Why Everything We Are Doing in Health Policy May Be Completely Wrong...

Why Everything We Are Doing in Health Policy May Be Completely Wrong …

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A relatively obscure paper (gated) published in an academic journal the other day was completely ignored by the mainstream media. Yet if the study findings hold and if they apply to a broad array of health services, it appears that the orthodox approach to getting health services to poor people is as wrong as it can be.

At first glance, the study appears to focus on a rather narrow set of issues. Although most states try to limit Medicaid expenses by restricting patients to a one-month supply of drugs, North Carolina for a period of time allowed patients to have a three-month supply. Then the state reduced the allowable one-stop supply from 100 days of medication to 34 days and at the same raised the copayment on some drugs from $1 to $3. Think of the first change as raising the time price of care (the number of required pharmacy visits tripled) and the second as raising the money price of care (which also tripled).

The result: A tripling of the time price of care led to a much greater reduction in needed drugs obtained by chronically ill patients than a tripling of the money price, all other things remaining equal.

This study pertained to certain drugs and certain medical conditions. But suppose the findings are more general. Suppose that for most poor people and most health care, time is a bigger deterrent than money. What then?

If that idea doesn’t immediately knock your socks off, you probably haven’t been paying attention to the dominant thinking in health policy for the past 60 years.

What I call health policy orthodoxy is committed to two propositions: (1) The really important health issue for poor people is access to care and (2) to insure access, waiting for care is always better that paying for care. In other words, if you have to ration scarce medical resources somehow, rationing by waiting is always better than rationing by price.

[Let me say parenthetically, that the orthodox view is at least plausible. After all, poor people have the same amount of time you and I have, but (unless you are a student) a lot less money. Also, because their wages are lower than other people’s, the opportunity cost of their time is lower. So if we all have to pay for care with time and not with money, the advantage should go to the poor. This view would be plausible, that is, so long as you ignore tons of data showing that whenever the poor and the non-poor compete for resources in almost any non-price rationing system, the poor always lose out.]

The orthodox view underlies Medicaid’s policy of allowing patients to wait for hours for care in hospital emergency rooms and in community health centers, while denying them the opportunity to obtain care at a Minute Clinic with very little wait at all. The easiest, cheapest way to expand access to care for millions of low-income families is to allow them to do something they cannot now do: add money out-of-pocket to Medicaid’s fees and pay market prices for care at walk-in clinics, doc-in-the-boxes, surgical centers and other commercial outlets. Yet in conventional health policy circles, this idea is considered heresy.

The orthodox view lies behind the obsession with making everyone pay higher premiums so that contraceptive services and a whole long list of screenings and preventive care can be made available with no copayment or deductible. Yet this practice will surely encourage overuse and waste and in the process likely raise the time prices of these same services.

The orthodox view lies at the core of the hostility toward Health Savings Accounts, Health Reimbursement Arrangements (HRAs) and any other kind of account that allows money to be exchanged for medical services. Yet it is precisely these kinds of accounts that empower low-income families in the medical marketplace, just as food stamps empower them in any grocery store they choose to patronize.

The orthodox view is the reason so many Obama Care backers think the new health reform law will expand access to care for millions of people, even though there will be no increase in the supply of doctors. Because they completely ignore the almost certain increase in the time price of care, these enthusiasts have completely missed the possibility that the act may actually decrease access to care for most low-income families.

The orthodox view is the reason why there is so little academic interest in measuring the time price of care and why so much animosity is directed at those who do measure such things. It explains why Jon Gruber can write an NBER paper on Massachusetts health reform and never once mention that the wait to see a new doctor in Boston is more than two months.

Yet the orthodox view may be totally wrong. Clearly, time prices matter to low-income patients. As the new study concludes:

The observed decreases from the days’ supply policy were larger than those from the copayment policy, indicating that the increase in the time costs from more frequent trips to the pharmacy were more of a barrier to medication adherence than the increased copayment…. The decrease in adherence occurred at a mean level of usage generally thought to show clinical effects. The probability of being 80 percent adherent decreased between 1 and 13 percentage points, implying that the policy changes resulted in a substantial decrease in medication adherence for the chronic medication users.

John C. Goodman, PhD, is president and CEO of the National Center for Policy Analysis. He is also the Kellye Wright Fellow in health care. His Health Policy Blog is considered among the top conservative health care blogs where health care problems are discussed by top health policy experts from all sides of the political spectrum.

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36 Comments on "Why Everything We Are Doing in Health Policy May Be Completely Wrong …"


Guest
Jul 25, 2011

This post ignores the fact that under heatlh care reform many more nurse practioners will be providing care to the formerly uninsured (and many others) in Community Heath Centers.

The Affordable Care Act provides funding to expand the capacity of CHCs by 50%.

The ACA also provides generous loan forgiveness and scholarships for nurses as well as higher pay for nursing school teachers. This will expand the pool of nurses and nurse practioners available in 2014.

Increasingly, nurse practioners will be providing more and more of the primary care, preventive are, pediatric care and obstetrical care that Americans need. (In Europe the vast majority of babies are delivered by
nurse-midwives. Mortality rates are lower–even when you compare only white mothers and babies in the U.S. to white mothers and babies in Europe. C-section rates also are much lower in Europe.

By and large, there is no shortage of doctors in the U.S.– nor is there expected to be a shortage. (When it comes to healthcare, Bostson is an outlier in many ways. A recent survey by Merritt Hawkins, a company that
specializes in recruiting physicians, show that wait times in Boston are
2 1/2 times longer than in the the average city.

The Dartmouth research also shows a high level of overtreatment in Boston–Medicare patients seeing more specialists than they need to, undergoing more tests and procedures than they need to– with outcomes that are no better than in regions where care is less aggressive.

Guest
DeterminedMD
Jul 26, 2011

You know, Ms Mahar, I honestly do not know if you are just being clueless or blatantly dishonest, but to say “By and large, there is no shortage of doctors in the U.S.– nor is there expected to be a shortage.”, is a lie. And your expectation that Nurse Practitioners will just fill the void you say in the prior sentence is not there anyway is not a realistic solution.

Admit it, you truly hate physicians, your rhetoric in your posts and thread comments has consistently revealed this intent. Cite away all your “contacts” and alleged physician allies, you are just a Democrat hack in the end. PPACA is not going to help health care, and I hope readers who are not sucked into this pervasive lie campaign get all the facts and info from non partisan sources.

Besides, Boston Massachusetts is not an example of Americana, ma’am.

Guest
Nate Ogden
Jul 28, 2011

“This post ignores the fact that under heatlh care reform many more nurse practioners will be providing care to the formerly uninsured (and many others) in Community Heath Centers.”

What a tortured definition of the word fact. There is no fact that there will be more nurse practitioners, there is funding that might create more nurse practitioners that might treat formally uninsured.

By your twisted logic Maggie it was a fact 200,000 uncoverable people would be have coverage under the PCIP program. A real fact, not a Maggie fact, is only $12,437 were enrolled first part of this year.

“The federal Pre-existing Condition Insurance Plan (PCIP) program — a program that has the capacity to cover about 200,000 uninsured people with serious health problems — had 12,437 enrollees Feb. 1, officials say.”

Liberal healthcare bills are not facts, they are agendas and plans that seldom achieve a fraction of what is promised.

Guest
Devon Herrick
Jul 25, 2011

Nearly 34 million uninsured individuals will gain health coverage under PPACA. Expect them to nearly double their consumption of medical care. Seventy-eight million Baby Boomers will retire in the next two decades. As they age their health needs will rise. Some practicing doctors are part of the Baby Boom generation. They will retire. Medical science is expanding the definition of disease and the number of conditions that can be treated will rise over time. I believe all these factors point to the possibility that demand for doctors could exceed the supply in the coming decades.

Guest
Dr. Mike
Jul 25, 2011

CHCs (aka FQHCs) are extraordinarily expensive places to receive care. They receive 2 to 3 times as much money from the federal and state government as is received by private practices for the exact same care. They have extremely high overhead (Local FQHC with 5 providers has a CEO, CMO, CFO, COO, etc. which are all high paying administrative positions – my three provider clinic only has a part time practice manager). The extra funding for identical care was intended for the CHC to provide free or nearly free care to the uninsured. With the passage of the PPACA it is likely that the ratio of government insured to uninsured will increase significantly, with the coresponding increase in routine office visits that cost the taxpayers $120-$140 instead of the $40-$60 I get FOR THE SAME SERVICE.
There is absolutely a skewed concept in the country of what poverty is. Having traveled in Asia and Central America I can tell you that those we classify as “poor” in this country are truly rich by the standards of those other countries. There is no scientifically valid evidence that I have seen that the MAJORITY of Medicaid recipents would suffer any real harm from bearing some financial responsibility for their care. If a minority would suffer, then there are ways to deal with that separately.

Guest
Nate Ogden
Jul 28, 2011

it will be dismissed because its from Heritage but you can’t argue with the facts, our poor have it damn well.

If you define Harm as having to cut back on smoking or drinking, or maybe not having a flat screen then yes they suffer harm.

http://www.heritage.org/Research/Reports/2011/07/What-is-Poverty

Guest
Lynn in SC
Jul 25, 2011

The research was done in North Carolina and not South Carolina. Two different states with two different Medicaid programs and policies.

Guest
Jul 25, 2011

I’m sorry, but I don’t quite understand.

Somebody increased the price by $2 (I know tripled sounds more ominous), and found that poor people were more willing to pay 2 more dollars, than they were willing to travel 2 more times to the pharmacy, which with gas prices today costs way more than $2.

From this extraordinary finding, we deduce that poor people are not sensitive to price, but are sensitive to convenience?
Which of course is an indictment of the liberal advocacy for providing financial aid to the poor in general.

Guest
steve
Jul 25, 2011

Poor people can calculate the price of gas or subway tickets. Quite the revelation. John Goodman is a genius.

Steve

Guest
Nate Ogden
Jul 28, 2011

I thought all the poor had to take public transportaiton? And why couldn’t they pick the Rx up went they went shoping for all their other groceries and such or do the poor only shop once every three months? It didn’t cost them a penny in extra gas unless they were truly stupid in how they plan their errands.

“we deduce that poor people are not sensitive to price, but are sensitive to convenience?”

I pretty clearly grapsed they are more sensitive to convenience then price , I don’t see how anyone could read into this a lack of any price sensitivity….oh wait let me put on my liberal blinders…..How dare you John, to claim they are not price sensative is unheard of, how does John get away with saying stuff like that. I just saw him kick a kitten and took candy from a baby as well. Its amazing what you miss when you don’t have your liberal blinders on.

Guest
Steve Barrett
Jul 25, 2011

This is a provocative article. There is an old saying that contemporary, business-driven healthcare does not take into account: “Time heals.” We nurses see the truth of the saying, but we work in institutions that abuse the “healing powers of time.’ So our jobs force us to try to cheat the client of time (the time required to heal) and abuse our selves (our bodies/our selves) in the meantime. So I appreciate the emphasis on time int he article. I am a Licensed Vocational Nurse working in an Alzheimer’s Unit in Texas.

Guest
Jul 25, 2011

I think we have no clue what direction we should go to.

Guest
Peter
Jul 26, 2011

More all the poor to the wilds of North Dakota and their health care access to Florida, but reduce their co-pay – that will keep costs down.

Guest
Peter
Jul 26, 2011

Of course first word above is “move”. D’OH

Guest
Jul 26, 2011

I understand those who are exceedingly rural might have some issues with traveling to the pharmacy every month. But those not living on the edge of the remote and are only paying only a dollar or 3 for prescriptions should have no complaints.

Guest
Jul 26, 2011

John, you shared an intriguing piece of research from Health Services Research (HSR). You supposed that “for most poor people and most health care, time is a bigger deterrent than money”. But it may not have been time alone. Some responses to the blog have mentioned the cost of gas or other transportation. But for some of the most vulnerable there may be real issues with their physical ability to travel. How do we balance such creative alternatives with meeting the needs of those most at risk, not just the relatively well population? The high costs come with acute care, which can be precipitated by lack of medications.

The HSR article suggested that increasing the copay, even though the increase was a modest few dollars, was a deterrant to needed medication. The increased time price of care had a larger negative impact. Neither had a positive effect.

I will continue to read your blogposts for approaches that improve quality and bend the cost curve, of primary importance to our nation. Respectfully, I am not certain the HRS piece provided one of them.

Guest
Jul 26, 2011

Melissa–

I understand why going to a pharmacy once a month should not see like such a big deal for someone living in an urban area.

But imagine that you are a single mother, poor, with two children. Your time is very limited.

Of perhaps you are parents in a two-parent family where you both work two jobs (probably one,is part-time), minimum wage. Poor people who are lucky enough to be employed have less time than the rest of us.

Guest
Nate Ogden
Jul 28, 2011

“But imagine that you are a single mother, poor, with two children. Your time is very limited.”

Is it? Signle moms don’t feed their kids or does the grocery fairy fill the cubbard? Have none of your liberals been outside the city or meet a poor person? I know many poor people and very few of them are short on time, most of them have to much time and that is why they drink and smoke so much. picking up an Rx when they get their ciggs or groceries is not going to cost them an extra minute or dollar in transporation cost.

From my experience actually working in this industry I would also guarantee you most of these people are already going to the Pharmacy multiple times. For what ever reason people do not have all their Rx filled at the same time. They are comming up for refill at all times during the month.

Guest
waste_of_time
Jul 26, 2011

this article is a waste of time…

a high school student could write better….

Guest
Reality
Jul 27, 2011

I suggest that M Mahar, and all those who fanatically oppose physician autonomy and identity, to shadow a real doc in a busy hospital or practice for one week. I bet it would be an eye opening experience. It may even trigger a re-evaluation of their motives.

The sole reason why HSAs and similar constructs are being resisted is because they change the flow of healthcare dollars, granting more control to patients (consumers) and physicians (providers). That’s it.

There is tremendous activity right now to turn healthcare delivery into an activity with a defined set of deliverables to ensure that the flow of dollars is further controlled by third parties and tied to an arbitrary set of “quality” measures. This is generating a lot of business for the big consulting firms like McKinsey who are well versed in quatifying processes into units of production to measure productivity. Applying the same principles to healthcare delivery, means cookie cutter medicine for most with more personalized care for those who can afford it. Quality is just a buzz word used since there is no evidence that centralized care delivery and ACO type arrangements actually improve quality. The real gain is more CONTROL to third parties.

In the push for expanding coverage and central control, good enough is the goal, thus the chatter about mid levels and so on. Since the actual premise is not based on increasing quality but controlling costs and maximizing control over the flow of healthcare dollars, all genuine attempts that oppose this core principle, regardless of their potential to reduce costs or improve quality, will be shut down with the full weight of the system.

Guest
DeterminedMD
Jul 27, 2011

Hit it right on the head, autonomy and independent thinking is contraindicated to what government these days wants from those it controls, not a typo, as they in DC are not interested in representation, just resentment they have to put on the dog and pony show of elections every 2 years. And those who write for either side of this monolithic party of Republocrats are the modern day Goerbels of this onslaught of public interest being smothered by a septic tanked soaked pillow.

Yeah, harsh and irritating analogy, bringing up Nazi references, but, isn’t this kind of propaganda the benchmark for what goes on to this day? After all, isnt PPACA in the end a slow death for many in this country who have to turn to corrupt government? You all have the ability to read and dissiminate the facts versus fiction. So do so!!!

Guest
Nate Ogden
Jul 28, 2011

more then McKinsey the government wants every healthcare dollar to pass through it. Even has cost skyrocket out of pocket spending is projected to drop to single digits between now and 2020. Individuals engaging in activity outside of government control means loss opportunity for government to tax and profit from it.

Guest
Jul 28, 2011

Nate writes: ” does the grocery fairy fill the cubbard

I think you mean cupboard.

Why is it that so many trolls are semi-literate?

Guest
Nate Ogden
Jul 29, 2011

name calling, that is a sure fire way to win an argument and show how much smarter you are, THCB taught me that, when they started their campaign for civil and respectful debate. I guess they didn’t invite Maggie to turn over a new leaf.

“Why is it that so many trolls are semi-literate?”

Maggie writes: fact that under heatlh care reform many more nurse practioners

I think you meant; fact that under health care reform many more nurse practitioners

Health and practitioners are the correct spelling, you misspelled practitioners numerous times, obviously not a typo. Also Boston is spelled Boston, only one S not two. Under that you normally don’t follow the with a second the.

Maggie writes: (probably one,is part-time)

We use spaces to separate words in the English language.

Maggie…..I’m betting you really wish you had your editor right about now don’t you? So I mistype one word and I am a semi-literate troll. You missed multiple words and punctuation does that mean your illiterate? Maggie the illiterate Troll, hads a nice ring to it.

That was a fun exercise, can you try to stick to the arguments so I don’t need to take you to school again?