Friday, April 14, 2006

Leapfrog Over What?

In the US, large employers have become more vocal about the need to control the cost of their employees' health care, for which they pay, and improve its quality. Leading the charge on this one has been the Leapfrog Group, which announces itself as "an initiative driven by organizations that buy health care who are working to initiate breakthrough improvements in the safety, quality and affordability of healthcare for Americans." The Group proclaims that "today, doctors and hospitals are paid without regard to the quality or affordability of the care they provide. This practice discourages efforts to deliver better and more efficient care. Leapfrog and our members are working to create real incentives to improve care through new payment practices. We also encourage consumers to choose high quality health care providers."

In a 2005 article in Health Affairs written by Robert S Galvin (director of corporate health care at General Electric), and Suzanne Delbanco (CEO of the Leapfrog Group), the authors proclaimed, "large employers can play a unique role in theU.S. health care system, using private-sector purchasing approaches to procure health benefits for their employees. Most employers believe that the appropriate use of market forces, such as public disclosure of physician and hospital performance measures, incentives to create price- and quality-sensitive consumers, and rewards for better care, is the optimal way to control costs and improve quality." So, " in 2000 a small group of large employers formed the Leapfrog Group to address these shortcomings in the market. They developed purchasing principles to deliver a new message to health plans and providers about the imperative of swift action to "leapfrog" over the current state of poor value."

The Leapfrog Group describes its members thus "Leapfrog has over 170 members who are made up of Fortune 500 companies and other large private and public organizations that provide health benefits for their employees, retirees and dependents. Together they spend nearly $67 billion each year on health care for 36 million Americans in all 50 states." Perusual of the Leapfrog Group's membership list does include some prominent, large corporations that employ many people, for example, Citigroup Inc, and Qwest Communications International Inc.

(It also includes many health care related companies, including pharmaceutical companies like AstraZeneca, Eli Lilly, GlaxoSmithKline, Merck and Co, and Schering-Plough, and managed care companies, like Aetna Inc, Cigna, HCA, Humana, and UnitedHealthGroup, just to name a few, which may have particular interests in quality and affordability issues beyond those entailed by their status as large employers who pay for their employees' health insurance. But that is for another day.)

Thus a recent article in the Wall Street Journal (available here from the Pittsburgh Post-Gazette) adds some irony for this Friday. The article is about how "former top executives at many corporations are receiving partial or full lifetime medical coverage on top of pensions valued at millions of dollars." Furthermore, "companies often provide their top executives with more generous health-care plans than other full-time employees get and then continue to provide the richer benefits through retirement." Most of these benefits are not clearly disclosed by the companies' public filings. Two relevant examples:
  • "Citigroup Inc. promised to pay the premiums and out-of-pocket expenses for both health and dental care for Chairman Sanford I. Weill and his wife now, and it will continue to provide those benefits for the rest of the Weills' lives, the company's proxy statement says. Citigroup will also continue to pay for any taxes Mr. Weill owes on the imputed income arising from these benefits. A company spokeswoman says the benefit dates back to a 1980s contract and isn't available to other executives."
  • "Regular employees who lose their jobs can apply for continued health-care coverage under Cobra, the federally mandated requirement that employers of a certain size allow departed employees to remain in the company health plan for some 18 months. However, the coverage, which can cost more than $1,000 a month, can be too expensive for laid-off workers." However, "Qwest Communications International Inc., pay[s] 100 percent of executives' Cobra costs, according to filings. A Qwest spokesman confirms those details but declines to comment."
Not to be too heavy-handed, but as mentioned above, Citigroup Inc, and Qwest Communications International Inc are both members in good standing of the Leapfrog Group. It looks like some large employers' concerns about controlling the costs of health care do not apply to their top employees. Top executives of such corporations may be well insulated from the sorts of concerns about health care that affect their employees. Yet it is the top executives, not the employees, who are represented in such organizations as the Leapfrog Group. Any changes that the Leapfrog Group manages to make in the provision of health care to their employees are not likely going to affect these top executives. So what is it, again, that the Leapfrog Group wants to leap over?
But as F Scott Fitzgerald said, "the very rich are different from you and me."

No comments: