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Final Questions and Comments from the Audience

             DR. GINSBURG: Do you want to come to the microphone?
             FLOOR QUESTION: I am writing this up for the Health System Center.
             Helen Darling, you mentioned, and a couple of the panelists this morning mentioned, what a good idea it would be if people could carry over their unused health benefits. In the next breath, you mentioned your concern for families with chronic children. Isn’t it the money that went into the system that wasn’t tapped for health care needs that really subsidizes now those chronic and serious health needs?
             MS. DARLING: As far as I am concerned, as long as everybody is protected for the higher cost and more extensive, we are really talking about like in the medical savings account model where everybody has a certain amount of money for visiting the doctor and doing things like that, the sort of very low end.
             If, for example, you are a lower user, then, yes, I think letting them carry it over, that is different from letting them have it at all, but if they have it at all, which we have in the current model, then it makes no sense to not let it be carried over.
             He is right. Every year in December, I buy seven new contact lens because I never use up my money. That soret of stuff is silly.
             DR. ATKINS: Can I comment briefly?
             DR. GINSBURG: Sure.
             DR. ATKINS: I think it was one of the groups this morning talked about having the episodic allowance, and in a system in which chronic disease gets taken care of with some kind of a capitated model where it is based on a diagnosed condition and you kick into then that kind of managed care, in that environment, in that context--and then, of course, you have to deal with risk adjustment--the medical savings account makes great sense as a way to handle the front end of the cost up to some dollar level. That is one way of dealing with it.
             The other thing is that I think some people view the medical savings account as more of a lifetime accumulation approach, which is that by retaining it over some period of time, you build up a fair amount that then becomes available to you when you hit a period in your life when you are more likely to have higher medical costs.
             I do not know if we have the capacity in this country to go to a lifetime model or not, but I think that is some of the thinking.
             DR. GINSBURG: Good. We have a few questioners. We will start with Greg.
             MR. SCANDLEN: Greg Scandlen with NCPA.
             I have just a couple of quick points. On the tight labor market issue, you all seem to assume that this will be perceived as a take-away benefits rather than an enhancement. I would suggest for a lot of the community, that is not the case, particularly for mid-sized employers, employees who may be in an HMO they do not like. With the current disgruntlement, widespread disgruntlement with managed care, a lot of people may see this as a huge enhancement of their benefits program, not a take-away.
             The other thing, just generally in the discussion, Helen alluded to this, and I appreciate that, but there is too much talk about employers like this, employers like that, workers can do this, workers cannot do that. That is kind of like Washington government program thinking where whatever you do has to apply to everybody.
             In this case, we are talking about a market. The majority of employers may not like this. Eighty percent of employers may not like this, but that leaves 20 percent, which is a hell of a business for some companies. That is not to be dismissed.
             MS. DARLING: Absolutely.
             DR. GINSBURG: Alan?
             MR. WILDE: Alan Wilde with The Urban Institute.
             I have a question about sort of the value of choice which is a theme here. We just had an issue in health affairs talking about Medicare competitive bidding demonstration falling apart because of the gap between the theoretical value of rules of competition and the practical reality that in markets some people actually lose.
             It seems to me that if we are thinking about defined contribution as more than just outsourcing the administrative tasks of a benefits office, but really moving to a defined contribution, and we know that people are very, very price-sensitive, it seems like a likely outcome here is a large majority of middle-wage workers moving into low-cost plans and entrepreneurs being willing to offer on a defined contribution model some low-cost plans.
             I am trying to imagine the politics of that and why they are any different from what we have just been through. Employers, for price reasons, moved their employees into managed plans and the employees bristled at the restrictions on those plans.
             Now, employees empowered, I suppose, presumably will make identical decisions and feel just as frustrated as they did when it was their employers. It seems to me, there is a lot of power to be harnessed in the market, but I am worried about the political endpoint being the same as the one we just went through. How is it that by calling this choice, we really think that in the end, the employees will be more satisfied?
             DR. ATKINS: For one thing, I am not sure we are ever going to be able to get away from the fact that the employees or the patients are going to become increasingly frustrated with the costs that they are going to have to bear in a much more expensive system.
             I think the idea of choice is the employees or patients, whatever, have to take more responsibility for the consequences of their own actions in wanting health care because I think the employers started out by trying to create a system in which they would have decisions made for them. They would get things that people felt were medically necessary, and they wouldn’t get things that people felt weren’t medically necessary. The difficulty with that is it makes somebody else responsible for the decision.
             So I think people are exploring ways to get employees to be more involved in that decision themselves, and I think the feeling is that if you begin to see what the impact of what choice is on cost, hopefully you become more of a partner than an opponent in terms of managing health care cost, but who knows?
             MR. HERSCHMAN: Can I make one point. I think this is important. We keep hearing cost, cost, cost. It is value. The issue is value.
             Cable TV costs more, but we buy it because it has value, okay? If people want easier cell phones, they will go for 7 cents a minute. They understand it, but it might cost more. I think you have to think of it broader than just cost, and when you get to things at an individual level--I will go to a narrow network insurance product, not one that my employer would ever pick, because that is imposing it on people, but if it meets my criteria and the price is right, I am willing to do that. It is a good value.
             So I think you have got to get out of the cost mantra and think about value, and once you start thinking about value, then you will see that markets work.
             MR. NEWCOMER: Well, I just want to add to that. In our focus groups, we found out that about two-thirds of the people there wanted to spend more to get providers they thought had value, and they couldn’t get to them because their health plan wouldn’t sign them up. They were more expensive.
             I think the questioner’s assumption is not necessarily proven in the marketplace.
             DR. GINSBURG: Helen?
             MS. KROL: I would like to address that. We have point-of-service plans, and you have a $200 deductible and 80-percent coverage to go out of network on a plan that only costs $10 a month to participate, and 90 percent of the utilization is in network. I spend all of my time lately dealing with Pennsylvania because hospitals are dropping out of that network. When I tell people for $200, you can go out of network, they say, "You expect me to pay that?" So there is the marketplace and your shelf, you know, the grocery store concept. It is based on the premise that consumers have information, and the information is validated by organization, Food and Drug Administration, Agriculture Department. There is information on that box. So you know what you are buying.
             Unfortunately, in this marketplace, there is no information on cost that is readily available to consumers, and there is even poorer information on quality. People just make decisions based on reputation of the hospital that they want to go without any information on the outcomes of those procedures.
             So I love Regina Hertzlinger’s book, and we move to a market-driven system, but in 2 years at Lucent, I have not been able to put cost data up. I have not been able to put reasonable quality data up. So, I mean, we would love to be in a market, but a market has to provide those attributes.
             DR. GINSBURG: Larry and then Helen.
             DR. ATKINS: I would just say there is a great danger that in the absence of really good information on providers that does distinguish on the basis of quality and outcomes that the higher price that a provider charges will be seen as a proxy for higher quality. So people will just buy more expensive providers because, gee, they must be better, and I think there is a danger of that if we do not get good information.
             DR. GINSBURG: Helen?
             MS. DARLING: I think there is also always the danger of judging the future on the past, although that is sort of the only thing we have, but most people will put into model types that they do not like and they did not have choice. So a lot of the frustration is that they sort of think that there is "managed care," and that is kind of in their minds that sort of everything that they don’t like.
             So what we do not know--well, maybe some of us do know because we have offered multiple options--how different it would be if you had the wide range and you did, indeed, have at least more information than we have got now and you pay a difference.
             My experience is very similar to Pam’s. I was always astonished at how little money it took for even wildly well-paid people to nitpick about reimbursement, and I never understood why they cared. It was less than you would pay in a taxi to go to National Airport, and these were people with lots of money. So there is something about the mentality or people coming in and saying why don’t we pay for something. I say, "We could take your money in a premium. We could pass it through, add 25-percent administrative cost, and send it back to you as 80-percent reimbursement. Would you really rather do that, or why not just pay for it yourself out of your flexible spending account?," and they would have the same look of horror, "You mean to get my mammogram, I might have to pay for it?," even though it is their lives.
             So I think we have to be realistic, and people probably will never be happy with all the solutions. I guess the one point Larry made and others have made, which I think is really important, the worse news is still ahead. The kinds of increases we have had in the last 4 years are terrible, basically, especially this last year, depending on whose numbers you look at, 9 to 13 percent in one year alone.
             Everything about what we have got in the system today would suggest that that is going to continue to explode. There is nothing. Nobody is managing care out there anymore. They are not even watching the store anymore. They are certainly not doing case management. We audit these places. So we know that.
             So what we have had for the last couple of years, we will have many times over, and I think if there is a level of unhappiness, we got it in the next 2 years and it is going to be brutal.
             DR. GINSBURG: Thank you.
             That would be a good time to close the meeting, but I would like one last question, though.
             MS. VARNEY: I have been standing here a long time.
             DR. GINSBURG: I know. I want to hear the question.
             MS. VARNEY: I am Stacy Varney, and I am with Choicelinx. My question is with regard to consumers having access to more medical information now than ever before. Do you see any kind of a shift or a trend toward employees wanting more options around alternative care that may not be covered under a traditional health plan, and if so, do your current plans provide for that? Would you have any plans to offer those options in the future?
             DR. GINSBURG: Or, actually, if I could modify, whether defined contribution would make a difference in offering alternative care.
             MS. VARNEY: Exactly.
             MS. KROL: At Lucent, we do offer acupuncture and chiropractors care, and we have looked at alternative medicine networks. We are waiting for them to be more fully developed in terms of credentialing and breadth of providers because, in certain geographic areas, we do not have very good coverage, but with that model, again, having information to be able to discriminate when you are depressed, should I be taking St. John’s Wort and what is the cost of that versus a therapy appointment versus a massage. So, again, we would like to see more alternative medicine treatments available to consumers because they do value it, I believe. They spend a lot of money on it outside of the plan.
             I guess that is why I have been also struggling with a lot of this competition model. I think we have worked a lot on trying to provide integrated models around health and welfare and alternative medicine, the psycho-social support with illness. As we look at some of these models, we are really looking at competition on price with providers and value, and I get a little nervous that we are kind of fragmenting the care, mind-body care concept around some of these talks. I am still struggling with how to package products that would be more comprehensive versus purchasing just a gall bladder operation or cardiac care without purchasing the rehabilitative services and other services involved.
             DR. GINSBURG: Any others? Steve.
             MR. WIGGINS: I just would like to make one comment on alternative medicine and some of the options that will exist. When you actually move to episode-based payment, which we did at Oxford for 30 episodes--we have 80 now in this new program--we got lots of providers moving into it. We had tens of thousands of patients going through them. We had more money for alternative medicine, and people in an episode-based allowance system can make that tradeoff. They can say, "I would rather spend maybe one day less in the hospital out of a 7-day stay. I would rather use those incremental resources for acupuncture." It might be something as esoteric as chi gung or some other type of alternative therapy that could be used when you have control of the resources.
             It is too bad that we really didn’t get a chance to go into this model deeper because so many of these issues are so easily addressed with more explanation.
             DR. GINSBURG: Thank you.
             I appreciate your staying longer. I think we had some great discussion. I want to thank all of the panelists, Sally Trude, Jon Christianson for his moderating. Please fill out the evaluations before we go. We need them.
            I want to thank you, the audience, for providing such provocative questions, and The Robert Wood Johnson Foundation for its support of this meeting.
             Thank you.

             [Whereupon, at 12:10 p.m., the conference concluded.]

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