65 billion cost
What the Democrats are Saying…

• John Edwards:         ―Any politicians who say they can provide universal health care and
  other promises while ending the federal deficit are not being honest.‖
   – Medicare+ plan for all Americans, but not necessarily a ―single-
     payer‖ plan; that will be decided by giving everyone a choice
   – Promote competition between private insurers and government
   – ―Pay or play‖ system for employers, provide employee health
     insurance or pay a tax
   – Establish ―regional purchasing pools‖ to enable consumers to bargain
     for lower premiums
   – Require insurers to pay out at least 85% of premium income in
     benefits, i.e., ―minimum loss ratio‖
   – ―Cost containment‖ (hmm, does this mean more regulation?)
   – Will raise taxes on those making more than $200,000/year to pay
     for the estimated $90-120 billion cost of his plan
    What the Democrats are Saying…

•   Bill Richardson: ―The cornerstone of my plan will be to allow all Americans to
    buy the same coverage as Congress.‖
     – Expand Medicare, allowing those 55 and older to ―buy in‖
     – Allow working families to buy coverage through FEHBP (the same plan
       as Congress)
     – Impose an ―individual mandate‖
     – Mandate that private insurers accept all (―guaranteed issue‖)
     – Refundable health insurance tax credits to all based on income
     – Streamline existing regulatory system and expand health I.T.
     – Establish a ―cooperative relationship" between individuals, businesses
       and states "catalyzed by the government"
     – ―Heroes Health Cards‖ for military veterans to improve their care
     – Cap interest payments on credit card medical debt
     – No need to raise taxes, his plan will be financed through savings by
       ―getting out of Iraq‖ and reducing military spending.
What the Democrats are Saying…

• Christopher Dodd       (Senator from Connecticut) :
  – Create a ―Health Care General Fund‖ (HCGF) with employers
    having a a ―play or pay‖ mandate, exempting employers of 10
    or fewer employees
  – Individual mandate, for those without employer health
    insurance, buying from HCGF at a price based upon their
  – Expand Medicaid and cover all children up to 300% of poverty
  – Encourage ―chronic disease management‖ using clinical
    information technology
  – Allow nurses to unionize even if they have supervisory
What the Democrats are Saying…
              Joe Biden
              Senator from Delaware

– Expand health insurance for
  children and relieve families and
  businesses of catastrophic
  health care expenses
– Support states pursuing
  alternatives and experimenting
  with ―universal‖ coverage plans
– Use the experience of these
  states to develop a national
  universal health system
What the Democrats are Saying…

• Dennis Kucinich    (Congressman from Ohio) :
  – Sponsor of HR 676 that would establish a
    single-payer universal health care plan for
    all Americans called the United States
    National Health Insurance Plan completely
    funded by taxes and run by the government
But a few Republicans are also
     talking health care…

     But one can’t run…
                  The Gubernator
   Gov. Arnold Schwarzenegger (R. Calif.)
• employers with 10 or more employees would have to offer
  health insurance for workers or pay a fee of 4% of payroll
  to a state pool that would help workers purchase coverage,
  with the amount that they pay based on income
• employees could pay for health insurance with pretax income
• health insurers would be required to sell policies to all state
  residents, regardless of whether they have medical
• residents who refuse to obtain health insurance could face
  reductions in their state income tax refunds or have their
  wages garnished
• Medi-Cal, the state Medicaid program, would be extended
  to all adults with annual incomes of as much as 100% of the
  federal poverty level and to children -- regardless of their
  immigration status -- in households with annual incomes of
  as much as 300% of the federal poverty level
• additional subsidies would be available to help state
  residents with annual incomes of as much as 250% of the
  federal poverty level purchase health insurance
  The Gubernator
• the proposal would increase by
  $4 billion reimbursements to
  health care providers under
• physicians would have to pay 2%
  of their revenues
• hospitals would have to pay 4%
  of their revenue to help cover
  the cost of the program
• the proposal would be financed
  in part with about $5 billion in
  federal matching funds that the
  state will receive as a result of
  restructured health care
  programs and with state funds
  currently used for charity care
The Romney When He Was Governor Plan:
          Individual Mandate
                ―Healthcare for Everyone‖
• employers, most of whom already offer insurance, would be
  ―encouraged‖ to continue doing so voluntarily; Romney vetoed a
  Democratic proposal to ―tax‖ employers not offering health
• individuals who don't have insurance would have to sign on to one
  of two insurance pools
   – Commonwealth Care through which people of moderate income and
     small businesses could buy insurance from private insurers at a
     special rate. It would not be subsidized by the state.
   – Safety Net Care for residents with incomes up to 300% of the
     federal poverty level, which is $28,700 for a single person. Policies
     would have no annual deductible and would be subsidized by the
     state, with policyholders paying 1.3% to 5.8% of their income, or
     $2.30 to $32.31 a week, for an individual plan.
• individuals who do not get insurance from their jobs or buy it
  through one of the programs would lose their personal tax
  exemption of $3,300 — worth about $175 for an average
  taxpayer — face withholding of their income tax refund, or if
  they get medical care, their wages could be garnished for
The Romney as Presidential Candidate Plan:
• Disavow mandate in his original Massachusetts plan
• No mandates, individual or employer
•   Phase-out employment-based insurance, all insurance should be
•   Tax-incentives to encourage transition
•   Encourage high-deductible, low cost insurance and encourage people
    to use less healthcare, thus reducing costs
•   Allow the states greater freedom to experiment with alternative
    private sector initiatives, eliminating many insurance regulations that
    ―raise‖ costs, allow cross-state sales of health insurance
                       Rudy Giuliani
                      The health care system requires a "paradigm shift" toward the
                       individual health insurance market. Currently, about 17 million
                    residents have individual health insurance, compared with about 175
                    million who have employer-sponsored coverage. Giuliani said that he
                    opposes proposals to require all residents to obtain health insurance
                    because government subsidies would be required for those who could
                           not afford a policy, which in turn would drive up costs.

•   Phase-Out the U.S. ―Employment-Based‖ Health Care
•   Families eligible for $15,000 tax credit to buy individual
    health insurance
•   Allow families to keep the difference of they buy less
    expensive plans
•   Release Health Care Insurance from State Regulations
    and Mandates and Allow Cross-Border Purchases
•   All Purchases of Health Insurance Would be Tax-
    Deductible, Regardless of Whether They Were
    Purchased Through and Employer or Individually
•   Block grants to states to encourage innovation, reduce
    health costs, enroll eligible uninsured and address
    ―adverse selection‖ issues
•   Increase price and quality transparency
•   Reform medical liability system
•   Expand Health Savings Accounts
•   Invest in Health I.T. to reduce errors and improve
           Mike Huckabee
         (former Governor of Arkansas)

• Keep health care in the
  private sector
• Improve private sector
  delivery system to rein in
• Tax breaks and paid
  days off for employees
  who engage in ―healthy
              Sam Brownback
                     Senator from Kansas

•Establish price transparency throughout health
system so that consumers, not government can make
the decision (hmm, what about quality)
•Insure ―freedom of choice‖ in health coverage so
consumers can choose health coverage that is right
for them, even across state lines
•Create a lifetime electronic medical record, giving
consumers control over its use to insure privacy
       Tom Tancredo
        (Congressman from Colorado)

                             • Enforce immigration laws and
                               funnel savings into health care
                               (exactly what ―savings‖ are
                               these, Congressman?)
                             • Provide access to lower cost
                               insurance by establishing
                               ―association health plans‖ for
                               non-group covered citizens and
                               legal immigrants
                             • Provide national relief to the
                               states to help cover the
                               unemployed citizens and legal
                               aliens (are we getting a message
                               here Congressman about illegal
  Photo taken from his         immigration?)
official campaign web site
Not yet heard from:
 • Former Tennessee Senator,
   television and movie actor Fred
   Thompson has made no
   statements (as of August 15,
   2007) on health care
 • Texas Congressman Ron Paul (a
   physician) has nothing on his web
   site on health care
 • California Congressman Duncan
   Hunter has nothing on his web
   site on health care
             Already Out
• Former Wisconsin Governor
  and Secretary of Health and
  Human Services Tommy
  Thompson (the other
  ―Thompson‖ who based on his
  DHHS tenure may really have
  had something to say. Tommy,
  we hardly knew ya’)
Scenario 2: Bigger Government by Request:
    Impact on the Health Care System
• Health Plans
  – Plans become more regulated
  – Delegated to becoming back-office processors
  – Transaction supporters not market makers
• Providers
  – Hospitals are secure but under-funded for major
    capital initiatives
  – Top tier institutions make it on philanthropy and
    differentiated care for the affluent elite
  – Only cost-reducing technologies are rewarded
  – P4P: You gotta perform to avoid a pay cut
Scenario 3: Disruptive Innovation
• Cheapo plans proliferate (high
  deductibles and retail primary care)
  forcing cheaper delivery models to
• New disruptive competitors emerge at a
  lower price point, e.g., Revolution
  Health, Wal-Mart, Kaiser Lite
• Almost as good, and a lot cheaper

• Probability over 10 years: 10%
                       Feature Article
                   Going the Distance for
                   Health Savings. Could
March 2007 Issue
                     overseas travel for
                    lower-cost surgeries
                     become an option in
                        health plans?
Have Surgery. Go Sightseeing.
Published: March 24, 2007
WOULD you be willing to have non-urgent medical procedures done overseas, if you could
recover in a fine hotel and your employer not only picked up all the costs, but actually paid
you for having the work done outside the United States?
You may be faced with that decision, if HR Magazine is right in its prediction that ―medical
tourism‖ will become one of the benefits corporations will be offering soon.
Medical tourism, or medical travel as it is also called, involves traveling to “respected
medical facilities” in countries like India, Thailand or Singapore to have non-life-threatening
medical procedures done, Betty Liddick writes. “It also often involves recuperation at a
resort, or tourist destination, all for less than what treatment alone would cost in the
United States.”
The price is obviously the appeal to employers. According to examples cited in the article
“Going the Distance for Health Savings,” the cost of sending a worker overseas for
procedures like removing a gallbladder can be at least 50 percent less than that of having
the work done in the United States, even if the employer pays for the worker to spend
recovery time in a fine hotel.
To encourage employees to go overseas, some companies are willing to give employees a
percentage of what is saved in medical costs.
The crucial question about medical tourism, which Ms. Liddick describes as a “small but
growing health care trend,” is, of course, whether the quality of care is equal to what could
be received at home.
“No one knows the answer to that,” said one expert quoted in the article. “Frankly, we’re not
in a position to meaningfully evaluate and compare American hospitals, let alone offshore
   Scenario 3: Disruptive Innovation
  Impact on the Health Care System
• Health Plans
  – Health Plan HDHP grow enormously
  – New competitors in ambulatory space allow cheaper
  – Contract with India for the high-tech stuff
• Providers
  – Outpatient alternatives grow from Minute Clinics to
    outpatient surgery chains to federally funded safety net
    community clinics
  – Hospitals are either struggling as government (under)funded
    geriatric ICUs or thriving as body repair shops for affluent
  – Primary Care becomes the ultimate P4P: it’s all retail
Scenario 4: ―Mostly‖ Universal Health
 • Mandatory universal individual
   insurance is passed
 • National policy commitment to
   restructure health care financing and
 • True managed health care
 • Focus on public health and prevention

 • Probability over ten years: 20%
 Scenario 4: Universal Health Care Impact
        on the Health Care System
• Health Plans
  – Health plans as active agents for health delivery
  – Sources of innovation in DSM and new reimbursement models
  – Get smart or get out
• Providers
  – Chronic Care management done right: innovation in community
    based chronic care
  – New reimbursement systems ―Daughter of Capitation‖ force
    market leaders into fundamental clinical system redesign
  – Acute care is evidence-based and standardized
  – Innovation concentrated in designated centers of excellence
  – P4P means better payment and earns the provider the right to
     Four Scenarios for US Health Care
                          Tiering of Healthcare: ―Tiers Я’ Us‖
                                  Jeanne’s Odds: 3-2
Minor Delivery System
                        Disruptive Innovation: ―Wal-Martization‖
                                     of Health Care
                                  Jeanne’s Odds: 5-1

                            Bigger Government by Request:
Major Delivery System         ―Daughter of Single-Payer‖
                                  Jeanne’s Odds: 2-1

                        Mostly or Almost Universal Health Care
                                  Jeanne’s Odds: 4-1
          Issues and Impacts
• High end patients and providers will always do well
• How bad will it be for the rest of us?
• True cost reducing technologies will always have
• True clinical breakthroughs that are radically better
  than existing modalities and therapies will always be
• Healthcare is a superior good and will take a larger
  share of national wealth
• But who pays for what and how will be central
  difficult questions for business, government, and
  households around the world forever
• Transforming for good: It’s all about Information
  and Incentives
          Issues and Impacts
• No matter what, we will need better value measures
  and more transparency of measures
• Value based purchasing and P4P will become more
  prevalent and have a powerful influence on providers
  and vendors
• Consumers will become more engaged in value
  decisions but we cannot rely on them absolutely
• The systems of health care need to be continuously
  improved to deliver greater value
• Will require clinical skills, process skills, use of
  cutting edge technology and big-time capabilities
• Most of all, it will require vision, values and
There’s Not Much We Have to Change….

 • Our values
 • Our Strategic Focus: From Pimp
   My Ride to Primary Care and
 • Our Reimbursement System
 • Our Delivery System
 • Our Individual and Collective
 • Our Expectations
  Jeanne Scott
    (703) 371-4894

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