Olympia Business Watch

California Dreaming

This entry comes from Grace-Marie Turner, president of the Galen Institute, Washington, D.C.  The Association of Washington Business (AWB) has had Grace-Marie speak about health care to our members on numerous occasions and most recently she was a presenter at the Washington Policy Center's health care forum in Seattle of which AWB was a co-sponsor.

In today's "Wake-Up Calls" which is Turner's web publication on health care policy, she talks about California's attempt at a single-payer Canadian-style health care system. 

California State Senator Sheila Kuehl (D-Los Angeles), chair of the health care committee, is pressing legislation to enact a health plan in which the state collects taxes to pay the health care bills for all Californians.  The state would then pay doctors, hospitals and other providers directly--hence the name "Single-Payer."  A better name would be "government run health care."

Gov. Arnold Schwarzenegger vetoed the plan earlier this year.

Sen Kuehl's single-payer, government-run health care, would be funded by a new 12% payroll tax and similar levies assessed on small businesses.  Even after collecting $167 billion to pay for the program, the state would be faced with $210 billion in health care bills the first year alone (2010).  To close the shortfall, the payroll tax would climb to 16% and projections are the rate would increase even more in subsequent years.   

Hopefully, our lawmakers and elected officials are doing the math and figuring out how much the Wisconsin and Massachusetts plans, which have a heavy role of government, cost before moving forward.  Then hopefully, they are looking at the benefits to people of their proposals. 

We will all be served well if they "Do the Math!" and build upon what is working and fix what is not.

Don C. Brunell, President (DonB@awb.org)

NGA Best Practices Recognition for Georgia Health Savings Accounts

Earlier we blogged on Georgia's consumer-driven health care reform. Today I see that the National Governors Association spotlighted the policy at the NGA Center for Best Practices.

Georgia Governor Sonny Perdue has signed two bills that promote high deductible health plans (HDHPs) paired with health savings accounts (HSAs). By linking HDHPs, which can be expensive for consumers, with HSAs, which allow consumers to set aside funds for future qualified medical health expenses on a tax-free basis, the legislation seeks to make HDHPs more affordable and more available in the private health insurance marketplace.

Critics may snark that such measures amount to small ball. Maybe, but I'd sure like to see more of it. All of the attempted grand slams seem to result in nothing but long outs and strikeouts.

Florida Passes No Frills Basic Health Coverage Free of Mandates

Florida's legislature just approved a "no frills" health care plan free of the state's 50 mandates which is estimated to cost people $150 a month.  The plan which will be introduced next year provides for primary care and catastrophic coverage for major illnesses. In Washington, similar legislation was tubed for various reasons.

Florida has 21 percent of its population uninsured--some 3.8 million people.  According to Gov. Charlie Crist (R) the reason is health insurance is too expensive.

Crist says government rules are imposed without regard to how much they cost and who will bear the burden.  In practice, Crist believes, the costs are disproportionately carried by lower-and-middle income workers who already have more limited insurance coverage as part of their compensation.  Most small businesses who struggle to provide health insurance coverage for the people they employ experience the very same problem as they deal with annual insurance premium increases.

"When prices rise because of mandates, the less affluent are often forced to make an all-or-nothing choice between Cadillac coverage, which involved just about everything or no insurance at all."

Thirteen states currently offer bare-bones policies.  According to the Wall Street Journal editorial today that while these plans are not a cure-all, they're a movement in the right direction.

Don C. Brunell, President (DonB@awb.org)

2008 AWB Session Review and Voting Record

We've just posted the 2008 Legislative Review and Voting Record to our website. AWB members will soon receive them with the May/June issue of Washington Business, which is in the mail now. Take a minute to review how your legislators voted on business issues in 2007 and 2008.

In the Senate, Republican Senators Jim Honeyford and Linda Parlette scored 100 percent in 2008.

Top ranking House members with 2008 scores of 96 percent were Republican Representatives Larry Crouse, Joel Kretz and Lynn Schindler.

Gov. Chris Gregoire received a 2008 score of 29 percent.

Analysis of New Jersey Health Insurance Provides Lessons for Washington

Grace-Marie Turner, nationally-recognized health care expert, considers a recent NCPA analysis of New Jersey's health insurance system. At the State Policy blog, Turner writes:

... a healthy 25-year-old male could purchase a policy for $960 a year in Kentucky but would pay about $5,880 in New Jersey.

Instead of community rating and guaranteed issue, New Jersey should allow insurers to charge risk-based premiums, write Herrick and O'Keefe [authors of the NCPA report]. In order to cover residents too poor to afford private coverage, the state could request a block grant for all federal Medicaid funds...

Washington lawmakers have long pushed community rating and guaranteed issue, restricting flexibility and driving up costs. As the NCPA concludes;

Mandated benefits and regulations have driven up the cost of health   insurance in New Jersey.

Here, too.

Georgia Passes Consumer-Driven Health Care Reform

The State Policy Network carries a brief story on Georgia's new health care reform. Early reviews from market-oriented groups are favorable.

Other states have attempted broader reforms that have failed (California and Illinois) or are struggling (Massachusetts). But John Goodman, president and CE0 of the National Center for Policy Analysis described Georgia’s as “very significant reforms.”

“Georgia is now the second state in the union to allow employers to help their employees obtain personal and portable health insurance – the type of insurance that employees own and can take with them when they move from job to job,” Goodman said.

Here's a link to the Atlanta Journal-Constitution story on the bill signing. Gotta say it's nice to see a health care reform story with a headline that reads: "Health plan options expand."

Michigan Businesses Not Ready for State-run Health Care

Crain's Detroit Business reports that a poll of Southeast Michigan business shows widespread opposition to a proposed amendment to the state constitution that would establish universal health care coverage. The survey findings mirror what we often hear from AWB members: they are concerned about rising health insurance costs, but they don't want a state-run plan.

Here's how the Detroit chamber explains it to the business paper:

We're interpreting that to mean that cost is a real concern, but they're not ready to let the government decide what the cost is,” said Sarah Hubbard, the chamber's vice president of government relations.

Given the overruns and high cost estimates of various universal coverage plans, that's just good sense.

The predictable response from amendment backers:

Former state Rep. John Freeman, D-Madison Heights, who is chairing the Health Care for Michigan campaign to place the proposal on the November ballot, said poll results indicate the need for “more education of the chamber members” on a proposal that he said benefits business and addresses their health care concerns.

I doubt that lack of education is the problem. More likely, business owners in Michigan, like business owners across the country, understand too well the risks associated with state-run health plans. They "get it," they just don't want it.

When People Are Hungry, They Need Food---Will There Be Enough?

World hunger is now front and center.  It is all over the news and the situation is so serious that World Bank President Robert Zoellick appealed to governments around the world to provide the U.N. World Food Program with $500 million in emergency aid by May 1. President Bush immediately responded with $200 million from the United States.

The cover story in The Economist magazine this week addresses the consequences of food inflation on the world's poor calling it "The Silent Tsunami."  The problem is growing and threatens to destabilize countries. Soaring corn prices are already responsible for riots in Mexico City, rising flour prices threaten to destablize Pakistan, and people caught hoarding rice in the Phillipines face the possiblity of life imprisonment. Hunger even prompted Haiti's prime minister to resign. 

So what's the problem?  One paragraph in The Economist caught my attention.

"The prices mainly reflect changes in demand--not problems with supply, such as harvest failure.  The changes include the gentle upward pressure from China and India eating more grain and meat as they grow rich and the sudden, voracious appetites for western biofuels programmmes, which convert cereal into fuel."

Time magazine estimates that corn from one in five acres in the United States is now going to ethanol refineries.  That is causing American family grocery bills to climb. Combine increasing fuel prices (gasoline, home-heating oil and diesel) with higher food prices and we are feeling the pinch at home.

In my column which appeared in today's The Columbian, there is reference to another problem which could have the same impact as the Irish Potato Famine in 1845-50 which killed 750,000 people.  That is the potential of a global pandemic of Ug99, a new strain of wheat rust which has hit Kenya and Ethiopia. Ug99 drew the attention of the Bill and Melinda Gates Foundation which awarded Cornell University a $26.8 million grant to develop a rust-resistent strain. 

While some oppose genetic modification, it has worked for years.  It allows research universities, such as Washington State and Cornell, to develop disease and insect resistent plants which in turn provide enough food for the world.

The point is there are tradeoffs when crops are converted from food for people to gas and diesel for cars, trucks and buses.  Those tradeoffs need to be carefully considered and thought out.  Research must to continue to insure that diseases, such as Ug99, do not spread across the world. 

When people are hungry and thirsty, everything else is irrelevant.  Hopefully, our legislators and elected officials will look at the big picture and not just focus on alternative fuels and invest in research, as have the Gates.

Don C. Brunell, President (DonB@awb.org)

New Study Pegs Wasteful Health Care Spending at $1.2 TRILLION

Before we even think about whether government should take over more responsibility for health care and calculate the associated costs, there is much work to be done with the current system.  That work could render billions in savings and lessen the physical and financial pain on patients and families.

For example, a new PricewaterhouseCoopers study found that wasteful spending in the health system is calculated at up to $1.2 trillion of the $2.2 trillion spent in the United States, more than half of all health spending. Defensive medicine, such as redundant, inappropriate or unnecessary tests and procedures, are the biggest area of excess, followed by inefficient healthcare administration and the cost of care necessitated by conditions such as obesity, which can be considered preventable by lifestyle changes.

PricewaterhouseCoopers’ paper classified health system inefficiencies into three “wastebaskets” that are driving up costs:

• Behavioral where individual behaviors are shown to lead to health problems, and have potential opportunities for earlier, non-medical interventions.
• Clinical where medical care itself is considered inappropriate, entailing overuse, misuse or under-use of particular interventions, missed opportunities for earlier interventions, and overt errors leading to quality problems for the patient, plus cost and rework.
• Operational where administrative or other business processes appear to add costs without creating value.

When added together, the opportunities for eliminating wasteful spending add up to as much as $1.2 trillion. The impact of issues such as non-adherence to medical advice and prescriptions, alcohol abuse, smoking and obesity are exponential, and fall into all three baskets.

Don C. Brunell, President (DonB@awb.org)

Disease Prevention in Action--Current Health Care System Working

In October, when I had my annual physical, the lab test showed I may one day be diabetic if I'm not careful with my diet and don't exercise more.  Rather than come back in a year, my doctor scheduled a six-month follow-up with another screening. 

Meanwhile, Premera, our health insurance carrier at AWB, didn't wait around.  Their systems flagged my potential problem and a registered nurse from the company's Healthy Conections program was soon on the telephone contacting me. Premera accompanied the call with a packet of information about diabetes and how to prevent and treat it.  In fact, between doctor appointments company RNs made several follow-up calls. When they found out that my new tests no longer showed indicators of diabetes, they took me off the active call list, but keep me on the "watch list."

Diabetes is nothing to fool around with.  In her later years, my Mom became a severe diabetic and we'd have to test her after each meal. Her poor fingers and thumbs looked like well-used pin cushions. Getting her system in balance was tedious and painful for all of us.  Eventually, the diabetes got to her kidneys and, finally, she died from congestive heart failure

I remember going to pharmacy (that was a dozen years ago) and picking up a month's supply of her medications, including insulin.  Her co-pay alone was over $250. Over the last 10 years of her life, we estimated her medications from diabetes-related diseases cost our family more than $30,000. So prevention is not only a heck of a lot less painful, but cuts costs dramatically, lessening the worries of people on fixed incomes and living off their life's savings and pensions.

While politicians focus on what is wrong with our health system, there are lots of things working right.  The key is build upon what is working and not toss the whole system out like the legislature did in 1993 and impose a single, government, cookie cutter, health care scheme which may or may not work and may or may not cost a lot more. 

Don C. Brunell, President