The volatile consumer protection issue moved beyond a piecemeal approach when a coalition of HMOs and consumer groups put forth a plan last year. Families USA's executive director looks toward the debate.
In 1982, Phil and Kate Villers put up $40 million worth of stock from their company, Computervision, to launch the Villers Foundation, to work on issues of health care for senior citizens and the poor. They hired Ron Pollack to serve as executive director, a position he has held since then. An attorney and activist, Pollack had started the Food Research and Action Center in New York in 1970. He won a series of lawsuits designed to force the federal government to follow through on legislation intended to feed hungry, poor Americans.
In 1989, the Villers Foundation changed its name as its scope broadened. Families USA calls itself a national consumer group, a tax-exempt public charity with a lobbying arm. In 1994, the New York Times tagged the group the "de facto public relations manager of the Clinton administration's campaign for comprehensive health care legislation." Pollack dismissed the characterization at the time, saying, "We don't see it as Families USA doing Clinton's work. We think Clinton has adopted what we've pushed since before his candidacy."
Pollack, 54, served last year on the President's Advisory Commission on Consumer Protection and Quality in the Health Care System, which drafted a health care consumer bill of rights. A graduate of Queens College and New York University School of Law, he is an outdoorsman. He has trekked across Nepal, hiked and rafted the Grand Canyon and was, at the time of this interview last month, looking forward to a kayaking trip off of Baja California. He spoke with Managed Care Senior Contributing Editor Patrick Mullen.
MANAGED CARE: Tell me about the mission of Families USA.
RON POLLACK: The initial mission of Families USA was to focus on the concerns of senior citizens, particularly those of lower incomes. Early on, we decided to focus on health care, because even with the existence of Medicare, senior citizens were saying that this was the area that was of greatest concern to them. The thing we cared most about was to achieve coverage for all Americans that was affordable and high quality. Given that, it became clear that to focus on health as a generational rather than an intragenerational issue did not make sense. So we focused as much on children and people of middle age as on senior citizens. We've always had a disproportionate concern about lower income constituencies irrespective of age and population groups that are at risk of not having adequate access to care.
MC: A question being asked now is whether people with health insurance are at risk for not getting adequate access to care and to consumer protections. You were on the commission that put together the consumers' bill of rights. When the commission's findings came out last fall, you said, "It's like having the Bill of Rights without the freedom of speech or religion. The rest of the rights may be worth adopting but the document still falls short." Where did it fall short and what has happened since to address those concerns?
POLLACK: First, I want to be clear that I strongly support the consumer bill of rights that was adopted. It is a very helpful set of proposals that are practical, can be adopted very soon and would not cause enormous controversy among the diverse players in the health care system. I want to see that adopted in a way that applies to everybody and is enforceable. Having said that, the commission had a ground rule that all decisions needed to be made unanimously. As a result, there were issues that could never seriously remain on the table. This was not because I or even a significant majority of the commission didn't support them, but because some portion of the commission could never find a way to say yes.
MC: For example?
POLLACK: I believe we need to eliminate discrimination against people who have disabilities or whose health status is precarious. People who need health care the most today have the greatest difficulty gaining entrance to a health plan or an insurance product, because of the cherry picking of the industry. I thought we needed to speak to that.
MC: As far as things such as clauses about pre-existing conditions?
POLLACK: Issues like underwriting practices that would result in very different premiums charged to people who have health problems. I thought that was an area that a consumer bill of rights should address. I also felt that meaningful parity for people with mental health problems should be addressed. There is no good reason to treat people with a mental illness in a discriminatory way compared to people who have a physical illness. Clearly, there were significant issues that we could not discuss in a meaningful way, because some portion of the commission would object to a specific solution to those problems.
MC: Even the proposals that got unanimous agreement and are the basis for proposals in Congress now face a million-dollar ad campaign sponsored by some employer and insurance groups. They oppose a health care consumer bill of rights because they say it will raise costs and lead companies to drop coverage. In your opinion, what's really behind that campaign?
POLLACK: I think we will see a strong campaign, but I don't believe that we're going to see an expensive public relations campaign. The insurance industry and health plan community recognize that it is going to be extraordinarily difficult to convince the American public that they should not have some reasonable protections regarding the health care they're promised by their plan. I do think we will see an intensive effort by the insurance industry and health plan community joined by some employers to try to bottle up any legislation.
MC: So you expect more of a Capitol Hill lobbying effort than a national advertising campaign like the "Harry and Louise" ads that health insurers ran against the Clinton health plan in 1993 and 1994?
POLLACK: Correct. It will be predominantly an inside-the-Beltway campaign, except that my guess is that some significant resources will be spent to try to galvanize opposition in some targeted congressional districts. If I had to guess, I'd say it would be in districts of conservative Republican members who have expressed interest in consumer protection legislation but who generally oppose any kind of government action. I'd say there are two kinds of organizations involved in this effort: the insurance industry and the American Association of Health Plans. They just cannot accept the idea of any kind of regulation. The only thing they would like to see adopted are things that are done voluntarily. They are joined by groups that have a "knee-jerk" ideological reaction to anything that relates to regulation.
MC: The question of whether the managed care and health insurance industry can regulate itself is an interesting one. Last fall Families USA, Kaiser Permanente, Group Health Cooperative of Puget Sound (which is actually now part of Kaiser), HIP Health Insurance Plan in New York and the American Association of Retired Persons came out with standards to protect people in managed care plans. I was struck by the fact more plans were not involved. Also, you said at the time there need to be legally enforceable standards, which suggest that self-regulation is unrealistic. Is that a fair reading?
POLLACK: I thought the agreement we reached with the three organizations was a rather important breakthrough. It was the first time any part of the industry publicly acknowledged the need for legally enforceable standards. I believe that additional organizations within the industry will come on board, perhaps slowly, to support legally enforceable standards. Still, it was a remarkable breakthrough. There had been a solid unanimous front on the part of the industry saying, "No, we never want to be regulated." These three plans were saying, "The public has lost confidence in managed care and is frustrated at being disempowered. We need to take reasonable steps to give the public greater empowerment and some meaningful consumer protections." I think inevitably we'll see others in the industry join hands with the first three participating HMOs.
MC: Including the larger for-profit companies? The three plans that signed on to this are half-century-old organizations that began almost as social movements. They see their role in a very different way than do for-profit managed care companies that have sprung up in the last 20 years or so.
POLLACK: That's right, they were the more likely ones to join hands with us. Assuming others will join, they're more likely to first come from the not-for-profit world and to have been in existence for a longer time. In the extraordinarily long period of time that we sat down with Kaiser, HIP and Group Health, I found a genuine frustration on their part at how something created in a visionary, altruistic and idealistic manner is now viewed in much more crass, financially driven terms that do not appear to be patient-friendly. So their decision to participate with us was a very unusual and difficult step driven out of frustration about how the industry had been tarnished in ways that they thought could be resuscitated. It requires doing things differently. Interestingly, the president's commission achieved unanimity on a variety of consumer protections that everybody felt were appropriate. With that unanimity, I don't think it is a big step to make these standards enforceable, and make sure these rights truly are guaranteed.
MC: By the way, have Kaiser, Group Health and HIP adopted these standards themselves?
POLLACK: This was not intended as a code for individual plan conduct. It was clearly stated from the onset that we were developing legally enforceable standards. One reason [Kaiser CEO] David Lawrence thought these standards should be legally enforceable is that to do these things alone, without the rest of the industry doing them, would put Kaiser at an economic disadvantage.
MC: One aspect of managed care that is attracting scrutiny is how physicians are paid and the incentives they receive. Historically, fee-for-service care was said to contribute to overuse of services. Capitation is attacked for encouraging underutilization. What kind of physician payment system do you think is fair to doctors and their patients?
POLLACK: I think we can build on what we have now, a managed care system that has capitated payment, as long as we create some reasonable consumer protections that truly are enforceable. The pendulum swung radically and quickly, from a fee-for-service system that encourages more and more services and tests, to a capitated system that places the incentives in the exact opposite direction. It has been too sharp a shift in too short a time to be acceptable to the public. A capitated system can work as long as there are meaningful protections established to make sure that this new incentive system does not lead to abuses. That's why building upon a consumer bill of rights that has legally enforceable standards is, in the long run, helpful to managed care. People would know that they have some recourse in case excesses have been perpetrated in ways that are harmful to a patient.
MC: So you part company with those who would ban capitation? There have been some state referenda on that.
POLLACK: I'm not sure that moves us in a positive direction at all. I don't think anybody should feel enamored with what we had with the fee-for-service system. Many of the problems that we have in our health care system are due to uncontrollable costs. We want to make sure that we don't create incentives for more services and tests, especially those that are of marginal usefulness or that may not be useful at all. While I'm not an adherent of eliminating capitation, such a system needs careful examination. I prefer to have a broad pool for capitation. Creating a capitated payment system for a small group of physicians who can't spread that capitated payment broadly enough is a recipe for disaster. When one or more very sick patients could cause some very significant economic problems, the conflict of interest faced by a provider is far too great.
MC: Do you think patients should be allowed to sue HMOs for malpractice?
MC: So you find the argument that plans don't make medical decisions, but payment decisions, to be disingenuous?
POLLACK: For most plans I don't believe that argument is accurate. Most plans are involved in clinical decisions. They paid for the protocols and clinical guidelines, and their staff implements them. So they play a very significant role in health decision-making.
MC: Let's talk about the president's Medicare proposal, which would allow people age 55 and up to buy into the program. Do you think the plan can pay for itself?
POLLACK: Well it certainly can pay for itself. To the extent that the arithmetic was done properly, it makes a great deal of sense to enact this small incremental step. I believe it's worthwhile to do this for four reasons. First, this population has a greater prevalence of serious disease than other uninsured populations. Second, businesses are dropping their coverage for retirees. A business could offer health coverage to three groups: employees, dependents of employees and retirees. Of the three groups, retirees are the ones who have the most attenuated nexus to the company in terms of helping it become profitable.
MC: In other words, they're a cost center, not a profit center.
POLLACK: That's right, and so they're the first ones who are likely to get dropped or see their premiums, deductibles and copayments increased. Third, a lot of insurance companies do not want to cover these folks, especially if they have a serious health condition. Last, the cost for people with health problems is so substantial that they can't afford it. So this population merits serious attention. Now this is only an incremental step with respect to this population. The group that probably needs the protection the most is unlikely to be able to afford these $300-$400 a month premiums. Ultimately we need to build on this proposal and establish a subsidy system like we have done in Medicare, where people at lower income levels have their premiums subsidized and at the lowest income also have their deductibles and copayments subsidized.
MC: How would you respond to those who argue that after President Clinton couldn't get his health reform plan passed, he decided to try to do it one piece at a time, and that it's disingenuous to make incremental proposals when the ultimate goal is some sort of national health insurance?
POLLACK: When the health reform effort failed, opponents of health reform said it was far too big and far too ambitious, and we really should make achievable reforms that are incremental and enable us to do things in a careful and prudent manner. The president essentially has adopted that course. An incremental effort adopted last year to cover about half of the more than 10 million kids who are uninsured today is extraordinarily valuable. By the president's calculations, 300,000 people would be covered by this new Medicare proposal, so these are really small steps. Also, it comes at a time when more and more people are uninsured. The number of people who get the health care protection they need in the private sector through their jobs is diminishing, largely because employers are shifting more and more costs directly onto the shoulders of their workers. To have an incremental strategy that targets the most vulnerable population that, at minimum, protects us against increasing the number of people who are uninsured, or at most makes some inroads so that we have at least some reductions in the number of people who are uninsured, makes a great deal of sense. The country was unprepared for comprehensive change, but very much supports reasonable, incremental measures. There is no question that the children's health initiative was very popular. I believe that the early retiree initiative is similarly popular. The president has learned the lesson of the 1993-94 debate and is doing things as thoughtfully and incrementally as he thinks the public wishes.
MC: Last December, Families USA issued a report looking at the percentage of Medicare HMO beneficiaries who left their plan in 1996. You found the disenrollment rates --that is, people who left a plan after one year — ranged from 2.4 percent for one plan to 81.1 percent for another. Nine out of the 10 plans with the lowest disenrollment rates were not-for-profit plans, while seven of the 10 with the highest rates were for-profit plans. Is it fair to draw the conclusion that not-for-profit plans do a better job serving the Medicare population than for-profit plans?
POLLACK: We were careful to say that these data were not determinative of whether a plan is good or bad. But certainly it is something people should look at. If a plan has a high disenrollment rate, a purchaser should examine that very carefully before joining. I would say it might provide some presumption about quality of service, but it's a refutable presumption and by no means the last word on whether a plan is good or bad. That said, I thought the most fascinating set of data that came from that analysis was what was happening to the overall enrollment of plans that had high disenrollment rates. I'm referring to what we looked at in Texas and Florida, which had a more significant penetration of managed care plans in the Medicare program than other states and had the highest disenrollment rates. In Texas, there were five plans in the state that had disenrollment rates in 1996 above 20 percent, meaning more than one out of five people disenrolled. Each of those five plans had a higher enrollment and market share at the end of the year than at the beginning of the year. In Florida there were 14 plans that had a disenrollment rate in excess of 20 percent. Nine of those 14 had a higher enrollment at the end of the year than they had at the beginning of the year. Even where people are voting with their feet, the plans that appear to have the worst records are not being hurt at all by the perceived inadequacy of service. So those plans were doing a much better job at enrolling and marketing and luring people into plans than they were in serving them and retaining them.
MC: Of course, one could argue that if they do a better job serving and retaining them they wouldn't have to spend that kind of money on marketing.
POLLACK: That appears to be right. You're also right that there was a marked difference between for-profit and not-for-profit plans in terms of the 10 plans with the highest disenrollment rates and the 10 with the lowest disenrollment rates. Before I make too much of that, I would note that there was also a serious correlation between low disenrollment and larger plans that had been in existence and serving Medicare beneficiaries for a while. How much was because of those factors, as opposed to being not-for-profit or for-profit, we're not able to say.
MC: Let's look at the larger question. It is a serious question whether health care should be a for-profit commodity. At least for the foreseeable future that's not going to change, but do you think it should?
POLLACK: I certainly think everybody should have access to health care. Every time I leave this country to travel with my family, when I talk about how many people are uninsured in our country, people look at me in disbelief. It is sort of second nature for people around the globe to assume that everybody should have access to reasonable health care. Explaining to a person from another country that the richest nation on the planet fails to do this for so much of its population is like trying to explain the Bulgarian economy to an American. It just doesn't make any sense. Having said that, I'm not sure I would correlate universal coverage with the question about for-profit or not-for-profit health care services. If I had my way, I'd prefer to see the health care system function on a not-for-profit basis, but I would not pursue an agenda towards that end because it's absolutely quixotic.
MC: The AMA and the American Bar Association are working with the American Arbitration Association to come up with alternative dispute resolution proposals in managed care. The AMA asked you to work on that commission. What's happening and what can we expect to come out of that work?
POLLACK: The short answer is I don't know. I hope this distinguished group of organizations can offer realistic ways of designing a cost-effective and timely external appeal system, one that gives consumers confidence that claims will be considered competently and objectively. We appear to be moving in the direction of accepting an external review system but we've not talked about how to structure that system. I hope this group can agree to structure such a system in a way that works for all parties.
MC: It seems that the bar would be more interested in having things go to court. What's in it for the attorneys to move things out of court?
POLLACK: Well, attorneys — and I'm an attorney myself — tend to have a clear understanding of the deficiencies of doing everything through a judicial process. It's slow and cumbersome. For somebody who cares not just about a legal victory but cares about true justice, in the context of managed care decision-making, justice delayed is justice denied. So if the process is cumbersome, people really are at risk, nobody is well served, and everybody recognizes it is ultimately a much more costly remedy. If we could find something less costly but will produce objectively sound results, that serves everyone's interest.
MC: Thank you, Mr. Pollack.