Entries in Riddle, Clive (304)


The Fast and The Furious: Health Care Reform Headlines

By Clive Riddle, May 20, 2009
While it remains to be seen if actual health care reform prodded by the Obama Administration and Congress should be described as a fast moving car, or as “The Slow and The Serene,” but at least the rate of headlines spewing out on health reform can be considered, as in the movie title, “The Fast and The Furious.”
Just during this week, we’ve been bombarded with developments. Here’s a sampling of what’s come out, under the category of “Who’s going to pay for this mess?”
Sodas a Tempting Tax Target
New York Times, May 20, 2009
Healthcare Overhaul Could Add Financial Burdens To State
Boston Globe, May 19, 2009
New Taxes Loom to Pay for Health-Care Overhaul
Wall Street Journal, May 19, 2009
Congress has little appetite for health care taxes
Associated Press/Google, May 18, 2009
Senate proposes alcohol, soda tax to fund health care plan
Politico.com May 18, 2009
Turning to the policy front here’s a sampling of headlines under the category of standing on soapboxes:
Baucus Message to Industry Lobbyists: 'Let the Process Work'
The Washington Post, May 20, 2009
The GOP's Health-Care Alternative
Wall Street Journal, May 20, 2009
Republicans To Introduce Health Reform Plan That Would Establish State Health Insurance Exchanges, Provide Tax Credits
Kaiser Daily Health Policy Report, May 20, 2009
Senators Push for Delay of Public Health-Care Option
Bloomberg, May 19, 2009
Senate Finance Committee Releases Policy Paper Describing Options To Pay for Health Overhaul
Kaiser Daily Health Policy Report, May 19, 2009
Dems Unclear Where Baucus Will Side on Health Care Reform
Politico.com May 18, 2009
Finally, here’s a few entries under that category of Newton’s Third Law That Every Action has an Equal and Opposite Reaction:
Physician Practice Interactions with Health Plans Cost $31 Billion A Year, Equaling 6.9 Percent of All Spending For Physician And Clinical Services, New Study Finds
Robert Wood Johnson Foundation Press Release, May 20, 2009
Health Insurers Promise ‘Meat’ to $2 Trillion Savings
[Bloomberg reports that health insurers will propose simpler billing for doctors and rewarding better-performing physicians as part of the industry’s White House pledge last week to help shave $2 trillion from U.S. medical bills over the next decade.]
Bloomberg, May 18, 2009
DOJ Insurers Probe Sought By Health Care Reform Advocates
The Huffington Post, May 20, 2009
Health Plans Support Competition to Benefit Consumers
AHIP Press Release, May 20, 2009



Health Reform: The Start-Up

by Clive Riddle, May 13, 2009

Health Reform, like any start-up, launched a web site ( www.healthreform.gov ) has issued fact sheets and press releases, received another round of angel funding (via the FY2010 budget) and this week announced it has hired a leadership team. Like any start-up, Health Reform has announced Strategic Alliances, this week touting voluntary commitment from six leading health care stakeholder groups to reduce health care costs.

What Health Reform now needs, like any start-up, is customers.

Here’s who the President met with this week, with each of the six stakeholders pledging help reduce health care costs by 1.5%:






  • Mr. Dennis Rivera, Chair, SEIU Healthcare, Service Employees International Union

The participants are now having to fend of skeptics of “voluntary” pledges. At least non were wearing any “WIN” buttons, dusted off from Gerald Fords voluntary “Whip Inflation Now” initiative in 1974.

Here’s who has been appointed by HHS Secretary Kathleen Sebelius to serve as key staff members in the new HHS Office of Health Reform:

  • Jeanne Lambrew, Ph.D., Director of the HHS Office of Health Reform, was previously an associate professor at the LBJ School of Public Affairs, senior fellow at the Center for American Progress, and worked on health policy in the Clinton Administration.
  • Michael Hash, Senior Advisor, will run the inter-agency process for developing specific aspects of health reform legislation, and has held senior positions at the Health Care Financing Administration (now CMS) and on the staffs of the House Energy and Commerce Committee as well as a private health policy consulting firm.
  • Neera Tanden, Senior Advisor, will work on developing health care policies for HHS and the Administration, and is the former domestic policy director for the Obama-Biden campaign and policy director for the Hillary Clinton campaign.
  • Linda Douglass, Director of Communications, was a traveling spokesperson for President Obama's 2008 campaign and was chief spokesperson for the Presidential Inaugural Committee 2009, and previously was managing editor for National Journal and prior to that was Chief Capitol Hill Correspondent for ABC News
  • Meena Seshamani, M.D., Ph.D., Director of Policy Analysis, will coordinate the quantitative and qualitative analyses on health reform conducted throughout HHS, and was a resident physician in Otolaryngology-Head and Neck Surgery at Johns Hopkins University.
  •  Caya B. Lewis, M.P.H., Director of Outreach and Public Health Policy, will coordinate HHS outreach and interaction with stakeholders on health reform, and was the Deputy Staff Director for Health for the Senate HELP committee under the chairmanship of Senator Edward M. Kennedy.
  • Jennifer Cannistra, Policy Analyst and Director of Special Projects previously served as the Pennsylvania State Policy Director for the Obama campaign
  • Karen Richardson, Outreach Coordinator, was previously the policy director at the Democratic National Committee (DNC).
  •  Michael Halle, Special Assistant, worked for the Presidential Inaugural Committee and Obama for America

Dual Surge: Ineligible Dependents, and Dependent Eligibility Audits

by Clive Riddle, May 7, 2009

Managed Healthcare Executive Magazine, in its May Issue, quote us in an article by Tracey Walker: “Audit Reviews Keep Costs Down.”

The gist of the article is, that 5% or more of many employer’s covered members involve dependents that do not currently meet their employer’s eligibility criteria, and that eligibility audits are an effective way to reduce employer costs and exposure- directly if they are self-insured, and indirectly if they can improve their experience with their fully insured health plan.. It is noted that in the current economic climate, employer demand for such audits may be on the rise.

Our quote involved regulatory scrutiny of health plan disenrollment of such dependents:

“Employers and health plans do need to be cognizant of regulatory issues as they proceed with dependent eligibility audits. Employers would have ERISA regulatory protections from state regulators, according to Clive Riddle, president and founder of MCOL, a provider of business-to-business managed care resources. ‘But when self-funding is not involved, the health plans covering the dependents flagged in eligibility audits must be cautious in how they handle disenrollment and in particular, rescissions of any claims incurred,’ he says. States such as California have clamped down on rescission activities, and health plans have to follow very strict guidelines in numerous states when dealing with this issue.”

Mercer last month issued a release on this topic: “Mercer sees significant growth in health plan dependent eligibility audits.” Mercer pegs the percentage of ineligible dependents in a range of 3% to 8%, and the average cost of covering a dependent for plan sponsors at $1,900 per year. Thus Mercer calculates a plan sponsor with 10,000 dependents and 5% ineligible could save $950,000 annually through such an audit. It’s certainly easy to see why such audits are increasing in frequency. And of course, due to the impact of the recession with layoffs and unemployment, the number of potentially ineligible dependents continue to rise.

From a public policy standpoint, a surge in employers and health plans dropping coverage of greater numbers of dependents will of course only swell the ranks of the uninsured. One policy solution would be to mandate dependent eligibility be tied to IRS dependent status, at least up to a defined age, as opposed to the current patchwork of employer, plan and state specific criteria, which typically would disallow a 22 year old just graduated college student living at home with their parents while looking for a job.


Increased and Decreased Utilization: The Recession Driven Paradox and Behavioral Economics

by Clive Riddle, April 23, 2009

Here’s two headlines from the past week:

So how does one reconcile the Thomson Reuters report that “20 percent of U.S. households postponed or cancelled care in the past year,” with the International Foundation of Employee Benefit Plans (IFEBP) survey that found “plan participants, perhaps fearing an impending layoff, are increasing utilization of their benefits”?

It’s quite easy actually, when you overlay the employees “fearing an impending layoff” from the IFEHBP survey with this finding from the Thomson Reuters study: “the percentage of households with employer-sponsored insurance showed a notable decline since the start of the recession, declining from 59 percent in early 2008 to 54.6 percent in early 2009.” We have one sector, fueled by those without coverage, that are delaying care greatly influenced by cost concerns, and another sector, fueled by covered employees uncertain about their future employment, that are accelerating their care while they still have coverage.

Behavioral economics would kick in here as we reconcile this on-the-surface paradox. Let’s consider a few Behavioral Economics concepts:

  • Status Quo (Default) Bias: People have a strong ‘status quo’ bias and often fail to take pro-active action to change the default
  • Hot vs Cold States: People’s decisions under aroused or ‘hot’ states tend to be significantly different from ‘cold’ calculated decisions
  • Loss Aversion: People prefer avoiding losses rather than acquiring gains. Studies suggest that losses are as much as twice as psychologically powerful as gains
  • Hyperbolic Discounting: Consumption now and in the near future is preferred to consumption into the farther future; The greater the uncertainty about this future the less the preference

One could argue that the Status Quo default is to receive a service when it is prescribed by a doctor, and to not receive a service when it hasn’t been prescribed or referred by a provider. One could also argue that a person that has lost, or perceives they will lose their health coverage, is in a ‘hot state’, and that persons told by their doctor they require services are in a ‘hot state.’

We can apply these assumptions in the following table of how consumer decisions fit the two survey scenarios, along with another scenario of those lucky enough not to be worried about their health care coverage. We would imply that “self referred” means you are contemplating a service that hasn’t been prescribed, maybe triggered by some direct to consumer advertising, advice from a friend, internet research or other such information.

Lack Coverage
Fear Losing Coverage
Stable Coverage
Self referred elective potential service
Default: No service
State: Hot
Decision: Won’t move from default due to dollar/time loss aversion and hyperbolic discounting that dollar savings today is greater than future health benefit
Default:No service
State: Hot
Decision: Will move from default due to covered benefit loss aversion and hyperbolic discounting that value of covered benefit and health service today is greater than future considerations
Default: No service
State: Cold
Decision: Won’t move from default because there are low loss aversion considerations and value of health benefit is no greater now than in the future
Provider referred/ prescribed elective potential service
Default: Receive service
State: Hot
Decision: Will move from default due to dollar/time loss aversion and hyperbolic discounting that dollar savings today is greater than future health benefit
Default: Receive service
Decision: Won’t move from default due to covered benefit loss aversion and value of covered benefit and health service today is greater than future considerations
Default: Receive service
State: Hot (health need)
Decision: Won’t move from default because there are low loss aversion considerations and value of health need is greater now than future considerations
Any service perceived or actually considered to be non-elective
Default: Receive service
State: Hot
Decision: Will move from default only if dollar/time loss aversion exceeds health loss aversion and hyperbolic discounting that dollar savings today is greater than future health benefit
Default: Receive service
Decision: Won’t move from default due to covered benefit loss aversion, health loss aversion and value of covered benefit and health service today is greater than future considerations
Default: Receive service
State: Hot (health need)
Decision: Won’t move from default because of high health loss aversion and value of health need is greater now than future considerations


The Thomson Reuters Study validated that many people will postpone care for other reasons than cost, but cost has moved to the top of the list: They found that: “One in five U.S. households postponed or cancelled medical care over the past year, up from 15.9 percent in 2006 when the survey last addressed this issue. Among 2009 respondents who postponed or cancelled care, 24.1 percent said cost was the primary reason. In 2006, the primary reason cited was lack of time......The majority of postponed services (54.7 percent) were for physician visits, followed by imaging (8 percent), non-elective procedures (6.3 percent), and lab or diagnostic tests (5.7 percent).”

The full Thomson Reuters Study is available on the Thomson Reuters website.




Insider’s View on the Direction of Consumerism and Consumer Driven Plans

By Clive Riddle, April 9, 2009

The Eighth Annual Consumer Driven Web Summit was held a few weeks ago, which included a survey of the professional attendees on a couple of key questions regarding the direction of consumerism and consumer driven plans.

What is the industry insiders’ view the main components of consumerism? Last year and this year they were asked to rank five components according to the value of the component from their perspective:

  • Account Based Plans (HSA/HRA/FSA)
  • Price and Quality Transparency
  • Retail Medicine (Convenient Care, etc)
  • Web Based Consumer Patient Health Records
  • Wellness Incentive Programs

Price and Quality Transparency continues to be ranked far in front of the five components being rated, and Wellness Incentive Programs continue to be ranked second. The mean score improved for Wellness Incentive Programs and for Retail Medicine, while the mean scores declined for the other three components:

Respondents were asked to rank each component 1 through 5, with 1 = highest value and 5=lowest value, and only use each ranking once; i.e. only rate one item a 1, one item a 2, etc.

Here’s the results for the past two years:











Price and Quality Transparency





Account Based Plans (HSA/HRA/FSA)





Wellness Incentive Programs





Web Based Consumer Patient Health Records





Retail Medicine (Convenient Care, etc)





It’s interesting to see that web based consumer patient health records aren’t prioritized a little higher, given their priority in policy circles and elsewhere. It’s also interesting to see account based plans lose ground. Many pundits have already pronounced the decline and fall of the account based plan, given the direction that the Democratic congress, Obama administration, and influential policy organizations have taken.

But not so fast. Insiders seem to feel what a number of recent surveys have shown, that employer interest in account based plans in rising as a tool to address cost related issues in this economic meltdown.

Respondents were asked to predict enrollment change for such plans. Here’s how they answered: “As a result of the Recession, will Consumer Driven Plan enrollment/ market share (compared to traditional managed care plan designs):”

· Increase significantly 26.4%

· Increase somewhat 42.5%

· Not materially change 14.9%

· Decrease somewhat 11.5%

· Decrease significantly 4.6%

Thus 66.9% felt enrollment would increase as a result of the recession, while 16.1% felt enrollment would decrease.

As health care reform takes shape over the next months (or years), the economy will undoubtedly weigh large in the discussions. The pundit’s reported death of consumer driven plans may prove to be premature.