Is Healthcare Reform for Real this Time?

Senator Ron Wyden of Oregon believes the stars are in alignment for comprehensive, meaningful and bipartisan healthcare reform.

For the past 10 or 15 years, since the Clinton healthcare plan was deep-sixed, healthcare reform has been off the table on Capitol Hill and the campaign trail. Talk about broad-scale revision of the healthcare delivery system had been hushed. But something has changed. Today’s presidential candidates and lawmakers are sounding the alarm about rising healthcare costs and the growing number of uninsured people in this country. Many have unveiled reform plans of their own. Organizations such as AdvaMed (an association of medical device manufacturers) have done the same.

Democratic Senator Ron Wyden of Oregon believes that at $2.2 trillion, America is spending enough on healthcare; it’s just spending it in the wrong places. His solution – the Healthy Americans Act – would deconstruct employer-based healthcare coverage. Individuals would take the money that would have been spent on their healthcare benefits and buy their own insurance. If they lose their job, the government would subsidize their premium payments until they got back on their feet. The Act (Senate Bill S.334) would eliminate much of the bureaucracy surrounding healthcare insurance, and provide coverage to all Americans – all for less money than what the country spends today on healthcare, says Wyden. He introduced the Act on Jan. 18 with co-sponsor Robert Bennett, (R-Utah).

The bill would dismantle the current model in which employers offer healthcare benefits to their workers – a system that is disappearing faster than a Popsicle on a summer sidewalk, says Wyden. Employers began offering benefits following World War II in order to circumvent a nationwide wage-and-price freeze. But today, the system sucks up trillions of dollars yet leaves people petrified of losing their healthcare coverage should they lose their jobs. Even those with jobs are losing their benefits, as their employers simply cannot keep up with the rising cost of insurance. Meanwhile, employers that continue to offer benefits to their employees and retirees are spending almost as much on healthcare as they make in profits, says Wyden. That hurts their competitiveness in the world market.

While members of Congress receive fine healthcare coverage, the number of uninsured keeps growing, says Wyden, who is a member of the Senate Finance Committee. He says it’s important to get all Americans “under the tent,” that is, insured. That’s true not only for moral reasons, but because the uninsured cost the healthcare system a lot of money. Lacking insurance, they fail to visit primary-care providers for early, preventive and relatively inexpensive care. Instead, they show up at the local emergency room, where care is much more expensive.

In fact, the American system of healthcare is actually sick care, says Wyden. “Medicare Part A will write checks for thousands of dollars so that a senior can be treated in the hospital after they have had a heart attack or a stroke,” he said on the Senate floor shortly before introducing his bill. “Medicare Part B – the part of the program that covers outpatient services – provides no incentives for changing the behavior that led to the chronic illness and landed the senior citizen in the hospital. Certainly, it is clear that preventing disease – not just treating disease – must be a bigger part of America’s healthcare future.”

Will healthcare reform, such as that proposed by the Healthy Americans Act, succeed in 2007? Yes, says Wyden, because all the key players are ready for it. The Clinton healthcare plan of 1994 lacked the support of employers, union leaders and patient advocates, not to mention providers, he says. “Now, Andy Stern, president of the 1.8 million-worker Service Employees International Union; Steve Burd, CEO of Safeway with more than 200,000 workers; patient advocates representing various points of view; and employers of all sizes have joined behind the Healthy Americans Act.”

Recently, the Journal of Healthcare Contracting spoke with Wyden about the Healthy Americans Act and healthcare reform.

Journal of Healthcare Contracting: You have been involved in healthcare issues before, including debate on Oregon’s law regarding physician-assisted suicide; the “Health Care that Works for All Americans Act,” which you proposed with Sen. Orrin Hatch in 2003 (and which led to the creation of the Citizens’ Health Care Working Group); and the Long Term Care Quality and Consumer Information Act in 2005. What have been the chief stumbling blocks on this country’s road to comprehensive healthcare reform? How about successes?

Wyden: The inability to find consensus has been driven by the fact that in the past, there’s been a great deal of scapegoating. Democrats say it’s the insurance companies’ fault; Republicans say it’s the trial lawyers’ fault; someone else says it’s the pharmaceutical companies’ fault, or that of greedy providers.

So we made a grid, so that all these powerful interest groups would have to give something, but also get something. For example, [under the Healthy Americans Act], private insurers would no longer be able to cherry-pick. You can’t just send fragile people to government programs more fragile than they are. Insurers will have to take all comers. But in addition to giving something, they get something – a very large market. Those who want to do good while doing well will have an opportunity to excel at that. In addition, there will be a whole new market for prevention, [with] incentives to put more emphasis on healthcare than sick care. We propose rewards for Medicare patients for lowering their blood pressure and cholesterol; and rewards for families too. If the parents take their kids to prevention programs, those parents get reductions on their premiums. Insurance companies have to give; but they also get. And certainly, they won’t get put out of business.

JHC: Why do you believe that in order to fix healthcare, the country needs to get everyone “under the tent,” that is, insured? Besides the humanitarian issues, what are the problems with having a sizable portion of uninsured in this country?

Wyden: Apart from the immorality of having so many people go to bed at night without secure, affordable, good-quality healthcare, what we’re [currently] doing defies common sense financially. By federal law, the United States has a universal coverage system: If somebody shows up at a hospital emergency room, presumably using services that [JHC] readers provide, they have a legal right to coverage. But who can logically argue that that’s an efficient, well-targeted use of financial resources? Wouldn’t it make more sense to put into place a rational system, so that instead of having dollars used that way, more money can go to prevention and outpatient care through private coverage, so that healthcare needs would be addressed long before [patients] show up in the hospital emergency room?

JHC: A key part of the Healthy Americans Act focuses on prevention and wellness. For example, the Act would provide incentives to consumers (including reduced Medicare Part B premiums) who participate in wellness programs. Why don’t we in this country have more of a focus on prevention rather than sick care? Wasn’t managed care intended to address this issue? If so, why did it fail to do so? Why do you believe the Healthy Americans Act has a better chance of succeeding?

Wyden: Past reforms have tried to drive people in one direction; we are proposing giving people a lot more choice. Today, 160 or 165 million people get their care through the employer-based system. They largely have no choice; they take what they get from their employer. Because employer-based coverage is melting faster than a Popsicle on a summer sidewalk, even that choice is becoming less and less – higher cost, less coverage. We’re saying, right at the outset, give workers three significant benefits: first, more cash in their pocket, because that’s a key part of the transition; second, more choices (because they’re dealing in the private sector); and third, going to bed with the security that they have healthcare that won’t be taken away if they lose their job or go bankrupt.

JHC: In the Healthy Americans Act, what would happen to Medicaid?

Wyden: Healthcare coverage today for the poor is inefficient and degrading to those with low incomes. I think it can be made more compassionate and efficient. If you’re poor in America, instead of trying to squeeze yourself into one of a number of [coverage] boxes, your coverage would be automatic. If your income is low, you can sign up for insurance through one of the health help agencies. Everything at that point is done electronically. If you’re not working, your subsidy goes up; if you are working, what you owe is taken out of your paycheck through electronic transfer. The Lewin Group – which is the gold standard of healthcare actuarial data – scored very significant administrative savings with this plan.

Poor kids in poor families will get those three things I spoke about earlier. And thanks to electronic transfer, they don’t have to go to the Medicaid office, stand in line and go through that degrading process. You’re like everybody else. You sign up once, you’re in the system, you get guaranteed coverage, like your Congressperson. Your kids have coverage too. If a state wants to go further than this and provide something more for poor kids, we require that it use Medicaid dollars to wrap around the guaranteed good-quality, affordable coverage that [the Healthy Americans Act would guarantee].

JHC: You have said that the states cannot be expected to reform healthcare, because they didn’t create the major problems in our system today. What can the states do to fix healthcare, and what must the federal government do?

Wyden: The story of what the states have done in the last couple of years warrants a big pat on the back and applause, because they’re doing an amazing amount of good work with very little bandwidth to work with. But think how hard it would be for the states to change behavior when they can’t touch the tax code or Medicare, which are the biggest drivers of American healthcare. They’re doing good work – getting businesses to offer incentives for prevention, etc. California and Massachusetts have done good work. But the biggest drivers in American healthcare are federal.

JHC: When you spoke on the Senate floor in January 2007, you said that “America is spending enough money on medical services; it is just not spending the money in the right places.” With that in mind, can you comment on the most flagrant examples of misplaced spending?

Wyden: The administrative costs of healthcare are staggering. The Lewin Group report says that the Healthy Americans Act [would result in] significant administrative savings. It would eliminate the cost of brokers and agent commissions, premium collections and medical underwriting. It would standardize basic benefits; eliminate changes in coverage due to job changes or family status; eliminate the cost of income-testing under Medicaid; and automatically terminate the withholding of premiums when a worker becomes unemployed.

JHC: How would the Healthy Americans Act affect reimbursement to hospitals and physicians?

Wyden: This goes to two of the most pressing concerns in healthcare today. People who now show up at hospitals and drive this growing concern about bad debt will have private insurance cards. [Providers] want those people to show up with private insurance cards. That will be a big change. Economically, providers will be reimbursed at commercial rates rather than Medicaid rates.

JHC: The Act appears to be good news for internists and family practitioners, who, if they were designated a Medicare beneficiary’s “health home,” could receive a management fee for providing continuous medical care to that person. Can you explain that?

Wyden: The “health home” provision is very important. Note I call it a health home – not a medical home. The term “medical home” [implies] that the only person who could coordinate a patient’s care would be a physician. But “health home” implies that nurses, physician assistants and other providers would also be in a position to coordinate care.

JHC: Why is it important to coordinate care, and how would the Healthy Americans Act do so?

Wyden: The typical senior sees seven doctors in a year. What happens today is, Doctor 2 and Doctor 3 don’t know what Doctor 1 has been up to. We take two steps to address that. First, we require that when someone joins a plan, an electronic medical record – which the patient owns – would be opened. Second, with the coordination we’re talking about, whether it’s by a physician, a nurse or another skilled professional, you reduce the prospect that Doctor 3 doesn’t know what Doctor 2 is up to. I’m still flabbergasted by the number of people lugging around their medical records.