Question No. 3: Gregg Underheim Response

Let me begin by stating what I support.

1. I support providing more information about cost and quality in healthcare
2. I support the Badgercare program
3. I support acquiring prescription drugs from Canada
4. I support the Seniorcare program that gives significant help to senior citizens for drug purchases
5. I support expanding the legislation that the legislature passed to allow for the pooling of small businesses to buy insurance.
6. I support low interest loans from WHEFA so that hospitals and clinics can move rapidly to electronic medical records
7. I support Healthcare Saving Accounts

Healthcare cost is one of the two most important issues facing the people of the 54th Assembly District and the people of Wisconsin; the other, of course, is taxes. People face hardships because they cannot get healthcare. Insurance premiums put pressure on middle class budgets. We must solve the problem of health care costs. That problem is a product of several forces.

First, there has been as explosion of technology in healthcare. It is ubiquitous and expensive. It has greatly improved the quality of care we receive; but, it has driven up cost. Second, in Wisconsin many hospital/physician networks have sprung up. We all know their names—Touchpoint, Affinity, Aurora, Marshfield, Gundersen, Dean, and Bellin, to name a few. Those networks have great power in the negotiation between insurance companies and self-insured businesses. Because there are a small number of networks in each geographic region those networks can and have negotiated very favorable reimbursement contracts. That drives up overall cost. Third, as a population we are getting older. As we age we enter the years during which we use more healthcare. Fourth, government is a problem. By underpaying for the care it buys, Medicare on the federal level and Medicaid on the state level, government drives up the cost in the private sector. Additionally, government frequently adds mandates—specific coverages that must be included in an insurance policy—that drive up cost. Fifth, healthcare providers must care for people who enter the emergency room, even if those people cannot pay. That drives up the cost for those who do pay. Fortunately, in Wisconsin, we have successfully addressed the Medical Malpractice problem in Wisconsin. Other states have not been so lucky.

The last issue I want to discuss is so important it deserves it’s own section. The issue is third party payment. In most instances of purchase of a service there is a direct payment relationship between the provider of the service and the recipient of the service. In healthcare that is frequently not true. The patient receives the healthcare; the provider gives the care; the insurer pays for the care. In that equation there is no incentive for the patient to seek cost effective care because the patient does not realize any direct or immediate economic benefit from seeking cost effective care. Let me hasten to add that there are many instances when seeking cost effective care is not reasonable or possible. When someone is experiencing a heart attack it is absurd to think anyone would make economic considerations. Find an emergency room!! There are, however, times when it is very reasonable to make economic considerations. Knee replacements, hip replacements, and early stage prostate cancer, are examples of surgeries that can incorporate price considerations. Additionally, some expensive tests could be subject to price considerations as well.

Let me hasten to add this as well. Along with a price consideration there must be a quality consideration. No one wants to get cheap bad care. To avoid that there must be good information about quality.

Once there is good information about price and quality there must be insurance mechanisms that allow people to see a reward for seeking high quality and reasonably priced health care. That tool is available but it is not yet widely used. It is called the Healthcare Savings Account (HSA). It is an insurance product that includes a catastrophic insurance policy and a saving account. In a group policy the employer would buy the catastrophic plan and contribute to the savings account. He would make the same total contribution that he currently makes. In fact, in some instances the employer makes a larger contribution than he does now because he believes this insurance tool would save money. The employee owns the savings account portion of the plan. He may take it with him if he changes jobs. The money is his to take at retirement. Under this plan there is an incentive for the employee to make cost effective decisions. The employee wins because he shops smart. The employer wins because some costs are avoided and because, when costs are incurred, they are smaller than they would have otherwise been.

Some strongly oppose HSA’s on the basis that healthy people will choose them and unhealthy people will not. There needs to be a serious test to determine the viability of HSA’s. I propose that they be implemented in Wisconsin by using the legislature and its employees as an experimental group. I am aware that they are currently being used successfully in private business. Nevertheless, the doubters must be placated.

The great benefit of HSA’s is that individuals will not longer be at the mercy of their employer’s choice of healthcare plans. Each individual will be able to choose his or her own doctor.

Irrespective of HSA’s, information is a key to controlling cost and quality. Employers need good information when they negotiate with insurers or when they negotiate with providers as self-insured businesses.

There are additional steps that must be taken in Wisconsin as well. First we must maintain the Badgercare program. That program has provided insurance for many low-income Wisconsin citizens. Also, we have initiated a pooling plan that allows small businesses to join together to form larger negotiating pools. That should be expanded. We also must avoid adding costly mandates to insurers.

Let me close by saying this. There is no issue that is more important to people than their health. Government must act in ways that control cost and ensure quality. We must do all we can to make health care available without hurting quality.