2006 Health Care Conference - Moving Health Care Forward:
Tools and Techniques for a Healthier Washington
2006-07
Over 250 state policymakers, physicians, business owners and industry association members attended Washington Policy Center’s Fourth Annual Health Care Conference on June 6th. The conference featured a keynote breakfast with Nina Owcharenko, Senior Policy Analyst for The Heritage Foundation’s Center for Health Policy Studies. After her address on current federal and state health care reform efforts, panel discussions were held on consumer driven health care, prescription drugs and biotechnology issues, and trends in health information technology. The conference concluded with a lunchtime panel on health care reform featuring key Washington State policymakers. This Policy Note summarizes the conference.
Keynote Address by Nina Owcharenko, The Heritage Foundation
Health care costs in the U.S. are rapidly rising. To confound these rising costs, 15 percent of the population is still uninsured and over $35 billion in taxpayer dollars goes towards funding their care. After highlighting these major issues, Ms. Owcharenko outlined President Bush’s health care reform agenda and the feasibility of these efforts.
President Bush’s plan addresses five major reform goals: tax equity, coverage portability, expanding coverage options, improving health savings accounts (HSAs), and other health initiatives. Ms. Owcharenko identified the first goal, establishing tax equity, as the most critical of the reform goals. The
The health insurance market is currently regulated at both the federal and state levels. The third goal of the President’s plan, expanding coverage options, builds upon the current system while also facilitating portability. At the federal level, the President hopes to further develop association health plans (AHPs). Started in the early 1990s, AHPs allow small businesses to pool together to purchase plans at the federal level. Potential expansions include allowing other large pools of people (i.e. churches, etc.) to purchase individual memberships via the group. Another potential expansion is permitting interstate commerce. Interstate commerce, or purchasing plans across state lines, has prompted concerns over regulatory issues. Ms. Owcharenko pointed out that interstate commerce would likely lead to regional competition and lend power to the individual. Efforts to expand coverage options are currently being supported by many members of Congress.
The President’s plan also seeks to make technical changes to HSAs. HSAs currently offer a tax favored account to pay for health expenses when individuals purchase a HDHP. Over three million people are currently covered by HSA qualified plans, and over 30 percent of those individuals were previously uninsured. These plans have attracted individuals from all age groups and income levels, with 50 percent of plan owners over the age of 40, and 43 percent of owners earning less than $50,000. The President has proposed changes to improve the administration of HSAs. First, money in an HSA could be used to pay the premium, not just the deductible. Second, the contribution amount could be raised, allowing further savings. Finally, increased contributions could be allowed for those with a chronic illness. Ms. Owcharenko also suggested an additional modification; employers should be permitted to contribute more money to their lower income employees.
The final aim of the President’s plan works to pass a variety of health care initiatives on topics such as medical liability reform, health information technology, price transparency and quality, and prevention and wellness. The concern with all of these initiatives is whether government can facilitate a competitive environment with such a high level of involvement.
Massachusetts’ recent health care reform is currently receiving nationwide attention. This state, with a Democrat legislature and a Republican Governor, used bipartisan support to pass a comprehensive reform package. The reform focuses on six key components: insurance reform, creating the Connector, subsidies for low-income individuals, an individual mandate, an employer mandate, and Medicaid expansion.
Ms. Owcharenko identified the first three components of the reform plan: insurance reform, creating the Connector, and subsidies for low-income individuals as the most valuable parts of the plan. The state first deregulated a previously restrictive insurance market. Insurers were then invited to join in the Connector, a type of health insurance exchange. Massachusetts also helped subsidize low-income individuals in purchasing plans.
Ms. Owcharenko noted problems with the final three components of the reform plan: the individual mandate, the employer mandate, and the Medicaid expansion. The state enacted a strict individual mandate requiring everyone to buy a plan or pay a fine. The plan had originally allowed for individuals to self-insure, permitting those who prove they have sufficient assets to pay for care to be free of the mandate. This option to self-insure was removed from the final plan. Ms. Owcharenko stated that the law would be better if it still permitted individuals to self-insure. Moreover, there are additional problems with Massachusetts’ law: the employer mandate has huge loopholes; and, the Medicaid expansion could ultimately bankrupt the state.
Ms. Owcharenko noted some key changes that would improve the Massachusetts model. These changes include resisting Medicaid expansions, refusing an employer mandate, allowing more individuals to self-insure, pursuing more aggressive market reforms, and broadening participation in the Connector. The Connector is still relatively limited and the group market component is not large enough. Massachusetts could also improve on the Connector by placing state employees in the pool.
Today, health care spending is 16 percent of the gross domestic product (GDP). By 2015, spending is expected to reach 20 percent of the GDP, of which half will be government spending. Medicaid currently consumes over 20 percent of most state budgets. Fortunately, the Deficit Reduction Act (DRA) made changes to slow the growth of Medicaid, with an expected savings of $26.5 billion by 2015. The DRA also offers greater flexibility to states via income related cost sharing, consumer directed care, pilot HSA hybrid programs, and long-term care partnerships. A few states have taken advantage of these new laws, but these reforms are only one part of the equation. The answer lies in a consumer-oriented, market-based health care system. Providing individual tax credits, increased portability, facilitating an easier consumer marketplace, and increasing employer and government flexibility will provide long-term solutions to the current health care crisis.
Talking Points:
President Bush's plan offers some valuable reforms, but some solutions lack the competitive free market environment.
Massachusetts' comprehensive reform made key changes, but some components of the plan may prove problematic.
- Nina Owcharenki
Consumer Driven Health Care Panel
Moderated by Paul Guppy, Vice President for Research, Washington Policy Center
Dr. Peter Dunbar explained that the WSMA supports consumer driven health care because it helps control allocation resources, encourages the doctor/patient relationship, allows for patient choice, and provides accountability for financing and delivery of services. He cited the economic burden of health care as today’s principal issue. To relieve some of this burden, the WSMA is in favor of redefining the basic health care product with fewer mandates. The WSMA believes that HSAs are a viable option; however, they are not a comprehensive solution. Health information technology, tort reform, and a limited government role are also necessary focuses.
Dr. Dunbar discussed the positive trends in HSA usage. In stark contrast to health care insurance rates in general, premiums for HSAs in 2005 saw a 17 percent decrease from 2004 rates. Acknowledging the arguments against HSAs, Dr. Dunbar cited a study which found that individuals with HDHPs were 30 percent more likely to skip or delay treatment versus 17 percent of individuals with traditional plans. Those with HDHPs were also 25 percent more likely to skip medications versus only 15 percent for those with traditional plans. The study also found that those with HDHPs spent larger percentages of their income on out-of-pocket expenses, with those making under $50,000 being particularly vulnerable to greater spending. It was noted that the study did not explore why individuals avoided treatment, if it was an actual under use of care or if they avoided an over use of care.
Recognizing these downfalls, Dr. Dunbar still focused on consumer driven health care as a good balance between curbing health care spending and improving health care outcomes. While the majority of physicians in the WSMA support market based solutions, between 25-30 percent of their physician members prefer government planning. Due to the diversity of physician opinions, the WSMA remains more bipartisan in its viewpoints. However, overall it sees the trend towards individual responsibility as positive and stresses the importance of giving consumer driven health care every chance to succeed.
Representative Cary Condotta, an advocate for HSAs in the House of Representatives, is also a small business owner. He shared his experience converting his employees’ coverage from traditional plans to HSAs. Overall, Rep. Condotta feels that it has been a positive change for his employees. His young staff consists of about 14 individuals, of which 1 employee has been disappointed with her HSA. Rep. Condotta offers each employee a set amount of money per month for health care expenses and the employee chooses how to allocate those dollars. Some employees place all of the employer contribution in their tax favored HSA account, others keep all of the contribution as cash, while some contribute to the HSA until they meet the HDHP deductible amount and then take the remainder as cash. Employees who have left the company have also been able to take their account with them.
Rep. Condotta noted a lack of competitive HDHP rates within Washington State and balancing the initial risks in transitioning to HSAs as limitations. To ease the transition, in the period before employees had built capital in their HSAs, he guaranteed coverage should any catastrophic accident occur during the first year. He also noted that it was more difficult for employees without families to build capital quickly, as the employer contribution is significantly lower.
While Rep. Condotta is pleased to have provided his employees with HSAs, as a state employee, he is not yet eligible for an HSA himself. In 2005, Rep. Condotta’s bill to allow state employees to purchase HSAs failed. The bill finally passed during the 2006 Session. However, marked resistance to HSAs still exists, and consequently, the bill will not take effect until 2009 because of administrative reasons.
Moderator Paul Guppy noted that with over 107,000 employees, Washington State is the largest employer in the state. However, state employees currently have good health benefit plans, so there is little incentive for them to switch to HSAs. There is some movement on the federal level, where five HSA choices are now a part of health care plans for federal employees. The panel summed up by reiterating that one of the greatest strengths of HSAs is that they are not mandatory, but are based on choice. While they are not a universal solution, they are an important part of providing affordable health care for the people of Washington State.
Talking Points:
Consumer driven health care offers a practical solution to improve our current health care system
- Dr. Peter DunbarSmall businesses can use HSAs to provide coverage for their employees at reasonable prices.
- Rep. Cary Condotta
Prescription Drugs/Biotech Panel
Dr. Richard Dolinar defined five major areas of quality based purchasing: evidence based medicine, the standard of best practices, electronic medical records, outcomes measurements, and pay for performance. He stated that these items have redefined decision making and changed the locus of control from the doctor/patient relationship to a third party.
Evidence based medicine (EBM) has become the foundation of third party decision making, but it actually is not evidence based because there are no studies showing that a third party decision provides better care. Medicine has always been fact focused, especially during the last 50 years. Now, randomized trials are considered the highest level of evidence, with other methods deemed secondary. This model disregards the importance of observation, as evidence from randomized trials shuts down all further discussion.
The current standard for decision making, the idea of best practices, is flawed in that it places what is best for the group over what is best for the individual. Algorithms replace medical judgment, creating a problem of knowledge. The problem is that algorithms can not respond to changing circumstances, only clinicians can. In this equation, electronic medical records have become the monitor. Unfortunately, a third party makes decisions based solely on cost effectiveness. A third party relies upon outcome measurements to gauge success; however, measurements could appear to be improving but in reality things could be getting worse. The final factor in the process is the idea of pay for performance being the enforcement mechanism, ultimately shifting decision making away from physicians. To conclude, Dr. Dolinar mentioned HSAs as a possible solution to the current problems with evidence based medicine. As HSAs put the patient in control, it removes the majority of third party control over decision making.
New medical device technology is dramatically changing treatment of various diseases. Technologies are reducing reliance on traditional surgeries, speeding recovery and minimizing side effects, which in effect work to improve health care outcomes. Thomas Clement outlined companies that have recently introduced novel technologies, such as: Sonosite, Northstar Neuroscience, Spiration, Calypso Medical Technologies, Targeted Genetics Corporation, and Pathway Medical Technologies.
Sonosite has designed a portable, handheld ultrasound machine which allows for increased mobility of care. Strokes are the leading cause of long-term disability in the
Talking Points:
Decreasing the focus on EBM allows for increased clinician discretion and personalized health care solutions
- Dr. Richard DolinarEmerging medical device technologies are improving health care outcomes
- Thomas Clement
Health Information Technology (HIT) Panel
Jaime Herrera, Legislative Assistant, Office of U.S. Representative Cathy McMorris
Carrie Freeman, Director of Sales and Marketing, First Choice Health
Dr. Guy Mansfield, Director of Health Informatics, Product Strategy Group, GE Healthcare
Medicaid spending is projected to reach $5.2 trillion in the next decade, and over the next 20 years the current rate of spending would bankrupt every state. In a bipartisan effort with Congressman Adam Smith (D – Washington), Congresswoman Cathy McMorris (R – Washington) designed a small demonstration project to address Medicaid spending. Jaime Herrera explained how the Medicaid Assess Project through Information Technology (MAP IT), currently being considered in Congress, would construct a virtual case management tool allowing providers to create personal health records for Medicaid patients. While only 20 percent of Medicaid recipients suffer from chronic illnesses, they consume 80 percent of Medicaid spending. MAP IT presents a tool to connect providers and provide complete, updated records on Medicaid patients. This comprehensive approach is intended to help decrease spending by better managing the Medicaid population, especially those with chronic illnesses.
Carrie Freeman presented trends in HIT from the consumer perspective. The emergence of consumer directed healthcare plans has created greater demand for patient knowledge of plan designs and cost information. The Internet is facilitating the acquisition of such specific knowledge. A variety of decision support tools provide access to new areas of consumer knowledge, such as: more reliable health information, cost and quality information, health tracking instruments, and pricing for health services. One of these tools, Pharmacy Benefit Managers (PBMs), provides comparative information on prescription drugs. PBMs allow comparison of drugs within the same drug class, as well as offer formulary, cost, and generic drug information. Other innovative sites give estimated costs for health procedures or offer comparative hospital information. To compare hospitals, the patient enters an ailment, a zip code, and ranks various factors according to personal preference. The patient is then provided with a personalized ranking of area hospitals, including overall rankings and rankings based on each of the individual factors. As consumer driven health care increases demand for these decision making tools, more technology and tools will become available.
To highlight deficiencies with the current system of medical record keeping, Dr. Guy Mansfield outlined the technology available via his local veterinary office. There, he receives automated care reminders, communicates with his veterinarian via email, and accesses his pets’ health records online. However, when it comes to his personal medical care, such technology is not available.
The health care industry is moving towards electronic medical records (EMRs). EMRs provide a major shift from the traditional paper records, and a number of companies have developed EMR products. For example, General Electric has built Centricity Enterprise, a large integrated patient care database. This system is designed for large hospitals and integrated care delivery networks (i.e. hospitals and their satellite networks).
The integrated database has multiple record keeping applications. It provides for uniform documentation of care, collects lab results and other supplementary test information, as well as helps manage administrative functions such as billing. In addition to the record keeping applications, the system is also a computerized physician order entry device. It guides physicians through screens where pertinent medical information is presented and gives procedural treatment steps. It features built-in intelligence to cross check patient history, from allergies to prescribed medications. It provides a form of “facilitative guidance,” providing clinicians with the necessary tools to make the best possible discretionary decision.
A 2003 Rand study found that even when there is wide spread clinician agreement on the “best care” for common diseases, patients only have a 50 percent chance of receiving these best care practices. Human learning limitations prevent clinicians from knowing everything about all diseases. Facilitative guidance provides information and recommendations when they are most needed, at the point of care.
In collaboration with leading medical researchers and leaders in HIT, General Electric helped to develop Shareable Active Guideline for Environment (SAGE), a local clinical information system. SAGE provides a technical infrastructure to encode medical knowledge in the form of best practices, widely disseminate the information and deploy care recommendations. During the five year project, the group created working prototypes of SAGE and enabled the systems to interact in real time. It allows clinicians to query local medical records and provides best care recommendations. SAGE also holds great potential for addressing public health issues. If avian flu outbreaks occurred, the Center for Disease Control (CDC) could disseminate information and treatment guidelines to local providers, who in turn would provide the CDC with information specific to the region.
Dr. Mansfield predicts that we will see some success in national efforts to broaden options of these types of programs, as well more standardized exchanges of information, and more active decision support at the point of care. These efforts will need to be coupled with care improvement methodologies, changes in the health care culture, flexibility and leadership from providers adopting the systems, an evaluation of privacy concerns, and continued improvement of technology by manufacturers.
It is important to consider some limitations to integrated patient care databases. Currently, system manufacturers have not developed technology that would be effective or affordable for smaller care providers like family practice clinicians. Another important consideration is how medical malpractice liability is affected by facilitated guidance systems. Does it ultimately decrease discretion by making clinicians liable if they do not follow the recommendations? Dr. Mansfield acknowledges that this technology does raise legal issues that need to be resolved. He noted that some of GE’s clients have addressed this issue by integrating a legal statement into patient paperwork.
Talking Points:
If passed, MAP IT would provide a case management tool to improve care and decrease costs of treating Medicaid patients with chronic illnesses
- Jaime HerreraConsumer directed healthcare plans have facilitated the emergence of decision support tools
- Carrie FreemanEMRs provide clinicians with disease and treatment information and recommendations at the point of care
- Dr. Guy Mansfield
Policymakers Lunchtime Health Care Reform Panel
State Senator Karen Keiser (D – 33rd District), Chair, Senate Health & Long-Term Care Committee
State Representative Bill Hinkle (R – 13th District), Ranking Republican, House Health Care Committee
Christina Hulet, Governor Gregoire’s Executive Policy Office
Moderator Jim Vesely asked each panelist to discuss what they predict for health care reform in Washington State next year. Senator Karen Keiser sees the legislature taking a broader view than in past years, looking for true reforms rather than incremental improvements. She noted the Governor’s Blue Ribbon Commission on Health Care Costs and Access as a body capable of bringing about true reform. Personally, she will work on one of her projects from last year, encouraging early intervention through workplace wellness programs. Representative Bill Hinkle stated that health care is one of the most polarized debates between parties. He believes that limited government and market based solutions will be the key to success. He would like to see more of a focus on opportunities and incentives rather than on mandates. Christina Hulet believes that recently there has been more convergence of views between the parties, especially on issues such as chronic care management, prevention measures, and health information technology. She noted that Governor Gregoire expects to work on improving the delivery of health care. Ms. Hulet also identified the Blue Ribbon Commission as an effective means of developing a long-term plan and laying a strong foundation for the 2007 Legislative Session.
Mr. Vesely then asked the panelists how they will deal with growing health care needs while also facing deficit spending. Ms. Hulet believes that Governor Gregoire will address insurance issues while also looking at cost effective long-term planning. There will also be a focus on better spending of state resources, including partnering with the private sector. Sen. Keiser believes that the focus will be on lowering costs and increasing the quality of care because both the state and private sector are paying too much. Rep. Hinkle stated that much of the debate would be silenced if the Fair Share Act is on the agenda again next year, as it is a deal killer for many. He noted that the status quo is not sustainable and real reform is necessary.
Mr. Vesely then asked the panelists to comment on King County Executive Ron Sim’s plan for county employees, where employees are given lower premiums for making healthier lifestyle choices. Rep. Keiser praised the program for aligning incentives with good behavior and offering a market based approach. She stated that it is a sign of what is coming, a greater focus on health and wellness programs. Rep. Hinkle agreed with the program for the most part. Ms. Hulet highlighted a similar program recently launched by Governor Gregoire, Washington’s Wellness Works Campaign for employees of state government.
An audience member asked why there is no private representation on the Blue Ribbon Commission. Ms. Hulet said that it was a deliberate choice to make the Commission a decision making body. However, the Commission is currently having discussions on how to structure the stakeholders’ role.
Audience members asked how the legislature is working to help small businesses and how it is addressing the issue of mandates. Sen. Keiser stated that mandates are not the issue, as removing mandates only shaves a small portion off of the total cost. She noted the potential of the Small Employer Health Insurance Partnership Program. The program allows small business owners to purchase insurance for their employees by sharing costs. The owner pays 40 percent, the employee pays 20 percent, and the state pays the remaining 40 percent. Rep. Hinkle said that the program is not a real reform because it does not make health care more affordable. He also stated that mandates are a huge problem and much of the reason why Washington’s average premium is over $400 a month, approximately double the cost of other states. He believes that the legislature must listen to what the purchasers are saying. Ms. Hulet pointed out that many mandates have passed with bipartisan support.
An audience member asked if Washington State was ready for a big idea. Ms. Hulet stated that the Blue Ribbon Commission should be open to some big ideas. The Governor is optimistic about what this group can do, while also recognizing that there is a lot that has already been accomplished. Sen. Keiser declared that Washington is ready for serious reform, and that fundamental decisions need to be made soon. Rep. Hinkle indicated that the Blue Ribbon Commission will not be able to achieve the level of reform necessary.
Talking Points:
In 2007, the Legislature will look at broader reforms than in past years
- Sen. Karen KeiserReal reform would entail limiting government and using market based solutions
- Rep. Bill HinkleThe Governor's Blue Ribbon Commission is working to develop a long-term plan for reform
- Christina Hulet