Observations in Health 

Observations: Henry Sobanet

Henry Sobanet, President, Colorado Strategies LLC

'Attack Every Angle' to Revamp Health Systems

By Sandy Graham
Photograph by Dan Sidor

EDITOR'S NOTE: Henry Sobanet is president of Colorado Strategies LLC, a private consulting firm specializing in economics, Colorado budget issues, legislative affairs and strategic management. A Denver native, Sobanet holds bachelor's and master's degrees in economics from the University of Colorado and served as former Gov. Bill Owens' director of planning and budgeting. Sobanet worked with Len Nichols, Ph.D., professor of health policy and director of the Center for Health Policy Research and Ethics at George Mason University, on the recent study, "The Future of Colorado Health Care," about the effect of health care reform in the state.

Economists are no strangers to intricate issues and complex data, but health care's financial conundrums were eye-openers to economist Henry Sobanet when he worked on a recent health study.

Sobanet, president of the Denver-based consulting firm, Colorado Strategies LLC, knows thorny issues. In his work in state government from 1999 to 2006, he helped work out a budget compromise between Gov. Bill Owens' administration and lawmakers and found an innovative approach to a then-$11.3 billion shortfall in the state pension fund.

Earlier this year, he embarked on his first intensive foray into health economics when he provided economic analysis for a health reform study, "The Future of Colorado Health Care," supported by The Colorado Trust and the Colorado Health Foundation. The study concluded that escalating health care costs are placing an increasing strain on Colorado households, employers and governments, and making health insurance less affordable. Without reform, Coloradans – especially business owners – will have to spend more on health care coverage, and the economy will suffer.

"I was amazed at the complexities of the issues and how everything interacts," says Sobanet of his work on the study, authored by Len Nichols, Ph.D., a respected health care economist. "Health care is so complex and such a big segment of the economy that you have to attack every angle."

What concerns him most, however, is the steady growth in health insurance premiums that Colorado and the rest of the country are experiencing. Year-to-year increases have gone as high as 10 percent – and into the higher double-digit stratosphere in some parts of the country. That's hard on individuals but especially hard on businesses. Employer-sponsored health insurance covers nearly 60 percent of nonelderly Americans and nearly 63 percent of Coloradans under age 65, according to the Kaiser Family Foundation. Costs typically are shared with employees through payroll deductions. The pinch that workers and owners have felt has now become a punch in the nose.

Skyrocketing premiums "have a huge impact on businesses that want to provide health insurance, but they also impact [employees'] take-home pay. That in turn affects everyone's ability to buy things," Sobanet says. "Businesses feel the effects in their costs of doing business and their ability to sell goods. And if your customers are feeling this, too, then it's a double whammy."

With Colorado's budget in bad shape, the state doesn't have the economic resources to expand health insurance coverage significantly to the roughly 18 percent of Coloradans who are uninsured. However, there are ways to make health care delivery more efficient. And businesses can help drive the change.

"One way is for employers to exert more purchasing power," Sobanet says. "They need to understand what they're buying" when they choose health coverage for employees. This might mean asking insurance plans to change the way they reimburse providers for care from the current fee-for-service approach, or to cover less-expensive types of prescription drugs - all with the goals of saving money and keeping a lid on premiums.

If Colorado and the nation don't contain health costs, Sobanet predicts there will come a time in 10 to 15 years when many families won't be able to afford coverage. This will mean fewer people will receive preventive care or treatment for chronic conditions, and more will use expensive hospital emergency rooms when health crises hit. And as is happening now, the costs of caring for the higher numbers of uninsured will be shifted to those who still have health insurance.

"We get caught in a pretty nasty cycle without cost containment," Sobanet says.

As Sobanet worked on "The Future of Colorado Health Care," he found his views of health care reform evolved. It became very clear that the state and nation cannot simply "tweak the system" to contain costs. In fact, he says, proponents of a single-payer system (where one entity, typically a government agency, essentially handles health coverage for everyone) have "very compelling arguments" about cost containment. Integrated delivery systems such as Rocky Mountain Health Plans in Grand Junction, Denver Health or Kaiser Permanente nationally also have greater success at cost control than the existing system, Sobanet notes.

"Are they perfect? No. With any type of system, there will be issues," he adds.

But few health experts will argue that the system the United States has now is working well or delivering cost-effective and high-quality care. While the United States spends a much higher percentage of its gross domestic product on health care than other industrialized countries, it does not appear to have commensurate positive differences in health outcomes.

"I don't think anyone would say we'd design the existing system from scratch if we had it to do again," Sobanet says. "This is not the most efficient way to deliver health care."