Economy Department with Ezra Klein

Economy Department with Ezra Klein

Ezra Klein
Washington Post Business Blogger
Thursday, June 18, 2009; 12:00 PM

Ezra Klein writes a Post blog about economic and domestic policy, and he was online June 18 at noon ET to take your questions about collapsing banks, cap and trade, health care reform and pretty much anything else you can attach a chart to.

This week, Ezra was joined by Scott Armstrong, president and CEO of Group Health Cooperative, the nation's largest co-op health care systems, to discuss the Senate proposal for a national co-op health plan.


Ezra Klein: Hey folks, this is Ezra Klein, here with Scott Armstrong, President and CEO of Group Health Patners. I've not done one of these two-person chats before, so forgive any early technical screw-ups. Here we go.


Moscow, Idaho: Is there a single article, Web site or book that you'd recommend to my health reform skeptic friends? It would be best if it came from a source without too much liberal stink. (I know, my friends are a pain.)

Scott Armstrong: There are plenty non-partisan sources. One recent, compelling article was published in the New Yorker by Atul Guwande, talking about the geographic variation in costs and quality across the country. The Commonwealth Fund reports are another good resource.

Ezra Klein: That's a good recommendation from Scott. I'd also add, just from the last few days, David Leonhardt's column on rationing, and Steve Pearlstein's two columns on doctors. But those are pretty wonky. If you want a more general audience introduction to the issue, read "Sick" by Jon Cohn. Beautifully reported, very accessible, and very persuasive.


Anonymous: Simply put how does your business model work compared to the existing private companies? How would that provide me savings or offer others access to health care?

Scott Armstrong: The primary difference defining Group Health is that we are an integrated care system, combining our health plan financing with our large, integrated group practice. By combining both in one organization, we align incentives across our care providers, focusing everyone on a common goal--to improve the health of our patients.

This integration allows us to innovate, deepening our patient-focused investments in many ways. Most recently we've seen some great results from our revised primary care model (people refer to this as a medical home).


Washington, D.C.: Scott, what percentage of your members actually participate, i.e. vote? What's their average age?

Scott Armstrong: More than 40,000 members, of our total 600,000, are registered as voting members. I don't know for sure, but they range all across the adult spectrum.


Croton-on-Hudson, NY: Why does Sen.Conrad (and, apparently, everyone else in the Senate) assume that 60 votes are required to pass a public option plan? Why not let the GOP actually filibuster, put every Democratic lawmaker in front of a TV camera until the GOP senators stop talking, then pass a sensible plan with Democratic votes?

Ezra Klein: Because it's still not clear how you break the filibuster. In point of fact, it wouldn't be the Dem lawmakers in front of cameras until the filibuster ended. It would be Republican lawmakers. One of the issues with the filibuster is you need the whole majority on the floor at all times to try and break the filibusters. But you only need a handful of minority members.

The question I have, however, is will we see a filibuster? Because you can't filibuster the public plan. You can only filibuster health care reform. if Franken is elected and Kennedy and Byrd can vote, that's 60 Democrats. Imagine five of them would vote against the public plan. The public plan would still pass with 55 votes. The question is whether those five Democrats would join a Republican-led filibuster effort against the whole health care bill.


Washington, D.C.: Now that Tom Daschle has come out against the public option, are you glad that he is not HHS Secretary?

Ezra Klein: It's a fair point. I think there was a lot Daschle could have brought to the position -- in particular, a real working knowledge of the congressional process and the CBO. And if he were serving the president, and the president supported a public plan, he'd support one too. And vice versa, of course.

That said, I think the White House's health care process has been handled pretty adeptly. Orszag and his team have really done an impressive job. And they've certainly been important voices given the dominance of economic concerns -- Daschle couldn't have made the argument about the economy with the same credibility. So maybe it was all for the best.


Evanston, Illinois: Hey Ezra and Scott, Milton Friedman pointed out that because of our employer-based health coverage system, most people don't purchase healthcare directly and therefore spend much less time shopping around for the best treatment at the lowest price. Wouldn't a step in the right direction be to transfer the employer based subsidies to the individual? Isn't the idea of single payer grossly inefficient?

Ezra Klein: To the question of whether single-payer is grossly inefficient, no, it's not. Single payer systems tend to spend about half what we do per person, they cover everyone, and their outcomes are comparable. We spend twice as much as necessary, leave 46 million uninsured, and have mediocre outcomes. Inefficiency, thy name is America.

That said, it's certainly true that transferring employer-based subsidies to an individual would be a step in the right direction -- as long as it's paired with reforms of the insurance market so individuals can effectively navigate it. For a very good example of how this might look, check out the Healthy Americans Act that Sen. Ron Wyden and Sen. Bob Bennett have introduced.


Charleston, S.C.: Why isn't single-payer at the table? America needs help out here beyond the beltway . . .

Ezra Klein: The basic reason is that single payer doesn't have the votes. I think there's a lot to recommend the policy, but in a world where it's not even clear that a popular White House and a 60-vote Democratic majority can pass a public plan, it's hard to imagine them passing the effective nationalization of nearly 20 percent of the American economy.

To put it arguably more cynically, in our system, the question is not whether something is good policy. It's whether it's passable policy. And no one has yet provided a compelling explanation of how a single payer plan is passable policy.


Perrysburg, Ohio: What exactly is a health care co-op and how does it work to cut costs?

Scott Armstrong: Group Health is a consumer-governed non-profit corporation. Our trustees are elected by a vote of registered members. This is one way in which our patients take an active role in our governance and, beyond that, in their own health.

In our integrated care system, we know that we'll see better health outcomes when are patients are more actively engaged.

Ezra Klein: Scott, let me ask you to expand on that: The idea Conrad introduced doesn't seem to have the same type of provider/coverage integration. You're group sounds like more of a co-op health care system. His idea is more like a co-op insurance provider. What's your take on that more specifically?

Scott Armstrong: Because the Coop proposal in the Senate is still evolving, I can't comment spcifically on how we compare to their model. My experience tells me that a proposal that incents the integration and coordination of care will be most effective--and that's a key feature of what Group Health is all about.


Herndon, Va.: Ezra, can you provide an example of where this low-cost full-coverage health care actually works? Is there a country out there who's doing it? Or is this just another ridiculous liberal fantasy that will end up costing a fortune and failing to deliver?

Ezra Klein: Could you be more specific on your question? What "low-cost full-coverage" health care are you referring to, in particular?

To answer it generally, however, some examples: France, Japan, Germany, England, the Netherlands, Sweden, Canada, Israel, Finland, The Veteran's Health Administration. All are full coverage within their systems. All cost less than we do -- most of them a lot less. But let me know if I'm misunderstanding your q.


integrated care system: Does this mean you hire your own physicians? If so how do you pay them? What are the chances that a lot of doctors would join such a system? They certainly have not in the past.

Scott Armstrong: Most of our patients get their care from our providers, paid on a salary, in our 26 medical centers across the state. We also contract with a broad network of additional providers in those specialties or markets where we don't have our own doctors.

Our doctors generally are very happy working here. Satisfaction survey scores have sky-rocketed in recent years, and we are seeing more applications for every open position than we have in years. Our care providers can focus primarily on caring for their patients rather than running a private practice.

Ezra Klein: This is something that really excited me about Scott's model: The idea that it's better for doctors, and that doctors are, in turn, responding by joining it. Integrated systems -- where coverage and care are provided by the same company -- have a lot of advantages. And one of them is that everyone is working on the same team. That's good for the patient, of course, but as Scott says, it's also probably good for the doctor.


Hampton: Transfering control of 30% of the America economy, just like seizing the banks and GM, hardly inspires confidence. The government runs Fannie, Freddie, the Post Office, Amtrak -- all of them badly, inefficiently, and with high degrees of political corruption. Why should we believe GM or healthcare will be any different? I'm sure Scott will get rich, but I don't want to have to talk to a government bureaucrat when my son gets sick. Period.

Ezra Klein: Not sure that this makes a lick of sense. Scott's company is in the private market. The government seized the banks because the banks, private companies, fell apart, and almost took the economy with them. And being a government employee doesn't tend to make anyone rich.


Wonktown, USA: Ezra, you've written about the Byrd amendment before. What do you think are the odds of using budget reconciliation? I'm crossing my fingers AGAINST because (a) I don't want a Swiss-cheese piece of legislation and (b) I don't want the whole thing to expire in 5 years.

Ezra Klein: I think pretty low. You don't hear about it much anymore.

My guess, too, is that anything going through reconciliation would not be health reform. It would be expansion of a couple parts of the public health care system, like Medicaid, say. And maybe it would include subsidies for purchasing health care on the private market. But everyone is pretty clear at this point that you can't get a big bill through that process because the Senate parliamentarian will quickly, and worse, unpredictably, shred it.


Wilmington, NC: I think if everyone knew we spend twice the average of all other developed nations on health care, it would significantly alter the debate. Do you agree? Why is this fact so hard to come by in our "debate"?

Ezra Klein: I don't think it's hard to come by. But I think it doesn't penetrate the way we might hope.

One thing, however, is that people are so insulated from health care spending that it's hard for them to really understand what this means. Our employers pay most of our costs. Medicare or Medicaid pay for most of us who don't have employer coverage. If this was coming out of our pockets in a way we understood -- rather than coming out of our wages invisibly -- I'd guess that facts about spending would be a whole lot more salient than they currently are.


Washington, D.C.: Most doctors I have won't take on new Medicare patients because they're not happy with the reimbursement levels. Some of the doctors have even gone so far as to not accept any insurance. You pay upfront, and try to get something back from your insurance company afterwards. Given this kind of distaste from doctors, I wonder how anybody in the so-called "public option" is going to get an appointment anytime in the near future! Are doctors going to forced to participate in the "public option" or lose their licenses? I can see a lot of them retiring before they do that. How is this going to work?

Scott Armstrong: This is one of my bigger concerns about some of the proposals being considered in Congress right now. To the extent they reduce cost simply by paying providers Medicare FFS rates, this could seriously disrupt the care system in markets like Washington, Minnesota and Oregon, where our rates to providers are already the lowest in the country. As you point out, many doctors are already refusing new Medicare patients in these states. Prepaid Medicare plans like Group Health builds relationships with providers in advance and assures that patients will have access.


Seattle: Secretary Geithner was on Capital Hill defending Treasury's new regulatory proposals. Are the suggested new authorities for the Fed putting too much on the Fed's plate? As the Fed takes on more power and works with greater consultation with the Treasury, has it lost its (supposed) political independence? Does the new proposal make this more of a problem, or is it a problem at all?

Ezra Klein: It's a legitimate fear. On the bright side, there's no real evidence that the Fed has lost its independence. And the reason the admin wanted to give the Fed these new responsibilities is that the Fed is, in fact, more independent, and thus more free to act as a systemic regulator, than an agency that's directly accountable to the Congress.


New Brunswick: Mr. Klein, can you spell out WHY the public option isn't a "passable policy"? Is it really as bald as "health insurance companies oppose it?"

Also, a good sized percentage of people simply DO NOT HAVE THE FUNDS to pay even a $1000/month plan (for a single person). $1,000/month is well below what a current decent plan costs for even one person.

How can for-profit plans handle the reality that many people can allocate maybe $350/month for health care?

How is anything OTHER than a public option plan include such people? And what happens if a plan is enacted that leaves a substantial number of people still unable to afford a health care plan?

Ezra Klein: I think, with sufficient White House leadership and popular mobilization, that the public plan is "passable" policy. But I also don't think it's the panacea some suggests. A public plan won't necessarily be a lot cheaper for people. If a private plan is $1,000 a month, a public plan, if we're lucky, will be $900-something. And it'll be more if it ends up attracting mostly the sick and the elderly.

The key for short-term affordability isn't whether a plan is public or private. It's whether subsidies are sufficient.


Arlington, Va.: Why are we often discussing the "shopping around" comparison for saving on healthcare costs? If I'm sick or in need of medical attention I haven't the time nor the ability to shop around, no matter who's paying the bills.

Ezra Klein: That's an important point. No one comparison shops from a gurney. But I'd take it a step further: One of the key questions with any "market good" is the ability to say no. If I don't like the price or quality of a TV,I walk out of the store. If my doctor tells me I need an operation, though, I have neither the expertise nor the options to effectively say no. I can ask *another* doctor for their opinion. But that's not the same thing.


Arlington, Va.: No plan is without weaknesses and uncertainties, especially in an area as complicated as health care policy. I find it helpful to know that proponents genuinely understand the arguments from the other side. You've made a number of points in favor of the current health care proposal, but can each of you outline what you believe to be the best argument against the administration's health care proposal?

Ezra Klein: I can't speak for Scott, but I think the current proposal doesn't nearly go far enough. It's trying to preserve bad features of a bad health care system. The employer tax exclusion, for instance, should be scrapped entirely. We need real integration. Less of a patchwork. Less reliance on employers. I think reform might make things a bit better, but we're not anywhere near solving our problems.


Washington, DC: Gentlemen, Currently we've got hundreds of managed care organizations with incentives to reduce costs. There's a wide variety of plans and they can experiment. If we move to a system with guaranteed issue and community rating, along with a public plan, do the incentives for cost cutting innovations at the level of the health plan get any stronger? Are they anywhere near the incentives when you've got universal coverage and a single-payer health system?

Scott Armstrong: Guaranteed issue and an adjusted community rating system, like the one we have in Washnigton, paired with a requirement that all individuals have insurance, could work as a strategy to offer everyone access to coverage. In order to make this work, we also need to restructure how the providers in our care delivery system are paid--encouraging providers to align around a common goal of promoting health for our patients. This is the best way to reduce costs.


Cameron, N.C.: Since you brought up the Atul Guwande article, how does your group co-op compare to say the Mayo Clinic model? Guwande: The Cost Conundrum

Scott Armstrong: Group Health and Mayo have much in common. Our providers are mostly salaried, and work in teams to offer patients the fastest path to better health. We bring together many specialties and professionals to create innovative approaches to organizing care. We invest in medical homes, electronic medical records, and chronic care programs that are hard to support in a fee-for-service system.


Boston: Scott, what happens when a member of your coop desires or requires care from an out-of-network physician (for example, for a specialist who isn't one of your salaried physicians)? Is that possible? If it is, is there a large amount of cost sharing?

Scott Armstrong: We offer our patients a variety of coverage options. Some of our plans focus on our own medical centers, and others are structured to offer more balanced choices. If any of our patients need highly specialized care not provided in our network, then they get it. Plus, the total costs our patients pay in any year are capped.


Fairfax, Va.: The cost savings in single-payer plans come primarily from the ability to move away from a fee-for-service pay structure, right? Which in turns means that hospitals and doctors are paid drastically less?

Ezra Klein: Often not. The cost savings in single payer frequently come from monopsony bargaining. It's still fee-for-service, but because the government controls the market, it controls the fee.

As example, imagine you were in charge of buying bananas for everyone on earth. It was just you. Banana producers could sell to you or go out of business, but there were no other buyers for bananas. You could basically set your prices. And you would probably set them below where the producers are making much profit, but above where they all go out of business. That's sort of how single-payer works.


Philadelphia: How effective do you think the President's prime-time discussion on health care will be in persuading Americans to support health care reform? What does he need to do specifically?

Ezra Klein: Hard to say. In the 1990s, Clinton gave a famous speech to a Joint Session of Congress. The teleprompter broke down in the middle, but he still gave what's considered a masterful address. Pundits applauded. Support for reform shot up. And he still failed. So this is really going to be a question of ongoing strategy, not just one speech.


Baltimore: On my local news today, I heard that the health insurance companies in my state are projecting/proposing a 9% rate increase for next year. Shouldn't that be the final comment in the public vs. private health insurance debate? Here we have an economy that is barely escaping deflation and the health insurance companies want a 9% increase? Without a public plan of some kind, optional or not, health insurance will increasingly be out of reach for many people, working or not.

BTW, from what I've been reading what may emerge from Congress is some variation of the Massachusetts plan for mandatory insurance. What I haven't read is any in depth analysis of the impacts - are many people choosing to reside in nearby states? Are individuals paying the fine rather than buying insurance? Where can I find this information?

Ezra Klein: A few things. First, it's not that insurers "want" that increase. It's how much more they're paying for care. Their profits won't go up by whatever that dollar value is, guaranteed. Rather, what's driving that expense is more people getting more care that's more expensive per unit.

As for the Mass Plan, the Urban Institute has done some impressive studies and surveys on it. You can find them on Urban's web site. Coverage is, if I remember, in the high-90s. The plan has worked out pretty well, given its stated aim (expand coverage).


Washington, D.C.: Scott,

How do the doctors in your system handle medical malpractice? Also, are your specialists paid at higher rates than the primary doctors and if so, by how much?

Scott Armstrong: We provide medical malpractice coverage for our care providers. Our rate of malpractice claims are very low, largely because our system is focused around evidence-based clinical guidelines, that are made easier to follow with our electronic medical rcords, and our teams of care providers work together to assure that our clinical decisions make sense.

Our providers are paid relative to community compensation averages. Our primary care providers in general make less than specialists. We've had a lot of candidates for any open primary care positions in the last couple of years, because there is so much beyond salaries about our system that is attractive to them.


Temecula, Calif.:

Do you think the average person struggling with their health insurance, or presently uninsured, is going to be in an appreciably better circumstance in four years, or should we really just be anticipating minimal improvement?

Ezra Klein: Presently uninsured? You might be much better off. presently struggling? hard to say. Depends on the nature of the struggle. Someone on the individual health insurance market is likely to see a huge change in their fortunes. Someone who can't really afford the insurance their employer is offering is less likely to see a sharp improvement.


Ezra Klein: I think that about does it for us. I'd like to thank Scott Armstrong for joining me today, and all of you fine folks for asking questions. Hope it was helpful.


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