Bill Owens: Health Care - Good Ideas And Silly Ideas

The Republican debate on Thursday, February 25, had Mr. Trump, and to a lesser extent Senators Rubio and Cruz, presenting what only can be characterized as a silly idea for health care reform.  In contrast, a recent Wall Street Journal article entitled, “Companies Form New Alliance to Target Health-Care Costs” presented a sensible proposal. 

Let’s discuss the silly idea first.  Mr. Trump spent much time waving his hands and drawing what appeared to be lines in the air (I did notice his hair didn’t move), which purportedly supported his idea that there would be great competition, if not magnificent competition, if only companies could sell health care insurance across state lines.  This has been a staple of Republican attacks against Obamacare for years. 

Currently, every state in the United States requires some level of scrutiny before allowing any insurance company (health care, property and casualty, life insurance, etc.) to sell insurance within its borders.  States want to make sure that the companies selling insurance to their citizens have, in fact, the economic resources and are managed appropriately to be in a position to pay claims submitted by their citizens. 

Now consider the Republican suggestion to allow companies to sell insurance across state lines. Is this an attack by Mr. Trump, Mr. Rubio and Mr. Cruz, a challenge to states’ rights, or a use of federal preemption to create an “insurance czar” to regulate insurance companies? Or do they propose to do away with financial regulations in their entirety and simply allow fraud to be perpetrated against citizens throughout the United States?  This clearly makes no sense, and is at best irresponsible. Can you hear state governments howling at any of those outcomes? What about insurance companies who do play by the rules, and make an honest attempt to ensure that they have adequate assets with which to pay claims?  They might be upset as well. 

The only person on the stage with an actual plan was Governor Kasich. He presented something rational that might work when incorporated into Obamacare.  There followed a discussion about the mandate and preexisting conditions.  The totality of that conversation left my head spinning, as I couldn’t follow the logic of any of the candidates, other than Governor Kasich. 

Now let’s move on to the good idea. The Wall Street Journal reported, as noted above, that a number of large companies (among them Macy’s, American Express, and Verizon) intend to form an alliance that will utilize their data and market power in an attempt to hold down the cost of health care. 

Many of the companies mentioned essentially act as self-insurers and hire insurance companies to process claims flowing out of the plans that these companies have created and funded.  In many instances, the plans are the result of, or at least subject to, collective bargaining agreements, the negotiations of which most often focus on the amount of premiums and deductibles paid by employees. 

This is clearly an interesting and market-based approach which Republicans could look at as a vehicle for improving Obamacare, to ensure that these groups can use their data to evaluate the types of claims they are paying, the treatment and medication costs, and the outcomes (quality). 

If we look at what is going on in New York State as part of the Delivery System Reform Incentive Payment (DSRIP) program, the creation of the Prospective Payment System (PPS) for Medicaid and medical homes for Medicare, the same idea is essentially at play.  These programs focus on the gathering of data to determine what steps providers can take to reduce costs and improve outcome for all of us.  This makes great sense to me, and I hope it works (particularly as a DSRIP Panel member).

American Express, Verizon and Macy’s should take a look at the New York DSRIP model and determine what aspects of it could be incorporated into their program, as much of their information, data and analytical tools are effectively online and can be reviewed rather easily. Even if the specific program isn’t available, the concepts are clearly well spelled out. 

If I were still a member of Congress and companies came to me with this type of proposal, I would readily support an analysis to determine what legislation was needed, if any, to allow a pilot program to move forward to determine whether or not this could, in fact, bend the cost curve.  

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