Posted May 28, 2007  

A Governor on the Challenges of Health Care

Pennsylvania Governor Ed Rendell came to Washington, D.C., this month to brief the Kaiser Family Foundation about Rx for Pennsylvania, his comprehensive health-care-reform plan that would, among other things, provide universal access to health insurance for uninsured Pennsylvanians. In that briefing and a follow-up interview with Governing, the governor talked frankly about the challenges of passing health-care reform. He also talked about the high cost of the health-care system and what states can do about it.

A PLAN FOR COVERAGE

Governor Ed Rendell

Part of Rx for Pennsylvania is “Cover all Pennsylvanians” — CAP. We’re using the same general principle as Cover all Kids — take an existing system (for kids it was SCHIP) and allow the uninsured to buy in. In our state, 78 percent of the uninsured are working. The vast majority of them work for small businesses. They earn low wages — less than median income, which is $40,000 in Pennsylvania. Most small businesses that don’t offer insurance would be willing to spend $100 to $200 a month if we could get to that cost structure. Under our plan for employer coverage, they pay $170 a month and the employee contributes $10 to $70 a month based on income and percent of level of poverty. The uninsured who don’t work can buy in for a monthly premium. The self-employed can buy in even if they exceed 300 percent of poverty, but they buy in at our cost.

PAYING FOR THE PROGRAM

Under the insurance plan, mental health is covered, there’s prevention stuff in there and a wellness option. It will take $1.47 billion to fund. How will we pay for it? Employer-employee contributions will pay for 37 percent of the cost. The federal government — CMS [Centers on Medicare and Medicaid] waivers — will cover 33 percent. No state can get this done without federal participation. The state will pay for 23 percent of the plan. We’ll do that by increasing the tobacco tax by 11 cents a pack and extending the tobacco tax to cigars and smokeless tobacco, which we don’t currently tax. We’ll also redirect some funding streams. The adult-care health program, for instance, will go into the mix. As more and more of the uninsured are covered, uncompensated care funds for hospitals will be redirected.

The 7 percent that’s left is the most controversial part of the proposal. Companies that do not offer health care will pay a fair-share assessment of payroll. I was at a meeting with [Governor Arnold] Schwarzenegger the other day, waiting to see what California would suggest as an assessment before I set ours. He said 4 percent. I went to 3 percent so I could say, “See, we’re so much better than California.”

GETTING BUSINESS TO BUY IN

The biggest challenge politically is the fair-share assessment. Some businesses are already barking to legislators. We need companies who do offer health insurance to say, “Hey, we’re paying for those who don’t.” Costs get passed on — 6.2 percent of premiums go to pay for uncompensated care. Every company’s premium would drop 6.2 percent if everyone was covered. So we need businesses to weigh in, to say it has to happen. Something has to change, because the cost of providing health insurance is killing American businesses, especially those in the global marketplace.

Businesses want to continue to offer health insurance if they can, but they need to see results — lower premiums. So cost containment is key, but the key on cost saving is on how the plan comes out of the legislature. Everybody says universal access is a great thing. But when it comes close to a vote, different organizations will send lobbyists. They’ll tell legislators they love the plan, it’s visionary, it’s great — but the tiny percent of it that affects us needs to be cut out. Another group comes and says it’s “visionary” but that the 5 percent that affects us, cut that out. If the legislature yields to all of those wishes, 40 percent of the plan is gone. Cost containment is not as sexy as universal access, but it’s key. And giant corporations’ action is key.

Politics is a wonderful business. It’s lobbyist-dominated until a tidal wave comes and sweeps everything aside. If a tidal wave comes, it may be the worst of all potential options.

Businesses should do it now and at the state level. If we’re looking to build a national program, can we do it with the state taking shared responsibility with the feds? Yes. If Pennsylvania, Massachusetts, California and Illinois join with Vermont and Maine to offer affordable health care to everyone — if we come close — others will replicate those efforts, and the feds will continue to cooperate. The attitude at CMS reflects a willingness to make state programs work.

MANDATING COVERAGE

We didn’t do what Massachusetts did. We didn’t make coverage mandatory. Those male invincibles — the 20- to 40 year-olds who think they’ll never get sick — we’re not going to mandate they get coverage. People will choose. We’ll want everybody in the same insurance pool. We’ll take away demographic rating for everything but age and geography, meaning an insurance plan can’t charge more for a 25-year-old woman who may get pregnant than for a man. We’ll eliminate those factors.

TIMETABLE FOR PASSAGE

This bill has 70 parts. Timing remains a legislative prerogative. We have no assurance that there will be swift action. The budget is due July 1, and that will consume several weeks. We hope to get it passed in the House before summer recess, by the Senate in September and implemented by January.

The Bush administration wants this to happen, it wants the states to do it. Bush went out of his way to mention it in his State of Union address. There’s a real recognition that they want it to happen.

HOLDING THE LINE ON COSTS

Pennsylvania has 770,000 adults — 3/4 million people — uninsured. But if all we do with a health reform plan is cover them, it’s a Pyrrhic victory. If you have unrestrained costs, the system will collapse. You can’t afford to cover everyone if you don’t rein in costs.

It’s not rocket science. You can do it. In Pennsylvania, hospitals are required to report infection rates to a cost-containment council. Our hospitals reported 20,000 incidents and 1,500 deaths at a cost of $3.5 billion. Is that a cost of doing business for the health care system? No. Other countries have zeroed it out, and a few hospitals in the U.S., including one in Pennsylvania — the Pittsburgh VA — have cut it down.

INFECTION CONTROL

The most prevalent hospital-acquired infection is MRSA. A lot of people carry it, and although they aren’t sick with it, they can spread it to vulnerable people. Most American hospitals do nothing to check and see if you’re a MRSA carrier. The Pittsburgh VA tests people before they are admitted. If someone is a carrier, they’re admitted but there’s a different protocol. Red tape is placed around the bed, and no one is allowed to get closer to the patient than that red tape unless they’re gowned, gloved, masked and capped. Those materials are destroyed immediately after use.

The VA did a study of how many times people came into a MRSA room and what it cost for the protocol: $144 to replace the gowns, caps, masks and gloves. The average cost of a hospital stay is $131,000. With a hospital-acquired infection, it’s $181,000, meaning a hospital stay for a hospital-acquired infection is an additional $50,000. With their program, the VA has cut their infection rate in half.

We are going to try to get regulations to make VA-like protocols mandatory. Even if we don’t succeed with the legislature, I’ll insist on reduction of infection rate as condition for re-licensing. I intend to suspend hospital licenses.

A ROLE FOR THE FEDS

The feds have to pony up for an interoperable e-health system. Every American should carry a card to plug into a computer with his medical history. There are significant cost savings, but the upfront costs of an e-health system are $100 billion to $125 billion. Only the feds can do that.

To really drive down the costs for the Rx for Pennsylvania plan, the feds need to put in place a stop-loss plan for the high cost of a small number of people. If the feds took over the cost of their care after a certain point was reached — if the feds did that, you could have a workable system of national health care.

FLEXING A REGULATORY ARM

I’d give the insurance commissioner regulatory power, including rate-setting power and the power to force a different form of payment. Rate setting is crucial to making sure cost savings have an impact on premiums. We can set rates for car insurance but not health insurance. We’re asking that 85 percent of the health insurance premium be spent on delivery of health care.

As to forms of payment, we could dictate a team approach for treating diabetics. Under the current system, if you’re suffering from symptoms of diabetes, a doctor tests you. He finds you’re in the early stages of diabetes. It takes 20 minutes. The doctor gives you pamphlets about nutrition and testing yourself and wishes you well. You leave, but you don’t like the diet or the first test is too painful. You don’t follow through. The next time you see the doctor, you’ve got severe diabetes. Under the team approach, as part of that first visit the nutritionist spends an hour with you planning your diet and follows up to help you make adjustments. A physician assistant demonstrates how to do the self-testing, follows up with calls to see how you’re doing and adjusts the test if you’re having a problem. The team is managing the disease to hold it at the borderline status.

But we can’t do that because HMOs only pay the primary caregiver. Nurse practitioners are treated as specialists, so they’re too expensive. Nurse-run clinics become more expensive than an emergency room visit. We have to use regulatory powers to force these changes. We’re getting cooperation from HMOs, so we may be able to do it in friendly way. We’re working on changing those structures. We are the 800-pound gorilla. We pay for 20 percent of people with HMO insurance.

CORRECTING MISTAKES

Another thing we’re going to do is get 500 of the biggest health-care payers in a room together and get them agree to say: We ain’t paying for hospital-acquired infections anymore. Send that message to hospitals. Hospitals will have to get more aggressive in dealing with infections.

No other business would pay for mistakes the way the health care system does. A diabetic goes into the hospital for amputation of a leg, and the hospital amputates the wrong leg. We pay for it. And then we pay again for the amputation of the other leg. There’s no transparency, no pay-for-performance. No other business would tolerate this. It’s the worst system. We pay the most and get worse results. Canada pays half what we do per capita and has better results [on certain things like infant mortality]. We’ve taken every natural cost check out of the system. An elderly lady goes to the supermarket and checks her sales slip to make sure everything she bought is in her bag of groceries. But she gets a hospital bill and she doesn’t even look at it.

PROVIDER SHORTAGES

We are losing primary care physicians. Nurse-practitioner clinics can help fill the gap. We need to open the door to allow non-physician health care professional to practice to their full capacity to fill a lot of gaps.

As of now, nurse practitioners can’t order a walker for a patient. The patient has to go to a doctor to get one. That’s nuts. Our health care system is open 8-4:30, but you want something to go to on the weekend or evenings. In Pennsylvania, we’re paying a premium for primary care to be open nights and weekends. But as a country, we have not let allied medical professionals practice to the extent of their abilities.

DUPLICATIVE SERVICES

We need to limit capital expenditures of hospitals. Maine is taking a crack at that. We have too many duplicative, expensive technologies, and that jacks up costs. We need one gamma knife, not four in hospitals next door to each other.

SUMMING IT UP

Business will finally tip the scales. But we need the annoyance quotient out there — a show of public concern. We’re not there yet.

Copyright © 2007, Congressional Quarterly, Inc. Reproduction without written permission is prohibited. Governing, City & State and Governing.com are registered trademarks of Congressional Quarterly, Inc.