Health care cannot realistically be separated from the economy these days, yet that was about all a panel of knowledgeable participants could agree on during a discussion recently on factors driving health care costs in New York State and possible solutions to the upward trend.
The Dutchess County Economic Development Corp. hosted a lunch at the Poughkeepsie Grand hotel May 21 in which Kenneth Adams, president and CEO of the Business Council of New York State, Paul Maceilak, president and CEO of the New York Health Plan Association, state Assemblyman Joel M. Miller of the 102nd district encompassing most of Dutchess County, and Ray Sweeney, executive vice president of the Healthcare Association of New York, offered their takes on improving costs connected to the health care system of the state.
The basic problem, as presented by Adams, was that New York legislators are still somewhat heedlessly adding mandates for coverage. “You don”™t make health care more affordable by making it more expensive,” Adams said. He said New York businesses labor under a health care-related taxing scheme costing $4 billion annually, including some $800 million that goes not to help pay for general fund matters.
But Assemblyman Miller said that the problem was not with the mandates, but with the profit-seeking at HMOs. “HMOs are not there to help you, they are there to make money,” said Miller. ”So we make mandates.”
As a state, “We should not have allowed HMOs to become for-profit entities,” said Miller, adding that the “biggest problem” in terms of controlling costs is that the state “doesn”™t regulate insurance premiums anymore.”
Paul Maceilak, president and CEO of the New York Health Plan Association, good-naturedly joked about representing the HMOs. “Everyone loves to kick around health plans,” he said, saying that conventional wisdom makes the health insurance industry about as popular as Wall Street bankers and tobacco companies. He said he understood the unpopular status of his industry, because, “Health plans must say no sometimes.”
But he noted that in the health insurance industry, things were not as robust as just a few years ago. In 2005, he said, the profit margin of HMOs was 5 percent, he said, but currently it is down to 2 percent. He said that two HMOs, CDHP and MHP, suffered losses last year.
Maceilak criticized the state Legislature and bureaucracy as being well meaning but poorly managed, saying that “one hand does not know what the other hand is doing.”
Maceilak was particularly critical of the notion of regulating insurance premiums or requiring prior approval of rates. “How many companies would want price controls on their product?” he asked.
He said that the pledge made recently to President Obama by industry executives to reduce health care costs by 1.5 percent sounds like a minor matter until one does the math. He showed a chart depicting the trillions of dollars in savings that would accrue over 10 years from even such a modest change, saying instead of rising by 20.5 percent over the next decade, the health care costs would rise by “only” 17.5 percent if the industry fulfills its promise. He said the “1.5 percent would bend that curve.”
Miller, though defending the legislative activism as necessary in the face of cost cutting by HMOs, said that New York could no longer afford its historic generosity. “We spend more on Medicaid than California and Texas combined,” he said. “We”™ve got to cut back.”
Adams of the Business Council said, “There is no silver bullet” for controlling health care costs but said that New York must stop imposing mandated coverage for conditions that affect relatively small segments of the population, but increase costs for all.
Adams also endorsed the approach of the Berger Commission, which recommended the closure or merger of numerous health care facilities including hospitals and nursing homes, saying that consolidation and regional approaches are best. “We need regional health care planning and community health care planning,” he said, as opposed to institutional level planning.
The message to state legislators, “Is please do no more harm,” Adams said. “The message to business is they”™ve got to hear from you.”
