California’s health care initiative: How’s it working in the Bay State?

Today’s debate focuses on the experience of Massachusetts with its own individual-mandate health reform plan. Previously, Wright and Zingale discussed the basics of Gov. Arnold Schwarzenegger’s healthcare initiative, the wisdom of using insurance as the mechanism for universal healthcare and the burdens of the individual mandate on those who can’t or don’t want to pay for it. Tomorrow, they will wrap up by debating the problem at the federal level.

Consumers are the point, not the problem
By Anthony Wright

Yesterday, I railed against the habit of blaming the uninsured for ourhealth care crisis, rather than the broken system itself. Today, I’ll defendthe insured, who often get blamed for rising health care costs.

Yes, reader, some policymakers say that it’s your fault... because,apparently, you use too much health care.

And in this Orwellian world, the solution to rising health costs is toimpose more costs onto patients.

From President Bush on down, the trend toward so-called “consumer directed”care is to make patients more price-sensitive on using health care in thefirst place, through high deductible plans and other forms ofunderinsurance. Under the guise of patient empowerment, we see moreCalifornians underinsured, in a thinly-veiled attempt to shift the risk andcost of health care from employers and insurers to individual consumers andfamilies.

The theory seems to rest on the notion that people binge-shop at theemergency room. In fact, the data show that even insured patientsunderutilize medical services.

High-deductible plans offer the worst of both worlds. Patients withsignificant cost-sharing are half as likely to go to the doctor, fill aprescription, or get needed emergency care—and thus they have worse healthoutcomes. Many Californians who live paycheck-to-paycheck faceserious debt and even bankruptcy before meeting a $5,000 deductible. Yetexcept for the rare catastrophic event, they are paying a premium to beuninsured.

Governor Schwarzenegger’s plan features some of this “personalresponsibility” policy direction, offering tax breaks for Health SavingsAccounts (HSAs)—inappropriately using the tax code to encourage highdeductible plans.

Those facing the mandate to buy coverage under the Governor’s plan,without help from an employer or government, have two awful choices: anon-choice of buying comprehensive coverage that is simply out of reach for thevast majority of uninsured; or the option of buying a still-unaffordable$5,000 deductible plan that meets the requirement, but will not beaffordable to actually use.

The Governor should know better. He appropriately talks about prevention,and how it is cost-effective for Californians to get care up front, beforeit becomes a bigger and more expensive problem. But these plans won’tprovide coverage for the preventive care known as disease management thatreally will save money with the big-ticket health costs: asthma, diabetes,obesity, heart disease.

Anthony Wright is the executive director of Health Access California, the statewide healthcare consumer advocacy coalition, which hosts a daily blog here.

Massachusetts is too expensive; California controls costs
By Daniel Zingale

Anthony, you make an important point about how some health services areunderutilized. First on the list of what we need to encourage isprevention, and under Governor Schwarzenegger’s proposal preventive carewould be covered so people would have no financial reason to miss out onhelp in avoiding conditions like diabetes, obesity, and heart disease in thefirst place.

If we don’t do a better job of preventing these conditions with relativelylow-cost early interventions, there will never be enough money to pay fortreating all these avoidable illnesses once they have set in. Those aretreatments and costs to the system we all want to avoid. Meaningful reformmust emphasize health care, not just sick care.

While we are underutilizing prevention, some medical interventions are infact being used too much. A chilling instance of medical intervention runamok occurred in a hospital in Redding, where patients were being givencompletely unnecessary heart surgery on a regular basis. Less publicizedoccurrences of unnecessary treatment, over-prescription of drugs, andduplication of services are pervasive in our current broken system. And the consequences affect both the cost of health care and publichealth.

So meaningful reform cannot be built on the notion that more medical care isalways in the best interest of consumers. Still we are in agreement thatpremiums, co-payments and deductibles must be affordable.

That is why the Governor proposes helping cover those who can’t afford itthemselves. Those who currently have no insurance, but can afford $100 permonth premium, would certainly be better off with a $5,000 deductible thanwith hundreds of thousands in catastrophic medical bills resulting inbankruptcy for them and another bump in the hidden tax for those withinsurance.

What Governor Schwarzenegger means by shared responsibility, includingindividual responsibility, is each of us maintaining health coverage we canafford. And doing all we can to stay healthy in the first place. Considerjust one incredible statistic: A 2005 study by the California Department ofHealth Services estimates that if the number of physically activeCalifornians increased by only 5%, we could reduce direct andindirect medical costs by $1.3 billion a year.

But beyond responding to what you wrote, Anthony, I want to answer today’squestion as well.

The biggest difference between our plan and Massachusetts’ is that ours hasno impact on the state budget. If we simply adopted the Massachusetts planhere it would cost our state budget at least $9 billion a year.

Massachusetts has also run into trouble because its plan sets goals forsubsidized coverage that officials thought would materialize, but thoseproposals are coming in higher than they hoped.

Governor Schwarzenegger’s proposal uses existing market prices and productsas a guide, so we know that the mandated minimum policy can be bought todayfor about $100 a month.

We also have a much more robust and competitive market in California.Massachusetts has just four health plans to choose from. California, whichhas a strong reliance on managed care, has seven major players and manysmaller ones that can help keep prices affordable.

Massachusetts also put its initial focus on getting everyone covered, optingto address cost containment later. Governor Schwarzenegger recognizes thatboth need to be addressed simultaneously.

Significant increases in Medi-Cal reimbursement, tax incentives and a hostof other affordability measures will all help to ensure a more competitive,functional health care system and will stop runaway double-digit increasesin premiums.

We all know this is not going to be an easy problem to fix, but by dealingwith the issue in a holistic and comprehensive manner as the Governor hasdone, there’s no reason to believe we can’t have great success and be abeacon to the rest of the nation.

Daniel Zingale is senior advisor to Gov. Arnold Schwarzenegger and chief of staff to Maria Shriver.