The most recent St. Norbert CEO Breakfast & Strategy session featured Mike Hamerlik, CEO of WPS Health Solutions, headquartered in Madison but known up here for their Arise health insurance plan. Bigger, they run a huge plan administration business for major parts of the government (VA, etc.), covering 22 million people and processing more than $100 billion. Huge.
He talked about “the health care mess.” Among his points:
• We talk about access, how it works, and the payment system, but the real problem is cost. We wouldn’t be in this unaffordability situation if costs had been better controlled. (He didn’t explain how, or what we must do in the future.)
• Health Care System? It’s not a system, because the interactive parts aren’t working towards a common goal.
• Competition doesn’t work to reduce prices because of the lack of transparency, so market-based solutions can’t work. The total cost is shared (and hidden) by too many.
• Demand is insatiable. “Do what it takes.
• The solution is somewhere in the middle.
• ObamaCare is rich in benefits, including guaranteed issue which makes private insurance ineffective.
• ObamaCare would only work under an insurance concept if everyone was required to pay, but the penalties were too low and the subsidies too narrow. Too many people couldn’t afford it, which is why the Individual mandate went away.
• It’s a death spiral. As costs keep going up, healthier individuals figure out a way to opt out.
• Drugs: In 2000, drugs were 5% of the total spend. Now they are 25%-33%. We need government price controls. The industry says that would impact R&D, but I don’t think so. It’s the (third party payer) market that drives prices, not costs.
• Some of his solutions:
— Measure and publicize Quality: There are variations, and we need to know them. That will bring rationality to pricing.
— Waste: Correlated with quality. There’s at least 20% waste in the “system.”
— Get employers out of the payment sequence. Let families decide what they want.
Some good quotes:
• In my position, when I go out in public, I feel like the fire hydrant at a dog convention.
• Asking for questions: Go ahead. I’m your pincushion.
• Congress: Either they do nothing, or over-react.
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