Health Care Reform in Germany
This past spring, Health Affairs, the premier health policy journal, had an interview with the German Minister of Health, Ulla Schmidt. The interview focused on reforms to Germany’s health system instituted principally in 2007. Minister Schmitt was asked what were the goals of the reforms. Her answer – she wanted to preserve the principles of social solidarity and affordability that had always been a part the German health system.
In comparison to health care in the United States, the Germans system could hardly be called a system in crises. The per capita costs were about half of what they were in this country $3,200 per person in Germany compared to $6,400 here. But they did have too many uninsured – about 0.2% of the population. The United States, by comparison has 15% uninsured.
So the question is, What do Germans understand by social solidarity? Minister Schmitt explained that everyone in Germany has guaranteed access to health care and everyone contributes to the financing based on their ability to pay. Well, if that is social solidarity, where does affordability fit in? For Minister Schmitt, if the entire system is not affordable, the social solidarity begins to break down.
Too much of the health care debate in this country is muddled by ideology on both sides. For many in this country, European health care sytems smack of “socialism.” Yet, two of the defining characteristics of the German system are not real popular among progressives in this country. The Germans have an individual mandate and they rely on insurance companies, although in Germany they give them a more accurate name, Krankenkassen, or Sickness Funds.
In my last post, I wrote that health care reform proposals need to focus on the patient side of the health care delivery system by designing systems that eliminate the cumbersome, even tortuous routes that patients must travel to enter that increasingly privileged space – a person with health insurance.
An illustrative example is the Qualified Medical Child Support Order (QMCSO). QMCSOs apply to those children who live with one parent but the court orders the other parent to provide the health insurance. The parent who has custody of the child is called, logically, the custodial parent. The other parent is called, can you guess, the non-custodial parent.
Every child support agency in every county and state in the country has a bureaucracy for the purpose of enforcing and administering QMCSOs. It does not matter why the parents are not together. Some are divorces, but some were never married. For a group of 25,000 Participants, my staff probably spends one to three days per month on issues related to QMCSOs.
Very little of that time is spent processing the paperwork. Most of it is dealing with custodial parents, non-custodial parents, child support agencies (issuing agencies in bureaucratese), carriers, attorneys and other stakeholders. In other words, our staff’s time is matched by someone else’s staff time. I did an extrapolation to the US population. It assumes our population is a representative sample of the general population. By my estimate, it is costing the United States economy $100,000,000.
Since November 4th, interest in health reform proposals has understandably intensified. I like to flatter myself that this blog might make a small contribution. But I do have a day job and so the horn I blow here only has one note; if we simplify the system we can find the money we need to cover the people without health insurance and increase product satisfaction among all stakeholders.
I am not a policy wonk who views the health care system wonderfully distilled through the glorious abstraction of statistics; nor am I encumbered by practical politics. I view the system from the bottom looking up. I have a stake in the present system, but that stake is poorly represented in these musings. I am a gatekeeper to the health care maze. In my ideal world there would be far less need for the work I am doing.
I know from daily encounters just how daunting that maze is for people needing care. I tend to demonize piece rate physicians who are too quick to deny care rather than trust the maze.
So when I read others who write about health care reform I look for my theme. On Sunday, November 23, 2008, the Washington Post published an opinion piece by Shannon Brownlee and Ezekiel Emanuel, 5 Myths About Our Ailing Health-Care System. The authors are right on target with four of the five myths that they debunk. They drive home the point that we are paying a lot of money for our health care, that we are paying a lot of money for not particularly good health care, that we really are paying the price through premiums, taxes, and lost wages, and that Americans are ready for a change.
Patients, administrators, and family members of victims aired their reflections about medical errors in a video on the on-line New York Times this week (November 25, 2008). They all lamented that if only doctors and hospitals could own up to their mistakes, there just may be fewer lawsuits.
Two stories I listened to more than ten years ago underline that theme. A friend, a lawyer representing a medical provider, shared with me his concern about his client that he would be defending at trial that week. He had advised his client to settle because the evidence against his client was strong and he was not optimistic.
The patient had acquired an infection while in the hospital. The evidence was incontrovertible and the patient had died. But the patient was old and infirm and had little time left and even less quality time. The infection may have hastened the inevitable but it also made the end needlessly painful for both the patient and the patient’s family.
The family asked only that the hospital not bill them for the extended six month hospital stay caused by the infection. If the hospital agreed they would not sue. The hospital could not admit to a mistake and, as a result, appeared headed for a judgment that would cost the hospital several times the hospital stay.
The second story was from woman I met while waiting for jury duty. It seems that during stomach surgery her doctor had perforated her stomach and he did not discover it before she was stitched back up. The stomach acids caused havoc on her intestines. I asked her if she had sued her doctor. Oh no, she was quick to reply. The doctor was so distraught about the mistake. She could not do that to him. He had paid for all her medical expenses since the incident several years earlier. In addition, he only operated on one patient after that accident, resigning from his surgical practice, but not from his medical practice.
Every health care reform proposal attempts to offer some relief for small businesses. According to the National Federation of Independent Businesses (NFIB), small businesses create 2/3 of American jobs, yet half of the uninsured are in small businesses.
Look at President-elect Obama’s health care proposal on his campaign’s web site. The first two items:
- Require health insurance companies to cover pre-existing conditions so all Americans regardless of the health status or history can get comprehensive benefits at fair and stable premiums.
- Create a new Small Business Health Tax Credit to help small businesses provide affordable health insurance to their employees.
What’s remarkable about these proposals is that we are still discussing them.
Let’s look at the second item – a tax credit for small businesses. In my opinion, it is a mistake to separate the small business market from the individual market. Almost every small business starts out as a solo enterprise. How many creative ideas never come to market because the would be entrepreneur is afraid to go without health insurance?
Yet we don’t make it easy. Anyone who has ever itemized deductions has experienced the limits on the deductibility of health insurance costs. There is also something called a section 105 deduction that you can learn about elsewhere. Yet business owners can deduct the full cost of their medical insurance. I would welcome an explanation that justifies this disparity, or at least explains the politics to me.
The real nut is the first item. That we allow insurance companies to only insure healthy people is the greatest tragedy of American health care. This is called medical underwriting. Jonathan Cohn in his book, Sick, has a wonderful chapter on this stain on American health care.
I support a simpler health care system. That is my number one priority. Thus I am unimpressed with the health care reform platform of our newly elected president. I do share the hope and optimism of many that meaningful change can and will happen.
But getting a simpler health care system means that some of the stakeholders need to be cut lose from the system. That is a politically daunting task. It is why most health care reform proposals try to add more patches to what is already a shabby patchwork quilt of private and public programs.
One effort does try to simplify a small part of our current system. At least 30 states have mandated that insured health care plans cover all children until they reach a certain age. Yet as simple as this concept is, it comes with more variations than states that have adopted it.
What are we trying to simplify?
Most health plans offer parents with dependent children in college the opportunity to continue coverage for their child if they provide evidence that the child is enrolled in a qualified post secondary education program.
This is a holdover from the days when children entered the job market after high school and those jobs provided health insurance. Today, it is more likely that neither half of that statement is true. It is an obvious adaption to changing times. It is a relatively easy way to expand coverage to a vulnerable population. Young adults are healthier than the general population and therefore not an expensive expansion. Of course, that doesn’t prevent this trend’s detractors from referring to it as the “slacker mandate”.
Sometimes people are magically teleported outside of their health care silo.
This happened to a group of our participants every month for several consecutive months.
At the beginning of each month one of the members of this group would call our office – “The doctor won’t treat me because he/she was told I have no health insurance.”
Our Plan had recently approved coverage for domestic partners. Somehow, the computer system of one of our carriers could not properly interpret the code for a domestic partner. The computer saw this adult as a child. Sound like Alice in Wonderland? One computer makes you larger and one computer makes you small.
The carrier told the doctor’s office that this member had no other adults on their plan, only a dependent child or dependent children. In at least one case, the domestic partner was 52 years old and the couple had no dependent children.
Now this should not present an insurmountable challenge. The Health Insurance Portability and Accountability Act (HIPAA), Public Law 104-191, includes provisions for what is referred to as Administrative Simplification. This rabbit hole of regulations details in excruciating detail the requirements for transmitting electronic files (Electronic Data Interchange or EDI), including enrollment files, first appeared in 2000.
The implementation guide for the enrollment file, ANSI ASC X12N 834, lists the acceptable individual relationship codes. They appear in the INS02 Segment in the 2000 Loop. The primary card holder is represented by the number 18, a dependent child is a 19, a spouse is a 2. You may argue that the codes don’t make sense. But they don’t need to. After all, they are being read by a computer. The code for a domestic partner is 53.
Notice that it does not include any of the digits used in any of the other codes. So how does a 53 get confused with a 19? Is our group the first to cover domestic partners? How is a fifty two year old interpreted as a dependent child?
But as confounding as computer systems may be, they are at least constrained by laws of logic, laws that most of us find baffling, but laws nevertheless. How logical is it that every month, in some cases, every week or day, countless thousands of group health plans must send their updated enrollment and eligibility information to their respective health insurance carriers - m ost of the time electronically, but far too often, on paper.
Seven dollars and forty cents hardly seems like an amount that should erect a barrier to health care.
In fact, when Mr. Koch (all names are fictitious) called to complain about this bill for seven dollars and forty cents, my first reaction was, “You should appreciate how lucky you are that you have a health care plan that pays most of your bills. Why are you quibbling over $7.40?”
Of course, that is not an appropriate customer service response.
But listen to Mr. Koch. “This bill is for two pain pills that were given to me when I was admitted to the hospital for an emergency surgery. Medicare won’t pay for the pills because they were “self-administered.”
Our insurance plan won’t pay, because Medicare won’t allow payment. (a common Medicare complementary policy). The hospital wants its $7.40. I must have been semi conscious when they gave me the pills, because I do not remember it at all. Why should I pay for pills that some nurse made me swallow when I was semi-conscious?”
Mr. Koch’s total pharmacy bill for this hospital stay was over $8,000 Who is the one who is quibbling over $7.40? And the issue has little to do with whether the two pills cost $7.40.
In fact, it is more likely that the hospital knows full well that the two pills only cost $0.20 But they calculate that it will take at least an additional $7.20 of bureaucratic labor to collect that $0.20. The bureaucracy needs to be fed.
Think about the effort to maintain these bureaucracies. Somewhere in the bowels of the CMS (Center for Medicare and Medicaid Services) someone has crafted regulations that stipulate that Medicare will not pay for certain medications that are self administered.
The logic is apparent Before Medicare Part D, CMS did not pay for prescriptions outside the hospital or physician office. “Self administered” appears to fairly delineate the boundary between those drugs that can only be administered in a hospital or physician office setting, from those dispensed by a pharmacist.
Instead of focusing on Joe the Plumber and his tax phobia’s, perhaps the presidential candidates should talk to Jesse the Artist and ask him or her about health insurance. On Sunday, October 19th, I visited the Bethesda Row Arts Festival in Bethesda, Maryland. I did just that. In a very unscientific survey, I talked to a number of the artists about their health insurance.
Why should anyone else be interested in artists? Because they are small business people. They are also very creative. It is this creative entrepreneurship of small businesses that candidates like to support because it is the economic engine that drives the American economy.
Artists as Small Businesses
I was curious whether health insurance was a barrier to entry for these artists. Two of the artist referred to a study (but could not name the source) that 83% of artists had health insurance. That was consistent with my own unscientific study. I talked to close to 20 people. Only three had no health insurance. But, on the other hand, only three paid for their own health insurance.
Perhaps they asked the wrong question.
Approximately six months ago our office began receiving stacks of paper claims for prescription drugs. The drugs originated in various Veterans’ Administration medical centers around the country. They were for drugs that members in our Plan had received at VA medical centers.
It was obvious that there had been some sort of new policy at the VA that required the VA to obtain payment from other payers when veterans had other coverage. The problem in this case is that our Plan had just changed pharmacy benefit managers effective January 1, 2008.
So think about this. Until recently, a veteran who also happened to have other coverage went to a VA medical center and received care. The VA paid for the service and somebody figured out how much it added to national health expenditures. Our health plan did not pay for the services and therefore nothing was added to national health expenditures, other than the cost of keeping that Participant enrolled in our Plans.
Then someone in Congress got the idea that the VA could save money by finding someone else to pay for services. Ignore the macro perspective that it increases the total cost to the system. Now a layer of bureaucracy is added to find who is liable for payment and send the bill to that payer. Remember the card game Old Maid? Who is going to be left holding the poison card? That’s what our health care financing system has come down to.