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On the Third Hand: Living will

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I’m up to page 220 (of 512 pages) in America’s Bitter Pill, Steven Brill’s new book about the U.S. health care system, and I’ve pored through the index and looked hard at the recommendations at the end.

So far, my verdict is that the book is a great, useful book. Whether you agree or disagree with Brill’s perspective on health reform and the Patient Protection and Affordable Care Act (PPACA), he’s done a great job of making sense of the drafting, passage and implementation of PPACA.

Someone could quibble about some of the omissions. It might be nice, for example, if he’d looked a little at health reform controversies in countries outside the United States, and if he’d looked at the performance of state-based exchanges other than Kentucky’s Kynect system.

He (sigh) does not mention me or Of more significance: He doesn’t mention the National Association of Health Underwriters or the National Association of Insurance and Financial Advisors, and the surname “Trautwein” does not seem to be anywhere in the index.

But Brill does give a lot of great information about how the PPACA exchanges operated by the U.S. Department of Health and Human Services (HHS) came to be how they are.

He does mention everything from the tanning bed tax, to the essential health benefits package, to controversies over the exact nature of the preventive benefits package that every PPACA-compliant major medical plan must cover without imposing out-of-pocket costs on the enrollees.

He describes the infighting that led to many of the typos and other drafting problems in PPACA, and why the demotion of the “Office of Consumer Information and Insurance Oversight” to a “Center for Consumer Information and Insurance Oversight” (CCIIO) was a disaster for PPACA exchange program implementation.

He gives a plausible explanation of why the Obama administration shut out the advice of health insurance companies and health insurance brokers, even when they desperately needed technical advice from people in the health insurance industry – although, interestingly, it seems as if the people who gave Brill interviews are more likely to be the good guys than the folks who declined to be interviewed are.

On the one hand, at the very end, Brill blows it, in my opinion. He says the United States ought to cut insurance companies out of the picture and put (of all entities) hospitals in charge of the U.S. health care system.

Earlier in the book, he devotes many pages to explaining how different teams inside CMS and HHS – intelligent, well-educated, high-minded, fairly low-paid individuals who were working in different arms of the same not-for-profit national government – went to war with one another. Then he somehow thinks that the actuarial, benefits administration and health care delivery units inside giant hospital-run health care organizations would work together better than the units inside HHS.

On the other hand, he offers a seven-point plan for making sure the hospital-run plans would be nice. But he doesn’t really explain why, for example, the hospital executives, who would have tightly regulated compensation, would be willing to accept all of the abuse that health insurance company executives get for trying to limit spending on health care. Brill’s hospital companies would each compete with another hospital company. It seems as if both companies would have more of an incentive to be nice to each other than to be nice to patients. 

And, in the real world, sorry: But, as important and noble as hospitals are, they’re also the most dysfunctional, nasty players in the U.S. health care system. Customer service at health insurers is not always great, but it’s a lot better than the level of customer service at the typical hospital billing office. 

On the third hand, I think the sections on how the exchanges came to life support an important point: That we civilians have absolutely no way to understand what’s going inside HHS and CMS, and no reason whatsoever to trust the idea that anyone there has any idea whether the PPACA exchange plans, or any major medical plans governed by PPACA, are sustainable.

I think the real lesson of Brill’s book is that, of course, it’s possible that PPACA World health insurers will do fine, but that there’s also a possibility that they’ll all collapse like a house of cards in a few years.

Just as banking regulators want banks to develop “living wills,” to show how they would proceed if they faced severe financial problems, state insurance regulators and guaranty funds ought to develop living wills to sketch out ways they might proceed if health insurers run into severe problems.

Of course, fate will probably then laugh at this precaution by causing the health insurers to report great profits, but it’s better to see that happen than to see unexpected wrinkles in the PPACA risk-management programs or other programs and rules knock the insurers down without anyone having a resolution plan in the file cabinet.