The Public Option

Tuesday, November 24, 2009
Office space was at a premium in East Podunk, Kansas. Approximately 90% of the buildings were occupied on any given day. The building owners were getting fat and sassy. There was no need to reinvest or renovate their properties. At least, that’s what the mayor was saying. How could the mayor and city council solve this problem?

The mayor of East Podunk convinced the city council to strengthen the zoning laws. The new regulations were a hassle, but the building owners quickly adapted, made the required renovations, and profitably passed the costs to their tenants. Rents went up. The mayor seethed.

An office in East Podunk, Kansas carried a certain cache. It also carried a heavy price tag. The mayor heard the complaints. None of the councilmen worked in East Podunk, not even the ones who owned their own businesses. Something had to be done to make East Podunk more affordable without reducing the quality of the office space. How could the mayor keep the building owners honest? The landlords needed competition.

East Podunk, Kansas needed a public option.

The city of East Podunk purchased a building and began to compete with the landlords. The building owners immediately noticed:
1. Their new competitor, the government, owned a building that couldn’t pass the new code.
2. Private businesses must build property tax, snow removal, and other maintenance costs into their rent. The city did not.
3. Private businesses pay property taxes which benefit the schools. Again, the city did not.
4. The city fathers of East Podunk, embarrassed by the prospect of a large empty building, cut any deal to find tenants.

Yes, the city of East Podunk succeeded in keeping the building owners honest. Honestly mad. Governments can compete, one city or one state versus another, but they don’t compete with businesses.

Building owners? Health insurance companies? You can change the names. You can change the venues. What won’t change is the behavior of government entities with too much money and too little talent.

We all live in East Podunk, Kansas.

By the way, I heard from a lot of people who wanted to post a comment to one of the last few blogs. I am trying to see if there is an easier way. My offer still stands. You may email me at and I will post your comment for you.

Just Enough Research

Friday, November 13, 2009
79.3% of all statistics are created at the moment of citation. (margin of error +/- 4%)

Last Sunday’s Cleveland Plain Dealer reprinted a New York Times column written a few days earlier by Nicholas Kristof. Forum section. Page 2, directly beneath the Darcy cartoon. The great thing about appearing on the Opinion Page is that reporting and facts are optional. Mr. Kristof is convinced that our health care pales in comparison to the incredible medicine practiced in Canada, Great Britain or even Slovenia.

I was about to put this article away in favor of a better use of my time, Sudoku, when I saw the claim that Canadians live longer than Americans (his word, not mine) after a kidney transplant. That got my attention.

Regular readers of this blog know that I am not going to disparage the Canadian health care system. I’m not a huge fan, but there aren’t Canadians dying in the streets. So, is post-kidney transplant care significantly better in Canada than here in the US? Possibly, but it just seemed too easy. I had the feeling that Mr. Kristof did just enough research.

Let’s start with the source of this information. Mr. Kristof doesn’t cite his source, but a quick GOOGLE search turns up Nicholas Skala, a staff person for Physicians for a National Health Program. Mr. Skala wrote his report for the organization dedicated to single payer health care in 2006. It has been cited numerous times by publications such as The Washington Monthly. One of Mr. Skala’s assertions was that kidney transplants were more numerous in Canada since they didn’t have the profit motive of keeping patients on dialysis. I read that twice and knew that I needed to do more research.

Population as of November 9, 2009
United States – 307,897,484
Canada – 33,838,720 about 11%

Kidney transplants performed in 2007 (last data available)
United States – 16,517
Canada – 1,200 about 7%

Not more, but less. So are US citizens 50% more likely to need a kidney transplant? Does the Canadian system cherry pick who is eligible for a kidney? There are actually several issues involved.

1. I found the actual 2005 study which was published in the American Journal of Transplantation in 2006. The study compared post-transplant mortality among adult recipients between January 1, 1991 and December 31, 1998. Mr. Kristof’s article made this appear to be current information. It is not.
2. Canada did not have a national registry until this year. They have had a real problem matching donors to potential recipients. This will help.
3. 23.2% of the kidney recipients in the study were African Americans as opposed to 2.6% of the Canadians. As the study indicated, factors such as diabetes mellitus, age, and the number of donors of African descent may have an impact in the outcome of the report. The authors noted the lack of detailed donor data from CORR (Canadian Organ Replacement Register).
4. Is there equal access to kidney transplants in Canada? The answer is “No” according to Dr. Jeffrey A. Zaltzman of Toronto’s St. Michael’s hospital. That was published August 29, 2006. “No” wrote the Calgary Herald on November 9, 2009 when they noted that “the disparities in the medical treatment received by First Nations people compared with other Canadians have attracted growing national and international attention.”

I don’t have the research staff of the New York Times. Felicia, my secretary, and I spent a couple of hours following links on GOOGLE. I learned far more than I ever wanted to know about kidney transplants, everything from how much dialysis costs (a fortune, up to $150,000 a year) to how few transplant facilities there are in Canada.

What I learned is that Canadians who live near a major hospital and have the good fortune of a live donor have an excellent chance of survival. There are a lot more facilities and options here in the United States. In other words, the Peace Bridge is not going to be bumper to bumper with Americans searching for kidneys.


One more thing. The Kristof article also stated that “An African-American in New Orleans has a shorter life expectancy that the average person in Vietnam or Honduras. Found that too! The original report was posted on WWLTV’s website on September 18th. The Update was posted on October 22nd. The doctors noted that African-Americans are sicker longer, have lower incomes and a large portion are uninsured. It was crime and the murder rate, however, that got the most focus. Dr. Kevin Stephens, the director of the city’s health department said “All of these things work together. We just can’t fix health care. You’ve got to fix education. You have to fix the crime. Your have to fix the entire community.” It was also noted “that whites in Louisiana, on average, will live four years longer than African Americans in the state, but even that is still lower than the US average.”

I’m sorry this was so long. I just think that the details are important.

Falling Through The Cracks

Wednesday, November 11, 2009
The three key stakeholders in the delivery of health care to our citizens are the government, the medical community, and the insurance companies. It has been the goal of this blog to show that none of these players can ever be allowed to operate unchecked.

Yes, I come to this discussion as a thirty plus year veteran of the insurance business. My experience colors my point of view as much, if not more, than my income needs. But, it is fair to ask if I have covered insurance problems and access sufficiently.

Today we tackle an insurance problem.

Joan Rogers (as usual, not her real name) was referred to me by one of my loyal readers. Joan is a self-employed professional in her late fifties. Her divorce was finalized in December 2006. She has been covered under her ex-spouse’s group health insurance policy ever since. Her COBRA ends next month. Joan Rogers is in trouble.

Ms. Rogers has several medical conditions. None are life threatening, but none are cheap to control. Her three medications have a combined cost of $7,700 per year. She does not qualify for a comprehensive individually underwritten medical insurance plan. Since she doesn’t have an employee or business partner, we can’t write a group policy. A group policy would have to take her. She doesn’t want to stop doing what she does just to get a job that provides insurance benefits. Well educated and talented, Joan wants to continue her career.

What are Joan’s options?

First, is it unfair that she doesn’t qualify for a regular policy? Joan’s prescriptions add $650 per month to the cost of her care. Her scheduled office visits and tests are hundreds more. How does Anthem or Medical Mutual build that into her rates? Do we spread her risk to your rates and mine?

United Health Care might take Joan. The policy would exclude treatment for her most expensive conditions and insure her for anything else. The premium is $320 per month. Since the policy would qualify for a Health Savings Account (HSA), Joan could put close to $4,000 in an account, take the tax deduction, and use the money to help pay for her medications. This is not a good option. She has way too much exposure.

I know what some of you are thinking. Since Joan is coming off a group policy, she is guaranteed the right to purchase an individual policy. HIPAA to the rescue.

Federal regulation guarantees that Joan can purchase a policy designed by her state of residence. Ohio has two awful options – The Ohio Basic and Standard Plans. The Standard Plan, the better of the two, has the following benefits:
• $750 deductible
• 70% / 30% coinsurance
• $5,000 maximum out of pocket each year
• $1,000,000 lifetime maximum
• $2,500 maximum benefit each year for outpatient prescription drugs

You get the idea. This is nothing special.

The Anthem premium for this policy is $2,994.95 per month. The Golden Rule premium for this policy is only $1,323.21 per month. These are not typos.

What is the answer? Damned if I know. I agonize over the uninsured and I have spent a ton of time on Joan’s case in the last week or so. And Joan is not the only person in this predicament.

Would the “Public Option” solve Joan’s problem? Hard to say. The Ohio Standard Plan is, in essence, the state’s version of the Public Option. Would the State of Ohio create a better plan the next time around or will the policy be created by the federal government? And who pays for this?

If preexisting conditions were no longer relevant and insurers had to accept all applicants, Joan’s problems are solved at the exact same moment that your problems begin. If everyone is required to have insurance, the burden is less severe.

But today is November 11, 2009 and Joan has run our of good options. There is a real need for health care reform. The question is how to correct what doesn’t work without destroying what does.