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Kitzhaber’s cure
THE ARCHIMEDES PLAN
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Throughout the spring and summer, the business response to
Kitzhaber’s ideas has been tepid. His smooth, compelling
diagnosis of the current costly health care mess and a plea for
some limited, widely available care system has drawn all kinds
of people into dialogue. Building on a web-based hub and the
expertise of Howard Dean’s campaign guru Joe Trippi, the
Archimedes Movement now has 14 chapters from La Grande to
Ashland and 2,500 people on its mailing list. Employers large
and small have shown up to hear Kitzhaber’s pitch all
around the state, and many seem intrigued by his suggestion
that something dramatic needs to happen in health care —
perhaps even taking some of the burden of health coverage away
from the employer. He’s made an effort to link the
dysfunctional public health care system with the rise of health
care premiums for businesses.
But his diagnosis hasn’t been so moving that the
business community, and especially its leaders, is championing
his cause. Top CEOs such as Portland General Electric’s
Peggy Fowler and Hoffman Construction’s Wayne Drinkward
have heard his presentation. But neither they nor any key
business leaders outside the health care sector have taken a
leadership role in the movement.
Some in the business community attribute this to the fact
that, until now, Kitzhaber hasn’t offered any concrete
proposal. “He articulates the problem really well, but
he’s still working on the solution,” says Duncan
Wyse, president of the Oregon Business Council, a Who’s
Who of civically active CEOs. Others question whether any
overhaul of health care will have enough political support to
get through the Legislature. “We’re certainly open
to the ideas he’s trying to promote, but from a political
standpoint could it be done?” asks Lynn Lundquist,
president of the Oregon Business Association and a former
speaker of the Oregon House of Representatives. Business groups
such as the Oregon Business Council are also working on their
own reform efforts at the same time as Kitzhaber. Fowler and
Drinkward are part of an OBC health task force that is focusing
on market-based reform aimed at controlling costs in the
current employer-based health insurance arena.
This fall, Kitzhaber can count on organized labor and some
health insurers and hospital executives to help him shape his
new health care system. But having a wide range of employers
involved is crucial because they are today the single biggest
group of health care purchasers in the state (see chart, below
left) and stand to be affected most by an overhaul of the
current system. They also faced a 9% increase in health
insurance premiums last year. In short, they are in a position
to exert a lot of influence on health care and they’re
searching for change.
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Estimated total health care expenditures in Oregon in 2004  The above estimate was made by health care consultant Bill Kramer for the state Office of Health Policy and Research, using state and national data. |
“I’m convinced that employers could make this
happen,” Kitzhaber says. “If you could get
employers and employees together you could fix this.”
Kitzhaber has also seen business work against him on health
care. He served two terms as governor between 1995 and 2003,
but he’s probably best known for engineering the Oregon
Health Plan, aimed at broadening the group of low-income people
with health coverage in the state, when he was Senate president
in the late 1980s and early ’90s. Initially, business
groups such as Associated Oregon Industries supported the
health plan and a companion bill mandating that employers offer
health insurance to their workers. But then business support
fell apart, and the mandate never made it into law and
Kitzhaber blames that, in part, for the erosion of the health
care picture in Oregon. There are currently more than 600,000
people without health insurance in the state, as both
businesses and the Oregon Health Plan have been dropping people
off health rolls due to higher costs.
This time around, the 59-year-old Kitzhaber will also be
asking businesses to back a monumental change: He wants the tax
credits they currently receive for health care spending to be
diverted to fund basic, universal health services.
FOR MOST OF THIS YEAR, that’s about as detailed as
Kitzhaber would get on his plan to overhaul health care. His
speeches focused on the dysfunction of the current system and
proposed that Oregon more effectively use the estimated $6
billion-$10 billion of public money used for health care
— the federal tax credits given to businesses and the
combined budgets in Oregon for Medicaid and Medicare, the
health programs for low-income residents and seniors.
But in August, Kitzhaber outlined more specifically how his
bill might look. Not surprisingly, it’s very similar to
the Oregon Health Plan legislation, which asked the federal
government to let Oregon spend expanded Medicaid dollars as it
saw fit. The new draft proposes that the federal government
grant waivers to Oregon to decide how to spend public health
dollars and that the state use a body like the Oregon Health
Policy Commission (which oversees the Oregon Health Plan) to
decide what to do with the money.
The draft bill also lays out 12 principles to guide that
decision-making body — such as “equality” and
“effectiveness” — but also practical items
such as malpractice reform and health information technology.
Kitzhaber says this will provide the “sideboards”
for a new basic system. And they are the part of the bill he
hopes to hammer out with interest groups, including employers,
in the next several weeks.
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Increases in health insurance premiums, 1988-2005  Source: KFF/HRET Survey of Employer-Sponsored Health Benefits, 1999-2005; KPMG Survey of Employer-Sponsored Health Benefits, 1993, 1996; The Health Insurance Association of America (HIAA), 1988, 1990. |
He had hoped to have this draft in hand several months earlier,
written with help of a small group of employers, seniors,
hospital execs and other stakeholders. But that group, to be
called the Archimedes Council, hasn’t come together as
planned, like several other elements of the movement, including
a late-arriving website, a confusing name (Archimedes was a
Greek mathematician and philosopher) and an erratic series of
events. Kitzhaber rallied a jam-packed Portland State
University event room in February and then hit a two-month lull
before a “launch” and interactive meeting in April.
“It’s been kinda like changing a tire while
you’re going down the highway at 50 miles per
hour,” Kitzhaber says with a cheeky grin.
He insists that he now has some big-name businessmen on board
— traditional supporters of his including Brooks
Resources chairman Mike Hollern and Greenbrier CEO Bill Furman
— and they’ll help him get the plan a fair airing
this fall.
WILL OREGON EMPLOYERS BUY INTO SUCH A PLAN? In May, Kitzhaber
had an opportunity to gauge opinion in an employer-only group
— 100 human resource reps and executives gathered at a
sprawling, rainbow-colored conference space in
Springfield’s Royal Caribbean Cruise Line headquarters.
Some of the attendees were members of a local group looking to
expand access to health care in the area. Other employers
seemed new to the scene and wore blank expressions, as if they
wondered exactly what it was they’d signed up for.
Jeff Elliot, president of JCI, a local manufacturer of rock
crushers, was nursing a coffee at the edge of the group milling
around before Kitzhaber started. “I’m here to see
what’s happening,” he said. Elliot’s company
competes against Asian manufacturers and he said health care
costs were holding him back considerably in that race.
“We’re putting more money toward health care than
we’re sending to the federal government in taxes,”
Elliot said.
Soon after, Kitzhaber started his speech, where he detailed a
system that “nobody could support if it were written into
law.” To him, Medicare and Medicaid are at the heart of
health care’s spiraling costs and swelling numbers of
uninsured. Over-65s are the single richest segment of the
population and a fast-growing one at that, but they are
guaranteed health care, which will mean a $65 trillion
liability over the next several decades that payroll taxes on
workers and employers can’t support. Meanwhile, as
low-income people continue to be purged from the rolls of
Medicaid and business health care plans, their recourse is the
emergency room, by law an all-comers venue but the most
expensive and inefficient place to treat people.
Kitzhaber estimates that treatment for those who can’t
pay, in the ER and elsewhere, accounts for 10% of private
insurance premiums. That means as the number of people heading
to the ER grows, so do insurance premiums.
Kitzhaber argues that the billions spent on health care in
Oregon each year need to be used in a more intentional way that
benefits a broad group of people. His model is the public
education system. There, nobody sends kids home from school
when the budget gets tight (or at least they make the funny
pages when they do). Instead, you raise the class size or limit
extracurricular offerings. In health care, this means paring
down covered services to what’s necessary so as many
people as possible can access it.
Kitzhaber finished his “rant” with a wink and a
smile, and the crowd broke into small groups where they rattled
off a litany of health-care-related issues that are becoming
alarmingly familiar in business circles: pay increases held
down, staff stress up, loss of employees to companies with
better plans, possible layoffs.
When it came time for solutions, one group said they liked the
idea of a universal program, as widespread “as car
insurance.” Mike Warner, HR director at Marathon Coach in
Coburg, suggested that if government provided a basic level of
public care for everyone, businesses might buy add-ons for
their employees. How to pay for it? “Scratch-it
tickets,” Warner said. Then, a little more seriously, he
added, “How about a health care program so good that
employers would move here and the new tax revenue would pay for
it? We’ve been chasing jobs away for so long and this
would be a good incentive for them.”
Kitzhaber finished the session by taking a short list of
suggestions from the crowd. One woman scrolled through her list
before landing on, “The system is so broken that you
can’t tweak it to fix it.” Kitzhaber smiled broadly
and raised a fist like Nelson Mandela.
WHILE KITZHABER’S MOVEMENT HAS BEEN GROWING, members of
the Oregon Business Council have been working on their own
fixes for health care’s woes. They are centered on
equipping individuals and businesses to be more intelligent
purchasers of health care and health plans. Eventually, with
hospitals and health systems cooperating to provide
intelligible information, consumers would be able to size up
health care services the way they would a cup of coffee or a
stereo system.
As it stands now, the real costs and quality information are
hidden from the consumers. Meanwhile, the cost of procedures
and wasted money in the system grows unabated. “They are
no normal economic checks that create an economically
sustainable system,” says Mark Ganz, CEO of The Regence
Group and a member of the OBC’s health task force. Ganz
and the OBC say that all other fixes to health care, including
expanding access to health insurance, are secondary to infusing
the scene with market forces. “If we don’t get at
that, we’ll never have a sustainable model. That’s
the problem with the Massachusetts plan,” he says,
referring to a new law there containing a web of incentives and
penalties for businesses and individuals, and subsidies for the
poor aimed at achieving universal coverage. “It never
addressed that.”
That casts Kitzhaber’s plan as a sort of limited
solution for business interests.
Even so, both Kitzhaber and OBC members stress that their two
prescriptions can coexist.
“I don’t think that anybody has the one solution,
but I gravitate back to my consumer and employer base when I
look at this,” says Hoffman’s Wayne Drinkward, who
heard Kitzhaber’s presentation this winter and says he
hasn’t ruled out supporting Archimedes in the future.
Ganz suggests there isn’t any friction between the two
approaches. “We’re coming at this from two
different directions, but I think they’re mostly
complementary.”
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Oregonians eligible for the Oregon Health Plan by category, 1994 - 2006  All values are for February of the year indicated. Oregonians without health insurance,1990 - 2004  Source: Office for Oregon Health Policy and Research RISING HEALTH CARE COSTS have led both businesses and the state of Oregon to drop people from their health plans. The number of uninsured people in Oregon has grown by more than 200,000 since 2000, to well over 600,000. As the state has had to narrow the low-income population that qualifies for the Oregon Health Plan, the number of people living in poverty in the state has grown — leading to a growth of the lowest- income members of the plan. |
Kitzhaber doesn’t argue with the approach of groups such
as the OBC, which may also present policy recommendations to
the Legislature this winter. He hasn’t suggested
scrapping the various private sector reforms, such as the move
from employers paying workers’ monthly insurance premiums
to providing them with a pot of money in health savings
accounts, which are designed to make employees more judicious
in their health care spending. Nor has he advocated the quick
fix of universal coverage. On his Archimedes blog in April, he
also cited the shortcomings of the new Massachusetts health
plan. Of his own plan, he says, “If we haven’t
managed costs, we haven’t accomplished
anything.”
In Kitzhaber’s view, however, there are certain medical
procedures that should be widely available and not left up to
the private insurance market. The public should decide what
those procedures are and fund them with public dollars.
“I don’t think this will replace employer-based
health coverage,” Kitzhaber says. “But insurance is
a hedge against catastrophe. So why would you insure against
immunizations or routine checks for hypertension or diabetes?
You want that. That’s a public good. And almost every
other industrialized nation has come to that
conclusion.”
The Archimedes staff has begun talking with local public
relations firms to package that pitch. And Ganz says they will
need a strong sell to get the business community to buy into
the loss of tax credits — in essence, higher taxes
— to pay for those basic health benefits.
“If it was part of a comprehensive fix, I would say
great, if that’s what it takes to fundamentally change
it,” Ganz says. “But if it is just taken away in
isolation, employers will say ‘Wait a minute, I want to
provide health care to my employees.’”
But Drinkward thinks the two groups will work out a
two-pronged solution, regardless of what happens to the tax
credit. (He says bigger businesses like his will provide health
care regardless of whether it’s tax deductible.)
Drinkward says there’s an urgency to health care costs
and care that’s similar to the workers’
compensation system crisis in the mid-1980s, when costs were
climbing through the roof and then-Gov. Neil Goldschmidt
convened a labor-management meeting in 1990 at Mahonia Hall,
the governor’s mansion. The two sides rewrote the state
workers’ comp laws and put costs in check.
“There we had a policy solution but we also made our
worksites safer,” Drinkward says. “I look at health
care the same way. There’s some policy stuff that will
help. But we can also make people healthier and take control of
how we engage the system.”
WHATEVER BECOMES OF THE ARCHIMEDES MOVEMENT plan in Salem this
winter, John Kitzhaber has figured out what the business
community has not — how to turn the words “health
care” from a conversation killer into a lively
dialogue.
His governorship flamed out in an obstinate moment in 2002,
when he infamously proclaimed the state
“ungovernable” during a bitter fight with
legislators who wouldn’t accept his tax increase
proposals. But after hinting at another run for governor this
winter, he now uses his disconnection from political office as
an invitation to conversation and a rallying cry for change
— for the moment, change in health care.
“Tom McCall had to live with the line ‘Come visit
but don’t stay.’ Mine is ‘Oregon is
ungovernable,’ but I still believe that,” he says.
“The capacity of our legislative institutions to respond
to these complex problems is really limited. Everything is so
partisan and transactional. You can’t fix health care
that way. You have to engage people in a discussion about the
values and the trade-offs and the choices and drive that back
into the political system.”
Kitzhaber’s 30-minute speech, “On the Road to
Revolution: Fear and Loathing in the U.S. Health Care
System,” which he’s given dozens of times since he
left office in 2003, has now evolved into a mini-Inconvenient Truth: an unwinding
of one of the gnarliest, most pressing but politically
untouchable problems. (Kitzhaber has been employed during this
extended road show by two foundations, The Foundation for
Medical Excellence in Portland and the hospital-quality-focused
Estes Park Institute in Colorado.)
After hearing one delivery of the speech at a health forum in
Portland this spring, Sen. Betsy Johnson, a Democrat from
Scappoose, turned to her neighbor and gasped, “God,
he’s good.” Then Bruce Goldberg, director of
Oregon’s Department of Human Services and the
morning’s moderator, said through the microphone,
“Governor, sign me up.” Peter Kohler, Oregon Health
& Science University’s outgoing chief, was scheduled
to speak next. “I feel like a pair of brown shoes at a
black tie dinner,” Kohler grumbled wryly into the
microphone.
Several anecdotes bring Kitzhaber’s speech to life
— an aging salmon swimming up the Rogue River, a seizure
victim whose lack of cheap prescription drugs eventually cost
the state $1 million — but one that he rarely uses might
be the most important. Last year, Kitzhaber watched his
88-year-old mother die. (His father also passed away in June.)
Near the end, it looked like she might have an intestinal
tumor, and she decided not to have all the procedures to
determine what exactly was going on. But the attending
physician prescribed regular blood tests anyway to keep tabs on
her. That’s when Kitzhaber met him square on: No more
tests. “She went home and the quality of her life
improved rapidly,” he says. “My dad and she had
been living around the laboratory waiting for the next results.
All of the sudden they let go of what they couldn’t
control — that they were mortal — and embraced what
they could control — a 65-year marriage.”
As Kitzhaber notes, Medicare would have paid for hospital
stays and blood workups, whatever the cost. But it
wouldn’t pay for a home nurse. He had long advocated for
a sensible use of public dollars, but the dysfunction of the
system had never been so clear. “That’s when I
realized we’ve got to stop defending these programs and
ask ourselves what we’re really getting.”
A few months later, he announced in front of a phalanx of TV
cameras that he would give up another run at the
governor’s office and return to work on that in which he
began — finding the right medicine for something
seriously ailing.
Archimedes Movement
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