A couple of weeks ago in writing about ERISA, I included some data on the stability of health benefits provided by large companies.  The Kaiser Family Foundation just released their 2008 Employer Health Benefits Survey.  Below is the updated chart from my earlier post.

Large Companies (>199 employees) Offering Health Benefits:
Eligibility, Take-Up and Coverage Rates

The Kaiser Family Foundation’s Report also included an interesting table that provides some insight into what I wrote earlier this week about the differences in employer health benefits between high and low turn-over industries.  The relevant information from  the Kaiser report’s Exhibit 2.3 is below:

Percentage of Firms Offering Health Benefits by Industry in 2008
Agriculture/Mining/Construction                                                67%
Manufacturing                                                                           73%
Transportation/Communications/Utilities                                    89%*
Wholesale                                                                                74%
Retail                                                                                        40%*
Finance                                                                                    81%*
Service                                                                                     58%
State/Local Government                                                           97%*
Health Care                                                                              71%
ALL FIRMS                                                                          63%

[* Estimate is statistically different (p<.05) from all other firms not in the industry category.]

Given the findings of the research discussed in my other post, these industry differences shouldn’t be surprising.  However, I do wonder if after this week the Finance Industry will still be on the high end of providing health benefits.  Of course, it also raises the question of whether financial firms that survive through a federal “bailout” or “takeover” (whatever the end result is) will offer health benefits 97% of the time like state and local governments?  If so, then the number of employees that have access to health benefits may increase - although I also suspect that the number of employees in that industry may decline overall, and possibly add to the number of people without health insurance.

In any case, I’m confident that the issue of employees’ health benefits will not be a significant concern for those trying to work out stabilizing solutions for the upheaval in the financial industry.  This would be consistent with the priorities that led to the famous statement about the 1992 Presidential campaign, “It’s the economy stupid.”  Or was it, “It’s the stupid economy”?

I recently heard Michael Critelli, Executive Chairman of Pitney Bowes Inc., talk about what the company has learned about the value of providing quality health benefits and services to their employees.

Because they have a workforce that is divided between their offices and customers facilities, Pitney Bowes has been able to conduct a natural experiment and see how providing access to different health and wellness services can effect their employees and the company’s costs.  What they found was that providing a good quality health benefits package in conjunction with healthy food and exercise options, etc., has reduced health care costs for their employees that work in their own offices compared to employees who work off-site.

I haven’t been able to connect with Mr. Critelli to get more data, but he did state that the saving have been around $2.3:1.  Pitney Bowes careers web-site states, “We recognize that our people are key to our success. Simply speaking, our business growth depends on the talent of our people.”  This sounds like the rhetoric that many companies use, but apparently at some level they actually put their money behind this statement.

Implications for Health Reform
At a time when some are proposing to shift the tax incentives for the purchase of health insurance from the employer to the employee - which would dramatically reduce the percentage of health insurance provided by employers - the experiences of companies like Pitney Bowes should be very informative.  Having grown up in the Insurance Capital of the World, I saw how companies that understand the value of employees health and satisfaction make extensive efforts to promote both.  Only time will tell what direction health reform will take in the US, and whether immediate cost reduction or longer-term health and productivity of the workforce will be the higher priority.

The cover of this week’s Economist magazine caught my eye because this weekend I was talking with people about stem cell issues in the context of the Presidential election.

Part of our discussion was how the selection of Sarah Palin as John McCain’s Vice Presidential nominee will effect the Republican ticket’s position on stem cell research.

Doing a quick search on the internet, it appears that John McCain is refining in his position to support research on adult stem cells, while maintaining a foundation that doesn’t alienate the conservative base of his party.  Specifically, the only reference to stem cell research that I could find on the campaign’s web-site is:

Addressing the Moral Concerns of Advanced Technology

Stem cell research offers tremendous hope for those suffering from a variety of deadly diseases - hope for both cures and life-extending treatments. However, the compassion to relieve suffering and to cure deadly disease cannot erode moral and ethical principles.

For this reason, John McCain opposes the intentional creation of human embryos for research purposes. To that end, Senator McCain voted to ban the practice of “fetal farming,” making it a federal crime for researchers to use cells or fetal tissue from an embryo created for research purposes. Furthermore, he voted to ban attempts to use or obtain human cells gestated in animals. Finally, John McCain strongly opposes human cloning and voted to ban the practice, and any related experimentation, under federal law.

As president, John McCain will strongly support funding for promising research programs, including amniotic fluid and adult stem cell research and other types of scientific study that do not involve the use of human embryos.

Where federal funds are used for stem cell research, Senator McCain believes clear lines should be drawn that reflect a refusal to sacrifice moral values and ethical principles for the sake of scientific progress, and that any such research should be subject to strict federal guidelines.

I also found other articles and analyses concerning his earlier positions on stem cell research which seem less equivocal than his current campaign position.

Q: Would you expand federal funding of embryonic stem cell research?

A: I believe that we need to fund this. This is a tough issue for those of us in the pro-life community. I would remind you that these stem cells are either going to be discarded or perpetually frozen. We need to do what we can to relieve human suffering. It’s a tough issue. I support federal funding.

Retrieved from http://www.ontheissues.org/Social/John_McCain_Abortion.htm

Source: 2007 GOP primary debate, at Reagan library, hosted by MSNBC May 3, 2007

New Ad
Our weekend discussion also turned out to be a bit prescient, since my internet search turned up information about a new radio ad the McCain-Palin campaign is running that touts all the benefits of stem cell research without making any qualifications about what types of research would be allowed, or any of the moral issues raised on his campaign’s web-site.

Stem Cells Probably Not a Defining Campaign Issue
While stem cell research is certainly a sub-issue of the abortion/choice debate, and would not likely be a deciding factor for many voters, it is an issue of particular interest for biomedical researchers and some patient groups concerned with the development of better treatments and cures for cancers, (as discussed in the Economist), and degenerative diseases like Parkinson’s and Alzheimer’s.  It will be interesting to see how this issue plays out in the next few weeks and if it is raised during any of the debates…. Stay tuned.

Two interesting and related items recently dropped into my inbox concerning the future availability of primary care clinicians.  As most people are aware, primary care services are becoming increasingly scarce - and has been seen here in Massachusetts expanding insurance coverage may only increase this strain.  In addition, there is some good evidence that a  major reason for our higher health care spending is having too many specialists and not enough primary care clinicians. So increasing the number of primary care clinicians might be part of the solution to controlling health care spending.

Incentives to Become a Specialist
The first article in my inbox was a Washington Post story stating that only 2% of graduating medical students were contemplating going into primary care.  However, what the JAMA study actually found is that 2% of those entering Internal Medicine residency programs were planning on going into primary care. The Wall Street Journal correctly noted that the study also found that 12% of students are planning on going into pediatrics, and 5% into family medicine.  However, that means that 8% of physicians in training who will be treating adults in the future are planning on being primary care clinicians…. And even if some of those specialists go into research or other non-clinical careers, the percentage of primary care clinicians for adults will likely not be more that 10%

The reason why so many graduating medical students were planning on becoming specialist was clearly stated in the opening sentence of the Wall Street Journal article: “Yes, higher pay is prompting many U.S. med students to choose lucrative specialties over primary care….”

Incentives to Become a Researcher
The second piece in my inbox was a notice from the NIH about their loan repayment programs for recent doctoral program graduates.  When I worked at the NIH in the early 1990s I helped start a loan repayment program for researchers working on AIDS related research.  At that time there was tremendous need for more people to focus on HIV and AIDS research, and that loan repayment program was restricted to NIH-based employees.  What struck me about the NIH’s notice was how much their loan repayment programs have grown: They now fund 1,600 researchers each year with a budget of $70 million.  While many of the individuals benefiting from these programs are not physicians, they do include pharmacists, psychologists and dentists.

Conclusions and Thoughts About Overall Priorities
What I found interesting – and somewhat concerning – is that if increasing the number of primary care physicians is a high priority, and Medicare is being advised to take steps increase financial incentives for primary care, (something I’ve written about previously), then why have the NIH’s loan repayment programs expanded to draw more clinicians into research?  Certainly research is a worthy endeavor and a great career, but the current structure of the programs given our national priorities, the expansion of NIH’s funding (which helps support researchers salaries), and the growth in the private biomedical research industry, all together beg the question about how these loan repayment programs fit into our overall national strategy and NIH’s funding priorities?

I’m sure that some people will criticize me for questioning these NIH programs, but I look forward to hearing their perspectives – both on the loan repayment programs and how incentives for primary care should be increased.

I’m also concerned about the JAMA study’s findings because they point out that changing financial incentives for primary care may not happen soon enough - and clearly today’s students haven’t gotten any messages that these incentives will likely change in the future.  However, they may be getting their information from their teachers - who likely directly and indirectly relate the financial and life-style attributes of primary care versus specialty careers.  While Medicare and other payers cannot make promises about how their reimbursements will be structured years or decades from now, perhaps there needs to be more educational efforts directed at medical students and residents about what the future financial incentives for physicians may look like.

Clearly there is much work to be done in this area to ensure a greater supply of primary care clinicians and to drive research efforts forward with appropriate priorities.

A recent Boston Globe article about a possible legal challenge to Masschusetts’ health reform initiative indirectly raised one of the most stubborn challenges in health reform:  The Federal ERISA law.  (See below for more about ERISA.)

The contentious issue in Massachusetts is a proposal to require employers to both pay at least 33% of full time employees’ health insurance premiums and ensure that at least 25% of their employees are covered by their health plan. (The current requirement is that they do one or the other.) So why should this difference be the basis for a law suit?  Actually, there isn’t really any legal difference.  In either case, an employer that provides health benefits to their employees by self-insuring, (rather than directly buying coverage from a health insurance company), could sue based upon the Federal ERISA law that regulates employee benefits.

The real difference between the proposal and the current law is political and philosophical rather than legal – employers are willing to live with the current either/or requirement, but don’t want to be pushed down a slippery slope where the coverage requirements and/or the small penalty of $295/employee for failing to meet the requirements are increased.  And their legal backup is ERISA.

So What is ERISA?  (Without going into too much detail.)
ERISA stands for the Employment Retirement Income Security Act of 1974, and it is a Federal law that governs how companies provide benefits to their employees.  The law is overseen by the Department of Labor, and was originally designed to ensure that pension benefits were properly managed and funded.  However, it also encompasses health benefits – but only for companies that provide the benefits themselves by self-insuring rather than purchasing health insurance for their employees from insurance companies.  The result is that ERISA mostly applies to larger companies which typically self-insure for several reasons:

• They don’t have to comply with state health insurance mandates – which is one reason why large companies can reduce their health benefit costs by self-insuring
• Since many large companies have employees in more than one state, by self-insuring, they can operate a single health benefits plan – under what is called an ERISA exemption – rather offer different health insurance options in each state based upon the states’ insurance laws
• By accepting the financial risk of self-insuring, they can also receive any financial rewards from controlling health care spending.  This also gives them incentives to keep their employees healthy as well as productive

ERISA is a Linchpin for Federal or State Health Reform
ERISA is a crucial part of health reform that is not very well appreciated and generally not discussed outside of very wonkish circles – which is probably why the Boston Globe article doesn’t even mention it.

At the State level – as in Massachusetts – ERISA theoretically precludes state governments from placing requirements on self-insured company’s health benefits programs.  However, ERISA does regulate how the benefits are provided, has requirements about providing information to employees about their benefits – aspects that are consistent with the law’s original focus on pension benefits – and has four coverage mandates:

• Non-discrimination against pregnancy as a medical condition
• Hospital length of stays for women following delivery: 48-hours or 96-hours following a Cesarean
• Parity between mental health and other benefits
• Reconstruction following mastectomy

ERISA has also been changed to require that companies continue to offer health coverage for a limited amount of time to employees after they leave the company (COBRA in 1986), and to limit or ban the exclusion of pre-existing conditions or other factors that might predict their need for future health care needs (HIPAA in 1997).

ERISA coverage requirements has rarely been modified because of the lack of any clear consensus for what changes should be made, and the concern that adding coverage mandates to ERISA would increase costs without expanding the number of people with insurance or improving quality. In essence ERISA is a major obstacle for health reform because it regulates one of the largest and most stable parts of the employer-based health insurance system. For example, the Kaiser Family Foundation’s annual survey of employers has shown that 98-99% of companies with more than 200 employees have offered health insurance to their employees every year since 1999.  Similarly, the percentages of employees who are eligible and who chose insurance coverage have remained relatively stable from 1999-2007:

Large Companies (>199 employees) Offering Health Benefits:
Eligibility, Take-Up and Coverage Rates

[It should also be recognized that health insurance costs are a significant factor for large companies to outsource jobs to small companies or independent contractors here in the US, or to send those jobs overseas to companies that have cheaper labor costs.]

The ERISA Chasm
ERISA is a huge uncrossed chasm for health reform because virtually any state law that places requirements on the health benefits provided by self-insured companies could be subject to a Federal lawsuit.  And at the Federal level – as noted above – nobody has come to a consensus as to what should be done, except for some chipping at the edges with worthwhile requirements.  In addition, the Committees with jurisdiction for ERISA generally have not made ERISA health benefit issues a high priority: In the Senate, jurisdiction for ERISA is shared between the Finance and the Health, Education, Labor and Pension Committees.  Each of these committees has significant other responsibilities, including Medicare, Medicaid, biomedical research and the FDA.  And in the House of Representatives, the Education and Labor in the House of Representatives has jurisdiction for ERISA, which is really their only health related area of authority.

ERISA’s Implications for Obama and McCain Health Reform Proposals
The importance of ERISA and its Federal oversight over all self-insured employer provided health benefits raises the question of how the plans of Senators Obama and McCain would be effected by ERISA?

Senator Obama’s plans clearly call for more Federal regulation of health insurance which could significantly change how health benefits are provided to employers.  This avenue for  creating a more stable system for health insurance/benefits changes would have to involve ERISA. However, his proposals explicitly state that individuals could keep the coverage they now have – which would likely mean limited changes to ERISA, and those changes might not raise too many objections from the large business community.

Senator McCain’s plans are based upon shifting the purchase of health benefits from the company to the employee by moving the tax deductibility from the company to the individual.  (It appears that there would also be a dollar limit on this deduction, and in essence also shifting from the general current situation of health benefits being a “defined benefit” to being a “defined contribution” – something that happened with many pension plans in the last ten years as a means for companies to control or limit their future financial liabilities.)  If a McCain plan required everyone buy their own insurance from insurance companies, then changes to ERISA wouldn’t be required, but it might lead to much more state legislative and regulatory action as millions more people become subject to state laws for both insurance company marketing and plan design.  In addition, one selling point used for McCain’s campaign positions, is that it would enable employees to take their health insurance with them as they went from job to job.  For that to be true across state lines, then tremendous changes to ERISA would be necessary – and probably much more than under the proposals that might come from an Obama Administration.

Conclusions
Sorry about the very long post, but as the title states, ERISA is truly an unbridged chasm.  Many health reform proposals have raced up to its brink only to suddenly stop short at the edge of the ERISA cliff – sort of like the comedy Westerns of the 1950s where the rider gets pitched over the head of the horse into the canyon.  In this analogy, perhaps the public and the politician are the horse, (I’ll let you decide which half is which), and the proposal is the rider – which gets lost in the depths of the canyon because the horse can’t find a way across.

For significant health reform to be achieved, all constituencies and stakeholder groups need to reach some consensus to build a bridge across the ERISA chasm.  Otherwise, no action will likely continue to be everyone’s second and fall-back option.

The August 16th Economist had an interesting article (and commentary) about patients traveling to other countries for medical treatments, a.k.a. “medical tourism.”  The article focused on the US healthcare system, and mentioned other parts of healthcare that are being exported, (such as transcription of medical records, reading of imaging studies), and imported, (such as physicians and nurses).  But there are two aspects of this issue that the article didn’t touch upon – chronic care and pharmaceuticals:

Medical Tourism Doesn’t Work for Chronic Care
Patients are traveling from the US to other countries for expensive procedures like heart surgery and joint replacements.  While savings from this medical tourism can be significant on a per procedure basis, it may only make a small dent in overall healthcare spending – and only produce a dip in cost while not significantly changing the growth rate in health care costs.  But more importantly, such medical tourism doesn’t address the expanding problems of providing care for patients’ chronic conditions – which is a major driver of increasing healthcare costs.

Importing Medicines – Safety
Importing medicines from other countries into the US has been a controversy for more than 10 years.  The US Congress has repeatedly authorized the importation of medicines from other countries provided the Department of Health and Human Services certified their safety.  But the HHS (under both Democratic and Republican administrations) has not made such certification – and that was before the deaths earlier this year from contaminated heparin manufactured in China.

Importing Medicines – Politics
While the Obama and McCain campaigns have very different positions on health care reform, their statements on importing medicines are very similar in that both include provisions for importing medicines only if they are safe:

• “Obama will allow Americans to buy their medicines from other developed countries if the drugs are safe and prices are lower outside the U.S.”
• “John McCain will look to bring greater competition to our drug markets through safe re-importation of drugs”

Healthcare Jobs and Economic Growth
The world is clearly becoming flatter for healthcare goods and services, and this could be a worrisome trend for the US economy since healthcare products, delivery and research are significant drivers of US economic growth. After all, healthcare jobs – in both delivery and biomedical R&D – are high skilled, high wage jobs that depend upon an educated workforce and an economical comfortable society that can devote a significant portion of its income to healthcare.  If the US starts shipping more and more healthcare jobs (and money) overseas, this could result in a downward spiral as the loss of those jobs undermines the strength of the US healthcare system and the country’s economic growth.  However, it is uncertain how much the loss of that part of economy could be offset by potentially lower healthcare spending – a cost that some economists believe is inhibiting economic growth in the US and our global competitiveness

A political insiders poll conducted by the National Journal (and published in their August 2nd issue) shows that Republicans are not counting on health care to help their party in the November elections.

Among the 7 choices to the question, “Which two issues will most help your party in November’s election?” none of the 42 Republican insiders picked health care.  Compared to that 0%, Energy was chosen by 90%, and National security by 31%

The poll results were also interesting for what the Democrats chose.  It appears that they are giving up on Immigration and National security as the issues that will help them in the November election – those two issues were picked by none of the Democrats.  Rather, Democratic insiders chose Economy (87%), Energy (39%), Iraq (37%)…. And of course Health care (21%)

So what does this mean for the actual election?  Are these political insiders too myopic with inside-the-beltway perspectives?  I find it hard to believe that Republic voters won’t care at all about health issues – particularly many of the conservative physicians who may be peeved about the President vetoing the bill to avert the Medicare 10.6% cut - which Congress later voted to overide.

Well it seems that the Democrats and the Republicans both have some validity in their positions:  According to Gallop’s June 15-19 issues poll, the Democrats do have a big edge on healthcare and the economy:

And according to CNN’s issue tracker from June 4-5 polling, the most important issue for registered voters was:

• Economy 42%
• War in Iraq 24%
• Health care 12%
• Terrorism 11%
• Immigration 8%

Taking all this together it looks like Democrats have the edge in the issues that are most important to the voters.  How this changes between now and November 4th as voters respond to new events and the campaigns’ messages will likely determine the election – assuming neither candidate makes major missteps.

I was at a party over the weekend with a number of clinical Fellows from a major academic medical center. They were all very nice, but I had a very strange conversation with a couple of the Fellows.

The conversation became strange when one of them asked me about what I thought was the biggest healthcare spending problem.  Rather than let me fully explain what I thought, they somehow quickly pronounced that pharmaceuticals were the largest cost in the US healthcare system, implying that this was the biggest spending problem.  The strange part of this conversation was that one of them had just taken a health policy class at the public health school affiliated with their Fellowship program.

After “discussing” this with them for what seemed like 20 minutes, (but it was probably actually only 10 minutes), I convinced them that the reality was that hospitals and clinical services each represented about 30% of healthcare spending, and that pharmaceuticals were only about 10-11%.  (That 10-11% is only outpatient prescription drugs, but inpatient medicines don’t represent a major cost for hospitalizations.  And besides, payers don’t pay for inpatient pharmaceuticals as a separate cost, they pay hospitals a global fee based upon the patient’s diagnosis and severity of illness.)

Anyhow, after this conversation, the party’s host (who had been listening to our conversation from afar) came up and asked me if they were wrong – and I confirmed to him that they were – which is what he suspected.  (He’s a very smart computer scientist guy!)

So, after the party I decided to look up the actual numbers - since I can’t keep them exactly correct in my head - and according to the National Health Expenditure Data collected by the Center for Medicare and Medicaid Services,  the following pie charts display various categories for where health spending in the US went in 2006 (the latest year data is available), 1980, and the projections for 2012:

[Note – In my conversation with the two clinical Fellows, my memory wasn’t far off. In 2006 spending was: Hospitals = 30.8%, All Professional Services = 31.4%, and Prescription Drugs = 10.3%]

While this data is illuminating, I’m still bothered by these two young physicians insisting that prescription drugs are the biggest piece of health spending in the US – especially since one of them had just finished a 2.5 credit class called “Current Issues in Health Policy.”  And if these medical professionals have that magnitude of misunderstanding about our healthcare system’s finances, it’s no wonder that the average American, legislator, or media professional, is confused.  But at least it seems the computer scientists know what’s going on.

I couldn’t resist witting something about this when I saw today’s press release from HHS which announced that Terry Cline, Ph.D., the administrator of HHS’ Substance Abuse and Mental Health Services Administration is leaving that post, and starting August 31st he will be the HHS Health Attaché and representative at the U.S. Embassy in Baghdad, Iraq.

On the serious side, I’m sure he will do good things to help improve the healthcare system in Iraq.  But on the less serious side, someone (maybe Jon Stewart?), needs to ask how did this happen?  How bad did he step on someone’s toes to get moved from Rockville, MD to Bagdad? Or was he just doing intensive and personal research into abusing substances, which led him to believe that Bagdad would be a nice place to be for a while?

While I certainly hope that Dr. Cline has a safe and productive time in Iraq…. but while he’s over there, given his expertise in substance abuse, maybe he can get over to Afghanistan too, since I understand they have a bit of an issue with poppies and heroin.

One of my interests in health communications is how the findings from scientific research are presented to various stakeholder audiences.  Because of this, I was interested to see how the titles of several reports about one study of an investigational compound highlighted different perspectives.

The compound being investigated in this research was resveratrol, which has been shown to replicate the life-span extending effects of dietary restriction in lower animals.  (Resveratrol is also the component of red wine that is believed to provide various health benefits.)  The new study looked at the effects of resveratrol in mice.  The titles of the journal article of the study’s findings, the NIH’s press release and the company’s press release were:

• “Resveratrol Delays Age-Related Deterioration and Mimics Transcriptional Aspects of Dietary Restriction without Extending Life Span” (From Cell Metabolism’s web-site)
• “Resveratrol Found to Improve Health, But Not Longevity in Aging Mice on Standard Diet” (From National Institute of Aging’s web-site)
• “Long-Term Study of Middle-Aged Mice Shows Resveratrol Improves Health and Mimics Some Benefits of Dietary Restriction” (From Sitris’ web-site)

Looking at these titles it is interesting to note that the scientific journal only includes a general statement about life-span.  Conversely, the NIH’s press release specifies the study found that only the mice on the standard diet did not see any great life span.  And lastly, the title of the company’s press release doesn’t mention life-span changes and only points to the positive effects in biochemical markers of disease. However, the text of the company’s press release states, “The study also found a significant increase in lifespan in both the resveratrol treated group on a high-calorie diet and the resveratrol treated group on a calorie restriction diet, but the treatments did not extend lifespan of mice on a standard diet when started at one year of age.” But, looking at the study’s data tables, it appears that the research only found an extended life-span in the calorie restricted mice if they were given a lower dose of resveratrol, this extended life span was only significantly greater than the mice given a standard diet, and it wasnot significantly greater than the life span of the calorie restricted mice given either a higher dose of resveratrol or none at all - see supplemental table S3.

The differences in these titles isn’t surprising considering their sources, but they do illustrate the challenge facing reporters trying to communicate the results from scientific research to the general public. That is why I focused on the life-span results, since that would have the most public interest and “news worthiness.”  Thus, in this case, if reporters relied on the company’s press release, they could end up writing a story slanted one way, whereas if they relied on the NIH’s press release their article could tilt another way.  And of course, a more fundamental challenge is how many reporters have the time and scientific background to read and understand the actual journal publication.

Anyone have other perspectives or examples on this topic?