Advocates For Consumer Rights

Hawaii Health Authority could reduce health costs


March 8, 2015
Hawaii Health Authority could reduce health costs, if empowered to do so
By Stephen B. Kemble, M.D.

In 2009, the Hawaii Legislature passed a bill to create the Hawaii Health Authority, charged with designing a universal health care system covering all residents of Hawaii. In 2011, then-Gov. Neil Abercrombie appointed the HHA members, who have submitted two reports outlining a roadmap to a cost-effective, universal health care system, building on models proven in practice elsewhere in the U.S. and from around the world.

Our Prepaid Health Care Act, passed in 1974, includes an employer mandate, bans pre-existing condition exclusions, and requires a rich benefit package and 80-90 percent actuarial value with no deductible. We have had the best coverage package and the broadest risk pooling in the country, along with the least competitive market, and yet until about five years ago, we had among the lowest premiums in the country. Hawaii has also had the lowest per-capita Medicare spending in the country.

The HHA has sought to expand on the lessons from Prepaid to develop a simplified universal system that would reduce total health care cost through administrative savings, not restrictions on care.

Based on the experience of other countries and economic analyses of similar proposals, the fully implemented HHA proposal would likely save around 30 percent of our total health care costs.

Current federal law would prevent full implementation, but by focusing on opportunities for administrative simplification and maximizing risk pooling, substantial savings would still be possible.

However, the Abercrombie administration chose to ignore the HHA’s recommendations and pursue the reforms promoted by the Affordable Care Act. All the administrative complexity and obstructions to care in our current fragmented health care “system” have been left in place, while adding a new layer of “Accountable Care Organizations” (ACOs) that propose to push insurance risk onto doctors and hospitals via bundled payments and capitation. To counter the resulting incentive to deny and restrict care, another administrative layer of pay-for-performance (P4P) is being added, relying on complex computerized data controlled by insurance companies and government agencies, to supposedly measure and reward “quality.”

None of this works in practice. ACOs are costing more to administer than they can save by reducing unnecessary care.

Transferring insurance risk to providers gives them incentives to game documentation and avoid sicker, more complex patients.

P4P measures have poor validity, don’t improve health outcomes and add administrative costs.

Administrative burdens and reduced payments are driving smaller and rural hospitals out of business, driving older doctors out of practice prematurely, and deterring younger doctors from entering primary care, psychiatry and other non-procedural specialties.

We no longer have enough physicians to assure the access to outpatient care required to keep patients out of the ERs and hospitals.

The result is a dramatic increase in health insurance premiums in the past five to six years, since Hawaii’s health plans began gearing up for the “transformation” envisioned in the ACA.

My own gross psychiatric practice receipts have been completely flat for the past 10 years, while my health insurance premiums have more than doubled.

Most of the increase is due to markedly higher administrative costs for hospitals and health insurance plans, plus a recent surge in drug prices by a pharmaceutical industry run amok.

There is no possibility in Hawaii of finding enough savings from reducing “unnecessary” care to offset the cost of these “reforms.” Abercrombie’s health transformation task force spent federal grants to generate plans that are disconnected from reality.

The Hawaii Health Authority has not yet been consulted by Gov. David Ige’s administration concerning health policy, but Hawaii could see improving access to care and large health care savings if the HHA were empowered to fulfill its mission, as stated in Hawaii law.

Stephen B. Kemble, M.D., is a member of the Hawaii Health Authority.