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Peter Lee of PBGH Talks about the Uninsured

By Brian Schilling

PBGH Executive Director of National Health Policy Peter Lee Talks About the Uninsured, Health Reform, and What Employers Can Really Do

Peter Lee oversees the Pacific Business Group on Health’s efforts to shape national and state policy. He is a sought-after speaker and testifies regularly on health quality issues and on the employer’s role in promoting affordable, accessible care.

IMPORTED: __media_C82F606632DA4BB08851976933C1F0A7_w_180_h_200_as_1.jpg Q: In the journal Health Affairs, you and Intel CEO Craig Barrett wrote about the crucial role employers can and should play in bringing about needed health reform. Do you think they’ll really step up to the plate?

A: Yes and no. Some employers are stepping up, but there’s a divide between employers who are fully engaged in reform efforts, between the relatively small number who are actually doing meaningful things to improve the delivery system or address quality issues, versus the majority who are rightly nervous when they hear the word reform and immediately start wondering, “How is this going to affect me?” Employers need to be looking at both issues and all too often we look only at “playing defense.”

Q: Do you see a big opinion gap between large and small employers on the issue of health reform?

A: Yes. Large employers look at this from an entirely different perspective—they want to know how it will or won’t affect their benefit offering and their efforts to promote productivity. I think a lot are skeptical that it will lead to real changes in cost trends. Remember we’ve been through this before. Nothing got fixed. In this economy, small employers aren’t thinking about what reforms might be needed to realize a higher-value health care system, they’re just trying to make it through the day. We’ve reached the point where a majority of very small employers don’t even offer health coverage. For them, the issue is what would a new mandate mean and how will they pay for it.

Q: Do large employers think about health benefits as a way of distinguishing themselves in the market for workers?

A: With regard to the core health benefits, large employers don’t generally distinguish themselves from one company to the next. But they do distinguish among themselves based on a range of wellness programs and other benefits.

Q: So wouldn’t employers just as soon have the government take over the job of administering benefits to everyone? Why isn’t there more support for single payer?

A: The main reason there’s concern among many employers is that it would mean handing this over to government. You would need to convince a lot of employers that it is within the government’s core skill set to administer health benefits to an additional several hundred million people in order to make employers happy with ceding responsibility here. The employer perspective is: while administering health benefits might not be what I’m in business for, I do an OK job and at least have my hands on the reins; I’m not ready to hand it over to government. No one trusts the devil they don’t know. That’s why everything the Obama administration says starts with, “Don’t worry, you keep what you have—we aren’t swapping you out with a government plan.”

Q: But do you think there is a chance that what we’ll really see is an effort to start phasing out employer-sponsored insurance?

A: The 160 million people who have employer-based insurance are pretty happy with it. They’re insecure that they might lose it. No one is going to ignore them and force a single-payer plan down their throats. My very strong sense is that the Obama administration is made up of economic pragmatists. A pragmatist is going to approach this from the standpoint of, “How can we preserve the present system, but improve it and expand access?” It’s the only approach that’s politically or economically feasible.

Q: You’re a vocal critic of the current system as being full of waste, inefficiency, and poor-quality care. Does it make sense to think about expanding access now, or do we need to fix the flaws in the system first?

A: The issues of cost and efficiency and quality need to be addressed first or at the same time as addressing access. To some extent, creating efficiencies is where the money for expansion of coverage will come from. If we don’t make the system more efficient and stem the really atrocious cost increases, it’s not possible to get everyone in the tent. We don’t get to a higher-quality, lower-cost system by expanding access.

Q: OK, I’m a small employer that doesn’t compete internationally with companies for which this isn’t an issue. Convince me that I should care about the uninsured.

A: If you’re one of the 50 percent of very small employers that doesn’t offer coverage, you care because there are real consequences that flow from your employees not having coverage. They are going to get sick and miss work more often, and they’re going be looking for other jobs that do offer coverage. And, as a small employer you’re probably perpetually worried about what it would cost if you did decide to offer health benefits. If you’re one of the other 50 percent that does offer coverage, you’re at a massive cost disadvantage when you compete with the company down the street that doesn’t. Or you might have an employee that you really want to leave, but he or she can’t because they’re afraid to lose their health coverage. It’s a rotten situation for everyone.

Q: What can—or should—an employer do to help promote meaningful health care reform, besides worry and be sympathetic?

A: Join a coalition. And make sure your voice is being heard. No purchaser, not even Medicare, is big enough to change the system on their own. And, it is clear that employers need to learn about and lobby for the range of elements that will promote value, such as payment reform, better provider-level measurement, and comparative effectiveness research.

Q: If everyone in the U.S. got health insurance tomorrow, how do you think it would affect the average company? What differences would they see right away or over time?

A: The mere fact of having health coverage for 50 million additional Americans will not necessarily make much of a difference at all to the average employer. There may be a minimal decrease in cost shift [from the uninsured to employers], but it would not plug the holes in the sinking ship of the American health care system. That will only be accomplished by applying comparative effectiveness research, payment reform, better information technology, and accountability and reporting.

Q: If you could wave a magic wand and change one thing about the system, what would it be?

A: I’d change the incentives for those that who deliver and receive care. I’d want to eliminate the whole pay-for-volume approach to compensation that we have now and establish incentives for physicians to provide the best and most efficient care. At the same time, we need to pay physicians or nurses for time spent coordinating care for the chronically ill—that’s often either not paid for or under-funded. Payment reform is the first and biggest piece of the puzzle that we need to put in place. One way for employers to learn about these issues is through the work of the Center for Payment Reform, a recently formed collaborative that is promoting transformational payment change. And I’d do the same for consumers: we need to expand the application of value-based benefit design to provide substantial rewards to consumers who adopt healthier lifestyles, like stopping smoking, and choose higher-value providers or treatments.

Q: Do you know anyone who is presently or who has recently been uninsured?

A: Yes, this is personal for me—my nephew went without coverage for a while. It’s very unsettling. I actually provided financial support to help him get coverage.

Q: You’re an advocate for using public policy to help people lead healthier lives. Can you give me an example of a policy or two that would make a real difference?

A: An easy one is dramatically increasing the tax on tobacco—it’s an easy way to provide a real significant financial incentive for people to quit smoking. One of the reasons California has one of the lowest smoking rates in the country is that it raised its tobacco tax, in concert with embarking on a broad campaign. Employers, though, will always have a role on health and wellness as well. Having effective smoking cessation benefits is an important way private policies can complement public policies.

Q: How healthy a lifestyle do you lead?

A: If you ignore the stress that comes with trying to address the shifting tides of health reform, I have a very healthy lifestyle. I exercise four to five times per week, don’t each much red meat, and don’t overeat. I generally practice what I preach.

Q: OK, so what did you have for breakfast this morning?

A: I had toast, a banana, and coffee—followed by a “chaser” of my morning swim.

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