Healthcare has been a hot topic lately at both a national and state level. With so many changes coming down the pipeline, many businesses are wondering how their companies will be affected. Recently, executives representing healthcare in Nevada met at the law offices of Holland & Hart in Las Vegas to discuss the issues facing this changing and sometimes challenging industry.
Connie Brennan, publisher of Nevada Business Magazine, served as moderator for the event. These monthly meetings are designed to bring leaders together to discuss issues pertinent to their organizations. Following is a condensed version of the roundtable discussion.
What are your thoughts on healthcare reform?
Charles Perry, Nevada Healthcare Association: I don’t have confidence that congress has the tools that it takes to come out with something, much less the administration. I haven’t seen anything that they’re doing right now that is going to accomplish what the goal is.
Dr. Sherif Abdou, Healthcare Partners of Nevada: They have the will. We are the tools. They do have the will to do something that’s sustainable and measure change. To get from the will to the applicable through a political process, it’s a challenge. I think we’re all responsible in this. If we’re willing to participate, we are the delivery model. I think there are going to be some laws and some bills that allow us to do so, if we wish to do so.
Dr. Carolyn Yucha, UNLV School of Nursing: I think this is such a complex issue that’s been decades in the making that I don’t see how anybody truly has the solution to this, and certainly it’s not going to happen quickly. Until we stop concerning ourselves about what’s best for me and what’s best for us, we’re not going to solve this. Everyone has their own little things. I’m sitting here saying, “I need more money for education,” you’re going to say you need your reimbursements to be higher. We have to put all of that aside and go back to what is the ideal and create the ideal. We have to give up what’s best for us personally and I don’t see this happening. This is just too complex with too many things hinging on it.
Rob Freymuller, Summerlin Hospital Medical Center: I think that we all probably share the same ideal or goals of how do you cover 48 or 50 million Americans with affordable health insurance. It’s interesting that we’ve mandated automobile insurance, but we don’t mandate healthcare insurance. There’s a significant portion of people in the population that can afford health insurance and choose not to buy it and use those monies for other things. It seems there are some baby steps that could be taken to mandate insurance and be cognizant of small businesses and how that works out. The insurance industry should speak forward in terms of pre-existing conditions, across state-line competition and innovative products. A lot of that can take place and it doesn’t impact government spending at this point in time. Coverage can be looked at in two different ways. Everyone, in a sense, in our country is covered. They could access an emergency room, there are laws in place that everyone can be treated. People get healthcare. So, coverage needs to be redefined as insured versus access to healthcare. The emergency rooms clearly aren’t the most affordable and efficient way to get that healthcare. It appears that we’re looking to try to solve this whole complex global problem in one fiscal year and it needs to be broken into some clearer goals.
Mike Murphy, Anthem Blue Cross Blue Shield: I think we’ve lost in the debate what the true goal is, at least where we thought it started out, which was, how do you improve the quality of care and how do you do it at a lesser cost. Most of the things that we’re debating about right now and talking about, aren’t really getting to the crux of either one of those things. It’s getting back to what’s the goal of healthcare reform. We’ve heard it go from healthcare reform to health insurance reform. The question is, what are we truly trying to get to? What are the steps and what are the real things that are underlying that are going to get us there?
M. Donald Kowitz, Saint Mary’s Health Plans: I agree with what Mike just said. I think something will pass because I think there’s enough momentum, but I don’t think it’s going to really address what we set out to do. I think both Congress and the Administration wants on record that they passed Healthcare Reform. But, in terms of really addressing the issues that you mentioned, cost and quality, I absolutely agree. There will be more people covered, and for some people there will be lower cost, not because the cost of the system is less, but only because the government now helps to pay for that, which is probably appropriate in many cases. They can, in some sense, say that its lower cost for some people, but it’s not really addressing the cost in the system. I think that will be with us. Then, like Sherif said, it’s going to be up to the people in the industry to continue to have to address those quality and cost issues.
Abdou: Because the government will never control the cost. The free market will determine the cost. And the government cannot change the quality. You cannot put it in the Bill of Rights that you must provide quality care. It’s either we’re going to police ourselves and determine what quality is and is not and we’re going to deliver it, or we’re just going to continue to look at it as an industry and here you go.
Can you have meaningful Healthcare Reform without even discussing tort reform?
Abdou: Yes.
Kowitz: Again, it might not be comprehensive because, as has been said, the system is extremely complex. So, you can do certain aspects of Healthcare Reform without touching tort reform, although I think it’s something that needs to be addressed. I guess it just depends on what the objectives are and are we really achieving them? That might be one that helps with costs but, in many ways, they’re not really addressing cost.
Abdou: And tort reform is not going to happen or have any true impact on the cost of healthcare until we change the fundamental culture of the American society of being a litigious society. If you limit it down to $50,000, I’m still walking around worried I’ll get sued for $50,000 in every case that I do. So, I’m still going to protect myself because I look at everybody as a possible lawsuit. Until we change that fundamental, it’s not going to impact the cost of healthcare. As a matter of fact, if you look at the 12 states that have tort reform, the healthcare cost has not changed a bit. The insurance premium changed. That means I make a little bit more money because I pay less for malpractice insurance, but my behavior didn’t change because I still look at every patient walking through the door as a possible lawsuit. Therefore, I’m practicing defensive medicine. But, so does the grocery store manager because, until we change the fabrics and the fundamentals of being a litigious society, tort reform is not going to have any impact on the cost of healthcare.
How long will it be before the community starts to feel the impact of Healthcare Reform and understand the changes?
Abdou: Nothing goes into effect until 2013.
Murphy: But, there are significant bridges between now and then that are going to affect employers. You’ve got an immediate expansion and extension of COBRA benefits to anybody who’s unemployed through the gap, through 2013, for example. There are some things that are going to affect the cost of the system between now and then. Yes, there are many things that don’t go into play until 2013, but there are stop-gap measures that are going to impact people’s premiums from day one.
Kowitz: I think the revenue piece is going to go into effect early on. As part of the tax increases they’re talking about, the fees on the insurance companies, those go in before. But, you’re right, the care part is out into the future.
How are premium changes going to affect businesses?
Murphy: We did an actuarial study of what we believed the things that are laid out in the Senate and in the House would impact premiums for individuals as well as business owners in the State of Nevada. We applied just some of the things we’ve seen. Premiums will go up. There are some inherent things that are in the underlying economics of this that will force premiums up. One simply is the minimum mandated coverage that’s out in the Senate bill right now is a richer benefit than what most Nevadans actually carry today, to the tune of, about 12 percent. That’s going to increase Nevadan’s, the small business owners’ premium by 12 percent. Then you start to bring together the age bands, which arguably you could say is a very good thing. Health insurance is expensive because healthcare is expensive and that’s just the reality of where we live in this country right now. Until you change those fundamental dynamics, we can put all of these things together, but here’s what the package is going to cost. We’ve estimated 70 percent of Nevada businesses will see an increase post-reform based on what’s on the table right now in the Senate.
Kowitz: The Congressional Budget Office’s recently came out with their estimate to the same, health insurance premiums are going to go up. They certainly talked about individual coverage going up. So, even Congress’ own Budget Office is saying that.
Murphy: We’ve got the Cadillac Tax that’s out there, and this is just an example of when you talk about a 10-year projection. A lot of folks are sitting around Nevada today saying, but my benefits aren’t going to hit that Cadillac tax. I don’t need to worry about it. In New York, the threshold is about an $8,000 value on benefits. Anything above and beyond that will be taxed at a 40 percent rate. The minimum coverage that a business is going to need to carry in New York already will surpass that Cadillac tax threshold. Yes, we’re [Nevadans] significantly below that. I’ve just run some simple numbers and they’re planning on ratcheting that $8,000 up by about three percent. We all know, healthcare costs are going up at a greater rate than that. I would argue that there’s very little in these bills that are going to control actual trend. This basically means Nevadans will hit that Cadillac tax in 10 to 12 years depending on what you want to assume trend is. We will hit it eventually. There are going to be businesses out there that are paying this tax that have to fund this plan.
James Kilber, Comprehensive Cancer Centers of Nevada: Another thing that we’re seeing with the economy, which is huge, is that people are really watching their money now. Which is, in the one instance good. On the other hand, they’re waiting until they’re almost so sick that if they would come in early, we could take care of it earlier. But, what we are seeing is a lot of patients waiting until the last minute and the elevation of where they’re at and the care that they need at that point is phenomenal. It’s added to the burden and to the cost of healthcare.
How big of an issue is Medicare fraud?
Nancy Whitman: It’s very big. 60 Minutes just did a whole program on that in Florida. It’s terrible, millions and billions of dollars.
Abdou: It’s absolutely huge. And, there are an industry of lawyers to sit down and tell you how to go around the rules and regs. The culture’s basis and core is so corrupt. I took a class on healthcare law. They spend all this time telling us here’s the law and here’s how you go around it. It’s not how you follow it, it’s how you go around it. I walked out of the class and said I’ve had enough of that.
Freymuller: I would propose that it’s also a reflection of the complexity of how those programs are administered and how they’ve evolved in a bureaucracy of compliance. An incorrect bill or an error is considered to be fraud when, in fact, it’s providers trying to figure out how to comply with a very complex system that has evolved over time and not necessarily been designed. When you look at another public option and plan that’s going to follow down that road, we don’t have those issues in the private sector. You don’t hear about fraud and abuse and wasted resources in the private insurance companies. It doesn’t happen. I think it’s a catch-all or umbrella that’s used inappropriately and it casts a bad light on the providers as a reflection of that system. I just say that the tough questions haven’t been asked or answered by our Congressional leaders. It’s not popular. The Health Reform does not fix Medicare and that’s a problem. It doesn’t fix Medicaid and that’s a problem. That’s some of the areas that should be addressed in reform.
Whitman: One of my concerns is they’re talking about expanding Medicare. If that is left up to the states, if the state received federal funds for five to six years, then what happens when that goes away from our state? Our program is reducing reimbursements to hospitals, to physicians. We have fewer and fewer providers that will take Medicaid or Nevada Checkup. What’s going to happen if we expand that income level? Right now, the state is one of the lowest in the nation. They’re talking about raising it to 133 percent of the Federal poverty level. Yes, that will cover more people, but what impact is that going to have in our state on providers and reimbursements? I think that’s a discussion that seems to be under the carpet that people aren’t talking about. What impact will that have on hospitals and physicians if Medicaid is expanded in this state, because it happens at the Federal level and we’re mandated to follow that, and reimbursement does not go up. It’s at a rate where it was in 2002, it’s still very, very low.
Freymuller: Well, the Medicare program and Medicaid were not designed as private insurance products, they were designed with specific goals and objectives to provide healthcare to a senior population that’s no longer working. It was designed as a cost-based reimbursement, not to be in the private sector and competing. Expanding that would place undue hardship on all providers. If we talk about quality, innovation and technology, we’re going the wrong way there, because the resources won’t be there to provide the healthcare that this country expects and deserves.
Murphy: The reality is that the cost trend in the Medicare program has gone up at a much faster rate than what we’ve seen in the private sector. Medicare costs have doubled every four years, I believe, since the inception of the program. Although healthcare trends are high in the private sector, they’re not that high, which would suggest that the private sector in and of itself is doing something to contain costs that Medicare is not. I think 2017 is when the Medicare program becomes insolvent at current projections.
Abdou: It’s 2016.
Murphy: So, we’re right around the corner of talking about funding a new program with a program that’s arguably on the road to insolvency as it is.
Is there going to be a continued demand for healthcare professionals?
Perry: I don’t see it lessening. It’s the new graduates that are coming out that don’t have the practical experience. They have the clinicals that they get in the nursing schools, but they don’t have any bedside experience to serve a patient. We’re working with SNMIC [Southern Nevada Medical Industry Coalition] and the Workforce Investment Board here to funnel some of those training dollars from workforce investment monies, and that’s what they’re for, to help employers be able to afford to train these people and put them to work.
Yucha: It’s comparable to a residency program as we do with physicians. They’re not expected to get out of school and function. In nursing, they have less education and we expect them to work anywhere in the hospital they’re assigned to work and they’re not ready.
Perry: They come out expecting that’s going to happen also. That’s another problem, the expectations the graduates themselves have that when they come out, they’re going to be immediately employable at these real high salaries but they don’t have the credentials to qualify for that.
Freymuller: When you talk about education and the industry, healthcare gets kind of tainted in a negative fashion in the industry because of the cost. When you look at healthcare in any city, second to the local government, it is the number one employer. It’s huge. It’s a thriving, vibrant industry that contributes probably the most to any local economy. I think that you want to have a better outlook on what healthcare does. You hear sometimes that at a Federal level we spend 15 percent of the GNP on healthcare. Well, what’s more important than our health? Maybe we should spend 17 percent. Maybe it’s not enough. I think we need to change public perception a little bit about healthcare. So, for young people in careers in healthcare, it’s an exciting, growing dynamic field. It contributes significantly to the economic commerce of a city and it shouldn’t be forgotten and not looked at.
