It's Worth Noting

You're right Mr. President, the election is over.

Of those gathered at the Blair House for Thursday’s healthcare summit, President Obama needed to be reminded more than any other that the election is over.  Obama has assumed since his victory that the same support he received on the campaign trail would carry over into his Presidency.  Obama forgot, however, that being a candidate for President and being President are not one in the same.  A candidate only needs to appeal to enough to win the majority of electoral college votes.  A President must appeal to the shifting will of the people as economic and political realities dictate.  Considering how Obama has dogmatically pursued his healthcare agenda in the face of the people’s rising opposition, it’s evident that Obama has failed to understand the important distinction between campaigning and governing.

Campaigning is easy compared to governing.  During a campaign, people can rally behind lofty ideas unhindered by political and economic constraints.  It’s a solutions utopia.  From how to handle North Korea, Iran and Afghanistan to closing Guantanamo and passing sweeping healthcare reform, Obama had the freedom to espouse idealistic solutions that differentiated himself from the competitors and lead to victory.  All of this happened during an election cycle that lacked dynamic political and economic constraints that are a reality today.  Afghanistan has proven more challenging than Obama thought.  Iran and North Korea are not as easy to deal with through diplomatic means as Obama assumed.  The promise of more and better healthcare for less money isn’t as appealing or convincing since Americans have had to grapple with the details.  Average Americans are looking for work and trying to avoid having their homes foreclosed, but our President is acting like it’s still 2008 and he’s at a rally energizing the base by saying the impossible can be done if we’re just willing to suspend belief and trust our elected representatives to do what’s best for us – like they always do.

When a President takes office, it’s imperative that he shift from campaigning to governing.  He must lead the whole nation, supporters and opposition alike.  He must adjust to the political and economic realities of the day, not bask in the utopia assumed during the election cycle.   Despite the quip to Senator McCain, Obama is the one who needs to acknowledge that the campaign is over and that the task before him is to govern.  The economy presents genuine constraints.  Americans are out of work, their wealth has been diminished and our national debts continue to mount.  Obama presses on, recommending a budget with a record deficit, new taxes and expansion of government programs.  The evolving political climate presents constraints too, which Obama must react to, not bulldoze through.  Average Americans are by every objective measure against sweeping healthcare reform.  Obama presses on.  Why?  The only conclusion one can draw is that Obama is committed to pursuing an agenda regardless of whether it’s still politically or economically feasible or desirable.  This is what you do when you’re trying to win, not trying to govern.

The country is in desperate need of a President who lives in reality, who is in touch with the lives and will of average Americans.  We do not need a President who assumes we’re ignorant if we disagree with him.  We do not need a President who is paternalistic, but one who is respectful.   Mr. President, the campaign debates, speeches and rallies are behind us.  This is 2010, not 2008, and the election is over.  Some of your ideas, which resonated with many on the campaign trail, are not tenable today.  When will you recognize this, adjust and truly govern?

The confusion over pre-existing conditions

The Speaker took issue this week with how Republicans are addressing the issue of pre-existing conditions. I'd like to take issue with how she's distorting this issue to create confusion instead of clarity.

In most states, group plans only restrict care for pre-existing conditions if there's been a gap in coverage for a month or more. In these situations, treatment for pre-existing conditions is usually restricted for just a year.

Individual plans are another matter though. With individually underwritten plans, carriers can frequently just deny coverage if they don't like your pre-existing conditions. If they don't deny you, they can simply make it too expensive or force you to sign waivers. In most states, however, once you have individual coverage you can't get dropped. So, if you obtain and maintain coverage before conditions develop, you don't have an issue after the fact (aside from the issue group and individual policies have - premium inflation).

So, individual policies present some problems, which I think a freed up market can resolve. For group plans and for those who maintain continuity of coverage, the issue is minor. Let's stop creating confusion and fear by suggesting that the problem is more widespread than it is. It's sensational when you tell the story of a person it impacts, but in perspective, it's not the biggest problem we have.

Our biggest problem is that we've not allowed the healthcare market to operate freely to control costs and improve value/quality. If the government promotes competition and sensible regulations, insures can be incentivized to compete even for those with pre-existing conditions. Insurance is risk shifting, so the known risks matter, but it's an opportunity for an issuer if the competitive and regulatory environment are properly aligned.
Levi

Sent from blackberry

The real conflict behind health care reform

Is the provision of health care the responsibility of the government?  How are liberty and freedom are impacted by your answer?  This is where I believe the real conflict in the health care reform debate lies, but the President has said that using health care reform as a proxy for the limited v. expansive government debate is improper at this critical juncture.  I couldn't disagree more and believe he's missing or dismissing the reality that a large portion of Americans believe that limiting government is necessary to retain our freedom and liberty and, in this case, to actually improving health care.

A couple of generalizations to get us started and probably get me in trouble with a few people:

• Liberals and democrats typically believe that one of the primary purposes of a government is to provide a minimum standard of living, a floor, which no one would live below.  If the government needs to spend (i.e. tax) more or expand to this end, it's worth it.
• Conservatives and republicans typically believe that the primary purposes of a government are to protect life, property property and regulate free market imperfections.

So why are these philosophies on purposes of government important to the health care debate and not just red herrings as the President would have us believe?

First, while I'm strongly in favor of making sure those less fortunate have food, shelter, education and health care, I believe those needs can and should be met by caring and generous private citizens and charities, not the government.  I believe those who disagree have good intentions, but their faith in humanity is tragically low.  I believe Americans would rise to the challenge to care for the less fortunate if given the clear responsibility and financial resources to do so.  When the government absconds the role and raises taxes to fund its ambitions, society suffers.  Why?  The public increasingly looks to the government as the solution to its societal problems rather than themselves or their family, friends and community.

Second, while capitalism is subject to greed and abuse, both can be held in check without the government taking over an industry or becoming a competitor to private enterprises.  If greed is of concern, increase competition.  Government penalties or incentives cannot compare to the check against greed created when a business has to respond to competitors who are working to sell more for less to gain market share.  What happens though if a company choses to take advantage of market imperfections, e.g. lack of transparency for consumers, in response to increased competition?  This is a situation where, if left unresolved by the market, the government can and should constructively step-in to assist and keep abuse in check.  When the government fails to restrain itself to the roles of fostering competition and policing when needed, the market suffers.  Distortions develop in response to ill conceived government intervention and the cycle of corrective, i.e. expanding, government action begins.

I agree with many others that health care reform is needed, to control costs, increase access and improve quality.  I also believe, however, that a primary reason reform is needed is because the government has already intervened too much and has lost focus on its proper role.  Today, individuals do not take responsibility for their health, Medicare is the pricing barometer and insurers have little concern for intrastate competition.  Individuals, providers and insurers are simply reacting rationally to incentives or penalties put in place by the government.  Those in the government have had good intentions, but like too many market interventions over the course of our short history, the unintended consequences cause more problems than they solve and spark a never ending cycle of correction action.  Let's stop the cycle.  Let's demand that the government refocus its actions on what will increase freedom and liberty, increase individual and collective responsibility and incentivize enterprising companies and individuals to lower costs, expand care and improve quality.  It can be done and if pursued, will help draw us back to what makes us American.

Healthcare Reform Links

If you're interested in learning more about healthcare reform, particulalry free market oriented alternatives, the sites below should be helpful:

http://www.commonwealthfund.org/

http://www.conservativesforpatientsrights.com/

http://fixhealthcarepolicy.com/

http://www.galen.org/

http://healthcare.cato.org/

http://www.healthcaresharing.org/

http://healthreform.kff.org/

http://www.healthtransformation.net/

http://www.heartland.org/suites/health%20care/

http://www.hschange.com/

http://www.randcompare.org/current/

http://www.rwjf.org/healthreform/

http://www.voteforbusiness.com/issue.jsf?issueId=2381

What I wish we were talking about in the healthcare reform debates

My company, like many others, will be directly impacted by the outcome of the healthcare reform debate. I am deeply concerned that conservatives are squandering an opportunity to offer effective leadership on this issue. At this critical juncture, will we demand that the government return to its proper function in the marketplace, correcting abuses and imperfections, or will we allow the government to encroach on our self determination and free markets?

I believe that Americans, not representatives or bureaucrats , are best suited to solve the difficult problems we face if given a fair opportunity to do so. We'll have to wrestle with some difficult economic realities, but I believe we can succeed if the government truly gets out of our way. There are seven key talking points that I believe conservatives should focus on to help inform the public, develop a proposal and prevail in this debate.

1. Rationing - No resource is unlimited, so no resource, including healthcare, can be consumed without limitation. Therefore, under any system, healthcare is and will be rationed. The choice is between natural rationing, which is a result of price/demand, or artificial rationing, which is imposed by the government.  I believe the majority of Americans can understand the concept of limited resources, even for healthcare, which means not everyone will be able to enjoy the healthcare they could take advantage or even need because they or society cannot afford it.  We need to be honest with ourselves and concede that this economic reality will be the determinative factor with regard to how much healthcare we individually, or as a society, are able to consume. 
2. Price control - Over the past few decades, Medicare has become the dominant pricing force in healthcare.  When you look behind the curtain of healthcare pricing, nearly all pricing is based on or substantially influenced by Medicare reimbursement rates.  Due to its overwhelming influence as a market participant, the government has in essence set the price for healthcare services.  Imagine if the government decided how much a significant portion of the population paid for gas all in the name of trying to make gas cheaper or more accessible.  In time, the tail would wag the dog and the government would be determining the price of gas each day.  Price distortions would develop and the incentive for competition would deteriorate since the market is not free to respond to normal price/demand adjustments.  We could abolish Medicare/Medicaid as we know it and thereby remove price controls from the market.  This will leave us with some who cannot afford even minimal healthcare, which is where vouchers come in.
3. Vouchers - A credible argument can be made that there is a broad economic and moral good to be realized for supporting a healthy society.  Similar to the argument for grade school education, we can get the most out of our society if it is not only minimally educated, but minimally healthy.  The reality is that there are some who will be unable to pay for healthcare on their own.  If Medicare/Medicaid is abolished per my recommendation above, what should be done?  To ignore this problem is to lose the debate.  I suggest that CMS, which currently runs Medicare/Medicaid, be converted into an agency that does needs based evaluations for vouchers to help needy individuals purchase basic private insurance (HDHP w/ wellness benefits).  We as a society cannot afford to put everyone through college and we cannot afford to provide everyone with top tier healthcare.  We can afford to assist with basic healthcare and should for those who are truly in need (essentially, those who are already negative tax payors).  Otherwise, we'll exacerbate the free rider and uncompensated care problem discussed further below.
4. Interstate Competition - I'm a supporter of state sovereignty, but I believe there is much to be gained by allowing insurers and providers to compete freely across state lines.  I would like to see the federal government facilitate this cooperation by coordinating with the states to produce and adopt a uniform health insurance and practice of medicine code.  This would keep control with the states, but would allow for more competition, which I think would reduce healthcare costs.  This would be similar to how the states cooperate on the uniform commercial code, which is adopted by most states with few changes, as opposed to being dictated by the federal government.
5. Tax Deductions - Create a level playing field by extending tax deductions for health insurance premiums to individuals.  Unions won't like this because securing rich healthcare benefits is their bread and butter, but this is another economic distortion created by the government through the tax code.  Governments should focus their intervention in the economy on policing abuses and address abnormalities, not creating them.
6. Cooperative Plans - Large employers create self insured healthcare plans whereby they cover risk up to a certain point with cash on hand and then have a reinsurer for extraordinary claims.  This is attractive for a number of reasons, but one of the key benefits is that to the extent the employer is able to reduce healthcare expenditures, the savings are realized by the employer and can be passed on to their employees if desired (via rebate, premium reductions, increased benefits, etc.).  Unfortunately, there is no model that provides the same economic incentives for individuals or small employers.  Any gains from reduced healthcare expenditures go straight to the insurer's bottom line, but the insurer didn't create that gain - the insureds did.  Since the savings are not passed on, there is little to no economic incentive to get healthier and consume less.  There is an opportunity here for someone to create a cooperative alternative that passes on savings to those who generate the savings.  If individuals and small employers could get a rebate, premium reduction or increased benefits because they got healthier and consumer less, I believe people would respond.  If I am correct, these new cooperative plans would begin to take over market share and force other insurers to do the same.  There's still room for a profit, but it would only come from the insurer running a better company.
7. Free Riders - There will always be free riders in healthcare, even if we went down the road of an individual mandate, so this issue is a red herring.  In a civil society, to say nothing of the requirements of EMTALA, we would not tolerate letting someone bleed out at the hospital door because they cannot pay.  If we concede this point, then we will have free riders so what should be done?  Providers will need to account for some uncompensated care in their pricing, but if the market is setup to work better per the suggestions above, the amount of uncompensated care can be minimized.  In addition, I'd recommend that we give providers permission to aggressively pursue recovery of uncompensated care so as to severely penalize free riders.  So, the ER will take you even if you cannot pay, but it will cost you dearly as they pursue the debt as would any other creditor.  Society needs to accept and support this to mitigate the free rider problem. 

Thoughts or comments?

Treating people like customers, instead of mere recipients of your services: Part 3 of 3

Part 3 of 3 in a series on lessons from healthcare providers...

3. One of the biggest problems healthcare providers have today is justifying their pricing policies, which differentiate wildly depending on who's paying. I expect to be resolving bills from the delivery into early 2010 (e.g. I just finished resolving bills from a surgery from the same provider last March). The bill is candidly indecipherable, even to someone who knows the provider and the industry well. The problem is that the audience for the bills is not patients. The audience is insurance companies and government bureaucracies that have built massive claims processing systems. This is all well and good if providers could translate claim information into bills that patients (remember, they are the customers) could understand and pay with confidence. Instead, it's like getting a bill from Jiffy Lube that lists forty-five parts and service code numbers used to change your oil, with cryptic debits and credits, and then a tally line that is about twice as much as you would have expected. Would you pay the bill? No. Simply as that. Health providers expect otherwise, explaining that's is just too complicated to understand. Too complicated to post prices and too complicated to explain the price even after they know what it is.

How's your pricing? Does it make sense to you and everyone else involved in administering your company or does it make sense to your customers? If it requires more than ten seconds of explanation, you have room for improvement. Redo your pricing schedule by putting yourself in your customers shoes. What would make sense to them? What payment terms would be fair? Would they prefer more or less detail? Do product and services code need to be translated, at least for invoices and statements, into plain english? Do your product or service groupings make sense, whether the lack or proliferation thereof? If you offer discounting, is it consistent and are the qualifying parameters clear? If you rethink your pricing, invoices and statements from the customer's perspective, I bet you'll see your disputes go down and payments roll in faster.

Treating people like customers, instead of mere recipients of your services: Part 2 of 3

Part 2 of 3 in a series on lessons from healthcare providers...

2. After delivering our daughter, the next day our kind nurse suggested that we take advantage of the nursery so that we could get some sleep. Having had enough at this point, I replied that it wasn't our daughter who was keeping us up - it was her and the rest of the staff. She awkwardly chuckled, dismissing my comment due to my baggy eyes I'm sure. I didn't back down. I told her that I was serious, that this was the problem and asked if there was anyway that she and the others could leave us alone for as long a period as possible. She said she'd try. Seven minutes later, a solicitor from the hospital walked in and offered to take photos like we were visiting Disney World and Mickey just stopped by. While some things needed to be done on a strict schedule, most did not and the staff lacked any coordination to keep interruptions to a minimum.

Do you interrupt your customers at the right moment? How much better would it be if retail store sales staff were everyone and easily identifiable, allowing you to initiate the conversation when you either had a question or look befudled. Instead, we all try to reply politely when asked, "Can I help you," with nothing more than a foot in the door. Reevaluate your processes and procedures so you spend less time interrupting and more time being invited to participate in conversations when the customer is communicating that they want something from you. Checking in is fine, but get permission, coordinating the timing, frequency and duration with your staff so customers don't feel like they're being bombarded, but are being cared for by a customer conscientious team.

Part 3 of 3 later this week...

Treating people like customers, instead of mere recipients of your services: Part 1 of 3

My wife and I returned home from the hospital yesterday with our new daughter! The Lord has blessed us tremendously. Both are healthy and are doing well. A few business related thoughts after returning from the hospital:

I run a company that negotiates medical bills for self-pay patients. We’ve been at it for thirteen years and one thing hasn’t changed much: hospitals, and most other medical care providers, treat patients as recipients of services rather than customers. The same can be said of most government bureaucracies. Both forget that the person receiving the service is also paying for the services. I think this is because the service and payment transactions are separated for the most part For healthcare, most of the payment is made prior to service delivery via insurance premiums. For government services, most of the payment is made prior to service delivery via taxes. In both cases, any payment at time of service is relatively small and the natural accountability and incentive link is broken. While it's easy to trash healthcare providers and government bureaucracies for poor customer service, my experience last weekend offers some lessons for the rest of us.

1. Despite pre-registering with the hospital, when we went in for the delivery we had no less than ten more forms to complete while my wife was dealing with the early stages of labor. All of this could have been done prior to admission. They could have handed us a print out to review and confirm whether any information or decision previously submitted had changed. Instead, they asked us to sign and complete documents without any opportunity for reflection or discussion. The moment for thoughtful decision making had passed and, whether intentional or unintentional, this is when the provider thought it appropriate to bombard us with more questions.

Consider for a moment what's it's like to be a customer of your business. Do you ask for information in a manner and at a time most convenient for the customer? Can you reduce 10 forms to 1? Can you ask for something once, verifying if needed, instead of asking for it on multiple occasions? Do whatever is most convenient for your customer, not for you.

Part 2 of 3 later this week...