Exploring Human Potential

American Health Care’s “Original Sin”

Posted on | May 17, 2017 | 2 Comments

Mike Magee

As a young surgeon in rural New England, serving farmers and mountain people on the Massachusetts/Vermont border, my growing interest in health management was fueled by two luminaries – one 90 miles to the north and the other 90 miles to the east. One was fast at work mining Medicare databases to expose high geographic variability in diagnosis and treatment suggesting both inequality and inequity. The other was a student of all things Deming, a land where there were no bad employees, just bad processes. Both believed that the answer to healing an obviously unwell US health care system was data, analysis and systematic reform.

Jack Wennberg, a graduate of McGill who did his residency and public health training in epidemiology at Hopkins before heading north for a professional lifetime at Dartmouth, received a boost from President Lyndon Johnson in 1967 as Johnson was struggling to understand and control explosive hospital costs in the wake of his landmark Medicare legislation. Working off of a $350,000 NIH grant, Wennberg would later recall that “Our results were fascinating, because they ran completely counter to what conventional wisdom said they would be….It was immediately apparent that suppliers were more important in driving demand than had been previously realized.”

Don Berwick was a product of Boston. He graduated from Harvard College and Harvard Medical School before doing a residency at Boston Children’s and gaining a degree in Public Policy at the John F. Kennedy School of Government. One of the first proponents of quality measurement, he took a post as Vice President of Quality-of-Care Measurement at the Harvard Community Health Plan in 1983. Over the years, Berwick was fond of sharing the quote, “Every system is perfectly designed to get the results it gets.”

When the IOM landmark publication, “To Err Is Human: Building a Safer Health Care System” came out in 1999, Berwick was one of the lead contributors. The report stated, “The focus must shift from blaming individuals for past errors to a focus on preventing future errors by designing safety into the system.” But the statement that caused an uproar at the time, and an avalanche of hospital process reengineering and measurement, was the substantiated claim that some 98,000 American lives were needlessly lost each year as a result of human mistakes in hospitals.

Nearly two decades later, one would think all the data mining, process reengineering, and sincere hospital-centric collaborative efforting would wrestle the caring defects to the ground. And yet, a well respected study in the Journal of Patient Safety in 2013 placed the number of annual deaths at between 210,000 and 400,000. The offered cure? The author at the time seemed to suggest more of the same, stating  “The epidemic of patient harm in hospitals must be taken more seriously if it is to be curtailed. Fully engaging patients and their advocates during hospital care, systematically seeking the patients’ voice in identifying harms, transparent accountability for harm, and intentional correction of root causes of harm will be necessary to accomplish this goal.”

What’s the problem here? The problem is that all the reengineering in the world will never correct the American health care system unless we address the “original sin.”

In 1947, in the wake of WWII with casualties flooding the homeland and explosive chronic disease an endemic reality, Canada and the U.S. grappled with the appropriate response. Canada, first in the province of Saskatchewan, and a decade later for the entire country, chose a course whose step one was universal health coverage for all Canadian citizens. They boldly declared that Canada and its economy and culture could never be healthy and productive unless her citizens were healthy. In Canada, access to basic affordable care was declared the right of all citizens and was supported by public funding. The government became the payer, but the caring was the responsibility of the 13 provinces and territories.

Out of that decision, that Step 1, came three other derivative steps. Step 2. The government determined what basic services would be covered by all plans. Step 3. Each province or territory created a budget within their resources which effectively created priorities for funding with a heavy focus on prevention and social determinants of health over reflexive intervention and use of technologic wizardry to wage “war” on disease. Step 4. Over the years, annual budgeting has forced a reconsideration and at times a reordering of priorities, ensuring a collaborative, transparent, and thoughtful process of continuous improvement focused on improving the quality of caring while efficiently dispatching limited resources.

In America, in 1947, we chose a very different course. We rejected universality and declared health care a privilege not a right. That was our “original sin”. In its place we embraced profit-seeking free enterprise, complexity, inequality, reckless competition, and an unerring faith that American ingenuity, innovation, and scientific discovery would eventually win out. Disease would be conquered and we – at least some of us – would be healthy.

Over the decades that followed, we’ve had many opportunities to see the light, After all, when Jack Wennberg received that $350,000 grant from President Johnson, it was clear that we were off course. And over the years, our best thought leaders, almost exclusively from premier academic health systems, have sought out evidence, mined the data, and reformed the processes from the tip of the American health care iceberg. They’ve failed. And they will continue to fail unless together we accept and correct our “original sin.”

It is time now to make equal universal access to basic preventive oriented health care the law of the land. The steps this will trigger will be reparative. Without it, we will continue to decline.

U.S. Only Nation to Spend More on Health Care than on Social Spending.

Posted on | May 13, 2017 | No Comments

Strikingly, this 2015 Commonwealth Survey of 13 OECD nations reveals that the U.S. is the only nation whose spending on health care exceeds its spending on social services (housing assistance, employment programs, disability benefits, and food security).High health spending in the US appears to have crowded out other forms of social spending that contribute to health. Lower health trajectories and greater health disparities have been tied to low investment in social services.

Advice to the AMA & AAMC as Trump Becomes Unhinged.

Posted on | May 11, 2017 | 5 Comments


Mike Magee

These are troubled times for our nation. We are testing our democratic institutions, as well as the quality of our leaders. Will they stand up to a President who is unhinged and his sycophants who seek only a measure of power? With control of 1/5 of our economy, 1 in every 8 workers, and the health and welfare of 324 million Americans, health care leaders’ role is assured. But as we’ve seen with Tom Price, the possession of an M.D. does not assure wisdom, empathy, compassion, or understanding.

As I’ve said in the past, it is not easy to be the head of government relations for the AMA and the AAMC these days. Under the best conditions, the job requires unerring focus on priorities (like physician payment or funding for medical education and research), nimble short term planning, and above all covering your bases.

Their most recent calculation, to support one of their own – the ethically compromised Emory orthopedist Tom Price for HHS Secretary, who is also a card carrying member of the Association of American Physicians and Surgeons, is already in the wringer thanks to the Republican House’s push for Trumpcare. Likely both organization’s lobbyists anticipated as much, and were prepared to join a broad coalition including AARP, AHA, ANA and others “in defense of Medicaid expansion and vulnerable populations.”

The laughable contradiction of their full throated endorsement of Price, a champion of such restrictions, and their equally public opposition to legislation that originated from his lips, was executed with glib superiority. After all, at its core, government relations is an exercise in value-free pragmatics. Today’s friend is often tomorrow’s enemy. And these organizations have been fighting the good fight to protect their financial interests for many decades.

In addition to protecting their members’ interests – financial and otherwise – they must also protect corporate assets which are somewhat removed, and at times in conflict with patient care. Combined, the programs and services offered in 2014 by the two earned $475 million in revenue. Almost half of the revenue generated by the AMA came from royalties and sales associated with their exclusive control of the nation’s CPT codes and the Physician Masterfile Database that fuels physician prescription profiling. Just under 2/3 of the AAMC revenue derived from three data driven and monopolistic product sales – ERAS (Electronic Residency Application Service – The Match: $69.2M), MCAT (Medical College Admission Test: $33.2M), and AMCAS (American Medical College Application Service: $30.4M).

At times, member interests and corporate interests lack perfect alignment. For example, in late October, 2001, I was introduced to Senate Minority Leader Trent Lott (R-MS) as part of my campaign for Surgeon General. My handler, in his introduction, mentioned that I had been recommended for the job by AMA President Richard Corlin. Lott instantaneously erupted in anger and spewed the words, “You can have the AMA. I want nothing to do with them!” This confused me since I had assumed that the AMA was in good standing with President Bush and his Republican allies.

I was unaware at the time that Lott, a member of the Senate Finance Committee,  was in a pitched battle with the AMA over its exclusive ownership of CPT codes that are required for billing of physician services. His beef was twofold: 1) This “monopoly” as he called it required insurers and others to purchase CPT code books and pay royalties to the AMA which he claimed earned the AMA $71 million in 2001 (the AMA counter-claimed it was $18 million for what they defined as the “gold standard” of coding). 2) Lott felt the AMA’s control of the CPT codes and Physician Masterfile  Database was preventing the development of open source consumer health cost databases that would allow patients to compare costs of doctors and hospitals. This was part of a larger effort to address soaring Medicare and Medicaid costs.

At the time, one of Lotts countervailing medical association supporters was the Association of American Physicians and Surgeons, Tom Price’s current values home base. They weighed in at the time with this comment, “Senator Lott deserves everyone’s support in his effort to pull the rug out from under the AMA’s secret monopoly on these codes. Elimination of this AMA cartel will do more to protect patients than any patient’s bill of rights law.”

Times and circumstances change – sometimes suddenly, as we’ve seen this week. Our President is now unhinged and erratic. Our Secretary of HHS is more than a little ethically compromised and deeply connected to former AMA enemies. Our logical movement toward universality, simplicity, and continuity in health delivery is a step away from a reversal that would harm our economy and at least 24 million of our most vulnerable citizens.

So it’s not easy heading up government relations at the AMA or AAMC. There are a wide range of countervailing interests and priorities. In such complex times, it’s best to keep the advice simple. So here it is:

1. Support the good guys.

2. Protect those who can’t protect themselves – our most vulnerable.

3. Do the right thing – not for tomorrow, but for our future.

How Sick Is My County?

Posted on | May 8, 2017 | No Comments

New Interactive Maps: Check Mortality Rate in Your County Here.

Lickspittle Support For Trumpcare.

Posted on | May 4, 2017 | 4 Comments

Peggy Noonan

Mike Magee

Today the Republican House voted against their own self-interest by caving to Trumpcare. In doing so, they failed to heed conservative columnist Peggy Noonan’s advise from just a week ago.

In her opinion piece in the Wall Street Journal, she wrote “Being loyal isn’t being a lickspittle.” This of course sent me running to an online dictionary to find out what the word lickspittle means.

(lick·spit·tle (lĭk′spĭt′l) n. A fawning underling; a toady. lickspittle (ˈlɪkˌspɪtəl) or lickspit. n. a flattering or servile person. lick•spit•tle)

Her advice to Republican legislators was pretty stark. She said:

“Republican officeholders should by now have figured out how to speak about our ever-interesting president, and most have not. They think since he is a Republican and they are Republican, they must defend him on all things. They are looking at it wrong. He is Donald Trump. He is not ‘a Republican.’ He is a wholly unusual historical figure who happened to them, and who now heads their party.”

What then do they owe him? Peggy says, “They owe him an eager and open-minded willingness to work with him, to create helpful legislation, to join in debate and support him on areas of mutual conviction.” Note the word “helpful”, versus destructive and discriminatory in a Tom Price kind of way.

What do they not owe him? Peggy says, They do not owe him a thing in terms of covering for his gaffes or oddnesses, mistakes or failures. They should not defend him on his tax returns unless they think he is right not to reveal them. They should not defend him on his refusal to make public the White House visitor’s logs—unless, bizarrely, they think that constitutes good public policy.”

She concludes by suggesting the radical notion that they stand up for their constituents and oppose Trump – and not buckle like Billy Long and Fred Upton did yesterday. Going to elected officials and their staffers most primal fear – that opposing the leader of their party could get them fired or otherwise defeated, she speaks truth to power:

“If you’re a staffer and say that, you’ll get fired. But you’ll have shown some style and helped the country. You’ll for the first time get some respect, and will be able to support your family and go on to a good living while having rescued your reputation. The first paragraph of your obituary, years hence, will say you were fired for speaking the truth, not that you were embarrassing back in the Trump era.”

Lickspittles – fawning underlings, flattering and servile.

The Insurance Agent Dilemma – Key to the Single Payer Solution.

Posted on | May 2, 2017 | 1 Comment

Mike Magee

Since the election of Donald Trump we’ve been reminded – twice – that opposition to the ACA or Obamacare is real and alive. And yet, it is equally clear that Americans in majority numbers now believe that health care is a right and they are in no mood to give back access or protections associated with the ACA such as those prohibiting discrimination for pre-existing conditions.

Most Americans, including health professionals, see opposition to the ACA as centered in Republican ideology or a personal vindetta against former President Obama. But this is a serious misread based on an incomplete understanding of where the true fault lines lie.

The basic villain is complexity –  bred, nurtured and maintained since 1947 when we took an historic right turn from our neighbors to the north and built a wide open free enterprise system that empowered private insurers. Canada, in contrast, chose single payer simplicity. (Providers submitted bills for services. Government paid the bills. And the patient was left alone.) If you wanted extras, you could buy a private supplemental plan.

Nowadays, when people think of health insurers, we think of UnitedHealth Group, Aetna, Anthem, Cigna and the other giants. But to understand the latest seven years of guerrillla warfare, we need to appreciate how our self-created health care complexity has determined how  health insurance is sold and serviced, and by whom,  in small and large communities across America.

By 1960, roughly 70% of Americans received health insurance through their employers. For those who worked for large employers (more than 50 employees), the health insurance options were presented by the Human Resources department usually with the assitance of a local or regional health insurance broker or agent. For smaller employers, if they did provide health insurance as a benefit, a local agent largely substituted as H.R. person on behalf of the employer. Over the next fifty years, the ranks of individuals selling and managing health insurance plans for businesses and individuals swelled to some 500,000. The introduction of the ACA was a major disruptor to their careers.

A few basic facts:

1. Insurance agents or brokers look to individualize service and choice of plans for their clients, sell and renew plans, update clients on changes, and answer a wide range of service issues related to claims and billing disputes. Some agents estimate that over three quarters of their time is devoted to servicing clients after making the initial sale.

2. Some agents are “captives” in that they act as employed agents for only one insurance company. But the vast majority are independent, presenting a range of options to small and large businesses, and to individuals and families. They are self-employed and receive 1099s from the insurers.

3. Agents and brokers are licensed within their states where they practice. They are paid a commission on the sale of a plan by the insurance company. This is usually a percentage ranging from 1% to 5% on individual plans and 5% to 7% on small group plans. In some cases, rather than a percentage, they are paid a fee, per member per month. They may also be eligible for contingency commissions. For example, an insurer may provide extra rewards for selling types of plans with lower utilization rates and less for “Cadillac” plans that have high associated claims costs.

4. Insurance agents are represented by the National Association of Health Underwriters. They advocate and lobby for their members and provide curriculum to achieve professional designation as registered health underwriters (RHU), health insurance associates (HIA), registered employee benefits consultants(REBC and certified employee benefits specialists (CEBS).

5. In 2011, the new ACA federally mandated medical-loss ratio went into effect. This required that 80% to 85% of health insurer expenditures go to direct patient care. Health agents commissions were not considered patient expenditures but rather an administrative expense. This triggered a tightening and in some cases restructuring of agents commission rates nationwide. In addition, the introduction of health exchanges and Medicaid expansions, while adding potential new business, required a steep learning curve with confused clients and new software to master. This added even more complexity to the local agents jobs.

6. Many local agents saw the introduction of as an unwelcome government intrusion and potential competitor. Detractors say the law also spent $120 million mobilizing community organization “navigators” who lacked the licensing and experience of agents. As one Oklahoma agent said, “It would be very costly for a governmental agency in some far off location to match the service and value agents bring to their clients, and it would not be able to replace the personal relationships agents develop with their clients.” Another commented, “Remember, if you buy health insurance online, there may be no advisor to explain benefits, no advocate if problems arise and no counselor to help you make the right coverage choices.”

7. The decision whether or not to allow health insurance agents to collect commissions for selling health exchange plans was left to each individual state. Those commissions were paid by the insurers not the exchanges. In states like Connecticut that wanted the ACA to succeed, there was an early signal that commissions were allowed and involvement of local agents was encouraged. The commission in Connecticut was 2% to 4% or $10 to $20 per member per month. In states opposed to the ACA, signals were mixed or absent.

8. Local agents have been for, against and everything in-between when it comes to the ACA. This is what you get when you attempt to rationalize private enterprise inequity by employing private enterprise complexity.

On the one side you have Salt Lake City agent Ernie Sweat who says, “For an agent, there’s no reason to be afraid of the exchange. I’m putting one or two companies every month with the exchange…I ask those agents who say they’ll have nothing to do with it, are you really providing your fiduciary duty to your people if there’s a product that’s perfect for them but you’ve decided not to sell it?”

Oklahoma agent Melissa Parchman sounded hopeful when she said, “Having the Government as a partner is out of the comfort zone but a lot can be done to help our citizens when we come together.”

New Mexico agent Kevin Pelletier wrote,  “In a nutshell, they know that if they call me, I either have the answer or know where to find it. If brokers are factored out in the health care reform process, where will these employers go for help?”

But California’s Kevin Knass doesn’t see a rosy future. His advice: “I wouldn’t recommend a career of representing health insurance companies to anyone. Agents are destined to be replaced, not by choice but by design, with online enrollment portals and call center staffers who know very little about how health insurance actually works.” And yet others, at least in 2013, saw this as a growth business.

There’s no right or wrong here, except for the original 1947 choice to go private enterprise multi-payer when Canada realized that clarity and simplicity and universality were all essential for long term success.

All Canadians had coverage, birth to death. A single payer meant a single set of rules and procedures that all could understand and manage. Territories manage budgets and priorities. Doctors and nurses and hospitals focused on patient care.

The ACA took a giant step toward universality. But it neither clarified nor simplified. Perhaps health insurance agents can help us finish the job.

Non-Real Work: Eliminating Private Health Insurers From Primary Coverage. Single Payer Time Has Come.

Posted on | April 26, 2017 | 2 Comments


Mike Magee

Economist Herbert Stein, WSJ contributor, AEI senior fellow, and economic advisor to Richard Nixon, famously said, “If something can not go on forever, it will stop.”

When it comes to the health insurance industry in America, we may be approaching that point. Obamacare, and those opposed to it, have managed in the heat of battle to accomplish what others have tried and failed to do over the past century.

As the Republican’s Freedom Caucus head fakes another run at ACA repeal, an overwhelming majority of Americans now believe that access to quality health care is a right rather than a privilege. And as we’ve seen in the past month, attempts to reintroduce regressive policies that would discriminate and target the most vulnerable in America have met a stiff public rebuke. It’s hard to turn back time when it comes to social policy, especially when income disparity has reached stratospheric levels.

The debate is beginning to shift from how do we get private insurers to participate to how do we move toward a single payer system. The public conversation is no longer either/or, but rather what kind of single payer. Should a state like California with its huge economy go it alone, with Medicare and Medicaid waivers from the federal government? Should we have “Medicare for All” as Bernie Sanders advocates? Or should we expand on the success of the Medicaid extensions featured under the ACA?

At the core of all these solutions is simplicity, cost and trust. On all three scales, health insurers, and their lobbyists, and state and federal government protectors have failed us. The only reason it has taken this long for us to look elsewhere is because the facts have been so well hidden within the cracks of the Medical Industrial Complex. Until now.

The U.S. insurance industry as a whole consumed 11.28% of our total GDP in 2015, roughly $2 trillion of our $18 trillion financial output. By comparison, Canada consumed only 4.4% of its’ GDP. Roughly 1/3 of the $2 trillion we spent went to Health Insurers. They function in a separate universe from Life Insurers and Property/Casualty Insurers who each consumed about 1/3 of the spend.

There are approximately 2.6 million Americans who work in the insurance fields. 1.5 million work for companies, and the other 1.1 million are local insurance agents/brokers living in our communities. About 500,000 Americans are employed selling and managing health insurance plans. They work for one of the 859 health insurance companies in America.

Over 50% of the money collected from U.S. citizens in health insurance premiums by private firms goes to just 10 companies. Here they are with the premiums they collected last year: UnitedHealth Group ($67B), Anthem ($55B), Humana ($51B), HealthCare Service Corp ($33B), Aetna ($24B), Centene Corp ($20B), Independence Health Group ($14B), WellCare ($12B), Kaiser ($12B), Molina ($12B). Anthem and HealthCare Service Corp are BC/BS derivatives.

The private companies by some accounts consume at least .20 cents on every health care dollar. Roughly 50% of their spend goes to employee wages and salaries. Their back-offices from actuaries to claims processors, from marketers to strategic planners, consume much of the rest. But of course, there’s ample room for profit, as we learned last week when UnitedHealth Group CEO, Stephen J. Helmsley, reported a 35% 1st Quarter profit, largely tied to adding over 1 million Medicare and Medicaid customers in the quarter, after he stiff-shouldered ACA plans. Some of UnitedHealth Group’s profit came from their own customers. But much of it came from their role as silent partners for large self-employed corporations and the federal government. Much of the money was “passed-through” these middle men claim managers.

Consider the fact that in 2015, here was the breakdown on health care claims payments by primary source: Private Insurers (33%), Medicare (20%), Medicaid (17%), DOD-VA-CHIP (4%), Government Public Health programs (3%), Other 3rd Party Payers (8%), Self-Pay (11%). Point being that private insurers have been at the trough of public insurance for a long time.

Costs of course have been skyrocketing. Complexity and inconvenience is legendary. In one recent audit of private insurer managed Medicare Advantage plans more than 50% of denials were not accompanied by “adequate or accurate rationale”. The cost of such intentional complexity quickly multiplies through a Byzantine and financially corrosive series of feed back loops that demand ever more coders, billers and financial analysts in hospitals and doctors offices across our land. There are now 16 non-clinical health care workers for every one physician in the U.S.  Administrative costs in U.S. hospitals consume 25% of their budgets compared to just 12% in Canada.

As for trust, the politics of Obamacare managed to expose a wide range of bad behavers who overplayed their hands.

1.  UnitedHealth Group Inc. boldly announced their intended exit from the ACA Exchanges in 2015 in coordination with a Republican discreditation campaign to “death spiral” the program in the lead-up to the 2016 Presidential election. As they exited the admittedly challenging federal program, they made sure to be clear they were all in on the the low-hanging federal fruit like Medicare Advantage. When they pulled out of the Virginia exchanges, they boldly declared that this action “in no way impacts our small and large group businesses, or Medicare or Medicaid programs in the Commonwealth.”

2. Then there’s Aetna: Their chief executive, Mark Bertolini, loved the term “death spiral” and used it repeatedly before and after conferring with Trump in the White House. Their attempt at a megamerger with Humana was blocked on anti-trust grounds. Aetna took it to court and got a slap down from the judge who believed the company had “attempted to strong-arm the DOJ into approving the merger by threatening to exit from several insurance exchanges if the DOJ filed suit”. So much for public integrity.

Aetna has pulled out of 11 states, even though Standard & Poor’s and CBO says the exchanges will turn a profit next year. U.S. District Court Judge John D. Bates says they did it “to avoid antitrust scrutiny” and improve chances of an Aetna-Humana merger. It didn’t work. 

3. Anthem, an historic BC/BS carrier, now is the second largest private health insurer in the U.S., selling exchange insurance to 839,000 members in 14 states, accounting for nearly 9% of their total revenue. It’s threat to leave Tennessee health exchanges uncovered in a third of the states counties reduced the state’s insurance regulator, Julie Mix McPeak, to begging, “The message I’m conveying is, ‘We’ll do whatever we can to make this area attractive to you on the individual exchange market,’”

4. Let’s not forget a number of truly regressive state leaders from Kansas to Oklahoma who fought Obamacare tooth and nail, and are complicit with the insurance lobby. Consider for example Oklahoma insurance commissioner, John D. Doak, the former insurance agent from Tulsa, whose red Trump-style cap reads “Make Health Insurance Great Again”, and who admits to Okie insurance agents far and wide, “I was never for Obamacare from the beginning.” Oklahoma Governor Mary Fallin, who rejected $3.6 billion in funding in 2012, apparently agrees with her northern neighbor, Gov. Sam Brownback of Kansas, that taking her state down in financial flames is the way to go. Rather than participate in the ACA and with Doak’s full-throated support, she just announced a 25% cut in the state Medicaid budget which will close multiple rural hospitals, lead to a wholesale exodus of physician providers from the state’s Medicaid programs, and leave $8.6 billion in federal dollars on the table over the next decade. Her state ranked 49 out of 50 states on the 2017 Commonwealth Fund Health Performance Scorecard.

And I could go on. This is America’s health insurance industry – a network of “non-real” jobs that add remarkable cost, but no clinical care. Let the John Doaks of the world focus on life insurance and property and casualty insurance. That’s fine. But they, and their corporate patrons and lobbyists need to get out of health care, except for supplemental policies as in Canada. We as a nation can figure out how to provide primary coverage under a single payor model. It’s not that complicated, especially if everyone is covered, there’s no cheery-picking, and we don’t have to compensate CEO’s like Helmsley and Bertolini.

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