As I mentioned yesterday, I am at the Council meeting this week in Colorado Springs. On May 28, the main speaker was Howard Dean, former Chairman of the Democratic National Committee. Dean readily admitted that he did not have much of an idea about what brokers did until he spent time with the Council last week. The following is a quick summary of his beliefs on where he thinks the health care industry is headed and the potential role of the broker in the future.
Dean firmly believes in the role of Medicare and feels it should be expanded. He often cited that administration costs under Medicare are 4 percent versus the private market, which is 20 percent. It was quickly pointed out that Medicare is not properly funded and the private market could reduce costs simply by having Medicare pay its share. He admitted that it is a problem and does not really have an answer for it.
He said that government does not want to run health care, and that a public option would simply compete against a private one. The public option might be restrictive, which would allow it to hold costs down. The private sector would compete by being more innovative, which, in his mind, the government is not. When asked about the Trojan Horse theory, Dean reiterated that the government did not want to run all of health care. However, he contradicted himself moments later by stating he could see many employers — large and small — opting for the new public plan, but then quickly recovered by stating that ultimately they could get disillusioned and return to the private sector.
He feels that a bill will pass this year as “the pain of staying the same is starting to exceed the fear of change.”
A couple of other quick points he made:
- Competition does not work in the medical industry. When you add capacity, you simply add cost.
- Need to have better incentives for doctors, and less regulation.
- We will not end up with a single payer, the public plan will simply cover the underinsured plus some additional others who opt out.
- Most likely there will be supplement plans over the public option.
- Cost at the end of life is too great and we need better counseling and options for relatives. He clearly is not mandating that we will not cover end of life costs, but more thought needs to be given here.
- Wellness will not be a big part of this as Congress has no interest in telling their boss (the American people) that they are fat and need to lose weight.
One final point he made was that if he was a broker selling individual policies, he would be very concerned as he sees not much of a role in the future in that arena. For brokers doing group business, he would be nervous, but sees potential big opportunity. However, it will demand different thinking and our business will change. (He offered no other details.)
Finally, a question was posed as to why the speed of change. If Medicare is somewhat broken, why not fix it before we build upon it? His answer was that we are out of time and in order to be more competitive in the world economy, the time is now.
At the end of the presentation, I talked with quite a few brokers to get their reaction. A couple of major points from these discussions:
- Congress has no idea, for the most part, what we do. A broker was recently on Capitol Hill and heard we were defined as a “wasted marketing expense.” This comment is not made out of malice; it is made out of ignorance.
- The cost of standing on the sidelines is enormous. Every employee at every brokerage operation should be contacting their representatives and educating them.
- Nobody knows how to fix the system better than us. We need to be leaders and get in on the discussion.
In listening to Dean’s presentation, the general consensus is that Congress is going to move forward with something, even if they do not have a lot of answers. Brokers are going to need to clearly illustrate their value statement and be ready for change. It appears that the ones who can adapt and can take advantage of this chaos will not only survive but thrive in the years to come. More to come on that in future posts.