Consumer Power Report #247

Consumer Power Report #247
November 12, 2010

Greg Scandlen

Greg Scandlen is a senior fellow of The Heartland Institute and founder and director of... (read full bio)

I’ve gotten a lot of requests from people looking for a quick summary of what Obamacare will do to employers, to taxpayers, to consumers, to physicians, and so on. Unfortunately, I usually have to send them either lengthy research pieces or opinion pieces that focus on just one or two topics.

But now I have the perfect response to these requests. It is in the form of a report by Lisa Cummings, “The Effects of ObamaCare,” that was posted on John Mauldin’s Investor Insight blog. Mr. Mauldin describes Ms. Cummings as “an expert global benefits consultant with an emphasis on advising Fortune 500 companies of best practices regarding plan design and legal compliance. She is an ERISA attorney by training and has a rich experience with health and retirement plans in the US and around the world.” She was also a senior executive at Wal-Mart.

Please check it out. It is straightforward and comprehensive and includes just a few graphs and illustrations. But the listing of endless taxes, regulations, and mandates, and the likely response by employers, workers, and providers is devastating for the health care system and the entire economy. I have never seen any better description.

SOURCE: Investors Insight


IN THIS ISSUE:


CONSEQUENCES

Brookings’ Henry Aaron has a piece in the New England Journal of Medicine that suggests with the new Republican House, Obamacare could become “zombie legislation,” that is, a law that is on the books but impossible to implement so is universally ignored. He notes, “successful implementation poses remarkable challenges and will require adequate funding, enormous ingenuity, and goodwill from federal and state officials, as well as cooperation from private insurers, businesses, and private citizens.”

He takes Republican threats to defund implementation seriously and says the CBO estimates implementation will require between $5 billion and $10 billion in appropriations from 2010 to 2019, and the states also will have very large implementation costs.

SOURCE: New England Journal

John Goodman argues that such delayed implementation could be very good for Republicans politically. The health reform bill drove much of the vote in this past election and the threat of looming mandates and penalties will continue to benefit Republicans in 2012. He likens it to the ongoing delay of the SGR cuts in physician payment under Medicare. Obamacare envisions provider payment cuts even more drastic than the SGR cuts, to the point of being below Medicaid payments. He also notes that, even if all the promises of Obamacare were realized, the losers far outnumber the winners and are better organized and more aware of the stakes.

SOURCE: National Review

And in American Spectator, Bob Goldberg drills down even further into these implementation delays. He says the Republicans should begin with a replacement bill, which will be vetoed by the president. Having been rejected in offering positive changes, they will then be free to eliminate “any program, agency or grant that rewards or leads to the replacement of the collective intelligence of the American people with the decisions of self-anointed elite.” He then has an impressive list of seven targets for defunding and six items that should be restored or expanded. His recommendations are not the end of the story but they are a very good place to start.

SOURCE: American Spectator


CIGNA

If the Republicans would like to know what works in health care, they could do no better than look at Cigna’s latest report on its Choice Fund experience, culled from 5 years of real-world experience and 897,000 plan members, about half in “traditional” coverage and the rest in consumer-driven plans.

All of the metrics show that CD Health is working beyond anyone’s expectations.

In cost control, the CD Health plans save 15 percent in the first year, and it grows over time – 18 percent in year two, 21 percent in year three, 24 percent in year four, and 26 percent in year five. All this while individual out-of-pocket exposure is about the same (17 percent) in both plans.

In improving quality, there is 8 percent to 10 percent higher use of preventive services in the CD Health plan, and CDH enrollees are 9 percent more likely to get evidence-based treatment in the first year and 14 percent more likely in the second year of enrollment. They are five times more likely to complete a health risk assessment and 19 percent more likely to work with a health advocate. CDH enrollees are 40 percent more likely to use on-line cost and quality tools when making decisions.

There is a 13 percent decrease in the use of emergency rooms, and CDH enrollees are 9 percent more likely to switch to generic drugs. They lower prescription costs by 14 percent.

For chronic disease management, CDH enrollees are 21 percent more likely to participate in a disease management program and reduce their costs by 21 percent for joint disease, 8 percent for diabetes, and 7 percent for hypertension.

Finally, in a change from previous reports, CDH enrollees are slightly more satisfied with their plans than people in traditional approaches (83 percent versus 82 percent).

This is very big and important research that will be completely ignored by the social planners because it doesn’t suit their agenda.

SOURCE: Cigna

On the other hand, Cigna’s CEO David Cordani has cautioned against trying to repeal Obamacare. Why? Because “our country expended over a year of sweat equity around the formation of it.” True enough, but if it is a lousy law the time was not well-spent. Perhaps there is another reason?

Well, yes, yes there is. Reuters reports that Mr. Cordani said his company is “knee deep” in the process of implementation. Sorry, Dave, that is known as throwing good money after bad, something that is all too common in Las Vegas. But smart people know when to cut their losses.

SOURCE: Reuters


HEALTH INFORMATION TECHNOLOGY

We haven’t looked at HIT in a while. As you know the stimulus bill appropriated some $20 billion to roll out a national HIT system that would reward clinicians for “meaningful use” of Washington-dictated information systems. When there is that kind of money on the table all restraint is thrown out the window in the rush to grab it. The main caution has been around patient privacy. That is important, of course, but far more important are the fundamental premises driving this lust for cash.

Very few people will bother to read a new paper by four specialists in health informatics that cautions against hubris as we go forward. The work, “Health Information Technology: Fallacies and Sober Realities,” was published in the Journal of the American Medical Informatics Association. It is dense reading and includes 113 footnotes, but more’s the pity because it highlights some fundamental fallacies of the current frenzy to wire up the whole health care system.

Here are just a few of the thoughts presented:

  • Far from being “risk free,” HIT when deployed in high-pressure environments with critically ill patients poses significant risks. The authors note that it took over a hundred years to fully understand and mitigate the risks involved in building such systems as bridges, skyscrapers, and cars. HIT systems are likely to not only fail, but to fail catastrophically in part because they are not well-understood by the people using them. Very little is being done to guard against these problems.
  • While the FDA and others do exhaustive testing on medical devices and drugs, HIT systems are rarely subject to similar scrutiny.
  • It is supposed that humans will be able to catch any problems that crop up in HIT systems, but in fact humans are changed by the presence of such a system. Their judgment may be impaired by the demands of the system. Further, one of the main reasons for adopting HIT is to override human error, so it is contradictory to rely on these fallible humans to correct the technology.

I won’t belabor this. The authors examine 12 similar “fallacies.” As I say, it is a tough read and we need people who can express it in plain English. Let’s just say that we are in the middle of building a catastrophe that will make the BP oil spill look puny.

SOURCE: Journal of the American Medical Informatics Association

Greg Scandlen

Greg Scandlen is a senior fellow of The Heartland Institute and founder and director of... (read full bio)