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August 09, 2004
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The H.R. Doctor Is In

A Local Government Opportunity Buried In the Health Insurance Debate

Wherever the HR Doctor travels, there is a consistent theme that emerges from visits with elected officials, executives and individual employees not only in public agencies but in the private and the nonprofit sectors as well. That theme is the growing unease about the affordability of health insurance.

The theme is not only that of a concerned employer struggling to maintain quality benefits for employees and dependents. Rather, an increasing chorus of alarm about how this is a growing national, if not international, problem. It could drain us of energy and morale as well as dollars if we don’t create a common vision for how the population in general will fulfill its hopes and dreams for healthy aging.

It is generally held that more than 40 million people in the United States have no health insurance. Many of them are likely small children, pregnant women and senior citizens choosing between food and prescription drugs. This situation makes the problem all the more serious and compelling from a human as well as a political standpoint.

No voice in the chorus is suggesting this problem is getting any better and, frankly, no one is suggesting that the confusing array of prescription drug cards, which are slowly beginning to be marketed; nor the piecemeal alphabet soup approach of HRAs (health retirement accounts), HSAs (health savings accounts), FSAs (flexible spending accounts); nor consumer-driven plans with high deductibles; nor any of the other ideas being marketed or implemented currently are going to solve the problems. In the short run, the current "chaos theory" model results in added confusion, especially in the minds of the most vulnerable persons who need relief.

These scattered offerings are a reflection of a political reality that there is no agreement on a comprehensive healthcare model in the United States. Like it or not, good or bad, there is such a basic social consensus in places like the United Kingdom, Scandinavia or Canada. In the United States, there is an increasing feeling that the scattered approach to address a common and growing national problem is not healthy for our country.

We support and encourage concepts such as "no child left behind," while at the same time we leave millions of children far behind in terms of their ability to access high-quality healthcare and health education. This failure may well condemn us to produce a generation of obese children about to enter an unhealthy adulthood and even more expensive sets of problems for themselves, their employers, and their communities as they grow older and need even more care.

At the national level, there appears to be a paralysis of vision, will and consensus. However, it is very unfair for any of us to simply criticize, whine or harp on a policy failure without suggesting some kind of option, especially given the HR Doctor’s penchant against whining, arrogance, and inertia as one of our nation’s most serious underlying problems. It’s the least I can do to offer another model to consider in thinking about a solution to the healthcare problem.

No discussion on this complex subject can move very far along without calm wisdom. For the HR Doctor, that came from my Montana colleague, friend and health policy expert Terry Humo.

Terry points out that the first imperative in health policy is asking some difficult "core value" questions. He includes among those questions: Do we, as a nation, feel everyone is entitled to a basic level of health care or a full range of services without limit? In either case, who should pay? Should individuals receiving the care (as opposed to general individual and business taxpayers) bear the cost? What about individual responsibility for health? Should taxpayers pay for the ravaging health impacts of chain smoking, not wearing seatbelts, or drunk driving? What about patients who refuse to follow treatment or prescription advice? How about practitioners? Should they be paid based in relation to the quality of their services or the quantity?

Terry is absolutely correct that we have to create a more common consensus on the core values before we can create and implement any effective national policy. We simply haven’t gotten to first base yet on this score.

If there is any one consensus about America, it must surely be that this country is incredibly diverse. Top-down "Washington to everyone" solutions haven’t worked out well since the concept of Social Security was created in the midst of the terrible crisis of the Depression. If a top-down model won’t work, and if a state or an individual county or city is hard pressed to go it alone in creating an insurance program that will cover citizens with quality care and relatively simple processes, then what else will work?

Can we leave the fate of our healthcare system in the hands of malpractice attorneys? I hope not. How about to providers themselves who are in great measure wonderfully humane, but not without their own agendas? How about to executives of insurance companies? I don’t think so. How about patients who need help? The answer here too is "not completely." The kind of care system that would be designed by chronically ill patients would perhaps make accountants and tax payers seriously depressed.

The HR Doctor’s suggestion, unrealistic though it may be, is to use the brains, the hearts, the experience and the civic engagement of local government officials to create the more local answers to Terry Humo’s well-phrased questions. Here are some HR Doctor "what if’s."

What if the federal government provided umbrella "stop loss" financial protection for catastrophic illnesses among participants in a locally developed community insurance partnership? Neonatal intensive care, for example, for a newborn infant with acute birth difficulties, is likely to be the most expensive cost ever encountered in a health insurance program. As many self-insured employers can tell you, one such event can rather rapidly bring several hundred thousand dollar claims and hurt, if not destroy, an entire smaller jurisdiction system. Even if only one role for the federal government can be to safeguard local programs against catastrophic events, that one consensus can go a long way toward stabilizing one of the greatest risks in trying to create the local insurance program. This is a similar role to that of FEMA in a community disaster.

A second suggestion stems from the fact that the average educational debt for a medical student today is in excess of $100,000! At the fine medical school where beautiful HR daughter Rachel graduated, the average debt is $160,000! There are some debt-offset programs such as spending years in the military or providing healthcare in rural or underserved areas. In such cases, debt may be offset, on the basis of one-year service offsetting one year of debt. However, the HR Doctor will submit that the entire country represents an increasingly underserved area.

What if there could be a general offset program for debt reduction for any physician or registered nurse, dentist, optometrist or pharmacist who participates for a year in a local government-organized community insurance pool?

What if there was a federal offset for tax relief for individuals and corporations who set up, build or expand a medical facility such as a clinic, an urgent care center or a hospital as part of a community managed network in the same manner as the feds provide, or are supposed to provide, payments in lieu of taxes (PILT) for local governments which host national parks or military bases?

The crown jewel of a locally developed system will be leadership from local cities and counties that offer capitated or per person healthcare rates within a network or other locally developed incentives to encourage physicians, hospitals and other providers to join. The vision is to extend some degree of basic preventive and intervention healthcare to EVERY person, including municipal and county employees and dependents.

In effect, the proposal is the creation of communitywide "EPOs" Ð Exclusive Provider Organizations (sorry, there goes another acronym). Licensed physicians, for example, who accept a reasonably established capitated rate will be committing to serve any patient (or up to a certain number of patients) who comes to their facility. The rates would be set locally and adjusted regularly. The feds would take care of catastrophic cases, provide subsidies for participation by providers, especially new providers, and underwrite a portion of the per capita rates based upon criteria which could be set up to insure that a local or regional community insurance program can attract sufficient providers to voluntarily participate.

In the more tragically underserved areas, perhaps Indian reservations, migrant workers camps, prisons or within the most economically depressed communities, local government would receive a higher subsidy than a more affluent community would receive.

The danger here and the need for control here would stem from the fact that the system I am describing and the setting of subsidies must not be the exclusive purview of federal employees, no matter how well intentioned the GS-14 in a cubicle in Washington D.C. may be. Rather, a bottom up approach may work as a substitute for the paralysis of our inability to create a top-down, national model.

Patients would have the freedom to choose any participating provider and providers would have the option to be in or out of the network. The use of local tax incentives, and perhaps even a strong federal income tax incentive for professionals to participate in these networks, could be a very compelling contribution by the federal government to the realization of a truly American vision of a healthier nation. It would be a system locally controlled by the elected officials Ð you know, the ones closest to the people.

Of course, it is true that the national health care problem is immense. However, viewed from the perspective of an individual senior citizen with a chronic illness, a little baby in need of acute care, and a very scared mother or father with an ill child, the real national health crisis is one which appears locally. It can be seen in the doctor’s waiting room, the hospital emergency room, or on the streets.

In the kind of system envisioned in this article, by the way, there is great room for an expanded role as community healthcare providers for firefighter/paramedics.

Firefighters all over the country could spend a little bit of time and energy providing some basic healthcare information, education, vaccination, first-echelon health screening, and more for a community population. After all, are we not living in a world where fire departments now fight fires as a secondary activity compared to the number of responses to acute healthcare emergencies, such as auto accidents, heart attacks, drowning, or electrocution tragedies?

Let’s turn things upside down in terms of creating a workable local government-driven healthcare approach. I believe that it will be far better for the patients, the providers, the communities and the nation to try this model rather than carrying on for many more years in a healthcare environment dominated by scattered puzzle pieces lying on the floor in a confusing and unhealthy manner.

The national debate will continue, as well it should. Ultimately, a consensus on basic values and visions must emerge, despite the self-interest of many of us who make policy suggestions or decisions. If you don’t think some of the suggestions above will work, how about making other suggestions? Uncle Sam needs your input Ð before his hearing becomes impaired, he needs health insurance coverage, and he can’t remember where he put his insurance card!

Stay healthy, wear your seat belt and let’s try some locally-centered healthcare innovation that just might work!

Phil Rosenberg
The HR Doctor


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