Oregon Insurance Execs Dismiss Public Option

 October 27, 2009 -- The public option debated in Congress won’t gain any traction with Oregon’s insurance executives who keep comparing the proposal to traditional Medicare, claiming it’s a broken system in need of serious repair.

That message was driven home when a group of insurance executives gathered at the Multnomah Athletic Club to discuss their ideas for reforming the system – many of which have been tossed around for several years. Their unspoken message was pretty clear – don’t blame them for higher costs – it’s our fault.

“Our most daunting task is how to engage the patient,” according to Andrew McCulloch, president of Kaiser Foundation Health Plan. “That’s the frontier all of us are struggling with. There are all kinds of information, but if we don’t have the desire and behavior on the individual to look out for their own health, we won’t really achieve the desired results.”   The public option just complicates that task because, inevitably, it will reduce physician reimbursement – up to 21.7 percent, turning access into a major hurdle, contends David Hansen, chief executive of United Healthcare of California. “If you want to jerk the system back and forth, go to a public option which is straight Medicare. That will send a ripple effect to the rest of the market.”   If Congress slashes millions of dollars from Medicare Advantage Plans over the next decade, insurers may be forced to decrease benefits, charge higher premiums to seniors – or a combination of both.    “A $200 million cut in Medicare Advantage is far reaching in terms of the overall economy of Oregon,” said Chris Ellertson, president of Health Net Health Plan of Oregon. “There’ll be more pressure on reducing reimbursement on Medicare. “   Traditional Medicare won’t solve the problem, according to Jack Friedman, CEO of Providence Health Plans. Right now more than 50 percent of the primary care physicians in Portland have closed their doors to new Medicare patients because of the low reimbursement. “So if we make significant reductions in revenue, it will further excaberate the problem.”   Here are a few of other ideas they tossed around to reduce costs:

• Why not take a hard look at the 43 mandated insurance benefits required under law, suggested Ellertson, and use the public process to “mandate things we shouldn’t be paying for.”

• How about end-of-life care for people who are in their 90s, asked Friedman. “We’ve never had that conversation because politically it’s very difficult but it’s precisely what we have to do. All we’re doing now is bankrupting our children’s future.”

• People with chronic diseases such as diabetes need better management tools, said Hansen, who cited statistics showing that 10.7 percent of the nation has diabetes, while 25 percent of people remain undiagnosed. They should be identified and diagnosed early, he said, and given a wellness coach to manage their care.

• Oregon needs a sales tax, and cannot continue to jerry right the insurance tax subsidy because it simply excaberates the problem, according to McCulloch, referring to the 1 percent premium tax which is being passed onto consumers by the health insurers. “We need the political courage to enact a 2 percent sales tax and a constitutional mandate.”

• Insurers should come up with a collaborative process to credential physicians and other providers, suggested Ken Provencher, president and CEO of PacificSource Health Plans. “Each of us is collecting the same information and there’s just an incredible amount of duplication.”

Value-based insurance option

  Let’s face reality, said Friedman. Only 12 percent of medical services are considered effective, according to Dr. Jack Wennberg, a prominent healthcare researcher from The Dartmouth Institute. “We can get moderation if we have the courage to ask people to pay a little more for things that show very little return.”   That’s the rationale behind a new value-based health plan design being offered to large employers next year by ODS, Providence, LifeWise, Regence and PacificSource.   People with chronic conditions – coronary artery disease, congestive heart failure, COPD, asthma, diabetes and depression -- will not have to pay deductibles or co-payments for medical visits, diagnostic tests or pharmaceuticals. However, under the three-tiered benefit they’ll have higher out-of-pocket expenses for services such as back surgery. On average, those health plans will reduce premiums by 10 percent. (See related story.)   Although the plans recently became available, employers have yet to budge. “People seem intrigued by it, but we don’t have a buyer yet,” Friedman added. We need to start designing benefits so people who need evidence-based healthcare get it, and folks who are getting very discretionary services pay a little more, rather than have $5,000 deductibles in front of everything. We can get moderation if we have the courage to ask people to pay a little more for things that show very little return.”    The big question is whether employers are ready for such an option, said Denise Honzel,  a consultant for the Health Leadership Task Force which developed the new health plan in collaboration with insurers, physicians and hospitals.  “This is really a different approach and we have to work on the best way to communicate this to employers.”   By January 2011, analysts should know whether this value-based design has made an impact, she said. ‘Our goal is to see whether it reduces utilization in high-cost areas.”