"Two Girls Two Countries One Cancer"

David Whelan has an interesting article at Forbes.com following two girls through the same serious cancer diagnosis here and in Britain.

As David put it, "When stories get specific, as in the cases of Zoe and Ellen, two kids from similar backgrounds with the same disease, the generalities [about the differences in our health care systems] start to break down."

The "Frontline" Report on International Health Care, "Sick Around the World," is Worth an Hour of Your Time

Last night the PBS program, "Frontline" gave us an hour long tour of the health care systems in Great Britain, Japan, Germany, Taiwan, and Switzerland and asked what can we Americans learn from them.

When I heard about the program, I was dubious that an hour long report covering five different systems could possibly be helpful. But this hour long tour de force accomplished a great deal and I came away impressed.

Did the report skirt a number of really important issues and fail to mention things that critics or supporters will be upset about? Yes.

But from my experiences in international health care I have to say it is a generally fair and balanced job. "Sick Around the World" is a constructive contribution to our national health care debate.

As the report pointed out, most of these systems rely heavily on the health care market--private insurers, private doctors, and private hospitals.

The program also offered a number of conclusions from their investigation of these national health care systems which, from my own experience, I cannot deny:

• These nations have health care systems--often as much market oriented as government oriented. Market or government, the U.S doesn't have a health care system as much as a hodgepodge of things we have drifted into over the decades and that creates much of our problem.
• That the quality of health care in each of these nations is generally as good as ours--it is a myth that the U.S. gets a lot more quality health care for the money we spend.
• That these nations take advantage of market forces but at the same time all impose limits that so far we have been unwilling to impose.
  
• That nations who successfully rely upon private insurance use only not-for-profit insurers and the insurers must accept everyone.
• That everyone is mandated to have insurance and the poor and near poor receive adequate premium support.
• That doctors and hospitals are required to accept one standard price structure--and their prices are far less than ours.

The program ended asking, "Can Americans accept ideas like that?"

I strongly recommend you spend an hour online watching, "Sick Around the World."

All of my posts on international health care

Aetna to Provide Managed Care Services to the British National Health Service--Say What?

Aetna has been approved by the British National Health Service (NHS) as one of the suppliers who can provide local Primary Care Trust (PCT) managers "a wide range of support, ranging from specific tasks such as designing medical management programs, also known as demand management, to comprehensive contracting and procurement of services."

Where's Michael Moore? He needs to do an addendum to "Sicko" featuring the new Aetna network manager working with that happy British doctor he interviewed. There goes the neighborhood!

More seriously, we have talked about the "Mid-Atlantic Convergence" before. The national systems that use global budgets have been coming our way for some time as they look to implement many of the managed care techniques we have been using for years--Germany's implementation of DRGs in recent years, for example.

Don't leap to the conclusion that I am arguing that this proves the private market is the only way to manage health care costs. I have long believed that we will see America's health care system move in the direction of Europe just as they move toward us--the "Mid-Atlantic Convergence." It turns out that neither global budgets nor the private market, by themselves, have been able to get it done.

Previous post: "Mid-Atlantic Convergence"--The European Government-Run Health Care Systems Are Coming Our Way!

Aetna Press Release

The Best 39 Minutes You Can Spend Understanding the Various National Health Systems

NPR's "Fresh Air" broadcast a 39-minute interview with Jonathan Oberlander, a political scientist with expertise in health care politics and policy and the University of North Carolina at Chapel Hill.

Studying other systems is important as we in America look to reform our health care system. Unfortunately, we hear many things out of context and some outright myths.

Listening to Professor Oberlander, I came away impressed that I had listened to one of the most informed and dispassionate discussions of the U.S. health care system, as well as many of the other industrialized systems we have heard about.

If you want a straight down-the-middle 39-minute tour de force of leading international health care systems, as well as our own, give it a listen.

You can access it here.

"Sicko" Revenue Wanes at the Box Office--Why Didn't "Sicko" Resonate?

The Michael Moore movie about the U.S. health care system's problems, "Sicko," had incredible press before its debut. Moore appeared on the likes of Larry King, Leno, and Letterman, and about everywhere else in the days before its premier to hype his newest critical documentary.

Last week when the movie grossed only $4.5 million (putting it in 9th place) supporters pointed out that it only opened on 441 screens. The producer said he was just opening on a few screens while the movie "got its legs." Moore's last movie, "Fahrenheit 911," had opened on twice the screens--and grossed more than five times as much at $23.9 million in its first week on its way to a $100 million take.

Wait until next week they all said.

Well next week has come and gone.

On almost twice as many screens, "Sicko grossed only $3.6 million this past weekend--still putting it in 9th place and actually reporting less revenue than it did last weekend. Per screen, its revenue fell by about 50%.

So far, about a million people have seen it with a cumulative gross of $11.5 million. On the one-hand that's a lot of people.

But as a political statement, in a country with 300 million people, that's a pretty small audience. The antithesis of Moore, Bill O'Reilly, gets an audience multiples of that every weekday night.

After all the hype and with a U.S. health care system in such a fix, why hasn't "Sicko" resonated beyond what appears to be the already converted?

There could be any number of reasons. Perhaps its perceived as focusing on the negative with no viable alternative presented to its audience--people already know what the problem is and they want solutions.

More likely the 20-something folks, that go to movies more often than the rest of us, were more interested in seeing their childhood toys come to life in "Transformers" this weekend. Heavy policy isn't exactly what a lot of people think of for summertime entertainment.

"Sicko" is also a pitch for a single-payer government-run health care system.

Maybe someday America will get to that point. But I doubt it will be anytime soon.

During the past few years here in Washington, I have noted a marked focus on the part of many long-time single-payer supporters away from the policy they may see as the best--but also one they do not see as attainable anytime soon. They seem tired of holding-out for everything and getting nothing. The result has been a focus on "more realistic" incremental progress. "Families USA" is a case in point.

To be sure, there are those, like Moore, who haven't given up on getting us to a single-payer health care system in the U.S. But they look to be more marginalized at the moment than gaining traction. The presidential campaign of single-payer advocate Democrat Dennis Kucinich comes to mind.

"Sicko" is a political statement full of half truths taking pot shots at a system no one can defend.

I guess the people who buy movie tickets already knew that and just didn't think it was worth ten bucks.

July 16 Update: "Sicko" continues to wane. The weekend of July 13-15 Sicko grossed only $2.6 million in 756 theaters for a screen average of $3,500--the lowest of the three weeks. It has a three week gross of $15.8 million--66% of "Fahrenheit 911's" first weekend.

July 23 Update: Weekend gross of $1.9 million for 11th place with $1,701 per theater. Cumulative gross still below "F-911" first weekend at $19.4 million.

Watch the Wolf Blitzer interview with Michael Moore as Moore goes after CNN for trashing his movie.

Earlier post: A Review of the Movie "Sicko"--Michael Moore Blew It!

"Mid-Atlantic Convergence"--The European Government-Run Health Care Systems Are Coming Our Way!

One of the themes I have often heard in international meetings on the topic of health insurance is the term, "Mid-Atlantic Convergence."

That is, our system may be gravitating to look more like those in Europe and theirs maybe moving more toward ours.

One of the people I often see at these meetings is Bill Boyles, publisher of Health Market Survey and Consumer-Driven Care.

Today, I have asked Bill to weigh in with his observations on the ongoing evolution in Europe and in other systems:

Worldwide Expansion Of Private Insurance, Not Single-Payer
by Bill Boyles

I have been studying the private health insurance (PHI) markets worldwide for about two years in preparation for a new publication I am doing on the subject. My original assumption, based on conventional wisdom in the U.S., was that PHI is declining worldwide due to unaffordable costs. What I found out is actually happening is instructive for those calling for government control.

I never really worry any more when I read about Sicko or the Massachusetts single-payer crowd. As I look around the world it is obvious that dozens of countries have come to the conclusion – independently – that private health insurance beats a public utility model.

Out of approximately 100 organized health systems worldwide, I have not yet come across a single one that is moving to a public-utility model or an all-public financing system. China is a good example: it is now debating which way to go because it has tremendous needs in a rural population but clearly prefers a private insurance system in it’s newly-prosperous cities. While this is being debate, private insurance is growing anyway by millions of members every year.

Private health insurance is fantastic for economic growth. It creates national wealth by building an infrastructure of hospitals, physicians, labs, and technology, boosting GDP and per capita income across the board and generating tax receipts and foreign trade.

This is really the lesson here: private insurance is a great economic stimulant – and in the case of the U.S. system this is too much of a good thing. We need to scale back the entire system because it is overcapitalized and bloated, unlike a new PHI system in China or India.

What is happening is that countries with private health insurance systems like most western European countries are moving to adopt U.S. private insurance management techniques like pay-for-performance, DRGs, price transparency, and even cost-sharing. The overriding goal is clear: they want to retain their universal coverage by keeping private insurance affordable.

Meanwhile, in dozens of emerging economies from Eastern and Central Europe to Latin America to Asia there is a rise in per capita income – driving demand for private health insurance. We estimate that there will be an increase in PHI worldwide enrollment of greater than 100 million covered lives in just the next five years. Meanwhile, Columbia and a dozen other countries have in just the past year converted their public-utility model health financing systems into private insurance markets with more announcements each week (I keep a list).

The U.K. is often cited as an example of where the U.S. does not want to go. I have news for all you critics: the U.K. is moving rapidly in our direction. I was shocked to learn that there will be no more waiting lists by mid-2008 following a major infusion of government funds combined with expansion of the private sector, resulting in a recent estimate of 11% of all encounters to private practice and a growth in private insurance (held by 40% of all U.K. workers).

The real question across the world health systems for the future is the balance between PHI and public funding of programs for the low-income population, seniors, and high-risk cases. If that sounds familiar it’s because that is exactly how the U.S. structures its approach, and represents a good starting point for emerging health systems looking for the right balance.

The Cost to Administer Medicare Versus the Cost to Administer Private Health Plans--The Difference Isn't Anything Close to 25%

Those that favor a single-payer government-run health care system have been reenergized by the Michael Moore movie, "Sicko."

One of their contentions I keep hearing is that we could save 25% by getting rid of private health insurance plans and creating one big government-run plan. They point to Medicare's expense factor of 2.9% as evidence.

The private health insurance plans have much higher expense factors.

But, like so many things in health care, it isn't so simple--or simplistic as I keep saying about this movie.

There are a number of other considerations:

• Medicare's capital costs - Medicare benefits are paid from payroll taxes and general revenues. Medicare has done its share to run-up the federal debt in its 40 years. In 2004, Medicare costs comprised about 12% of federal non-interest spending. Using that factor to represent Medicare's portion of government operations, Medicare's share of government debt service costs would have been $19 billion in 2004. Adding this cost would have boosted Medicare's administrative costs to just under 10%.
• Medicare pays health care claims for seniors which tend to cost a lot more than the average claim cost for a younger person thereby distorting any comparison between under-age-65 costs and those over age-65. For example, Humana reported its first quarter 2007 medical cost ratio to be 89.3% for its senior business. That is a lot closer to the Medicare expense ratio than I would expect most favoring a single-payer system would think.
• Medicare generally uses payment strategies to control costs (it just cuts payments). While it is starting to do things like disease management, that is a very small part of what it does to control costs. If Medicare had the whole system, it wouldn't benefit from the spill-over impact of private sector programs to control waste and would have to build and operate its own on a much broader scale. That would run its cost ratio up considerably.
  

Now, let's look at private sector health insurance plan costs.

The first quarter 2007 earning's reports from the HMOs included the following:

• United Health reported a medical cost ratio of 82.7%--which means 17.3% was spent on expenses, taxes, and profit for all of its businesses including commercial, Medicare, and Medicaid.
• Wellpoint's medical cost ratio was 83.1% in the first quarter of 2007 for all of its health care businesses--commercial and government. That leaves 16.9% for expenses, taxes, and profit.

But wait, what is the one thing health plans pay that Medicare doesn't pay? Taxes!

Wellpoint and United each paid taxes equal to about 3% of their revenue in the first quarter of 2007 (that's 3% of revenue not profit).

So, Medicare's real expense ratio is a lot closer to 10% than 3%.

The big HMOs have expense, tax, and profit ratios of about 17%. But, take 3 points from that because it was income taxes paid to the government--meaning their net cost is around 14%. Apples to apples, Humana paid out 89.3% of its senior revenue on benefits leaving 10.7% of expenses, taxes, and profits. Give them credit for taxes and who's out front now?

But what about that poor doctor's office today having to administer so many plans adding lots of expenses. True, one government plan would be a lot easier. But how much easier? You might have only one plan if the government took over but you would still have the same number of patients all with their unique needs and problems. And, would Medicare just be able to write checks if it were the only payer? Not likely. Medicare would be in the managed care business with all its bureaucracy before too long.

Maybe the private sector does cost more but could we please knock off this, "It costs 25% more" junk science.

The single-payer folks would do well to read more than the headline in an HMO earnings report.

A public/private system like ours will cost more than a single government-run system. But the difference in expenses is not so great that it should preclude our consideration for the advantages of private options.

A Canadian-Style Health Care System--How Would We Get From Here to There?

The movie "Sicko" inevitably gets us talking about making over America's health care system into one that would resemble the single-payer government-run systems like those in Canada, Britain, France--or now even Cuba!

I find the proposal a simplistic one.

Having spent so much time in Europe and Canada working with health care policymakers and major stakeholders there, let me first tell you I have a great respect for where they are. Their systems (well maybe except Cuba) work very well for them. In fact, I have lived in Toronto and carried an OHIP card and the system worked pretty well for our family.

If the U.S. had made Medicare universal for all of our citizens in 1965, as Canada did for its people, my sense is that we'd have a very different system in the U.S. but one that worked and was far more affordable because we would have made the transition when the system was a whole lot less expensive, complex, and addicted to perverse incentives. We would also have a lot less medical technology and knowledge throughout the world today. We probably wouldn't know what we were missing.

In 1965, the U.S. likely (and unwittingly) traded universal and much more affordable care for a system that has subsidized a disproportionate amount of the rest of the world's health care breakthroughs during the last 40 years.

But that is all a hypothetical discussion.

A big problem I have with those who now advocate moving to a single-payer system is how really poorly thought-out their proposal is. Proponents seem to presume that you can get from Point A to Point B in one easy move.

The problem is that since 1965 those who operate in the the U.S. health care system have become something akin to drug addicts--they are addicted to all the incentives we have--good, bad, and perverse.

The huge question now is how do you get the health care players cured of these incentive addictions and onto an efficient course.

Today, the U.S. health care system is like three big rigs on the highway, one each representing patient, provider, and payer expectations, nose to nose traveling down the interstate, their speed out of control at 80 mph, with no effective traffic cop keeping them under control. On a date certain, we make it all look like Canada. The result would be tantamount to all of those big rigs simultaneously having to lock-up the breaks because they would have to slow so dramatically.

You can’t just jam on the breaks and pretend the system can be quickly remade. It’s going to be a whole lot more complex than that.

Instead of hearing from single-payer advocates that this is the system we should adopt (and all of our problems will magically go away on a date certain), I'd like to see them give us a plan for how we will actually transform the health care system to one that is entirely under a government framework of controls.

How will doctors and hospitals respond to much lower payments ? The biggest difference between the U.S. and Canada/the EU is the health care provider prices?

How will we drive the existing excess health care infrastructure down to a sustainable level?

How will the politicians deal with patient expectations that are today open-ended and will have to be much more aggressively managed?

If the government runs it, it is by definition a political health care system. Do you think some of the most powerful political constituencies in the U.S. (doctors, hospitals, drug companies) are just going to sit idly by and magically behave themselves? How will a political system suddenly kick in and do what it can't do today--not be dominated by these powerful interests? Which politician is going to say "no" to the patient/voter?

Don't just give me the simplistic, "It's all in the expense overhead." Ya, but expense savings are one-time. The much bigger problem is the underlying and fundamental growth in health care costs. That's the big one and it relates to the above questions.

Tell me what the transition plan looks like and be realistic about how you get there.

Tell me how you politicize the entire U.S. health care system and the stakeholders just go along selflessly taking far less--perhaps humming the "Internationale."

You might want to go out on the Interstate this afternoon, get the car up to 80 in heavy traffic, and slam on the brakes--that would be good practice for what you are proposing.

A Review of the Movie "Sicko"--Michael Moore Blew It!

The Cost to Administer Medicare Versus the Cost to Administer Private Health Plans--The Difference Isn't Anything Close to 25%

There is a Health Care Reform Plan That Doesn't Duck the Big Issues--and More Than 100 Heavyweight Stakeholders Support It!

A Review of the Movie "Sicko"--Michael Moore Blew It!

Michael Moore's new movie, "Sicko," was supposed to be this great argument for a "single payer" government-run health care system.

It turned out to be exactly the opposite because Moore overplayed his hand and did his argument more damage than good.

The first half of the movie would have had anyone mad at the system--and for good reasons. It's real easy to find lots of examples of market stupidity in the way health care is delivered and he found some doozies.

It's also easy to find some examples of government-run stupidity in health care and he conveniently avoided those.

He highlights a case of our system denying a husband and father an end-of-life bone marrow transplant--denied not by a big insurance company but local plan trustees. He forgets to tell us that kind of end-of-life spending would never even be considered in Canada, Britain, or France. He doesn't think the U.S government-run Medicare system denies coverage?

He highlights the British system but never mentions that 12.5% of Brits have opted out of it and into private health insurance--most through employer provided benefits for the higher paid.

In politics, the battle is always over the middle. Those on the left will always be on the left. Those on the right will always be on the right. National elections, and national issues, are always decided by those folks who occupy the middle. They were the ones who elected Ronald Reagan and those same people elected Bill Clinton.

They will also be the ones that finally make health care reform a political imperative.

Michael Moore's adept movie making likely had those middle folks real mad at the largely market-based U.S health care system--for about the first hour.

Then, I think he lost them as they laughed at the foolishness of the French health care system and the notion that we had something to learn from Cuba.

Instead of going for the close he got off on a far left tangent highlighting a guy who left America and went home to France to get Cancer treatment. So far, a good argument for the French system. But then, when the treatments had ended, he showed the guy going to his doctor to get a prescription for three months off at full pay so he could go hang-out on the Riviera. He bragged about the French system's willingness to send a maid over to do the laundry for a new mother. All apparently common under the French system.

Later he went to Cuba and argued that their system, which he says spends less than $300 per citizen per year on health care and he says rates below ours, is a health care model for us to learn from. Arguing that a country, whose citizens risk their lives to get to Key West and which confiscates private property to function, is a model for us to learn from isn't a theme likely to play well with "Joe and Mary Middle America."

It's no surprise that the leading Democratic presidential candidates are not interested in getting too close to this thing.

But "Sicko" will help the Democrats.

In the end, Michael Moore is so far out on the extreme left that what he does accomplish is to make Hillary Clinton, Barack Obama, and John Edwards look like middle of the road health care reformers with their incremental health reform plans.

That's why I won't be surprised when Hollywood puts "Sicko" on network television in the days just before the 2008 presidential election.

My earlier post on "Sicko": "Sicko"--Hate it All You Like But Don't Ignore It! The Best Response is to Satisfy the Customer!

My earlier post on dumb things insurance companies do to unnecessarily make their customers mad: California Fines Wellpoint $1 Million for "Unfairly" Rescinding Health Insurance Polices--Was Wellpoint Fair or Not?

"Sicko"--Hate it All You Like But Don't Ignore It! The Best Response is to Satisfy the Customer!

Michael Moore's harsh critique, make that condemnation, of the health insurance industry is going to be hard to watch for those who have spent their careers in the business.

The worst thing we can do is to rationalize it away as just another "single payer's" prescription for socialized health care.

Thirty years ago, I was taught by the insurance company I worked for that the way to be profitable was to satisfy your customers' needs. Satisfy the customer and you'll have plenty of business which will lead to a better top and bottom line. Somewhere along the line, much of it when Wall Street moved in, we lost that focus. The focus became almost entirely bottom line, earnings growth, and share price--in that order.

Those objectives are just fine--as long as they come after you have satisfied the customer.

Look at some of the most profitable companies in the world--Toyota, Apple, and the like--and you will also see some of the happiest customers.

Health plan managers that have satisfied Wall Street have taken an incredible amount of money out of this industry in recent years for themselves. But what have they done for the customer--and the next generation in this business coming up through the ranks?

Hatchet job or not, take "Sicko" for the big warning signal it is.

The private health insurance industry is under assault, and was long before "Sicko," and we don't have long to make it work the way it needs to.

Satisfy the customer and you will have satisfied every person who went to see that movie--that's the best response to Michael Moore.

It's no coincidence that those health plans with top scores in surveys like the JD Power customer satisfaction index weren't the ones who got trashed in "Sicko."

Oh, that insurance company that taught me to put the customer first thirty years ago; they later demutualized, went public, made tons of money for management, and even later paid tens of millions of dollars in settlements with state regulators over claim paying practices.