“California is a place in which a boom mentality and a sense of Chekhovian loss meet in uneasy suspension; in which the mind is troubled by some buried but ineradicable suspicion that things had better work here, because here, beneath that immense bleached sky, is where we run out of continent.” ~ Joan Didion, “Notes From a Native Daughter”
As you recall, the Eagles turned that collision between the American boom mentality and a sense of Chekhovian loss into a pretty good song. Of course no one reads Chekhov these days. He’s too Russian. Few read Joan Didion. The Eagles will have to do – “There is no new frontier, we’ll just have to make it here.”
Sometimes you simply run out of options. People come to Los Angeles to reinvent themselves, to start a new life, to gain fame and fortune, or to escape it – it is a last resort. We’re famous for that. Things had better work here.
Of course they don’t, or things work out in an unexpected way and you make do. Los Angeles – and Hollywood in particular – is, after all, just another place. It just has nice weather, if you like bleached sky.
One thing that started our here was a pretty good idea. Up north, during World War II, at the Kaiser Shipyards and then statewide at Kaiser Steel, Henry Kaiser decided to offer his employees affordable, subsidized healthcare, and built and staffed clinics and then hospitals. That was both nice of him and a sound business decision at the time – having healthy employees is good for production, and as their families were also covered, he had employees who weren’t worried about the sick kids and all that. He was no dummy.
We owe much of the current configuration of healthcare in this country to him – the idea that healthcare comes with your job. It’s a benefit – the company covers a big chunk of it and you chip in, and everyone is happy, or at least not scared silly that illness or accident will ruin one party or the other. It’s not socialized medicine in any way. It’s a purely commercial transaction, quite capitalistic – for a time, if any of you remember the eighties, companies used to lure potential employees not just with salary packages but with boasts about their healthcare benefits – not just medical but dental, vision, sometimes mental health coverage, and even acupuncture and natural medicine herbal stuff. Things got too expensive, but there was a time when the array of such goodies was part of a sales pitch – if they wanted you, you got the pitch.
This of course morphed into the HMO model, the Health Maintenance Organization, in the seventies. Kaiser Medical had floated free of its parent and become Kaiser Permanente, a system of clinics, hospitals and salaried staff doctors, with which any company could contract for services at a per-member per-month basis. The financial model was capitation – money came in “per head” and was distributed to the organization’s entities “per head.” Nothing was to be fee-for-service.
The medical model was maintenance – physicals and pre-natal care and education and advice for members would hold down costs, catching anything unfortunate before it became worse, and needlessly expensive. It wasn’t a bad idea. Kaiser Permanente became the biggest HMO in California and the concept spread nationally. Accept a job anywhere in America now, if you can find one, and your HMO options will be explained to you – accept the staff model, or chip in more for access to the preferred provider list where you can choose your own doctor, or chip in even more for even more control. You can be sure the HMO broker has worked with the benefits manager and sold that manager something or other, keeping costs down for the employer and profits reasonable for the HMO. It’s just business.
The model has a flaw – anyone can see it. Not everyone is covered. Some employers do not offer healthcare coverage, at the low end of things, some offer very little, like Wal-Mart, some ask their employees to chip in so much that many employees decline coverage. Of course with so many desperate for work employers have little need now to offer much coverage. There’s no reason to – someone else, willing to cover their own healthcare costs, will take the job if you won’t. It’s just business. And of course the self-employed must make their own arrangements with any HMO that thinks they are not too much of a risk – smokers and those with any kind of medical record of illness or accident have a problem there. Such people can suck up resources rapidly and upset the system – if they can get coverage it will be amazingly expensive.
Then there are those who are not working – the young, those who have retired and the unemployed, or even those between jobs. They’re out of luck, and many of those who have retired have found that their retirement plan, that promised coverage after retirement, is no longer there – things happen, times get tight, courts rule that as the money isn’t there the promise cannot hold. As a last resort the government has reluctantly stepped in – there is Medicare and Medicaid, those programs that conservatives despise, for those too lazy to take care of themselves – or something like that.
So public hospital emergency rooms fill with the unlucky and those with inadequate coverage, just seeking basic care, and the hospitals are going broke, as by mandate they cannot turn anyone away. Medicare and Medicaid reimbursement doesn’t cover half their costs, and most of their income is derived from discounted fee arrangements with this HMO or that. Out here emergency rooms are closing left and right. Some hospitals have gone under.
Okay, maybe this is wrong – but having worked for a few years managing the folks who ran the business applications for a chain of eleven hospitals from San Bernardino to Long Beach – general ledger and accounts payable and all that – and having worked for a few years managing a group that handled eligibility and payments for Kaiser Permanente itself – and their IT budget is in the billions – it doesn’t seem wrong. Anyone from Canada or France or Sweden would roll their eyes. Why is healthcare here something that employer provides to employees, as it is in their interest to do so?
Why not think a bit bigger? If it is in their interest that they cover a big chunk of healthcare and you chip in a bit, and then everyone is happy, or at least not scared silly that illness or accident will ruin one party or the other, why can’t one of the parties be the government? The interests are the same – everyone will be more productive and not scared silly all the time, and the costs can be distributed far more widely. Add to that the obvious point that if American corporations didn’t have to pay for their employees healthcare they could become far more competitive – the thousands of dollars that is added to the cost of building each Chevy for employee and retiree healthcare could be diverted to both a better product and lower prices, and they might sell a few more of them. It’s madness. It is in the interest of the government to keep the population healthy – if it’s good for business it is surely good for the country.
But Henry Kaiser passed away in 1967 – he’s not around to huff and puff and say to America that this makes no sense – the basic idea always was to remove the crap that gets in the way of people doing their best. If the employer-based system isn’t working out the basic idea is still a good one. Our healthcare system is one more this-had-better-work-here California idea that didn’t work, or worked out in an unexpected way.
The problem seems to be a confusion of ends and means. The end, if you will, was to remove the crap that gets in the way of people doing their best, getting sick and the worry about getting sick. The means was free-market capitalism – making sure there’s a profit for everyone concerned – the employer gets productive workers and makes more money (increasing capital) at a predictable and relatively low cost, if the employer strikes a good deal with the HMO broker, and the insurer of the medical services, the HMO, makes a tidy profit, with careful management, and everyone is happy. The government has to do nothing – the welfare of its citizens, or a good chunk of them, is assured. What Adam Smith called the Invisible Hand – everyone competing in antonomous self-interest to grab what they can – will take care of everything with optimal efficiency.
Isn’t it pretty to think so? But as you recall, Nick Barnes said those words with bitter irony.
Okay, that’s an obscure allusion. Read Hemingway. On Saturday, February 23, you could read the big story on the front page of the Los Angeles Times. You knew it was the big story. It ran top right – Health Net Ordered to Pay $9 Million after Canceling Cancer Patient’s Policy.
Health Net was just doing the Adam Smith thing:
One of California’s largest for-profit insurers stopped a controversial practice of canceling sick policyholders Friday after a judge ordered Health Net Inc. to pay more than $9 million to a breast cancer patient it dropped in the middle of chemotherapy.
The ruling by a private arbitration judge was the first of its kind and the most powerful rebuke to the state’s major insurers whose cancellation practices are under fire from the courts, state regulators and elected officials.
There has been a problem out here. Get sick in an expensive way and a team of HMO investigators digs up your original application and if they find a misspelling or a misplaced comma, anything at all, they retroactively drop you – and the investigators get a bonus based on how much money they save the HMO. Actually they look for pre-existing conditions that weren’t explained the proper way, or not revealing your address from childhood – you might have lived next to a toxic dump when you were a kid after all – anything they could use. Start using expensive services and the team swings into action. One HMO was recently a tad embarrassed when the Times got a copy of a letter they sent to all their contracting doctors – help us out by indentifying high-risk patients who could cost us lots of money so we can go over their paperwork with a fine tooth comb and dump them, or else you’ll be in trouble. They defended that by saying it was just good business practice.
This one was a bad outcome for them all:
Calling Woodland Hills-based Health Net’s actions “egregious,” Judge Sam Cianchetti, a retired Los Angeles County Superior Court judge, ruled that the company broke state laws and acted in bad faith.
“Health Net was primarily concerned with and considered its own financial interests and gave little, if any, consideration and concern for the interests of the insured,” Cianchetti wrote in a 21-page ruling.
The full ruling is at the link, but in this case, the woman was one of those free-floaters – she owns a hair salon and has no big company to stick up for her. Health Net dropped her in January 2004, and she was stuck with almost a hundred thirty thousand dollars in medical bills – she was forced to stop chemotherapy for a few months until she found a charity to pay for it. Health Net’s head “ordered an immediate halt to cancellations and told The Times that the company would be changing its coverage applications and retraining its sales force.” And there was this:
Other insurers were considering changing their own practices. A spokeswoman for WellPoint Inc., which operates Blue Cross of California, the state’s largest for-profit insurer, said the company was in favor of such an idea. Blue Shield of California declined to comment.
It was bad:
State Insurance Commissioner Steve Poizner applauded the judge, saying “health insurers simply cannot hold out the promise of insurance for their consumers and then snatch it away just when people need it most. That is illegal, immoral and will not be tolerated.”
… At the arbitration hearing, internal company documents were disclosed showing that Health Net had paid employee bonuses for meeting a cancellation quota and for the amount of money saved. “It’s difficult to imagine a policy more reprehensible than tying bonuses to encourage the rescission of health insurance that keeps the public well and alive,” the judge wrote.
So capitalism took a hit. Are we Marxists now? See Los Angeles Sues Health Net over Rescissions – “Los Angeles City Attorney Rocky Delgadillo has filed a lawsuit against Health Net claiming that the insurer illegally rescinded policies of 1,600 policyholders who submitted expensive claims.”
Everyone wants to rap the knuckles of the Invisible Hand.
Something is up. Amy Harmon in the New York Times the same day wrote about patients who refuse to undergo genetic testing because they’re afraid that negative results will make it impossible to get health insurance:
“It’s pretty clear that the public is afraid of taking advantage of genetic testing,” said Dr. Francis S. Collins, director of the National Human Genome Research Institute at the National Institutes of Health. “If that continues, the future of medicine that we would all like to see happen stands the chance of being dead on arrival.”
… Insurers say they do not ask prospective customers about genetic test results, or require testing. “It’s an anecdotal fear,” said Mohit M. Ghose, a spokesman for America’s Health Insurance Plans, whose members provide benefits for 200 million Americans. “Our industry is not interested in any way, shape or form in discriminating based on a genetic marker.”
Still, a recent study by the Georgetown University Health Policy Institute found otherwise. In 7 of 92 underwriting decisions, insurance providers evaluating hypothetical applicants said they would deny coverage, charge more for premiums or exclude certain conditions from coverage based on genetic test results.
Kevin Drum seems to have it right:
Of course insurance companies are interested in discriminating based on genetic markers. That’s what insurance companies do: they evaluate risks and then offer pricing and coverage that are appropriate and profitable based on those risks. If they don’t do that, they aren’t being insurance companies.
It’s worth saying this over and over: insurance companies don’t discriminate because they’re evil. They do it because it’s what insurance companies do. It’s a core part of their business, and if they don’t do it they’ll go belly up.
This is the biggest reason for wanting to get private insurance companies (mostly) out of the healthcare business. If it were just a matter of their being corrupt or evil, that actually wouldn’t be so bad. We could figure out ways to regulate them into good behavior. But it’s harder than that. The kind of behavior that most of us want – comparable coverage for everyone under nondiscriminatory pricing rules – is flatly not something an insurance company can offer. If they do, they aren’t being an insurance company. And if they aren’t being an insurance company, then what good are they doing?
In this case the answer is: impeding progress. In other cases they’re merely adding huge amounts of overhead to the system. But positive benefits? Those are a little harder to make out.
Will Hillary Clinton make all this all better? Maybe, or maybe not:
Sen. Hillary Rodham Clinton’s (D-N.Y.) proposal to mandate that all people purchase health insurance would be a boon to the industry, filmmaker Michael Moore said Friday.
“Can you imagine, every time Sen. Clinton says that, the licking of the lips that goes on with these health insurance executives?” Moore said during a conference call. with reporters
“His movie notwithstanding, Michael Moore clearly doesn’t know a whole lot about how healthcare policy works,” Clinton spokesman Jay Carson said in an e-mail. He said Clinton’s healthcare plan would insure every American and make sure that covering people and not profits are the top priority.
Ah, profits would still be a priority, just not a top priority. Her experience notwithstanding, Hillary Clinton clearly doesn’t know a whole lot about how any business works.
Obama doesn’t much care for her take on healthcare. His plan allows people to opt out. But it’s not much different. Still the same day there was her scathing tirade about him (video here):
Since when do Democrats attack each other on universal health care? I thought we were trying to realize Harry Truman’s dream … Just because Senator Obama chose not to present a universal health care plan, does not give him the right to attack me because I did. So, let’s have a real campaign. Enough with the speeches, and the big rallies, and then using tactics that are right of Karl Rove’s playbook. This is wrong, and every Democrat should be outraged. Because this is the kind of attack that not only undermines core Democratic values, but gives aid and comfort to the very special interests and their allies in the Republican Party who are against doing what we want to do for America. So shame on you, Barack Obama. It is time you ran a campaign consistent with your messages in public. That’s what I expect from you. Meet me in Ohio. Let’s have a debate about your tactics and your behavior in this campaign.
What was THAT about? Mega-Mom with the pie roller in her hand and fire in her eyes says, young man, we need to talk about your tactics and your behavior? Is that what she wants to project?
She was complaining about mailers from the Obama campaign regarding her healthcare plan, but those mailers have been out for quite a while. What is going on?
Here’s an assessment from one “georgia10″ at Daily Kos:
A core part of her campaign has been that she is the “tested” candidate. That she has weathered decades of Republican attacks, that she is tried and tested in campaigns and that she is the “toughest” candidate to go up against the Republican machine in the general election. Against that backdrop of “I can take whatever is thrown at me,” her complaints this morning about how unfair Obama’s campaign tactics are ring a bit hollow.
But more disturbing is exactly what Hillary said. Leaving aside claims of Republican trickery, the most telling part of her speech was when she seemingly claimed that Obama has no “right” to attack her on healthcare. Since when is a candidate’s position on a given issue off-limits? Since when can a candidate claim that because I put forth position X, you can’t debate me on that position? Of course, Hillary’s point is that because Obama hasn’t put forth a “universal” health care plan, he can’t criticize it or ask how her plan will be enforced. But even this too is absurd.
And indeed, it has all become absurd, hasn’t it? Clearly, the Clinton camp has chosen to ride the Mark Penn strategy of negativity straight through Texas and Ohio. So we get a fiery Hillary chastising Obama (“shame on you, Barack Obama”), and challenging him to “meet me in Ohio,” as if we were in the middle of a grade school fight instead of a presidential campaign.
Welcome to the height of silly season, folks. It’s going to be a wild ride.
It’s more than that, actually. Riding out the earthquake as a core component of capitalism shatters under you can make you crazy. But as Joan Didion knows, out here at the end of things we’re used to earthquakes too.