POLICY/TECH: Just a wee bit more on CMS caving to the device guys

I was going to write some more about the CMS capitulation but over at Health Care Renewal Roy Poses has already said it all. Go and read.

This is why the Enthoven plan for putting private entities (or at least non-lobbyable) entities in the middle is perhaps the solution for the US to avoid the whole system getting even more like defense contracting. If the “plan sponsors” got a flat rate (or PMPM) from the government or price sensitive consumers but still had to deliver a mandated uniform benefits package, then they’d have the incentive to beat up on the suppliers.

It is amazing that Kennedy and Kerry can be bought off by their loyalty to Boston Scientific less than a week after Kerry stumps for universal health care. Perhaps he just can’t make the intellectual connection between the high cost of devices and the un-affordability of health insurance. On the other hand, perhaps this country is just ungovernable. We have seen the future and it is Halliburton.

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  1. Peter writes:

    $150,000 is a pretty low threshhold in your system, what happens when that is reached? Right now I think insurers have a $1- $2 million cap.

    Peter, you clearly have a fundamental misunderstanding of how QALY is applied in this context. Concievably, the $150K could be spent each year on a particular patient. Realistically that won’t happen until medical technology gets a lot better than it is. But you might spend several $100K this year with an expectation of several years of cure afterwards. To the extent we can obtain more in premiums (or obtain more efficiency) in the future, there needn’t be a lifetime cap.
    Barry: QALY is not the last word in economic evaluation of medical interventions. The World Health Organization uses a kind of “Present Value of a Human Life” calculation, for example. They would spend more on an adult with young children than they would on either a child or a grandparent (or presumably a childless adult). I am not saying this is the right thing to do, only that it is being done/thought about.
    Social justice is not well served by blind proceduralism — this is not what we mean by “blind justice”. So even if it is possible to apply economic evaluation, some services (like care for the disabled) ought to be provided no matter what.
    As with all social questions, the criterion is solidarity. But solidarity goes both ways — we must demonstrate solidarity with doctors, pharmas, supply chain managers, and educators as well as with patients, healthcare purchasers, truck drivers, and grade school students. It does not show solidarity when we complain bitterly about someone profiting by providing what we need.

  2. Peter, I’ll let you have the last word on this thread except to say the the vast majority of people likely to be impacted by QALY metrics (if we had them) are the elderly who are currently covered by Medicare or, in the case of nursing home costs, Medicaid (if poor), both of which are single payer systems for the large populations they serve and financed primarily by taxpayers. And don’t get me started on school vouchers.

  3. So now I see that this is really just another voucher plan, like the education vouchers the Repugs have been pushing. I don’t like education vouchers because it will transfer money from community public schools to rich private schools. Don’t think those poor kids will be able to use their vouchers in the high quality private schools in the burbs as the schools will find additional fees and barriers that will make them just as exclusive as now. The same thing will happen to healthcare, well off people will use the vouchers to help purchase premium care that will set service provider rates at the high level and draw resourses away from the rest of the system. As has been happening, tax rates for the upper income groups have been getting proportionally less as regressive taxes have taken hold, (fees, sales), so it won’t take long for the system to be cash starved. $150,000 is a pretty low threshhold in your system, what happens when that is reached? Right now I think insurers have a $1- $2 million cap. When the crisis happens as you say, we’ll see what happens. I doubt the power brokers who influence Washington will let themselves loose anything and will once again off-load costs down hill. We need to get rid of the insurers first, then figure out how to run the system from there. But in the present dishonest climate in Washington you won’t see any realistic solution that won’t rob the tax payer and be just another agency run by another incompetent political hack/ideolog.

  4. Peter, I think you far overestimate the power of the religious right. Like so much in government, solutions to major problems usually require a crisis or a perceived crisis first. We are probably approaching that point with healthcare, and we are already starting to see some experiments at the state level which will provide some good insight into what works and what doesn’t before we finally develop a national approach.
    A couple of points on QALY and rich vs poor. First, taxpayers are already paying about half of the healthcare bill in the U.S. between Medicare, Medicaid, Tricare, and conventional insurance for public employees. Private employers pay about 25% of the bill with probably half to two-thirds of that covered by large employers who self-insure and just contract with insurers for administrative services.
    A national health plan along the lines of the Century Foundation proposal would basically say to everyone, here is a voucher funded by taxpayers that is sufficient to buy coverage from Kaiser or its equivalent. If you want to pay more out of your own pocket for more choice or more comprehensive coverage or long term care insurance, that’s your perogative.
    In the UK, the current QALY threshhold is $50,000 GBP per QALY of about $94,000 U.S. dollars at current exchange rates. If we adopted this approach in the U.S., I expect we would set the threshhold at $125,000 to $150,000 per QALY adjusted for regional differences in compensation and other business costs. Insurers could offer policies at higher premiums that would cover up to a higher or even an unlimited QALY threshhold. I suspect that only a tiny fraction of the population could afford to self-fund very expensive care, and very few of those would want to. Remember Jackie Onassis, for example, who died of cancer at 64 opted to spend her final days peacefully at home after it was clear that nothing more could be done. Former President Nixon did the same. I would not lose any sleep worrying about rich people sucking up healthcare resources and crowding out care available to the middle class and poor.

  5. “One area where I think we have consistently failed in economic life is not sufficiently challenging interest groups to come up with viable alternatives”
    There is no way to intellectually challenge religious extremists; who now control the Republican Party. The way to sufficiently challenge them is to make them pay, then see if their fundamentalism is trully God sent. But they don’t have to pay, we can just keep borrowing the money.
    As for splitting the system into rich pay/poor pay, that’s what we have now. You will get a disproportionate allocation of resources to the rich side and starve the poor side. There will be no economic/care stake for well off people to support the other side and so it will be denied proper funding. And no there will be NO QUALY Metrics for the rich side cause how are you going to deny them when they are paying. You will then get, not QUALY Metrics for the rest, but simple economic, “well they can’t pay” decisions for the poor.

  6. Peter – Of course QALY metrics should apply to everyone, not just the uninsured. As for the religious right and any other group that opposes them, I have a simple three word question — what’s your alternative? I assume they are not willing to pay higher and higher taxes to support a do everything for everyone no matter what approach. One area where I think we have consistently failed in economic life is not sufficiently challenging interest groups to come up with viable alternatives when they oppose solutions intended to save money that might affect them adversely.
    I disagree with you on the all in the same boat, equal outcome mentality that you seem to espouse. If a wealthy person wants to pay extra for a private hospital room with gourmet meals, that’s fine by me. He or she should be able to spend their own money however they want. I wouldn’t even have a problem with them self paying for treatments that can’t meet a QALY standard. With taxpayer funds limited and many competing claims for them, we have to draw the line somewhere. What would be so terrible if the average person received care from Kaiser Permanente or its equivalent while a wealthy person who chooses to opts to pay extra for complete freedom to see any doctor, go to any hospital, get a private room in a hospital and pay to enroll in a conceirge medical practice?

  7. Actually the Boston Scientific lobbying story is a pretty interesting one. Think about the situation they face right now. With a series of new products in hand after the Guidant acquisition that have been linked to serious health problems, potentially major changes looming at the FDA, an uncertain clientele and suspicious distributors (docs). I wonder where their money is flowing. I somehow doubt Democrats are the only recipients of their largesse…
    In a Democracy there is a word for this, embarrassing …

  8. Ok Barry, would the application of Qualy metrics be applied to everyone, or only to the unisured?
    Try to get QUALY metrics used for the religious right, like the case of Terry Schrivo. You’re in for a fight. Maybe it would only be applied to Democrats :>), they’d support that. There is no present political/religious climate here for rational end of life decisions. My wife has witnessed the unisured mother of a brain dead baby clinging to, “God will send a miracle”, while the State spends a million dollars.
    Patients are in no postion to assess risks any more than they know when to fold’m or when to hold’m. It’s even a struggle for docs.
    I have said that I find the Century Foundation’s proposal a good starting point, but I fear that it is a method for two or three tier healthcare. “Let all those other people wait on hard chairs, I can afford the fast service padded couch.” In healthcare, not yacht ownership, I support the, “we’re all in the same boat approach”.

  9. C’mon, Peter. We’ve been over this before. I’ve said any number of times that I support systematic rationing of expensive and often futile care at the end of life. My personal preference is for QALY metrics as opposed to artificially restricting supply. I would love to see CMS take the lead in implementing this, since only CMS / the government could do it, and even CMS would have to drive it through our political process first. I also support more widespread use of living wills.
    Matthew and others have also pointed out that we ration care here too, but we do it haphazardly via price and affordability and whether you have insurance or not. If systematic rationing via QALY metrics would free up enough money to cover the uninsured, I’m all for it.
    Much more robust pricing transparency combined with unbiased, objective infomediaries to help patients assess the risks, benefits and cost-effectiveness of various treatment options would also be most helpful.
    Everyone recognizes that the current employer based model (outside of Medicare, Medicaid and Tricare) is unsustainable. One size fits all with rigid price controls is not the answer, in my opinion, but something along the lines of what the Century Foundation proposed might be.

  10. “That is why all of the countries with national health insurance systematically ration care one way or another including restricting supply and/or using QALY metrics.”
    Here we go again, they (single pay gov plans) ration, and we don’t.
    “there is always an underlying incentive to delay or deny expensive care to save money and increase profits.”
    What the gov plans do is attempt to control costs (notice not much of that happening here) in a way that is fairer across the board and still provide universal access. Life is always a balancing act. If we’re doing it better why does our “efficient free market system” cost twice as much as the single pay gov plans. As for taxpayers not wanting to pay more well I think they would, if they knew it was going to health care and could see the results of paying more, not into the bottomless pit of general revenues where a partisan party can rob peter to pay paul, paul being their corporate supporters.

  11. The problem with a flat rate PMPM is that it is notoriously difficult to estimate costs. Sources of excess costs can range from higher than expected general inflation (including wage and benefit costs), a worse than expected flu season, a relatively small number of extra very high cost cases beyond what was expected and providers driving utilization beyond what was expected to earn more revenue. Beyond that is the risk of external shocks like a terrorist attack or another Hurricane Katrina. To make this work, an insurer or other financially responsible entity would need sufficient capital to cover any cost overrun in the short term and be able to raise rates sufficiently to get back to equilibrium in the following year. For a government payer, that, of course, means raise taxes if necessary or increase borrowing which is not fiscally prudent in the intermediate to long term.
    Furthermore, in the case of private payers, assuming that reinsurance or stop loss coverage is not available on reasonable terms, there is always an underlying incentive to delay or deny expensive care to save money and increase profits. For government payers, taxpayers will not tolerate ever higher taxes to meet what often appears to be potentially near infinite demand. That is why all of the countries with national health insurance systematically ration care one way or another including restricting supply and/or using QALY metrics.

  12. This government doesn’t work because private, free enterprise industry bribes it not to work, then the same people getting the perks from the bribing run out and say how government can’t solve anything and we need less of it. What they really mean is less of it to work for you, but more of it to work for them. This country is surely on the downslide. If all those foreign dedt holders call their loans that have been keeping this economy afloat – blood bath.

  13. As a healthcare leader, I also worry about the impact of the medical-industrial complex on compassion in healthcare. For a GREAT article on this subject, go to a terrific new blog: http://www.journalofsacredwork.typepad.com
    Erie Chapman, J.D.
    Healing Trust – Nashville