Milwaukee Biz Blog

U.S. Sen. Ted Kennedy's recent cancer diagnosis resonates with me because it is the same malignant "glioma" that ended my father's life in 1970 at age 49. Yes, just 49!

As I "celebrate" one of those milestone birthdays that puts even more years between my own age and Dad's early death, I find myself in a particularly pensive mood.

To wit, it is interesting to recall that Dad's major medical policy had a $250 deductible and a lifetime limit of just $50,000. Remarkably, a team of neurosurgeons and a 110-day hospital stay did not exhaust that modest policy limit!

Roll the clock forward 38 years, and now you are hearing many lament the "cost shift" burden of high deductibles and even modest co-pays. Some speak of the growing underinsured problem - never mind the fact that a $250 deductible from 1970 inflated using regular CPI should today be around $1,500; using medical CPI, well over $3000.

In truth, the underinsured problem is not with front-end deductibles and co-pays but instead the back-end insurance policy limits of between $2 million and $5 million.

In this vein, Regina Herzlinger speaks of cancer drug therapies alone (e.g. Erbitux or Zevalin to name just two) that can cost $24,000! With evolving, ever more expensive treatments, the real debate on health care may need to focus on how much is a life worth?

And, should an HMO or government bureaucrat make that call? We might also ponder this: with identical cancers, should Joe Lunchbucket get any less care than Sen. Kennedy?

These are tough questions that do not allow for sound bite answers. My birthday wish is that more folks who really care would step forward and publicly address the gravity of the matter.

Jon Rauser is president of The Rauser Agency Inc., Milwaukee. He writes an ongoing blog about the health care industry at www.rauserhealthreview.com.

State Sen. Jon Erpenbach (D-Middleton) conducted a five hour long hearing Monday on Senate Bill 562, the Healthy Wisconsin AUTHORITY and Plan. For someone who has 25 years of experience helping people finance high-quality (but expensive) health care, I was struck by the theater of the proceedings and paucity of substance.

As just one example, I heard numerous individuals testify as to the "obvious" advantages of spreading risk over a larger pool to achieve lower costs. Over and over we heard about state employees having the best benefits anywhere and lower costs because of the buying power of this large group (260,000 statewide; 70,000 in Dane County alone).

Trouble is, that's not true. Where was testimony by the insurers (who cover both state employees and those of small business) that would reveal a significant disparity of costs on a per member per month (apples to apples) basis.

Let's also hear the testimony of impartial actuaries who would more accurately describe the utter predictability of morbity in any group over a thousand or so lives.

I can only conclude there is a reason such experts are not called to testify. It has to be the same reason this bill was reintroduced in the final week of the legislative session to be voted on, I'm sure, without further study and debate. The reason: politics.

Serious people in the private sector are hard at work trying to lower health care costs through hundreds of small steps that take time to bear fruit and can't be wrapped up into one neat reform sales pitch.

Their efforts are mocked as unverifiable and too little too late.

The real mockery should be reserved for those who think such a complex problem can be fixed in one piece of legislation. And for the utter deception of their sales pitch, they deserve the political results they nurture.

Jon Rauser is president of The Rauser Agency Inc., Milwaukee.

I have been invited to respond to calls for a single payer health system as envisioned by Sen. Mark Miller's Wisconsin Health Security Act (SB 51). Thank you for the opportunity, but real debate of a complex issue cannot be confined to a 650 word column or one of the many 20-minute forums the Miller camp has staged throughout the state in recent months.

I will do what I can in the space allowed.

Full disclosure: I am an independent health insurance broker. Along with 20,000 members of the National Association of Health Underwriters, my peers and I help more than 100 million Americans afford the expensive miracles performed every day by health care professionals. I know quite a lot about the financing of health care; I know very little about the delivery of health care.

Those that advocate for a government-run health system postulate eliminating insurers' egregious profits and wasteful administrative costs will more than offset the cost of bringing some 45 million uninsured into a mandatory one size fits all system. Rubbish!

As reported by the Centers for Medicare and Medicaid Services (CMS), private health insurance administrative costs nationwide average 14.1 percent of premiums paid; factoring out taxes and other assessments, the figure drops to 9.9 percent - not the 30 percent or more often cited. A related observation: when I quote comparable health plans with a Wisconsin-based not-for-profit insurer, they are often the same or a little higher than those of the largest for-profit national insurer. Is it possible markets create such a result? Who will drive efficiency and innovation in a government-run monopoly?!

We all know the status quo is unsustainable. Is there any doubt the private sector is on the cusp of breakthroughs in information technology that will even further reduce the cost of financing and administering health care. So, let's look at where 85 to 88 percent of every health care dollar is being spent to see opportunities for real reform.

That brings us to consumerism; most notably high deductible health plans (HDHP) coupled with health saving accounts. We Americans want to control our own destiny. Those who hated HMOs would like "Big Brother Health" even less. HDHPs are merely a way to take ownership over our health while at the same time making coverage choices for all more affordable. With premiums 35 to 40 percent lower than first dollar co-pay plans, this real savings - unlike overstated administrative costs - makes coverage far more affordable.

Properly set up, higher out-of-pocket costs at the time of claim are offset by the premium reduction with one big difference; if you don't use the more expensive first dollar co–pay plan, does the insurer send you a refund? (Now come on: I'm advocating a true insurance product that costs one-third less - everyone I talk to loves the idea of giving insurers less premium!) As for that canard about putting off routine care, virtually all HDHPs cover wellness at 100 percent (not subject to a deductible or co-pay).

Literally millions of Americans have bought into this concept, and the effect on the delivery of health care has been profound.  For example, it is not a coincidence that everyone is talking about wellness. Or that providers are sharing information on price and quality transparency.
Consumerism is chipping away at the status quo. And the pace of change will only accelerate.

I beg those serious about this "debate" to read "Your Health Matters: What You Need To Know About U.S. Health Care," authored by Greg Dattilo and Dave Racer (Alethos Press). This carefully documented book sets straight three myths about Canadian style health care that have been repeated so often they are mistaken for fact: to wit, under a single payer system, everyone has access, it costs less and outcomes are better. The truth may literally save your life!

Jon Rauser is president of The Rauser Agency Inc., Milwaukee.