Universal coverage can solve<br> state’s health care woes

The Claflin Co.’s President and CEO Ted Almon was recognized this month for his work in the health care industry with a Grassroots Champion Award, given through a partnership of the Hospital Association of Rhode Island and the American Hospital Association. (READ MORE) He spoke with Providence Business News last week about the ailing relationships between businesses, hospitals, insurers and the government.

PBN: Tell me a little about the Grassroots award?
ALMON: There have been a number of issues that I’ve advocated for, most notably a bill that is currently in the state legislature for copays and deductibles to be collected by the insurers instead of the payers. I think that that’s creating a really significant financial problem for all of the hospitals and it’s just not a model for how copays and deductibles – which have proliferated enormously in recent years – should be collected.
The hospitals, first of all, have no real way of identifying what the status of the deductibles is, although there are some online tools that do that now.
Secondly, after the patient is treated, the hospital has no ongoing billing relationship with the patient. So it’s easy for patients to just stiff them. I think that if the insurers just paid the hospital in total and then collected the copays and deductibles from their own subscriber, who has to pay them every month anyway, the model would be much more efficient and your chance of collecting would be much better.

PBN: Do other states use that model?
ALMON: I’m pretty sure this is an idea that we devised here. It is in response to the tremendous increase in high-deductible plans that are being promoted by the insurers.

PBN: What about proposed cuts to Medicaid and RIte Care?
ALMON: The interesting thing about health care is that health care is treated as a business in the country, in that its providers are private and they’re expected to compete.
But it doesn’t respond to market forces the way other industries do. That’s because it’s not really a business at all – it’s a social program.
The conservatives like to try to apply market forces to it, but they only distort the perverse incentives in the system and they keep making the problem worse. So how does that apply to Medicaid? I’ll tell you.
If you’re trying to save the government money, you therefore put in less money, so you have to have the intellectual honesty to say, ‘We’re not going to provide care to these people.’
But that’s not what they’re saying. Those people are still going to receive care, because the law requires that if they show up in the emergency room you have to take care of them. So what they’re really saying is they want to shift the way it gets paid for. And by the state putting less money into the Medicaid budget, it means we lose the matching federal funds, which are, at the very least, 52 cents on the dollar. And all that money is new money in the [state’s] economy.
So you’re not saving any money by cutting the Medicaid budget. It’s intellectually disingenuous, for one thing, and really what it amounts to is a perverse tax on businesses.

PBN: How does that affect a business like Claflin?
ALMON: It affects us through the rates that we pay. What happens is that the providers – let’s use hospitals – if they have an increase in uncompensated care they absorb that loss up to a point. But in order for them to stay in business, they have to ship some of that cost onto other customers.
The only population that is available for them to shift cost onto is the commercially insured population, which is typically businesses. So, the rates that I pay are not just paying for the cost of taking care of my employees, they’re rates that are covering everyone who is otherwise uninsured.

PBN: How should we fix the problem?
ALMON: We fix it by having some sort of universal coverage. And everyone recognizes that you have to have some sort of universal coverage.
Everybody has to be covered – there’s not total agreement about that, but anybody who knows anything about health care would agree that any solution that isn’t universal really won’t work.
There are about 40 industrialized nations in the world. Of them, we are the richest by order of magnitude and we are only one of three that don’t provide health care to all its citizens.
There is a debate about how that should be done. Sen.[Barack] Obama has one plan; [Sen.] Hillary Clinton had a plan; [former Sen.] John Edwards had a plan; Sen. John McCain has a sort of non-plan, because it’s not universal.
The simplest thing would be to put everyone on Medicare, because it’s been around for 40 years and it works. You’d have to modify the benefits a little. But then the question becomes, ‘How do you pay for it?’ If you had a huge expansion of Medicare it would create a tax burden.
So where that money would come from in the long term is out of the excess administrative cost that is created by using commercial insurance. I’m for Medicare for all, but I’m wide open to a variance of that. I’m very interested in what they’ve done in Massachusetts, I’ve studied that. I have grave reservations about an individual mandate.

PBN: How heavily have theses issues been spurred by the state’s economy?
ALMON: The health care problem and the debate about the cost of health care were coming along anyway. The debate is exacerbated by the economic situation in the state, but we’ve had budget crises in the state off-and-on for as long as I can remember. •
interview: Ted Almon
POSITION: President and CEO of The Claflin Co., an independent distributor of medical equipment; trustee of the Women & Infants Hospital Foundation.
BACKGROUND: Since 1976, Almon has served as president and CEO of Claflin, a Warwick-based medical-equipment distribution firm. He also serves as chairman of both the National Distribution and Contracting Inc. and the Health Industry Distributors Association. In 1997, he was honored by HIDA with an Industry Award of Distinction.
Before coming to Claflin, Almon had worked for six years in sales and marketing positions at Baxter Laboratories, which is now Baxter International.
EDUCATION: B.A. in psychology, University of Rhode Island, 1969.
RESIDENCE: Warwick
AGE: 60