star-telegram.com: Steve Jacob

Jacob: Health benefits a pill for business

Tue, 06 May 2008 13:48 CDT

By Steve Jacob

Mary Frazior, longtime president of the Hurst-Euless-Bedford Chamber of Commerce, felt compelled to gather a handful of the chamber's leaders to share the bad news.

She budgeted a health insurance increase of 12 percent for 2008. The real increase, it turns out, is going to be 24 percent.

Frazior presides over an organization that serves a mature business community and stable membership base. A rigorous expense manager, she performed her annual ritual with an insurance adviser: got bids from other insurance carriers, considered high-deductible plans that are not that much less expensive and looked at joining forces with the state chamber organization for possible economies of scale.

In the end, she rejected the alternatives and will absorb it because one less staff member than anticipated chose not to opt for insurance benefits. She pruned other expenses to pay for increases of 12 to 20 percent the previous three years. But she is running out of options.

"This is not sustainable," she said.

As Herbert Stein, chairman of the President's Council of Economic Advisers during the Nixon administration, once famously uttered: "All unsustainable trends stop."

The H-E-B chamber saga is played out every year as all organizations - but especially small ones - figure out ways to tighten their belts to cover outsized annual increases in health insurance premiums. They cut expenses elsewhere, give smaller annual wage increases or make the health benefits less generous by abandoning features, or by making employees pay larger deductibles, larger co-payments or a larger percentage of the premiums.

The RAND Corp. released a report last month confirming that that the economic burden of health insurance went up more rapidly for small businesses than larger ones from 2000 to 2005. Small-business health insurance share of payroll grew from 8.4 to 10.8 percent during that period - an increase of almost 30 percent. At the H-E-B chamber, the share of payroll has gone from 7.3 percent to nearly 13 percent since 2005.

The good news: Small businesses said they were no more likely to abandon providing health insurance for their workers than large businesses. This echoes Hillary Clinton's research as she was crafting her current universal healthcare proposal. Employers continue to believe that it is their responsibility to provide health insurance to their employees.

But there is an enormous difference in offering employees health insurance and having them elect to take it. Insurance companies charge small employers more because those electing to take the benefits are more likely to need them. Larger employers can spread the risk among larger groups of enrollees. Smaller firms also tend to pay lower salaries, making the insurance even less affordable for employees.

The 170 million Americans who get health insurance through their employers have seen the cost of their premiums increase 30 percent while their incomes increased only 3 percent from 2001 to 2005, according to the Robert Wood Johnson Foundation.

This continued erosion of "health benefits" eventually will make the term an oxymoron. Barring unforeseen circumstances (or a government takeover of the healthcare system), nearly all employer-provided health insurance will become high-deductible catastrophic insurance within the next decade.

That is not a very savory prospect, but the current system will not be changed easily. The employer-based system has been around for more than 50 years. About 60 percent of Americans receive health insurance through their employers, and most are still satisfied by the arrangement.

The fact that nearly all of the Democratic presidential candidates favored universal healthcare made it seem more inevitable or imminent than it really is.

The situation is not dire enough yet. Those hurting the most - the uninsured and underinsured - lack political power. The problem must reach much more deeply into the pockets of the middle and upper-middle class before it gains traction. Some pollsters believe that the national uninsured rate will need to increase from the current 16 percent to 25 percent - the current uninsured rate in Texas - before serious reform is considered.

Meanwhile, the universal healthcare crowd is split on whether it should be government-run or continue to rely heavily on employer-based private insurance.

And if a universal healthcare plan ever picks up steam, it will face what may well be Washington's most muscular special-interest coalition: Big Health.

The American Medical Association, the American Hospital Association, the pharmaceutical companies (collectively known as Big Pharma), medical device manufacturers and insurance companies have way too much at stake to see a radical change in the status quo.

In the meantime, the Mary Fraziors running U.S. firms big and small will continue their annual budget shuffling to accommodate substantial health insurance increases for eroding benefits.

If you're happy and you know it ...

Sat, 19 Apr 2008 04:42 CDT

By Steve Jacob

My late mother was fond of saying, "If you have your health, you have everything."

Her implication, of course, was that material wealth is immaterial to happiness. If you are not disabled or in pain, you should be happy. It is hard to argue with that logic.

In the vernacular of economics, health is classified as a "super good" for which there is an incessant and a virtually inelastic demand. That might help explain that sector's wallet-busting annual inflation rate.

Carol Graham, a senior fellow at the Brookings Institution and co-author of the book Happiness and Hardship: Opportunity and Insecurity in New Market Economics, points out that the link between health and happiness is statistically stronger than that of happiness and income. Traumatic health events such as onset of a chronic condition or permanent disability have a negative, and often irreversible, effect on happiness.

That seems to be stating the obvious. But some economists and scientists would beg to differ. It turns out that the link between health and happiness appears a lot more complicated.

In a recent study, researchers at the University of Edinburgh say 50 percent of a person's level of happiness is genetic. If you are sociable, emotionally stable and proactively productive, you are likely to be wired for joy. The researchers compared the personality traits of identical twins with other twins and concluded that happiness was in fact a result of those genetically encouraged characteristics.

Sonja Lyubornirsky, a professor of psychology at the University of California and author of The How of Happiness, agrees with that 50 percent figure but contends that only 10 percent of happiness is based on one's level of health or wealth.

Many psychologists believe everyone has a happiness "set point" to which each of us returns after life-changing events, such as an unexpected windfall inheritance or personal bankruptcy.

So if genes, health and wealth still do not completely account for happiness, what else does? It appears to be your expectations, which are well within your control. That brings to mind something else my mother used to say: "Be grateful for what you've got."

University of Southern California economist Richard Easterlin, whose specialty is studying happiness, is best known for uncovering this paradox: Wealthier people in a given nation are generally happier than poorer citizens, but happiness levels do not rise as that nation grows wealthier.

Graham believes that the same thing happens with the happiness-health connection: Health standards keep rising, and our expectations rise accordingly. She calls this a "hedonic treadmill" whereby our aspirations rise along with our income and capacity to create good health. Apparently it is all relative.

Graham compared the effect of obesity on happiness. In the United States, obesity was associated with unhappiness among those with higher incomes and professional status where the condition bears a stigma. But in Russia, obesity is most prevalent among its wealthiest citizens -- which was the case in early 20th-century America -- and they make up a group of pretty happy campers.

A January survey in Social Science & Medicine included 2 million residents of 70 nations. It concluded that lifelong happiness ebbed among people in their 40s and recovered in later years. The researchers pinpointed the lowest point at about 44 -- when one appears to surrender the relentless optimism of youth and gives way to maturity's wisdom, self-acceptance and perspective.

Ultimately, science seems to be supporting all of those bromides you have heard all your life from teachers, coaches, mentors and relatives. Stop comparing yourself to others. Set realistic goals and achieve them. Don't dwell on life's setbacks. If you act happy, you probably will be happy.

Or to paraphrase my mother, be happy if you're healthy -- and count your blessings.

Think America's healthcare system is the world's best? Think again

Sat, 29 Mar 2008 04:41 CDT

By Steve Jacob

It is hard to fathom how un-American the U.S. healthcare system has become.

This has nothing to do with patriotism. It has everything to do with a system that forsakes ideals we hold dear: the sanctity of life, fairness, innovation and efficiency.

The Commonwealth Fund Commission on a High Performance Health System periodically does a U.S. health system scorecard comparing health outcomes to those of five other industrialized nations. It is brilliantly named "Mirror, Mirror on the Wall," because our self-image is at odds with reality.

The United States was dead last in Commonwealth's last three comparisons. That, too, is un-American. This country is used to being the top dog in nearly every endeavor: finance, military might, diplomacy, athletics, technology. President Bush has declared that he presides over a nation with "the best healthcare system in the world."

To a limited degree, Bush is correct. The United States is the best nation on earth to receive top-notch healthcare -- if you are rich enough to afford it or fortunate enough to have private insurance. Bush's perspective appears to be partisan. According to a recent Harris Interactive-Harvard poll, 68 percent of Republicans consider the U.S. health system the world's best, compared to 32 percent of Democrats and 40 percent of independents.

Consider the following findings in published studies in the past 12 months that compare the United States to other industrialized nations. In America:

1 You are more likely to die of a treatable condition.

In a Health Affairs article earlier this year, British researchers ranked leading industrialized nations on the rate of preventable deaths. The U.S., which was 19th out of 19 nations, would have had 101,000 fewer preventable deaths annually if it performed as well as the top three countries in the 2002-03 study period. By gender, 23 percent of deaths in men and 32 percent of deaths in women were preventable with treatment. In another study, the U.S. life expectancy rank in 2004 was in 42nd place, down from 11th place two decades ago. We were 41st in infant mortality.

2 You pay outrageous prices for shoddy service.

In 2005, the U.S. spent $6,697 per capita for healthcare -- which is twice as much as five other industrialized nations. But its citizens were more likely to suffer from medical errors and be forced to go to the emergency room for care because of an inability to get a same-day appointment with a primary-care physician. Compared to five other nations with universal healthcare, the U.S. ranked fifth out of six on seeing a doctor promptly. The argument that universal healthcare produces more inaccessible service is a myth.

3 Our healthcare is primitive in its use of information technology.

It's hard to believe that a nation that spawned Silicon Valley and Microsoft would be so far behind other countries on electronic medical records and medication prescriptions. Besides obvious inefficiencies, not employing technology makes it more difficult to coordinate care, measure outcomes, apply evidence-based clinical guidelines and investigate errors.

4 Many people suffer because they cannot afford medical care.

The U.S. is last in nearly every measure of equity because of the disparity in the quality of care received by those of means and those without. Americans are more likely than their counterparts to forgo treatment, skip recommended tests or leave prescriptions unfilled because of out-of-pocket costs.

The common denominator in the consistently poor performance: The U.S. is the only industrialized nation without universal healthcare.

But there is much more to the story. Certainly, decreasing the number of uninsured would help these dismal numbers. But U.S. lifestyles and creature comforts also allow us to expend minimal energy. The resulting obesity and sedentary habits contribute mightily to our poor performance.

U.S. healthcare has become a caste system, stratified into the kind of social classes that the Founding Fathers so abhorred.

Those with private insurance rank on top for first-class service. In the middle are the underinsured, who have high deductibles in relation to their take-home pay. At the bottom are the uninsured. Even Medicare and Medicaid patients gradually are being squeezed out of the primary-care network because of inadequate provider reimbursement by the government.

And your class can literally be a life-or-death matter.

Can you see a doctor?

One way to stop burning money

Sat, 08 Mar 2008 04:39 CST

By Steve Jacob

The dumbest thing I ever did was acquire a cigarette habit at 15 years old.

The smartest thing I ever did was kick the habit for good about 25 years later.

I started smoking in the mid-1960s -- right when its prevalence peaked and just after the groundbreaking U.S. surgeon general's report on the dangers of smoking. Since that time, the nation has cut the adult smoking rate in half. That, along with now-routine seat-belt usage, ranks among the most successful U.S. public health campaigns in the past 50 years.

Smoking is the No. 1 cause of preventable death in this country, claiming about 440,000 lives a year -- more than AIDS, alcohol, car accidents, murders, suicides, illegal drugs and fires combined. Secondhand smoke causes another 50,000 deaths a year.

The modest financial investment made in discouraging children from getting hooked and helping adults quit is paid back many times over. Still, we are confronted with these startling statistics:

The Campaign for Tobacco-Free Kids estimated that the cost in federal and state taxes for treating tobacco-related disease during 2006 was $554 for each Texas household.

That same year, our state government spent 68 cents per household on tobacco use prevention.

Last year, the Institute of Medicine, the Centers for Disease Control and Prevention, the National Academies of Science and the President's Cancer Panel all issued landmark reports noting overwhelming evidence that comprehensive state-funded tobacco prevention and cessation programs significantly decrease tobacco use.

Most smoking-cessation efforts are geared toward adults. But the real anti-smoking battleground is in the nation's high schools. The U.S. adult smoking rate is under 21 percent, compared with 23 percent for all high school students -- and 24.3 percent in Texas high schools.

A child's first cigarette typically comes at 11 or 12 years old. One-third of those who sneak that first smoke will be habitual smokers by high school graduation. (That was me.) About one-third of those will die of smoking-related illnesses. (I hope that's not me.)

About 90 percent of adult smokers began in their teens; nearly two-thirds became daily smokers before they turned 19. The earlier you start, the harder it is to quit and the more likely you will get lung cancer or have other health problems in adulthood.

The peer-group pressure excuse does not hold up under scientific scrutiny. A Journal of the National Cancer Institute study concluded that teens were more likely to be influenced by tobacco company marketing than peer pressure. A similar study in the Journal of the American Medical Association estimated as much as one-third of childhood tobacco experimentation was prompted by such marketing.

Adult smoking rates are associated with low income and educational attainment. An estimated 36 percent of Medicaid recipients smoke -- a rate about 75 percent higher than that of the general population. An astounding 25 percent of pregnant Medicaid recipients continue to smoke.

States boasted they would attack the problem with proceeds from the 1997 class-action settlement with the tobacco companies, and that funding pledge is usually renewed whenever tobacco sales taxes are increased. But just 3 percent of the $25 billion that states will collect this year in settlement funds and tobacco taxes will go toward smoking prevention. Texas is budgeted to spend only 0.6 percent of its tobacco revenue.

The state's initial tobacco settlement funds, governed by a 1999 law signed by then-Gov. George W. Bush, were placed in several permanent endowments to fund higher education, medical education facilities, public health, and emergency medical services and trauma care. These are all worthy causes, but tobacco use prevention was conspicuously absent from the agenda.

Instead, the state funded a 2000-05 pilot program in Port Arthur-Beaumont that reduced high school smoking rates by 46 percent, compared with a 9.3 percent statewide decrease. That area's middle-school smoking decreased 34 percent during that period; the statewide rate actually increased 2 percent.

So where's the statewide rollout? This is like a company achieving monumental success with a new product in a test market and then stuffing the impressive results in a filing cabinet.

Maine, which spends the largest percentage of its tobacco revenue on prevention, has reduced smoking 64 percent in middle schools and 59 percent in high schools in the past decade. Its Department of Health estimates those declines have prevented more than 26,000 children from becoming smokers -- saving more than 14,000 from premature smoking-related deaths as adults and $412 million in future health costs.

The decline in U.S. smoking rates has stalled the past three years. The CDC cites two reasons for this: state cuts in tobacco prevention spending in the wake of 2001 recession and large increases in tobacco company marketing, 80 percent of which consists of product discounts aimed squarely at price-sensitive youths.

As a result, anti-smoking advocates are pushing even harder for higher tobacco taxes, fully funded prevention programs, more smoke-free workplace laws and Food and Drug Administration regulation of tobacco.