Few business issues have become as politicized in recent years as health care. The Business Journal assembled a panel of some of the most important decision-makers on the health care front, at both the county and state levels, as well as independent experts whose studies and opinions have helped shape the debate. Participants were Assemblyman Gil Cedillo, D-Los Angeles, chairman of the Assembly Budget Subcommittee on Health and Human Services; Phil Dalton, a consultant with the Camden Group; Mark Finucane, director of the L.A. County Department of Health Services; Martin Gallegos, D-Montebello, chairman of the Assembly Health Committee; Glenn Melnick, a professor of health care finance at USC and a health consultant at the Rand Institute; and Walter Zelman, president and CEO of the California Association of Health Plans.
LABJ
: To what extent is politics impeding or facilitating our ability to deliver health care to our population?
Finucane: From my own vantage point, I thought that politics was a terrible barrier to any improvements under either Gov. Wilson or Gov. Deukmejian. I was very critical during those 16 years about the way they conducted their health care policy initiatives. In part, it was about the politics of taking care of poor people, and it just did not register with the constituencies that had elected them to their office. I think government should do as much as it can possibly afford to do for as many people as it can possibly help. It has bitten me, too; I have been in enough political brawls and have been bruised you can’t always control where the punches go.
Gallegos
: I think politics has helped to facilitate health care, both in terms of access and quality of care and consumer protection and consumer confidence in the system. I think if it hadn’t been for the politics, we would still be hearing criticisms of the health care system. Politics was a driving force in positive change in the areas of quality health care and consumer protection.
Cedillo
: I think politics has been a fetter. Where else would you have a crisis where 7.3 million people are uninsured? Almost 25 percent of the population. And 80 percent of those uninsured are those who work every day. Where would you have such a crisis in which the state would not pull together all of its resources to intervene and solve the problem? The fetter on this is the politics of term limits, the politics of immigrants, the politics of race, the growing divide between wealth and poverty and the failure to pay attention to that. If you think of the politics toward education we have a governor who runs and says, “I’m going to win on education, education.” Politically, an education platform is very safe. But when you get into a question of health care, somehow it doesn’t seem to resonate in that same way.
Zelman
: I’m not going to deal with the county question, but judging from the state perspective, I don’t think the state has done badly, at least in the last few years. I don’t think the state did a bad job last year in crafting a balanced proposal to address the major concerns about managed care. So much so that we are way ahead of the federal government, and I keep asking myself, what is the big deal about the patient’s bill of rights? We have it all here already in spades, plus some. On the issue of the uninsured, we have gone further than we did in the recent past, but clearly not as far as we could go. But then again, where would the public go if the public had its druthers? It is easy to say universal coverage, but when you put the dollars before the public, (taxpayers) run, they back off.
Dalton
: From the provider side, 62 percent of California hospitals lost money on operations last year. And we are looking at, obviously, many troubled medical groups. What we have seen in the past year in terms of potential for hospital closures and change of ownership and concerns about how all those issues are being handled, I think that could be one of the repercussions of some of the legislative actions that have been taken. Looking at the provider standpoint, I think you will find a ton of agreement with the kind of intentions that have been sponsored through legislative activity, but there is still the concern with how you manage the business prospects.
LABJ
: So who should take financial responsibility?
Melnick: In terms of solving the uninsured problem, I don’t think it is feasible to ask a single state to solve the problem. It would create such hardship on businesses and they would vote with their feet and their jobs and move out. That is going to require a national solution so states are not in a position of bidding against each other for businesses and subsidies. So then we are left with an incremental approach, and if you step back and look, I think California has made more progress than many other states in terms of buying into Healthy Families and other programs. I think at least recently, the movement has been much better in terms of improving access to care, although there is a long way to go.
LABJ
: We just finished the legislative session, which saw a number of health care reforms including the creation of the Department of Managed Care. Have they been a success?
Finucane: Although education has been the governor’s priority, he has people from a policy standpoint who are sophisticated to work on these problems. He has shown an ability to adjust his own agenda. I don’t think you can do comprehensive health policy without a chief executive who is interested. And this one is interested; certainly, his representatives are interested. That is good for someone in my position. So I am heartened.
Gallegos
: The department took effect July 1, so my first response would be that it is too early to tell, in terms of results and performance. We had a couple of incidents with this administration prior to the formation of the new department that did send a signal that there was a new attitude toward the approach to the managed care system. I am hearing good things that clearly reflect what the Legislature’s intent was as they developed this new department a focused regulator just overseeing this $25 billion a year industry in California that covers about 26 million people. I was right in the middle of the HMO wars over the last five years, and I think what drove the fight was that patients didn’t feel like they were informed and understood the new system. Prior to its creation you had a card and you said you wanted to go to the doctor on the corner, and you just walked in. Women could go to their gynecologist without having legislation to say they could go. All of a sudden we had this new system where everything goes through a gatekeeper, and you had to have approval. But you are starting to see the new department going toward helping the consumer understand and navigate the new system, and I think that is the reason why you saw so few bills on HMO reform this year. Don’t forget that managed care now has penetrated 95 percent of the marketplace in California.
LABJ
: Walter, most of the reform efforts were aimed at the folks you represent, the HMOs. What has been their response?
Zelman
: Most of it is either not in effect yet or just taking effect, so it is hard to tell. But I don’t have any doubt that there will be a modest increase in premiums as a result of these laws. I don’t think it will be 10 percent, but it will be modest. You can’t give them (patients) more second opinions and more mental health and more access to different treatments without premiums going up a little bit. But overall, I think most of the plans view it as a reasonable response to the concerns that people had. I think it was, in part, the plans’ fault that they allowed the situation to get to that point before responding in a more dramatic way. We are not going to get out of our dissatisfaction with our health care given the economics of how we pay for it. We can only deliver what we are paid for, you just can’t keep asking for more and want to pay less. I think the new regulator has done a great job so far in sending all the right messages. On the other hand, they have said, “We don’t want to be a traffic cop.” They want to look at the big issues: education and prevention.
LABJ
: Perhaps the biggest problem facing the government in relation to health care is the uninsured population nearly 3 million in Los Angeles. How do we solve that one?
Cedillo
: I think there is a way we can solve it as a state. It may be that businesses will not walk away, but walk toward us if we solve this problem. We have to think of it in terms of how the uninsured create a competitive disadvantage for our businesses in the global economy. So if we want to make garments in the city of Los Angeles and the related industries, if we want to compete with Korea, we have to keep in mind that the Koreans provide health care. If they provide health care, how do we compete with them? Principally it is the low-wage industries and the smaller businesses (that don’t provide coverage to their workers). How do we subsidize them in a way that they can provide health care and stabilize their workforce? You have to do it at the front end so it is not more costly, and Mark (Finucane) has to figure out ways to pay for more expensive health care. The other area with tremendous resources and capacity is the labor movement. They are organized, I mean, it is a club of 13 million workers. How do we get them to come in and partner up with local government and businesses? I think probably we can do it state by state, and perhaps businesses will respond by walking to California from other places if we can work that out.
LABJ
: But it seems that there is not enough money in the system for the uninsured. How can we get more money in the system?
Melnick
: Some folks would argue that there is plenty of money in the system already. I think the research has shown that with the introduction of managed care into California, there has been tremendous savings to consumers because managed care plans have forced hospitals and doctors to compete on the basis of price for the first time. California is the envy of the rest of the country in terms of health care premiums. We have the lowest or among the lowest in the country. However, while there has been tremendous cost savings, we have not built a cost-effective system. We don’t really have in place the next generation of managed care, which is a system that will provide doctors with the data and tools they need to make cost-effective decisions.
So the question is: Can you capture those savings and re-deploy them to expand coverage? I certainly hope so, because currently we spend about $1.2 trillion on health care nationally, and the forecast says that within 10 years we will add another $1 trillion to our spending nationally. So we will be over $2 trillion a year with no adequate system for insuring whether the care being delivered is cost effective. And at the same time, new services, drugs and technology will be available. All of these new things will be available to the baby boomers, who are going to want them, and the doctors will have an impossible time saying no. Claritin is a great example. It came on the scene several years ago and now it is a multibillion-dollar drug because there is no infrastructure in place for (doctors) to say, “We have evaluated this and we can tell you honestly, you don’t need it.”
Dalton
: I think on the macro level there is plenty of money in the system, but when you get down to the micro level and talk about Southern California it’s a different story. Is enough money going to the physicians and is enough money going to the hospitals? Southern California from an employer standpoint is the envy of other parts of the country because the premiums are lower. Now the question is, when you look at the delivery of health care, are those premium rates high enough?
There are a lot of people who argue that those premium rates certainly are not enough. Is there room in the employer market to actually get higher premiums? I think there is. But will those funds get translated into the delivery system and will it make a difference in terms of how services are delivered? That’s the consumer’s question. Another difficult area is the Medi-Cal market. There is a pretty strong argument that says there is not enough funds in Medi-Cal to be able to support the services that people want to have delivered. I think you have to look at it area by area in terms of whether there is room for additional funding.
Zelman
: Here you see the tension between the economics and the politics. Can we do it economically, of course we can. How can you look at every industrialized country in the world and say they can do it and we can’t? California is a unique case, because we have all the characteristics of a society where there are high numbers of uninsured. The next step in managed care, if we could get there politically, is to get people to understand that there are two ways that we can go to solve these tensions. We can either put more money in the system and managed care can be just like Massachusetts, where they pay 30 percent more, and we’ll be driving people to the doctor in limousines in California. Or we can do what Glenn is saying and try to get more for less. But getting more for less means we have to make some choices. You don’t have to have that surgery most of the time. You don’t have to have that test, that often, most of the time. But people don’t want to accept those types of limitations, so what we have been doing is aggravating our problem of the uninsured by being more responsive to the well-insured. While managed care takes its share of criticisms, we are the only answer for California’s problem of the uninsured. If we want to get to universal coverage, we need to either put a lot more money in or we have to bite the bullet on some tough choices in terms of getting our cost structure down making sure people get what they need, but not more than that.
Gallegos
: There is enough money in the system from the feds and the state, whether it is from tobacco settlement money or budget surplus. This is what has been the most frustrating for me, working on health care policy: when we look at cost, we look strictly at the cost of providing care. But what does it cost to not provide health care to 23 percent of your population, including over 2 million children, children that we are holding to higher standards? We are not insuring that they are healthy and we are not insuring that they will become healthy adults. This means productive, well-trained adults who are able to earn a decent salary. We as a society have to stop looking at health care as a cost and start looking at it as an investment.
Finucane
: We can squeeze money out, but there needs to be more money in the system. People will pay, but so far they haven’t demonstrated an enthusiasm for investing in health care.
LABJ
: Might that be because everyone is so focused on education right now?
Finucane
: Look, education is not going to work in the L.A. Unified School District unless those kids have health care, period. They are never going to learn.
Cedillo
: You cannot earn or learn unless you are healthy. For every investment you put in schools, you undercut it by not making sure those kids are healthy. It is that simple. OK, so we are going to get the schools ready, and get them wired up to the Internet and do all this stuff, but we are going to send kids to school who are sick. Well then, other kids are going to get sick and come home, and that big investment sits there while we don’t have good attendance. They have illnesses that they take with them all of their lives. All of that stuff is so interrelated, but we leave one wheel off. It doesn’t make sense. I had this discussion early on, and people would say, then we would have “socialized medicine.” You know, they never say that we have “socialized education.”
LABJ
: Is there any provision of the Bush or Gore health care policy that is particularly disturbing to anyone, or particularly inspiring? How does it compare to Clinton’s original health care proposals?
Finucane
: Covering all the kids by a certain point is good health care, but it is also good policy development, at least from my standpoint. It is inevitable that the discussion of the family and the parents will follow. So I will follow every kid to every house and say to the parents, “While I am here, let’s talk about your diabetes.” The fact that they are talking about health care at all is very encouraging. What is discouraging is that (the presidential debate) is along the dominant theme of who can get more drugs to seniors cheaper, as opposed to the uninsured population. I tend to think it is very positive what Gore is doing and the fact that it has engaged Gov. Bush is very positive.
Zelman
: I think it clearly doesn’t compare to anything Clinton envisioned, but that is because the times are different. That is because the public mood is that anyone who stands up and says (what Clinton did) will get branded politically and sink like a stone. I think politically Gore is as far as the public will go.
What the Clinton plan proposed revolutionized American health care, even though it never happened. The government never acted, but the garage door was opened and cars were flowing out of there faster than you could imagine. Everyone was re-engineering health care and the government never did a thing. Gore is probably going about as far as you can in terms of what he promises. Neither of them are talking about infrastructure or change in the system or making any of the tough improvements.
Gallegos
: Clearly I like the Gore plan better. I think it is attainable and feasible. When I hear Bush talk, the little that he does talk about health care, it is almost like I am hearing Pete Wilson talk about health care.
LABJ
: On the local level, the county finally reached an agreement on a 600-bed County-USC replacement facility in Boyle Heights, with a satellite facility in Baldwin Park. Can we expect to see more progress on key health care issues, locally?
Finucane
: Over the last 10 years, the County-USC Medical Center became the national symbol of Latino access to the health care system. What you just saw was the agreement to put it behind us. I wish I had thought about the Baldwin Park recommendation earlier, I think it is superior to my original recommendation (for a 750-bed Boyle Heights facility). Baldwin Park is in the middle of an area that has been long promised to be served by this system. It can be part of a whole satellite system. Health care in L.A. is moving from a public health to a public safety issue. This whole final waiver is proof that we are turning to a different level of policy debate.
