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Will Association Health Plans Fix Our Ailing Healthcare ‘System’?

After at least six failed attempts to repeal and replace the Affordable Care Act (ACA), President Trump and some Republicans, notably, Kentucky Sen. Rand Paul, are poised to resurrect the quest to fix our ailing healthcare-cost conundrum. This new attempt, issued on October 12 through an executive order, discontinues cost sharing reductions for many low-income Americans, expands short-term, limited-duration medical plans, and expands access to association health plans (AHPs).

The AHP is really an old approach, shrouded in anecdotal arguments that sound hopeful – at least in theory.

AHPs would allow small-employer groups and individuals to join newly-created federal-certified associations based on certain types of professional, trade or interest groups – that offer insurance coverage to its members. The plans would be sold across state lines and have reduced state oversight. It should be noted that many states already have interstate agreements that allow their residents to purchase out-of-state plans. According to supporters, AHPs allow small employers to have more bargaining clout with insurance companies and be exempt from the ACA’s requirements on having to offer essential benefits. The argument is that AHPs will increase product options for insurance shoppers and, in doing so, lower health insurance premiums.

AHP History

The idea of AHPs has been around for decades, often cloaked in different names depending on how they are funded (fully-insured vs. self-insured). For example, ‘small business health plans’ are also known to be AHPs. These plans are proposed to operate outside state insurance regulatory authority and beyond the reach of state consumer protections and solvency laws. Another name given to AHPs in the past are multiple-employer welfare arrangements, or MEWAs. Self-insured MEWAs have a checkered past, largely due to having no clearly-defined regulatory authority. This caused a great deal of problems when multiple MEWAs went bankrupt and consumers had problems addressing financial responsibilities.

Adverse Selection

Opponents of AHPs are concerned with a two-word nemesis found in the insurance world – adverse selection. In health insurance, adverse selection happens when sicker people buy health insurance while healthier people don’t buy coverage. The American Academy of Actuaries, an organization that provides actuarial advice on risk and financial security issues for policymakers, is justifiably concerned that if AHPs are given preferential treatment on regulatory insurance rules, other individual and small group markets will be adversely impacted by having more costly Americans maintain coverage in alternative, non-AHP plans.

Through AHPs, young, healthy Americans would likely gravitate to acquiring cheaper, non-ACA insurance plans that would offer fewer comprehensive benefits. On the other hand, older, sicker Americans would desire to keep the more comprehensive ACA plans, thereby remaining with the alternative non-AHP plans. Over time, the insurance rates would increase for the older Americans and become more unaffordable. In the insurance world, this adverse-selection phenomenon creates a ‘death spiral’ that will eventually drive insurance companies out of the non-AHP markets.

Based on my past work in the benefits world, I have found AHP-type arrangements to be long on anecdotal promises, as mentioned above, but seldom provide the desired outcomes in a highly dysfunctional healthcare ‘system.’ Yes, removing some restrictive regulatory barriers may possibly shave a few percentage points off premiums, but this approach does little to nothing in reforming the complexities and inefficiencies found within the delivery of healthcare – where most time and energy must be spent to control costs and improve quality-of-care outcomes.

If AHPs can survive legal challenges from states and federal courts, AHPs may possibly serve one instructive role – the eventual demonstration that this ‘market-based’ silver bullet won’t fix the crux of our healthcare woes.  Broad competition currently happens between health plans, provider networks, hospital groups, physicians and clinics. How well has this level of competition ‘fixed’ our cost and quality problems? It has not.

In their 2006 book, Redefining Health Care, Michael E. Porter and Elizabeth Teisberg argue that the ‘right’ level of competition should be addressing particular medical conditions over the “full cycle of care, including monitoring and prevention, diagnosis, treatment, and the ongoing management of the condition.” The authors believe that if we want competition in healthcare, we must push for better ways for physicians and hospitals to compete – making them the best at addressing a particular set of medical conditions.

The value in healthcare comes from the delivery of the care, rather than relying on insurance approaches that merely attempt to carve up an already-bloated pie. The centric goal in healthcare should be to improve the quality of health outcomes per dollar spent. This is known as healthcare’s true ‘value.’

Embracing AHPs does little to address this value.

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Iowa Employer Benefits Study© – An Annual Tradition to take a 1-year Sabbatical

All of us have established traditions in our lives, whether it be family or friend-related holiday plans, vacation travels to a favorite destination, attending or watching sporting events, and so on. Yet, due to circumstances beyond our control, such as time constraints, finances, death and adverse health problems, traditions are made to be altered, or possibly discontinued. After performing the annual Iowa Employer Benefits Study© for the past 18 years, I have decided to give the survey a ‘rest’ for one year. Believe me, this was not an easy decision. But after a great deal of personal and professional reflection, it is the right decision. My ‘tradition’ has now officially been altered.

In today’s world of perpetual political turmoil, healthcare – more specifically – health insurance, has become a political football. Hasty decisions are being made to benefit political promises, usually at the expense of pursuing sound policy practices. What has occurred in our nation’s capital in 2017 is akin to watching a surgeon perform knee surgery with a butter knife. The process has been extremely agonizing to witness and I find myself wincing as this grotesque process evolves.

Now more than ever, it is important to monitor employer-sponsored health insurance costs and components. After all, health insurance costs continue to outpace the Consumer Price Index (CPI) every year. Rising insurance costs have triggered a host of other health plan changes – forcing employers to offer the most competitive health insurance package that they can. I certainly don’t take this fact lightly.

But another fact is very important to me – the ‘value’ of care received. I firmly believe it should ALSO be on the radar screen for employers, their employees and the general public. Similar to how politician’s view our healthcare ‘system,’ employers appear to be mesmerized, rightfully so, by the insurance cost problems. Recently, Warren Buffett described medical costs as “the tapeworm of American economic competitiveness.”

This cost concern, however, tends to suck the necessary oxygen out of the room, crowding out badly-needed, laser-like attention and focus on key cost drivers that impact costs in the first place. This is ‘downstream’ thinking, the actions we take about fixing the symptoms of problems rather than concentrating on the issues that actually CAUSE the cost ‘pollution’ we find so objectionable. Being distracted with downstream symptoms has lulled us into believing that we simply need to fix the “insurance problem” and the ‘upstream’ pollution will miraculously go away. Inflated health costs are actually more harmful to us because we refuse to look beyond the insurance component to help address the cost conundrum.

This serves as the backdrop on why I decided to place the Iowa Employer Benefits Study© on a one-year sabbatical. It’s time to move ‘upstream‘ and disregard the naysayers who believe the status quo is much too difficult to confront. It is just too easy and expedient to continue the work downstream – making the appearance that something is being done to confront the cost issue. But if ‘optics’ matter, I’m in the wrong business.

In the next few weeks, I will reveal research I’ve wanted to conduct for the last number of years, but did not have the opportunity to pursue – until now. This work will be found under my companion organization, Heartland Health Research Institute. If you haven’t signed up to receive my HHRI posts, you may do so here.

Poet Robert Frost famously wrote, “Two roads diverged in a wood, and I – I took the one less traveled by, and that has made all the difference.”

This road may be lonely, but well worth the effort.

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A Tribute to My Brother Rob

My brother, Rob, passed away on Saturday, August 26, after a three-month battle with Glioblastoma brain cancer. At times, toward the end of a person’s life, he/she might share valuable life-lessons. When Rob knew his time would be cut short, he didn’t disappoint. He provided heartfelt insight of his time on earth. I was asked by his wife, Patti, to “say a few words” at his funeral. Below is my ‘eulogy’ for my brother, Rob:

The 3rd chapter in the Book of Ecclesiastes opens with “There is a time for everything, and a season for every activity under heaven.” This chapter is really about the seasons we experience in our lives – both good and bad.

How can I possibly share one, two, maybe three, poignant stories about my brother Rob in just a few minutes? I simply can’t.

Instead, I will provide my brief impressions of what I observed during Rob’s final few months while he was with us…as difficult as it may be.

Following Rob’s diagnosis and surgery in May, the reality of his longevity was no longer in question. Once he returned to Centerville from Des Moines, he wanted to spend quality time with family and friends – and many times it would involve the enjoyment of a cigar – or two, or three!

Now, to be honest, I am not a cigar aficionado – far from it. But in late June, I had the opportunity to enjoy a cigar with Rob.  During our “session,” I realized that my cigar had emboldened me to ask Rob a simple, yet possibly intrusive question – which I would attribute to my cigar being laced with a ‘truth serum!’

My question to my dying brother was simply this: “Rob, as you look back now, would you have done anything different in your life?” At that time in June, Rob’s mind was still extremely sharp, but he had great difficulty speaking, he often was only able to stitch a word or two together…which was a great source of frustration for someone who normally is very articulate with his thoughts. Rob looked at me with a resolute determination and responded, “HAVE NO REGRETS.”

Later in this same conversation, Rob was able to make a point that smoking a cigar was most satisfying or fulfilling during the final third of the cigar…I don’t know if the smoke gets thicker, smoother, or is loaded with additional flavor – but it seemed to be the best part of the cigar experience, according to Rob. I believe that Rob was making a point about his remaining time with us.

As I now look back at our simple, yet revealing discussion, I can’t help but make an analogy between Rob’s cigar experience and his own life. You see, maybe a full cigar represents one’s entire life. Each puff marks a season that defines who we ultimately become – whether by choice or by circumstances.

Once the cigar is lit, life’s journey begins, supplemented with a great amount of anticipation and hope, and yes, even peppered with setbacks and pain. Rob’s journey included countless joyous occasions, whether growing up in Fargo with his family and friends, his marriage to Patti, the birth of their four children and their marriages, and now their grandchildren. The tapestry of his life is full of so many examples.

Rob was a planter, both literally and figuratively.  We know about the greenhouse and his beautiful gardens – this was the literal part.  Every season at the greenhouse and with his garden, he would reap what he had sown.  But he also had the uncanny ability to establish (or plant) relationships with others that stood the test of time.

And, in the last few months of his life, he quickly learned that what he had sown with countless friends and acquaintances throughout his life, returned a bountiful harvest of love and cherished friendships that painted a beautiful landscape for him to enjoy. This most satisfying harvest, I truly believe, was Rob’s final puff in his life.

Patti, Liz, Pete and Alex, on behalf of our entire family and all who love Rob, thank you for taking such good care of him, especially during this most difficult time. Your love for your husband and father has been absolutely amazing!

To Rob’s friends and colleagues in Centerville and beyond, your outpouring of support and love for him has been both inspiring and gratifying – words cannot adequately express our feelings.

And, finally to Rob – thank you for sharing these life-lessons with us. You will be deeply missed.

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