Healthcare reform is off the ground. What now? Kaiser Permanente CEO George Halvorson outlines the next steps we need to take to arrive at the perfect healthcare system.

Question: What are the steps we need to take to arrive at this perfect system?

George Halvorson: I think that we need two steps in the current process. I don't think we should think of it as just one big leap from here to where we are going. It's a two-step process. And the first step is: we have to get everybody covered. We have to have universal coverage; we have to have all the kids of America in a database where we can deal with asthma issues. We have to have everybody insured. Now that's the first stage. And we have to make them affordable.

And the second thing, and we have to do this very quickly, is we then have to improve care. Because we cannot afford the care of trajectory were on. We can't afford to have twice as many people with kidneys failing; we can't afford to have 23% of the people dying of sepsis in hospitals. That's the trajectory we can’t afford. We've got to fix that second. One bill can't fix both. One bill can't do all the insurance reform and to the care improvement reforms. So it's got to be a bill and a bill. It's got to be the bill and an agenda. Fill in a leadership and that is the model we have to use. And you can't get there just in one jump.

The hearings a year ago in the Senate were trying to deal with both of those issues at the same time and there were some very good conversations going on about the chronic care issues in America and the need to fix chronic care. And then there was a sense of who we're trying to figure out what step one and step two – that we have to get to step one as being the insurance part of the agenda, the coverage. Step two is to follow immediately thereafter. They can't follow two years from now or five years from now-- it has to follow months from now. And we need to jump on the agenda and fix a couple of those key issues and get people to pay out to do that. And I think America is ready for that. I think America is ready get healthier, but we have to be led there.

Question: What’s the logic in putting universal coverage first rather than first fixing the framework?

Halvorson: Well, number one; we’ve got to get those issues out of the way. If we try to fix diabetic care for the country, and we’ve got 30 million people, many of whom have high diabetic needs, not covered, we can’t do it. If we’ve got all those kids who have horrible asthma care not covered, in a care system, out of a care system, in an insurance plan, out of a care system, we can’t fix asthma care. We can’t do step two until we do step one. We’ve got to get everybody covered. Everybody in this country has to have access to care, and then we need to fix the care. But we need to fix it now. We needn’t fix it 10 years from now. And we know now what needs to be done for asthmatics. We know what needs to be done for people with congestive heart failure. We know what those issues are, we just have to get to them, but we can’t get to them until everybody has insurance. If somebody does not have an insurance plan and they have congestive heart failure, who, or what could possibly make their care better? Nothing. You’ve got to step one, step two. And if you think we’re going to somehow, playing with a horrible handicap, playing left-handed and blindfolded without everybody covered, we’re going to fix care, then after we fix care we’re going to come back and fix insurance. Anybody who thinks that way has never actually been involved in any care delivery or care financing. At Kaiser Permanente, we can’t fix care for the people who don’t have coverage. But we can do a lot for the people who do have coverage.

Question: How should employers be treated in the model?

George Halvorson: Most of Europe provides universal coverage and uses private health plans in an employer based system. So, if you’re in the Netherlands, a percentage of your paycheck goes to your healthcare benefit and you choose from 120 health plans. And you pick the health plan and that health plan must take you. It’s an individual mandate. The heath plan must take you. No health screening. If you are in Switzerland, your employer deducts part of your paycheck and you get a health plan, and there are 70 health plans in Switzerland and you get to choose among them. Germany has 300 health plans. Everybody in Germany picks private plans. Those countries have no government system of any kind. They do not have anything resembling Medicare or Medicaid, anything. They just basically have private health plans and an employer-based system. And the employers use their leverage as purchasers to get better deals for their workers and also to get health improvement agendas and health spas and that type of thing. So, if you are in Germany, the employers will negotiate spa treatments on top of the basic health benefits for workers. So involving employers in the model works just fine as long as care is affordable.

All those countries deduct from the paycheck even if you go to France, where they have a mixed system. The France system looks an awful lot like the Medicare, Medicare supplement model in the U.S. Everybody has a basic benefit package from the government, but it’s low, so 92% of the people buy private insurance and that private insurance pays the difference between what the government pays and what the doctor’s charge. And again, that model is done by employer. And France actually has many healthcare coops and many employers and municipalities will get together and create a coop, libraries will get together and create a coop. There are a whole bunch of coops in France and the French coops purchase care for workers, but again it’s a worker-based system-- everybody pays a portion of their paycheck to buy it. So, most of Europe is a payroll deduction, just like Medicare in the U.S. Social Security in the U.S. They used the same model in those countries, and then you get to choose between health plans.

So, having employers in the link can be done and it works just fine. The problem in the U.S. the reason it’s failed here is because, in those countries, every employer must be in. In the U.S., it’s optional. Some are in, some are out. Workers don’t know if they’re going to have health coverage. There’s an inconsistency in the American model that doesn’t exist in those other countries. But having employers in can be done just fine.

Recorded on: September 21, 2009