By Aaron Carroll

I’m reading a lot of articles, and seeing lots of tweets, that detail a running total of governors threatening to opt out of the Medicaid expansion. First of all, those are threats. They are very different than actual action. It’s also in the best interests of states to take this position as a negotiating tactic. In the end, though, I think it will be very hard for states to opt out. Here are some of the reasons why:

1. This is a pretty good deal for states. They’re getting most of the tab picked up by the feds.
2. It’s one thing to turn down high speed rail. It’s another to tell your constituents that they can’t have insurance entirely paid for by the federal government in 2014.
3. As more and more states take the money, those that don’t will be more easily marginalized.
4. History. States threatened not to join Medicaid the first time as well. All did, eventually. Now the program is so American that threatening to remove it is “coercive”.
5. There will be enormous pressure from doctors, hospitals,pharma, etc. who potentially will lose a lot of money in uncompensated care. They have pretty good lobbying groups.

Continue reading “Why States Won’t Opt Out of Medicaid Expansion”

By David Dranove

Those of you from my generation may recognize the title of this blog as the last line from the movie “The Candidate.”  Robert Redford’s character has just won election to the U.S. Senate and ponders his future.

Supporters of the Affordable Care Act should be asking themselves the same question.  They worked hard to get the bill enacted and then had to sweat out (literally in much of the nation) the Supreme Court decision.  But the bill as it stands will only go so far to cure our nation’s healthcare woes.  Yes it will expand coverage.  And the push for Accountable Care Organizations might reintroduce some of the cost savings incentives enjoyed by HMOs.  But this is legislation that relies on competitive healthcare markets yet does precious little to promote competition. There is a lot more work to be done.

I doubt that the current Congress has the stomach to consider any more healthcare legislation, but here are some recommendations for the next Congress (and for any states that want to make the ACA work for them.)

1)  Limit the tax deduction for health insurance.  Economists have been preaching this for decades and the justification is as valid as ever.  If individuals want insurance that pays for every last dollar of every last medical service, let them buy it with after-tax dollars.  Why should everyone else subsidize their profligacy?  It has been said that Congress can never muster enough votes for legislation limiting the tax deduction.  They said the same thing about comprehensive health reform.  Get this done!

Continue reading “What Do We Do Now?”

By David Dranove

I am coauthoring (with Cory Capps) a chapter on healthcare antitrust for the forthcoming International Handbook of Antitrust Economics. As we finish our first draft, we were searching for a good way to tie everything together. We both thought of concluding by discussing antitrust and ACOs. Cory and I believe that the underappreciated (and often excruciatingly boring) topic of antitrust is fully interwoven with the story of ACOs. And even if the Supreme Court strikes down the ACA (note to readers of my prior blog – I was just kidding), ACOs may endure. So this is as good a time as any to explain the connections between antitrust and ACOs.

I first recognized this connection twenty years ago, when my colleague Steve Shortell was touting the growth of integrated delivery systems. Steve even offered a universal health insurance proposal (which several states explored) built around competing IDSs. In Steve’s world, an IDS would consist of several hospitals and hundreds of physicians. I argued with Steve that economic theory provided little support for massive vertical integration (and theory is still not all that kind to the idea.) I granted Steve that if integration made theoretical sense, integration would be all well and good for Chicago, where there might be four or five competing IDS. But what about Milwaukee, Cleveland, or any number of other midsize metropolitan areas? They would do well to have two or three IDS. Indeed, even with a legislative mandate to form IDS, consolidation has left these and other midsize markets with just two or three health systems. Smaller metro areas might have only had one IDS.

Continue reading “ACOs and Antitrust: A Few Words of Caution”

By Peter Ubel

Dr. Timothy Wilt, a member of the United States Preventive Services Task Force, stood in front of the American Urological Association audience and explained why the task force could not recommend that men undergo routine PSA screening. At most, he explained, the test had been shown to benefit one out of 1000 men. Meanwhile, the test would cause hundreds of men to experience anxiety, and scores of them to experience impotence and incontinence from unnecessary treatments.

Twenty minutes later, I stood behind the same podium and asked the audience members to raise their hands if they disagreed with the task force’s conclusion. Ninety percent expressed their skepticism. What happened in the time between Wilt’s presentation and mine reveals a great deal about why experts cannot agree whether screening tests, like the PSA in middle-age men or mammograms in 40-year-old women, bring more benefit than harm, and about what psychological forces impede our ability, as a society, to figure out what basic bundle of healthcare services all insurance companies ought to pay for.

Wilt’s presentation was a model of scientific clarity. He explained that only two randomized clinical trials were conducted with enough scientific rigor to provide useful estimates of whether the PSA test saves lives. One trial showed no benefit and the other revealed the one in 1000 number which the task force took as the best case scenario. Wilt was followed on stage by Ruth Etzioni, a biostatistician at the Fred Hutchinson Cancer Research Center in Seattle.  Etzioni presented a statistical model suggesting that the PSA test benefited many more than one in 1000 men.

Continue reading “Is Prostate Cancer Screening Truly Harmful?”

By Aaron Carroll, MD

As I noted last week, I get a little annoyed by the seemingly constant public complaints of physicians, coupled with threats to leave medicine and dire warnings that no one will want to be a doctor in the future. This is in spite of it still being one of the most trusted professions around, and one that is darn well compensated. So it’s nice to see that the general public hasn’t bought into this meme yet (from the AAMC 2011 Medical School Enrollment Survey):

• First-year medical school enrollment in 2016–2017 is projected to reach 21,376. This projection represents a 29.6% increase above first-year enrollment in 2002–2003 and comes close to reaching the 30% targeted increase by 2015 the AAMC called for in 2006.
• Of the projected 2002–2016 growth, 58% will be at the 125 medical schools that were accredited as of 2002. New schools since 2002 will experience 25% of the growth, and the balance (17%) will come from schools that are currently in LCME applicant- or candidate-school standing.

Continue reading “So it Turns Out that Lots and Lots of People Still Want to Be Doctors”

By Peter Ubel

Imagine for a moment that you are an oncologist caring for a 53-year-old man with metastatic cancer, a person whose tumor has spread to lung and liver.

With standard chemotherapy, this man can expect to live around 12 months.  That standard treatment isn’t all that expensive in today’s terms, only $25,000 and his insurance company will pick up the entire tab since he is already maxed out on his yearly deductible and co-pays.

But wait!  Before prescribing the standard treatment, you find out there is a new chemotherapy on the market, one that costs $75,000 (in other words, fifty thousand dollars more than usual care) and has no more side effects than that standard treatment.

How much longer would patients like this have to live, on average, for you to feel that this new chemotherapy is warranted?

That’s not an easy question to answer.  But it’s not an impossible one either.  Clearly if the treatment would provide only, say, 1 day of additional survival on average, that would not amount to $50,000 well spent.  Just as clearly, if this man could expect 10 years of additional life, no one would deny him this new treatment.

So when, between 1 day and 10 years, does it become a tough call whether to prescribe this new treatment?

Continue reading “Paying an Arm and a Leg for a Month of Life?”

By John Goodman

Social Security, Medicare, Medicaid and other social insurance programs are bankrupting America. They will produce ever-escalating deficits for as far as the eye can see.

So what can we do about it? All we hear out of Washington are “eat-your-spinach” solutions — both from Democrats and Republicans. These involve cutting benefits, forcing doctors to ration health care, etc. Naturally, the beneficiaries resist such change.

My colleagues and I at the National Center for Policy Analysis have been thinking about a different approach. Reform of entitlement programs should be a win-win proposition. That is, it should be good for the individual who agrees to accept fewer government benefits as well as for the taxpayers.

Does that sound too good to be true?

Here is part of the idea.

Opportunities to Opt Out. People of any age should have the choice to opt out of social insurance in favor of alternatives that better meet their individual and family needs. In particular, they should be able to substitute assets and arrangements they have voluntarily chosen, and that they own and control, for the government systems they are now forced to be part of. In particular:

• People should be able to substitute private savings, private pensions and annuities, and private insurance for participation in Social Security.
• They should be able to substitute private insurance and private health savings for participation in Medicare and for participation in the federalized health care system sometimes called ObamaCare.

Continue reading “How We Can Keep from Going Broke”

By Harold Pollack

This post considers potential pitfalls of home HIV testing. It provides an excuse to write a slightly less nerdy column on the mathematics of screening tests.

My friend and co-author A. David Paltiel flew in from Yale to speak with my University of Chicago students. David is a national authority on medical cost-effectiveness, particularly in matters connected with HIV. For example, this beautiful New England Journal of Medicine piece showed that population HIV screening is surprisingly cost-effective, even in relatively low-risk populations. In significant measure due to this analysis, the Centers for Disease Control and Prevention modified national guidelines to promote much more aggressive HIV screening in a variety of settings. So if your primary care doctor or emergency department nurse asks you whether you’d like an HIV test–blame Paltiel.

David and I have published related work on issues surrounding home HIV tests, now under FDA review. (See a great earlier commentary by Walensky and Paltiel here.) To simplify things, the idea here is that you could go to your local Walgreen’s and buy a test kit for about $40. You swab the thing around your mouth. In about 20 minutes, with impressive “accuracy” (in a minute I’ll explain why the commonsense word “accuracy” is a slippery way to describe screening tests), the test will say whether you are HIV-infected.

One natural group of customers might be romantically-involved University of Chicago students: They go out on a date. It goes well. They buy a pair of test kits (maybe romantically sharing one) for a quick HIV test. If the tests come out well…. whatever one cares to happen can now proceed.

Is this test a good idea? In some ways, yes. This normalizes testing. Some people will get tested who would not otherwise obtain care. But there are a variety of reasons to worry. One issue concerns the ability of ordinary people not to mess the test up. A second issue concerns whether home HIV tests will lead people to avoid other medical and public health systems that could provide better counseling and (if needed) stronger post-test linkages to care.

Continue reading “Don’t Try This at Home: The Mathematics of HIV Testing in Low-Risk Populations”

By Emma Dolan

The Government Accountability Office (GAO) recently released a report that cites “substantial variation” in the prices paid for implantable medical devices in the Medicare program, and a lack of robust data needed to properly compare the prices paid for these devices across surveyed hospitals. A key driver of both of these findings is the existence of confidentiality clauses in medical device purchasing contracts that prohibit hospitals from sharing prices with third parties, including physicians, the health plans that pay for these devices, and patients.

It was with a sense of déjà-vu that I read this report; in 2010, UC Berkeley professor James Robinson and I published a series of briefs looking at variation in implantable device prices in California hospitals as part of a joint Value-Based Purchasing of Medical Devices project between the Berkeley Center for Health Technology and the Integrated Healthcare Association (IHA). This project included data collection on device costs, total surgical costs, complications, and length of stay for seven orthopedic and cardiac procedures in 45 California hospitals.

The data, as well as a series of IHA-sponsored roundtable conversations with stakeholders, found the same thing that the GAO report finds: a lack of transparency in device prices, sometimes driven by clauses that prohibit hospitals from disclosing the prices paid for devices, a lack of alignment between hospitals and the physicians practicing within their facilities, and very substantial variation in both the prices paid for devices and the total costs of the procedures used to implant these devices. For example, the average cost hospitals paid for knee implants ranged from $3,408 to $10,830, and the average paid for implantable cardioverter-defibrillators ranged from $19,578 to $35,916. There was also a substantial amount of within-hospital variation in device prices.

Continue reading “Price Variation and Confidentiality in the Market for Medical Devices”

By Mike Miliard

Healthcare reform is arguably the hot-button political issue of our time. And with the Supreme Court locked and loaded to decide the fate of the Affordable Care Act this summer, it’s a safe bet the controversial two-year-old legislation will have a huge impact on the 2012 election and beyond.

But what about health IT? If “Obamacare” has been a lightning rod, sparking historically nasty partisan bickering – Congress vs. President Obama, Republicans vs. Democrats, Fox News vs. MSNBC, the Tea Party vs. MoveOn.org – Washington’s efforts to spur healthcare information technology have enjoyed much broader support, on both sides of the aisle.

Just last week, a Washington think tank whose healthcare wing is led by two erstwhile rival Senate Majority Leaders put its weight behind smarter and more widespread use of technology and data exchange in healthcare organizations nationwide.

“To deliver high-quality, cost-effective care, a physician or hospital needs good information,” said former senator Bill Frist, MD, upon the release of a report, on Jan. 27, from the Bipartisan Policy Center’s Task Force on Delivery System Reform and Health IT. “Data about patients has to flow across primary care physicians, hospitals, labs, and anywhere that patients receive care.”

Continue reading “The Political Economy of Health Information Technology”