The Top Health Policy Stories of 2011, Part Two

Last week, I shared four of the top policy stories of the year that told us something about how health policy has been trending over the past decade or more.  This week, I’m offering four more to close out the year that tell us a little about where health policy is going in the future.

4.  Connecticut Employees Choose Health.  Back in the early days of managed care, when HMOs were not yet a four-letter word and they emphasized wellness as much as health care cost containment, they proved to be popular with members.  In August, the State of Connecticut revived the concept, giving its employees the choice of a lower cost health insurance plan that emphasized wellness or their traditional comprehensive plan.  It expected 50% to choose the new wellness plan.  But the state got a big surprise.  When the dust settled in October, 97% had opted for the wellness plan.  This will cost the state much more in the first year, but will also produce more than the $100 million in health care cost savings the state originally projected for the future.

The implication for future policy – people want do more for their health, and will if they see a direct financial benefit.

3. The Florida Legislature Puts the NRA In Charge of Medicine.  During its 2011 legislative session, the Florida legislature attracted some national attention when it decided to include the National Rifle Association (NRA) in the doctor/patient relationship.  The NRA asked the legislature to prohibit pediatricians from even asking parents if there were firearms in the house so they could counsel them about firearm safety – despite well-known evidence that children are more likely to die from unintentional injury than any other cause.  The bill passed, and the pediatricians were eventually forced to go to court to stall its enforcement.  With big lobbying organizations being allowed to sit in the doctor’s office with us, is it any wonder that people wonder whose side government is on?  

The implication for future policy – Patient privacy protections will erode if “smaller government” cedes more power to private entities.

2.  The Attack on Public Health.  After the loss of almost 30,000 public health jobs nationwide between 2008 and 2010, the Association of State and Territorial Health Officials (ASTHO) headlined an April press releasewith the words “Cuts to Essential Public Health Services Jeopardize Americans’ Health.”  The proof came in an article published in Health Affairs in August, which showed that a 10% change in public health funding changed infant death rates, as well as death rates from cancer, diabetes, and heart disease. 

The implication for future – we and our children will be less healthy tomorrow because of the cuts our policy leaders have made today.

1. The Implementation of the Affordable Care Act.  The implementation of the Affordable Care Act (ACA) was once again the health story of the year.  The public is still divided.  A plurality supports it, but the combined numbers of those opposing it either because they believe it did too little or too much comprise the majority.  Meanwhile, the law has begun to affect significant numbers of Americans.  For example, in September, CMS announced that 1.3 million Medicare recipients had received drug discounts averaging over $500 per person, and another 1.3 million had gotten a free wellness visit as a result of ACA.  And this month, the National Center for Health Statistics reported that 2.5 million young adults had insurance because of ACA provisions enabling them to stay on parents’ policies.    The election campaign and the expected May or June Supreme Court ruling on its constitutionality guarantee that this will be the story of 2012, too.

The implication for the future – government’s role in determining our health care future is going to grow, not diminish.  Policymakers will continue to struggle with our expanding $2.5 trillion health care economy and the public will continue to try to figure out whose side they’re on.

In early December, Our Health Policy Matters was averaging over 2,500 readers per month, and had recorded its 20,000^th reader – not too bad for the first year of a once-a-week column focused entirely on health and mental health policy.  I appreciate you all, especially those of you who printed and shared columns with your friends, used them with your students, and offered them to readers of your own electronic journals and web sites.

I’m always interested in your ideas about how to improve the column, and how to get it in front of more people.  Please let me know (gionfriddopaul@gmail.com) if you have any suggestions for me. 

And thank you all for engaging in the health policy debate, and my best wishes for a happy, healthy, and prosperous 2012!

A Different Kind of Individual Health Mandate

According to a recent report in Health Affairs, health spending in the United States is projected to rise by 5.8% per year over the next decade.

source: CT OPM

Rising health care costs are a problem that must be brought under control.  One approach is to do what Florida's doing.  It is forcing state employees into a single HMO, removing all competition from the market while praying that the HMO won't be motivated by making a profit. 

Another is to look at what the State of Connecticut is doing.

It is betting over $100 million that its employees and retirees will respond to a different kind of “individual mandate” from the one under fire in the Affordable Care Act.  Connecticut has decided to give financial incentives to employees and retirees to manage their health.  It will also penalize financially those who do not. 

State workers overwhelmingly voted to accept the new deal earlier this month.  If the plan works, then it may signal a new path for every state hoping to cut its future health care spending.

Connecticut was motivated to undertake this challenge by its mind-boggling budget deficit.  The deficit in the coming two years was projected to be 50% higher than the entire annual state budget was just a little more than 30 years ago.

To avoid thousands of layoffs, it entered into negotiations with its unions to change salary and benefit packages.

At the bargaining table, negotiators decided not just to employ the old, failed cost-containment strategies of reducing benefits to workers and squeezing payments to providers.  They took a different approach by promoting the participation of employees and retirees in disease management and health maintenance programs. 

They created a new “Health Enhancement Program” for all Connecticut state employees and all future retirees. Those who choose to participate in the “voluntary” program will benefit financially.  Those who do not will pay higher insurance rates as a penalty.

Participants in the Health Enhancement Program will receive some excellent chronic disease management services, including free health care and drugs.  They will not have to pay any co-pays for office visits related to diabetes, asthma, heart disease, hyperlipidemia, or hypertension, as long as they adhere to the schedule of visits recommended by their health care provider.

Participants in the program will also pay reduced co-pays for drugs needed to treat these conditions.  The co-pays will be as low as zero for all diabetes prescriptions and for generic drugs used to treat the other conditions.

In return, participants will have to agree to focus on staying healthy.  They must get regular physicals, eye exams, and dental cleanings.  If they and their dependents do all these things, they will receive a cash award of $100 per year for their efforts.    

On the other side, those who choose not to participate will pay more for health insurance and health care.  They will pay an additional $100 per month for their insurance.  They will pay higher drug co-pays.  They will also pay a new $350 deductible per individual, with a $1,400 family cap, for health care services not covered by co-payments.

Connecticut is betting heavily that its employees, retirees, and their dependents will want to manage their health – and, most importantly, that it will pay off in reduced costs to the state.

In June, the Office of Policy and Management estimated that the Health Enhancement Program will save the state over $100 million annually in health care costs.  OPM believes that 50% of those eligible will choose to participate, and that this will result in a 10% reduction in health insurance claims – even though some participants will be required to visit health and dental health professionals far more often than they do now.

The penalty provisions save the state another $18 million, which the non-participants will pay out-of-pocket in higher premiums and deductibles.

There may be two big holes in the Connecticut plan that will reduce the savings to the state.  While mental health and chronic pain services are still included in health plans just as before, the Health Enhancement Program does not include them among the conditions managed in the program.

Both affect a large number of people, lead to many expensive and preventable health care encounters, and often co-occur in a patient with the covered chronic conditions.  If a patient’s unmanaged mental illness leads to a failure to comply with a diabetes disease management program, both the patient and the state will lose.

Still, the Connecticut plan goes beyond what most other states have attempted, and is well worth a try. Changing the trajectory of increasing health care costs isn’t easy.  It will be interesting to see if Connecticut’s health “mandate” proves more popular and effective than the alternatives.    

If you have questions about this column, or wish to receive an email notice when Our Health Policy Matters columns are published, please email gionfriddopaul@gmail.com.