Category Archives: Health care

Arkansas’ other health care reform

Health care, State government

By Steve Brawner
© 2014 by Steve Brawner Communications, Inc.

Let’s play a word association game. I write “health care reform.” What comes to mind?

Probably “Obamacare,” and probably, if you live in Arkansas, not in a positive light. You might next think, “private option,” the state program that uses federal dollars under Obamacare to buy private insurance for lower-income Arkansans.

Meanwhile, there’s another important health care reform effort underway. While Obamacare and the private option are mostly about expanding health coverage, the Arkansas Payment Improvement Initiative is meant to address the biggest problems with the health care system today – costs and incentives.

The United States spends 18 percent of its gross domestic product on health care, far more than the rest of the industrialized world, and gets no better overall results. Too much of the care provided really doesn’t help the patients. These high costs and inefficient process occur largely because the system is based on what policymakers call “perverse incentives.” Medical providers are paid by the procedure, not the outcome – not for making us well and certainly not for keeping us from ever getting sick.

They don’t try to make us sick, of course, but the system’s incentives do influence their focus – how much effort they expend on preventive care, for example. As CHI – St. Vincent CEO Peter Banko told me, “Until you change how we’re being paid, you’re not going to see changes in the system.”

So Arkansas is changing the way they’re being paid.

As part of the Arkansas Payment Improvement Initiative, state agencies, insurance providers Blue Cross and Qualchoice, the Arkansas Hospital Association, and the Arkansas Medical Society collaborated to try to determine appropriate practices and acceptable ranges of costs for various “episodes of care.” They started with five situations: pregnancies; total hip/knee replacements; outpatient upper respiratory infections; congestive heart failures; and attention hyperactivity disorder.

For each of those episodes, a principal accountable provider now serves as the “quarterback,” meaning he or she is the main decision-maker responsible for coordinating all providers who are delivering care. That’s unlike a typical health care episode, where no one is in charge and patients are just handed off from provider to provider – each of whom runs their own tests for which they charge insurance companies and taxpayers. For hip and knee replacements, the quarterback is the orthopedic surgeon, who is responsible not only for the procedure but also for the 30 days prior and the 90 days afterwards.

After 12 months, the quarterbacks’ total insurance and Medicaid claims are totaled. Those whose costs are below “commendable” levels receive a bonus payment, and those whose costs are above “acceptable” levels pay back part of the excess cost.

Early results are promising. According to the Arkansas Center for Health Improvement, providers are performing more preventive tests for diabetes, HIV and other conditions in pregnant women. That makes sense, because they’ll be penalized if they don’t catch these health issues and costs rise later. Unnecessary antibiotic prescriptions for unspecified upper respiratory infections have dropped 19 percent. That’s important because antibiotics have no effect on, say, a cold virus, but the overuse of them leads to harmful effects, such as creating drug-resistant bacteria.

Again, incentives are the key. As Arkansas Surgeon General Dr. Joe Thompson, a pediatrician, explained, “It was easier for me to write the prescription for the mom whose kid had a cold than it was for me to spend the 10 minutes telling her why she really didn’t need the antibiotic.” Now that doctors face a financial penalty for prescribing a useless drug, they’re more likely to give that explanation.

One obvious concern is that providers will cut corners in order to shave costs, but that’s not been the intent. Providers still have plenty of incentives to provide effective care, including of course, their desire to serve patients. Keep in mind that more care is not necessarily better care and can be much worse for the patient. CHI – St. Vincent is participating in a similar pilot program through Medicare where the hospital and doctors are paid a set amount for joint replacement procedures and must control costs to make a profit. The result? Hospital readmissions have been reduced by two-thirds.

I asked Banko why the hospital and doctors didn’t make those changes beforehand. He replied, very forthrightly, “There was no financial incentive to.”

Who knows if all this is going to work, but it seems promising. What America needs isn’t more health care – but better and more affordable care. That will only happen when the incentives change.

Private option still splits GOP despite decrease in uninsured

Health care, Legislature

By Steve Brawner
© 2014 by Steve Brawner Communications, Inc.

Arkansas got some news last week regarding its uninsured population. Whether you think it was good news or just news depends on what you think about the “private option.”

The Gallup organization released a survey finding that the state led the nation in reducing its uninsured adult population. In 2013, 22.5 percent of the state’s adults were uninsured – the second worst rate after Texas. In 2014, only 12.4 percent were uninsured. Nearly half of all adult Arkansans who didn’t have insurance last year have it this year. Arkansas rose to 22nd, tied with New Hampshire. Texas is still last.

The increase in the number of insured Arkansans can be credited mostly to the private option, which is the state program that uses federal Medicaid dollars through Obamacare to purchase private insurance.

Under Obamacare, those residents were supposed to become Medicaid recipients, but the Supreme Court gave states the option of saying yes or no. Instead, some Arkansas Republican legislators said “yes, but” and fashioned the private option with Gov. Mike Beebe’s administration. The result is that about 200,000 Arkansans now have health insurance. According to Gallup, the top 10 states that showed the most improvement all took the federal money. Texas didn’t, and 24 percent of its residents still don’t have health insurance.

So that’s a slam-dunk case for the private option, right? Not exactly.

The private option barely passed in 2013 and barely survived in 2014. Like other state programs, it requires the support of three-fourths of the Legislature before any money can be spent on it. All the Democrats support it. Republicans are split between three groups – the yeses, the no’s, and the “heck, no’s.” There are enough no’s and heck no’s to kill it. For it to survive, the yeses must pull a few no’s to their side.

How could anyone be against something providing health insurance to 200,000 people? Cost, uncertainty, and concerns about the growth of government. The cost to the federal government is expected to be $1.59 billion in fiscal year 2015 and $2.35 billion in fiscal year 2020. Those may be federal dollars, but they come from actual taxpayers, including Arkansans. While the feds are paying for everything initially, in 2017 Arkansas will be responsible for 5 percent – a number that rises to 10 percent by 2020. Because the federal government is paying for most of it, the state supposedly gains $670 million over a decade. But that’s assuming Uncle Sam holds up his end of the bargain.

The Republican Party divide is illustrated in the state Senate. The soon-to-be top dog, incoming Senate Pro Tempore Jonathan Dismang, R-Searcy, is a private option architect. Last week, Republicans nominated Sen. Jim Hendren, R-Gravette, as their Senate majority leader, their number two. He’s part of the “no caucus.” Their new number three, Sen. Jimmy Hickey, R-Texarkana, the majority whip, is a private option supporter.

Hendren told me that while he’s glad that 200,000 Arkansans now have insurance, he remains opposed. He’s a chemical engineer who deals with numbers, and to him, the numbers just don’t add up. However, he said the facts have changed since he first started voting no in 2013.

“We have this program, and I’m one who believes you’ve got to be fair with people,” he said. “So anything that’s done, we have to take into account the fact that we’ve got a lot of people in Arkansas who are playing by the rules and who are working hard, and to just yank that away from them without any consideration is not something that I think is the right thing to do. So we’re going to have to look at how we can find some middle ground, or find some sort of process that gets us to a program that’s more sustainable.”

The private option debate dominated the 2013 and 2014 sessions, which Hendren doesn’t want to repeat this year. He wants Republicans to fashion a compromise or simply vote on the issue and move on. He said his goal will be to “not let that define us as a caucus.”

He wants there to be one Senate Republican caucus. Currently, on this issue, there are three: the yeses, the no’s, and the heck no’s.

Note: Here’s the Gallup survey.

Paying for wants, not for needs

Debt and deficits, Education, Health care

By Steve Brawner
© 2014 by Steve Brawner Communications

My wife, Melissa, matter-of-factly made this statement the other day: We have been trained to expect that our needs should be cheap or free, and our wants can be expensive.

The context was a discussion about the costs of health care, an obvious need. Americans expect insurance or the government to shoulder most of the cost of health care, employers to pay for most of the costs of insurance, and out-of-pocket expenses to be minimal. We’re outraged if a necessary minor procedure results in a bill of a few thousand dollars, but many of us will pay that same amount for vehicle accessories or for a larger house without making too much of a fuss.

Education is a need, and it’s free through the 12th grade. Teachers, a necessary profession, are expected to work pretty cheap, as are police officers and firefighters. Those aren’t luxuries, after all. Winning sports teams, however, are a want, so coaches and players are paid high salaries.

Electricity and clean water – they’re needs, and they’re cheap, considering their importance and what it takes to provide them to us. Meanwhile, many people pay as much for cable TV as those necessary utilities combined.

Gasoline is a need, too, and when the price first started rising towards $4, it sparked national outrage. How could something so necessary be so expensive? Many felt as if they were being taken advantage of. But many people will pay $4 for a soda or a beer at the ballpark or a cup of gourmet coffee.

There’s a downside when we expect our needs to be provided cheap or free: What happens when the costs rise – as with health care? Health care costs are now an unsustainable 18 percent of our national economy. One way to control those costs is to require individual consumers to pay more at the point of service so we’ll shop around for better prices or refuse unnecessary care. But that would require us to pay more for a need, which makes us uneasy.

Another challenge occurs when wants become needs, such as a college education. In the past, college was a want – an important want, but not an absolutely necessary one, which meant it was OK that it was expensive. Today a high school education is no longer enough for most professions. Most jobs of the future will require at least some post-high school education.

So what do we do now that college is a need? One solution has been to subsidize it with a want – the lottery. Who doesn’t want to win the lottery, even though it’s an inefficient way of funding scholarships that often preys on the poor or the misguided?

There are good reasons to subsidize certain needs. A free public education through the 12th grade gives all citizens, rich and poor, the chance to achieve foundational workforce and life skills. Health insurance, public and private, protects us from sudden, undeserved financial catastrophe and frees us to pursue our goals and callings.

But needs must be paid for, and ultimately, paid for by us. That 18 percent of the economy dedicated to health care comes from the taxes we pay and from the insurance fees that come from our pocketbooks and our employers’ bottom lines. If our insurance benefits were not so expensive, our salaries would be higher.

So we really do pay for needs. We just want to feel like we’re not. I’m not saying to stop all the paying, but we do need to stop all the pretending.

Don’t write private option’s obituary

Health care, Legislature, State government

By Steve Brawner
© 2014 by Steve Brawner Communications

In 1837, during a debate about a bill regarding paying bounties for wolf scalps, Arkansas Speaker of the House John Wilson left his chair and stabbed to death Rep. Joseph J. Anthony with a bowie knife. He didn’t like something Wilson had said about him.

Please keep that story in mind as Arkansas continues to debate the so-called private option. It will be one of the most contentious debates in memory, but no one will be stabbed on the House floor.

The debate over the private option, however, will dominate next year’s legislative session, just as it’s the most important issue in this year’s campaign.

As you may know, the private option uses Obamacare dollars to purchase insurance for more than 172,000 low-income Arkansans. Many Republican-leaning states have turned down that money, which was intended to enroll people in Medicaid, a government program. In Arkansas, Republican lawmakers and Gov. Mike Beebe’s administration instead worked out a deal where those dollars are used to buy private insurance.

Legislators are divided into three camps. Republican opponents say it’s Obamacare, and that it adds to the national debt, and that soon Arkansas will pay more and more for a program it can’t afford. Sen. Bryan King, R-Berryville, described it in an interview as “running up a credit card.” Republican supporters say it’s making lemonade out of lemons, that Arkansas and its struggling hospitals would be foolish to turn down the money, and that the private option’s reforms are being considered by other states and might make the entire health care system better. Democrats are just glad to get those dollars however they can.

The money must be appropriated by a 75 percent majority of both houses of the Legislature every year. This year, it passed with zero votes to spare in the Senate and one in the House. Two of the yes votes in the Senate have already been replaced by candidates who campaigned saying they would vote no. In one case, the losing candidate was one of the private option’s architects, Rep. John Burris, R-Harrison.

So it’s time to write the private option’s obituary, right? Well, no. Regardless of what happens in the next election, considerably more legislators will be for it than against it. Asked if House Democrats would consider shutting down the entire Medicaid budget rather than let the private option die, Rep. Greg Leding, D-Fayetteville, the minority leader, told me, “I wouldn’t want to commit it to that at this point, but I don’t think anything is off the table, including that.” Among the two major party candidates for governor. Democrat Mike Ross has made it clear he supports it. Republican Asa Hutchinson has not said he’s against it, which means he isn’t.

Even among private option opponents, there are “no” and “heck, no” factions. According to Sen. David Sanders, R-Little Rock, one of the private option’s architects, a number of “no votes” are waiting to have their questions answered, including how many carriers are offering insurance and what the rates are.

Regardless of what they think about the private option in principle, a lot of legislators will have a tough time simply taking insurance away from 172,000 people. King, a consistent opponent, told me that, while he wouldn’t rule it out, “Realistically, I don’t see how a defund, total defund could happen.” Instead of repealing the private option, the Legislature may reform it – maybe significantly. As Sanders described it, “With regard to the policy, we’re not pouring concrete. We’re modeling clay, and we’re shaping the policy as we go.”

So maybe the private option survives close to the way it is, or maybe it’s changed a little, or maybe it’s changed a lot. But simply grabbing a knife and stabbing it to death? That doesn’t happen very often at the Capitol – at least not since 1837.