MYTH #1: Because government payments to hospitals are so low, hospitals will continue to shift costs to private insurers, pushing premiums higher.
FACT: This is a canard that insurance lobbyists like to perpetuate because it helps justify climbing premiums. The non-partisan Medicare Payment Advisory Commission (MedPAC) has taken on exaggerated accounts of “cost-shifting” by showing that a hospital’s relative market strength determines what a hospital is paid by private payers.
MedPac points out that from 1994 through 2000, during the heyday of “managed care,” insurers had more power than hospitals in most markets: “managed care restrained private-payer payment rates.” But “by 2000, hospitals had regained the upper hand in price negotiations due to hospital consolidations and consumer backlash against managed care.”
Private insurers no longer tried to “manage care.” Huge hospitals had the clout to perform as many tests and treatments as they wished, without having to prove that the patient needed the procedure, and newly-consolidated hospitals could charge insurers as much as they pleased. They knew that the insurers’ customers wanted those large medical centers in their networks. Insurers “in turn passed along these costs through higher premiums to enrollees and employers,” MedPAC reports. “While insurers appear to be unable or unwilling to ‘push back’ and restrain payments to providers, they have been able to pass costs on to the purchasers of insurance and maintain their profit margins.”
Large hospitals with marquee names now have enormous power. Earlier this year, Massachusetts’ Attorney General reported that elite medical centers have been charging insurers twice as much as other hospitals charge for the same procedures. Insurers comply with their demands because they want “brand name” institutions in their networks. A 2008 Boston Globe investigation broke the story, revealing that hospitals such as Massachusetts General Hospital and Brigham and Women’s Hospital typically are paid 15 percent to 60 percent more for the same basic services that other hospitals provide, even though, when it comes to basic services, quality is not superior.
More recently, over at Managed Care Matters, Joe Paduda has highlighted a Health Affairs report which shows how “hospitals in California now occupy the high ground.” As the state’s hospitals consolidated they have forced insurers that need coverage in key areas to accept ever-higher rates: “In current health reform discussions and proposed legislation, providers’ growing market power to negotiate higher payment rates from private insurers is the ‘elephant in the room’ that is rarely mentioned,” the authors write. . . . “A recent study has shown that in California, after a downward trend in hospital prices for private-pay patients in the 1990s, a rapid upward trend began about 1999 that produced average annual increases of 10.6 percent over the period 1999-2005. The study’s authors concluded that the source of the near-doubling of California hospital prices remains “something of a mystery.” Analysis of Medicare Cost Report data by the Medicare Payment Advisory Commission (MedPAC) . . . shows that how much it cost hospitals to treat patients increased only 5.5 percent per year during that period.”
“The net is this,” Paduda observes: “hospitals’ market power enabled them to raise prices by 10.6% while their costs only went up about half that fast.” The authors of the Health Affairs report conclude: “California is leading a trend that will be felt in many other states, and soon.”
But under reform, perhaps the trend can be stopped. As I noted in Part 1 of this post, reform regulation will put private insurers under financial pressure. If hospitals over-charge, it will be harder for insurers to simply pass the cost along to customers. Under the new legislation, insurance companies will have to submit justification for requested premium increases. Already, some state regulators are getting tougher.
As a result, insurers will be more likely to stand up to hospitals. Meanwhile, states like Massachusetts and California will be taking a closer look at variations in hospital prices. And perhaps the media will continue to expose hospitals that are gouging insurers. It’s a good story. On the other hand, both newspapers and cable television reap revenues from hospital advertising. The Boston Globe deserves credit for digging into the facts. I hope that other members of the mainstream media follow suit.
MYTH #2: When 32 million formerly uninsured Americans begin flooding our hospitals and emergency rooms, we’ll all find ourselves standing on long lines.
FACT: The final legislation increases funding for community health centers to $11 billion over five years (2011 to 2015). Today, community clinics care for 20 million people—many of them among the 32 million uninsured. With the new funding, clinics will be able to absorb an additional 20 million of the 32 million newly-insured patients who will be seeking care in 2014.
This provision takes effect this year; it’s likely that Washington will begin to hand out funding in December. Of course some of the formerly uninsured will need hospital care; clinics won’t be able to accommodate all of their needs. But many patients who now receive most of their medical care at an ER will find “medical homes” in new and expanded clinics that are open evenings and week-ends. And if they receive ongoing care at a clinic, they will be far less likely to need hospitalization in the future.
Who will staff the community clinics? The legislation adds $1.5 billion to a medical school loan forgiveness program designed to encourage 15,000 primary care physicians to work in community clinics. Nurses and nurse practitioners also will play a vital role. To increase the nursing workforce, the law includes a loan repayment program that repays 60 percent of nursing student loans in return for at least two years of practice in a facility that has a critical shortage of nurses. The law also provides grants to nursing schools and academic health centers to enhance education and practice for nurses in master’s and post-master’s programs. These programs prepare nurse practitioners, clinical nurse specialists, nurse midwives, nurse anesthetists, nurse educators, nurse administrators, and public health nurses.
As I explained here, the nursing shortage has been caused, in part, by the fact that we don’t have enough nursing school teachers. As a result, nursing schools are forced to reject qualified applicants. The legislation establishes additional loan programs within schools of nursing to support students pursuing masters’ and doctoral degrees. Upon graduation, loan recipients are required to teach at a school of nursing in exchange for cancellation of up to 85 percent of their educational loans, plus interest, over four years.
This law also provides for “nurse-managed health clinics,” creating a new $50 million grant program to support innovative safety net providers. These clinics are designed to serve as crucial health care access points in rural areas such as Tyrell Count, North Carolina, where there are no doctors. As the Kentucky Herald Leader explains: “There’s only Irene Cavall, a licensed nurse practitioner and the sole source of primary care for 4,000 residents spread out over 600 square miles. It’s been that way since the county’s lone doctor moved away two and a half years ago.”
Nurse-Family Home Visit Partnerships also will help take up the slack. The new law’s “maternal, infant and early childhood home visitation provision” adds $1.5 billion over five years that can help programs that send specially trained registered nurses into homes to visit first-time, low-income mothers for a period of 2 1/2 years, coaching them on healthy pregnancies and helping them cope with the realities of caring for small children. It’s much less likely that these mothers will turn up in ERs, seeking medical help for their babies.
MYTH #3: New rules restricting doctor-owned hospitals will leave us short of hospital beds.
Fact: It is true that after December 31, 2010, physicians will no longer be able to invest in hospitals to which they refer patients, and existing doctor-owned hospitals will not be able to expand. (There is a limited exception to the restriction on growth: if the doctor-owned hospital treats a higher percentage of Medicaid patients than any other hospital in the county–and is not the only hospital in the county–it can add beds.)
Why interfere with a physician’s right to invest in a hospital? Lawyers can own hospitals, why not doctors? According to the American Hospital Association (AHA) when physicians refer patients to facilities they own, they are tempted to “cherry-pick” relatively healthy well-insured patients, while sending difficult cases and uninsured patients to the local community hospital. In effect, they skim the most lucrative business, focusing on money-making procedures such as heart surgery, while leaving it to the community hospital to provide money-losing services such as burn units, ERs and trauma centers.
Research suggests that the AHA has a point. In 2006, Business Week reported on a study of heart hospitals in Arizona which found that about 21% of patients admitted to physician-owned hospitals undergo routine surgeries such as a heart bypass, but are otherwise relatively healthy. At facilities that were not doctor-owned, only 10% of patients fit that profile; “the vast majority of cases at these hospitals were more complicated and expensive to treat because patients suffered from multiple problems, such as diabetes and other chronic conditions.” Another study by the Texas Hospital Assn. (THA) found that the year after a physician-owned heart-imaging facility opened in one town, the cardiac care center at the nearby community hospital slid from a $524,646 net profit to a $20,786 net loss. “We’re all for competition,” THA spokesman Gregg Knaupe told Business Week. “Problem is, this isn’t fair competition.”
That community hospital in Texas began losing money because it was treating many uninsured and Medicaid patients while the doctor-owned center welcomed well-insured patients. On average, Medicaid pays 70% less than Medicare, and Medicare often pays less than private insurers. Little wonder, then, that doctors don’t usually refer Medicaid patients to facilities they own. A study by MedPAC, confirming earlier work by the Government Accounting Office (GAO), reveals that physician–owned heart hospitals treat 75 percent fewer Medicaid patients and that orthopedic hospitals owned by doctors take in 94 percent fewer Medicaid patients.
Physician owners deny the charges, and claim that their focused surgical centers offer better care. But if facilities owned by doctors tend to treat easier cases it becomes hard to compare quality of care. As a study published in Health Affairs in 2006 observes: “Peer-reviewed research finds that lower unadjusted mortality rates in cardiac specialty hospitals [owned by physicians] are largely attributable to the fact that these facilities admit healthier patients. After adjusting for procedural volume and patient characteristics, mortality rates and outcomes were similar” to outcome at large non-profit community hospitals.
Moreover, even though the patients are healthier, MedPAC reports that care at specialty hospitals owned by doctors tends to be more expensive.
Finally, there is evidence that when physicians own hospitals, they are more likely to over-treat. A study published in Health Affairs, comparing “practice patterns of physician owners before and after they became owners” confirms that rates of use of [magnetic resonance imaging], physical therapy treatments . . . increased significantly” when physicians have a financial interested in the hospital. Business Week highlights a separate survey by the Center for Studying Health System Change which suggests that specialty hospitals owned by doctors may also drive up aggregate health-care costs by spurring demand for pricey elective surgeries.
The bottom line then, is that, too often, physician-owned facilities help drive health care spending higher, while providing care that is no better. Meanwhile, they undermine the community hospitals that we all need by siphoning away health care dollars that could support essential but low-margin service.
Nevertheless, reforms’ critics charge that by restricting the growth of doctor-owned hospitals, the legislation will leave us with too few hospitals beds. This is yet another myth. The truth is that we have more inpatient beds than we need in most parts of the nation—and excess capacity leads to over-treatment. As Dr. Donald Berwick pointed out in a 2008 speech at Famlies USA’s annual health care conference, after adjusting for differences in local prices and the underlying health of the population as well as the age and race of the patients–Medicare spends $3,000 more per beneficiary per year, in some parts of the country–for no apparent reason.
Berwick, who President Obama has tapped to head the Centers for Medicare and Medicaid, asked what high spending regions in parts of Louisiana, Texas, Florida, New York, New Jersey, and Southern California have in common. The answer: “32 percent more hospital beds, per capita, and 65 percent more medical specialists. . . . Supply drives demand. When more technology, more beds and more specialists are available, the extra resources are automatically used, without anyone thinking too much about it.” Outcomes are no better, sometimes they are worse.
I have often wondered why research shows that Medicare spends more in Louisiana than in other states—even after researchers correct for the low incomes and relatively poor health of the population. Then I discovered that Louisiana ranks second only to Texas in the number of doctor-owned specialty hospitals in the state. This helps explain both the number of beds, and the higher Medicare bills.
MYTH #4: Hospitals cut a sweetheart deal with Washington. Reform will do little to rein in hospital bills that have been climbing by over 7% a year.
FACT: As I noted in Part 3 of this post, when you consider who won and who lost under reform legislation, hospitals emerge as winners—for the short term. When it came to negotiating with reformers, they “got into the tent early,” and the reductions in Medicare increases that they accepted will be offset by an influx of paying patients.
It’s also true that our hospital bills have been spiraling– up more than 7% a year, from 2005 through 2007. In 2008, higher fee-for-service hospital spending once again spurred inflation; by year-end, hospital care accounted for fully 31% of the nation’s health care bill.
But as Moody’s, a bond rating agency that rates hospital debt, points out, over time “as governmental auditing and oversight of revenue is tightened, hospitals will be pressured to operate more efficiently, forcing spending cuts and mergers among smaller hospitals.” “After 2014,” Moody’s observes, “many key provisions will be implemented.”
For example, beginning in 2014, the U.S. Health and Human Services Department will report every hospital’s record for medical errors and infections involving Medicare patients on its hospital web site, notes Consumers Union, publisher of the highly-regarded Consumer Reports. “It’s definitely a step forward,” says Lisa McGiffert who leads Consumer Union’s Safe Patient Project. “It’s not everything we wanted,” McGiffert adds. “But it will create a lot more attention on hospital acquired infections.”
In 2014, Medicare will trim payments by one percent for hospitals with the highest rates of medical harm as measured by “hospital-acquired conditions.” Consumers Union explains what the term means: “These include certain preventable infections and medical errors, such as serious bedsores, catheter-associated urinary tract infections and certain types of falls and trauma.”
Moody’s expects “additional Medicare cuts for high-cost, less efficient hospitals in high-cost markets.” As Moody’s analyst Mark Pascaris explains: “The key longer-term challenge for not-for-profit hospitals is reform’s reliance on extracting long-term cost efficiencies from hospitals, probably resulting in diminished hospital revenues.” This is, of course, good news for patients. “More efficient” hospitals mean fewer errors and higher quality care as well as lower costs. Medicare also will be experimenting with ways to pay hospitals for value, not volume. Those that have relied on overtreatment and over-testing to stay in the black will be in trouble. And Moody’s notes, “We also expect hospitals will face more difficult negotiations with commercial and managed care insurers who themselves face increased scrutiny and fees and are most affected by sweeping changes in the legislation.”
Finally, reform legislation calls for closer scrutiny of the federal income tax exemption that non-profit hospitals now enjoy. The bills requires that non-profits conduct a community health needs analysis at least once every three years, soliciting input from the communities that they serve. In addition, if they want to hold onto their tax-exempt status, they will be expected to be a little more forthcoming when it comes to helping the poor. They must notify patients of financial assistance policies through “reasonable efforts,” before initiating various collection actions or reporting accounts to a credit rating agency. Even after reform, some families will remain uninsured. But under the legislation, hospitals will no longer be allowed to charge uninsured, indigent patients more than they generally charge insured patients.
Going forward, the Internal Revenue Service will review the exempt status of hospitals every three years. In addition, the legislation requires the U.S. Department of the Treasury, in consultation with the U.S. Department of Health and Human Services (HHS), to prepare an annual report for the U.S. Congress on charity care, bad debt expenses, certain unreimbursed costs and costs incurred for community benefit activities.
Recently, an Illinois Supreme Court made headlines by denying property tax exemption to a nonprofit hospital. It’s likely that in the years ahead, these new standards will lead to debate as to whether and to what extent nonprofit hospitals are distinguishable from for-profit hospitals. Do they all deserve their tax breaks?
For related articles:
Myths & Facts about Health Care Reform, Part 1
Myths & Facts about Health Care Reform, Part 2
Myths & Facts about Health Care Reform, Part 3
Maggie Mahar is an award winning journalist and author. A frequent contributor to THCB, her work has appeared in the New York Times, Barron’s and Institutional Investor. She is the author of “Money-Driven Medicine: The Real Reason Why Healthcare Costs So Much,” an examination of the economic forces driving the health care system. A fellow at the Century Foundation, Maggie is also the author the increasingly influential HealthBeat blog, one of our favorite health care reads, where this piece first appeared.
Categories: Uncategorized
You should take part iin a contest for one of the greatest websites on the web.
I am going to highly recommend tjis website!
Your position is a false one. Instead improving capacity of health care industry to treat disease we should provide more effort to prevent disease and give people the tools to imprve their health care.
Once again, the top down mentality rears its ugly head where so called health care experts dictate to the public what health care is. Its time for a revolution in health care and put the public in charge of the heallth care system- failing that the tragic anti-patterns in health care will continue.
Hmmm, how ironic the next site I go to has this link.
Readers, enjoy?
http://reason.com/blog/2010/05/13/time-is-not-on-obamacares-side
I hope you people above are right in exposing there is some questionable reliability about this author. I am a realist though, the harsher the criticism and the focus on political ideology as extremist in opposition to the author makes me leery of the intent.
I just want to see people out to profit on the health care profession be exposed and revealed to be the frauds this legislation is really about.
It would not surprise me if key Republicans in Congress are equally making out in the end, they are just as covert as their Democrat counterparts. Invested readers in the truth and need for transparency, beware, no politician right now can be trusted. Our system is truly broken, and there are many defenders, apologists, and propagandists who will lose, hopefully, when the full truth is revealed.
And I hope the public outrage is just!
Maggie, it is ridiculous to use that one MedPac report as your evidence that cost-shifting is a “myth”. Like Actuary said above, I too have seen it, witnessed it, had to price a product higher because of it. The academic literature shows that cost-shifting is real, not a one to one shift of all dollars, but anywhere from 15-40%. Those are significant costs being passed on to private insurers.
I’ve read that same MedPac report (see page 25 of this PDF for those who are interested http://medpac.gov/chapters/Mar09_Ch02A.pdf), and you mention how they said that “efficient” hospitals make a profit or break-even. Based on their own criteria of “efficient” those hospitals earned a 0.5% margin on Medicare. Those hospitals only represent 12% of the total. So even carving out the best 1/8 of the hospitals, they still are just barely able to break even. Do you think we can magically make the other 88% of hospitals just as efficient as the best 12%? And do you think hospitals can survive on 0.5% margins in the long-run?
You’re being blinded by your own ideology here, trying to use one report that is in conflict with a great deal of other peer-reviewed academic literature, and is in conflict with the real-world experience of those who actually do the day-to-day work of negotiating hospital reimbursement rates and analyzing public/private insurer cost data.
FACTS
Madam, you blithely inferred that you had interviewed insurance CEOs at Barron’s. Until I posted your Barron’s records from ABI — ending 1997 — 13 years ago. Then this was posted —
” .. I was at Barron’s from the late 1980s to the late 1990s ..”
Facts are facts, madam. Try using them — they will help.
Matthew — want to check my facts? Access ABI or Lexis-Nexis.
Maggie —
1) There is cost shifting, I have seen it, lived it, been party to it, responded to it, etc.
If hospitals say they are not getting enough $$$ from Medicare/Medicaid and that is why they need to raise their reimbursement levels from the commercial payors, what do you call that?!?!
2) There are negotiations, usually private, many times antagonistic, and even sometimes public. The hospitals always portray the fight for more $$$ as “the big bad pencil pushers” vs. “the miracle workers”. The fact is that BIG Insurance Companies are trying to keep reimbursement down to satisfy their ASO accounts and to keep their premiums down.
Unfortunately, even if prices only went up slightly, increased utilization is a real cost driver (or revenue maker, depending on which side of the MRI one is on).
damages have never been the problem in malpratice, it’s defending yourself from the bogus cases that never should have seen the light of day.
Maggie – I think a distinction needs to be made between tests that are ordered to diagnose the patient’s problem and the course of action recommended once the problem is identified. Maybe some of the docs can weigh in on this, but I’ve heard them comment time and time again that if imaging or blood tests are not ordered because the doctor doesn’t think they’re necessary, patients often perceive the doctor as not thorough in his approach. An unhappy patient either may find another doctor or will be more likely to sue if there is an adverse outcome. Doctors who own their own equipment do indeed order more tests.
Once a diagnosis is determined, doctors determine what needs to be done including referral to an appropriate specialist or hospital. So, at least with respect to diagnostic care, a treatment decision may be part money driven, part defensive medicine, and part trying to ensure that the patient is satisfied. Even the doctor himself often cannot tell you precisely what drove his decision to order tests that he thinks were probably unnecessary.
Regarding tort reform, I don’t consider what Texas did to be tort reform. Damage caps are not tort reform. As I’ve said many times, tort reform means specialized health courts and not juries deciding malpractice cases and it means robust safe harbor protection from lawsuits for doctors who follow evidence based guidelines where they exist. No state has enacted tort reform as I define it. Even when they do, it will take some time for doctors to perceive tort reform as “for real” before they start to reduce the defensive medicine that pervades the medical culture in the U.S.
Maryland has saved medicare and medicaid money. Yeah, on the backs of Maryland taxpayers. Umm, did you forget, ma’am, that states have to pay their share of what these programs alleged provided for those enrolled in them? Are you in medicare or medicaid as a patient? If you are, are you going to tell readers that you are absolutely satisfied with the level of care your insurance allows you to access?
Well, I doubt you are in either plan, I doubt you have have ever had to deal with formularies or hold ups in accessing services for insurance review, and I sincerely and truly doubt you are an objective, unbiased reporter of these alleged facts you continue to spew at this site.
Since you seem to like to write equally long rebuttals at this thread, care to include a disclaimer you are not on any democrat or profit beneficiary of this legislation so we can have it for prosperity, and in the end, call you on your hypocrisy when the truth comes out if you say you are neutral now?
And you have yet another posting today. You are truly an amazing person. Your eyes have to be as brown as what you are serving up! But, pontificate away further, why say it simply so people can just see the truth in a few words?! Stagger them with thousands of words, endless links, and statistics cherry picked to allegedly prove you right.
Like a politician. You are judged by the company you keep. Care to drop some names from your DC support group!?
“Finally, all of the medical reserach done by int’l teams shows that care in Western Europe is, by and large, as good or better than care in the U.S. Better outcomes. Higher patient satisfaction–and lower costs.”
Questionable research done by people with a political agenda. Break down any of these “studies” and you will quickly see they aren’t worth the paper they are written on.
For starters your comparing what is usually a fairly homogenous system, NHS, against the aggregate results of 1000s of US systems. Those aggregate results are dragged down by a few very expensive plans, MA, NJ, etc and a few very poor plans, Medicaid. The 50% or so of the public with private employer paid insurance have far better coverage then any european nation. We have better doctors, better facilities, better everything. That is why they feel they have better coverage. People in UT and other midwestern states also don’t have the price disparity so your cost argument is also BS.
“Kaiser’s use of Health IT improves patient outcomes.”
So know your back to argueing it lowers cost, you have been on every side of this claim 5 times just in the one post. Either their premium is higher becuase their investment in IT didn’t pan out or it should be lower because it doesn’t work. You can’t claim both….well actually you can your a journalist.
For a laugh please explain to all of us non fellows how you measure satisfaction scientifically between to distinct populations with no overlap. What exactly is your baseline or control? No one with middle school science would give an ounce of credit to any such study.
Gary O, Margalit, Barry, Nate
Gary O. Thank you for the info and very good analysis on Kaiser. And yes, Halverson is an unusual and honest CEO. His book is well worth reading.
Margalit– Kaiser is a hybrid, part for-profit, part non-profit: “The Health Plan and Hospitals operate under state and federal non-profit tax status, while the Medical Groups operate as for-profit partnerships or professional corporations in their respective regions.”
Spending on Health IT is not like lavish spending on new constuctrion. Kaiser’s use of Health IT improves patient outcomes. Meanwhile many of Kaiser’s hospitals are extremely Spartan-they are not over-spending on – amentities.
Finally, all of the medical reserach done by int’l teams shows that care in Western Europe is, by and large, as good or better than care in the U.S. Better outcomes. Higher patient satisfaction–and lower costs.
The only thing that we do better is what Don Berwick describes as “rescue care”– very rare, unusual high-tech interventions. Europe is better at managing chronic diseases.
But you’re right, many Americans don’t believe this because they have been brainwashed by the propaganda coming from the for-profit health care industry –not to mention the AMA.
Barry–
Do you have good reserach from peer-reviewed journals showing that overtreatment in the U.S. is consumer-driven? (Virtually all health care economists, going back to Kenneth Arrow, the father of health care eocnomics, say it’s supply-driven. More than two decades of the Dartmouth Reserach, Atul Gawande’s work, etc. etc. confirm Arrow.
Secondly, do you have reserach from peer-reviewed medical journals showing that that fear of litigation drives over-treatment in the U.S.? If so, why is over-treatment rampant in Texas, where they have had tort reform?
Karl– As you know, I don’t usually respond to your comments–too abusive, not well-evidenced.
But this is not the first time you have commented on my background, suggesting that I am an imposter, or in some way lying. So here’s the resume:
I was at Barron’s from the late 1980s to the late 1990s–mainly writing cover stories on a wide variety of subjects. Then I left Barron’s and began writing a column for Bloomberg focusing on international markets and economics. During that time (end of the 1990s) I was predicting what would become the crash of 2000, pointing out that insiders were selling while small investors were getting in, and drawing the parallels between what was happening to what had happpened in past bull and bear market cycles. I also pointed out that the financial press in other countries was far more skeptical about the boom than American jouranlists. In this country, too many financial jouranlists had become cheerleaders. I also wrote about China, Russia, oil, Latin America etc.
Some of my columns were re-printed in the Washington Post, the Financial Times the LA Times . . .
I also began writing for Bloomberg’s magazines, and, in 2000 began writing Bull: A History of the Boom: 1982-2003 (Harper/Collins, 2003.) Warren Buffet recommended the book in Berkshire Hathaway’s annual report. At the end of Bull! I quoted sources recommending that people buy gold and other commodities. Turned out to be good advice.
After that, I began writing Money-Driven Medicine (Harper/Collins, 2006), and then became the health care fellow at The Century Foudation.
So I’ve been keeping busy, learning a great deal as I go along.
FACT
” .. Having come from Barron’s I wouldn’t think I would have to be giving you economic lessons Maggie but apparently so.”
FACT: ABI reports this as last article —
“Maggie Mahar. (1997, October). The new Florida. Barron’s, 77(42), T19-T20.”
Been a long time? You decide.
Having come from Barron’s I wouldn’t think I would have to be giving you economic lessons Maggie but apparently so.
“I’m not sure why some people on this thread believe that “it can’t be done”–(reducing costs, improving quality, while covering everyone) when every other developed country in the world has managed to do it.
Of course, other countries also wrestle with health care inflation, but we’re the only country that endures runaway increases in prices while still not being able to cover everyone.”
…EU president Van Rompuy warned that the bloc risks irrelevance and the end of its expensive welfare programs if it can’t speed up economic growth, forecast to expand by just 1 percent this year.
“With 1 percent growth we can’t finance our social model any more. With 1 percent structural growth we can’t play a role in the world,” he told the World Economic Forum in Brussels. “We need to double the economic growth potential that we now have.”
We have “run away” inflation because we can. The American economy had excess capital that it chose to spend inefficiently on healthcare. We could have bought more Chinese electronics, eaten out more, or wasted it on any number of other things but instead chose to overmedicate and treat ourselves.
While it is always nice to reflect on what we could have done with the money we wasted, as a country we were much further ahead spending it on healthcare then more foreign oil or Chinese toys. Elasticity of money is a concept that should be taught to every liberal.
In regards to the quote from the EU president, these other, supposedly successful, developed countries you claim have it figured out have no answers of the sort. They don’t spend as much on healthcare as us, not because they don’t want to, but they can’t. The money isn’t there. What they spend on bloated pensions and high unemployment is what we spend on healthcare.
Neither their social spending nor our healthcare spending is sustainable. The answers to either’s problems are not found across the ocean. Our Social spending is blowing up as is their healthcare spending.
Far from your claims, there has been no replicable success.
MAGGIE’S SCREW-UP (2)
” .. It seems to me that this thread reached an extreme of absurdity when Karl wrote: “Most people — if they do NOT smoke, over-eat, dope, booze heavily, or live quietly — will not have major medical problems.”
Right, Maggie.
Over-eating is not a problem.
////////////////
“More police, fire recruits flunk fitness test”
http://bit.ly/cXIWWp
“JACKSON, Miss. — When the Jackson Police Department tried to recruit new officers this spring, more than a third of the applicants were not able to pass the initial physical fitness test.
“The city’s police academy’s initial fitness exam includes push-ups, a 1½ mile run, an obstacle course and a flexibility test, Deputy Police Chief Gerald Jones said.”
OWE-bama and his political-puppets expect TAXPAYERS to fund this kind of fiscal STUPIDITY. Paying for the STUPIDITY of fatties, smokers, dopers, boozers and “extreme living.”
Nov. 2, he’s getting a wake-up call. That’s a FACT.
GOOD ENOUGH
” .. You apparetnly dont know the difference between first hand experience and reading someone else’s work ..”
Good enough for OWE-bama and Maggie — the BANKRUPTCY court will understand. Not.
Oh, and of course, Medicare and Medicaid are financially solvent. And PhDs in English and JDs are really MDs.
And non-profit?
“Non-profit hospitals’ top salaries may be due for a check-up”
http://www.usatoday.com/money/industries/health/2004-09-29-nonprofit-salaries_x.htm
“I suspect that its cost growth-rate is lower than competitors, but has no incentive to pass this along as lower premiums.”
Gary, I suspected as much as well. I’m sure it’s all legal and above the board, but as a non profit organization, I’m not sure Kaiser should have that choice. It’s not much different in nature than the large non profit hospitals going on construction binges.
Barry, may I suggest another reason why people don’t think it can be done, or rather don’t want to see it being done.
I think most folks with decent insurance strongly believe that, for them and their family, health care in the US is much better than what Europe has to offer. Since resources are indeed limited, an attempt to distribute resources more equitably, like in Europe, will increase what the poor get at the expense of what the well insured already have. So while average quality will increase, their personal quality will decrease to European levels.
That’s why there is so much talk about how we can’t afford the same level of care for everybody.
“This is based on what? I ask this rhetorically, because Nate never provides sources, because he is a self-proclaimed “expert.””
Well Gary O if I work in the market and see the kaiser quotes and see the groups not buy kaiser what better source would you like me to cite? You apparetnly dont know the difference between first hand experience and reading someone else’s work.
“In any case, it sounds like Kaiser is confident it is outperforming other providers on the basis of both quality and cost effectiveness.”
Anthem is confident it is as well as United, Aetna, and just about every other carrier. Can’t say I remember the last time a carrier said they weren’t confident in their quality and cost effectiveness. Instead of believing a CEO who’s job it is to pimp his bottom line I like to see what people are actually buying, and it aint kaiser.
FATAL FLAWS
” .. it sounds like Kaiser is confident it is outperforming other providers ..”
You presume (1) the California health care market is rational and (2) the current administration is competent.
As for (1), you must be joking.
As for (2) — the current administration has, once again, had its truthfulness seriously questioned in public.
http://dyn.politico.com/printstory.cfm?uuid=83A7F13A-18FE-70B2-A8B371C7087ACB10
http://bit.ly/byty7I
“Facts” — so difficult to (D).
“I’m not sure why some people on this thread believe that “it can’t be done”–(reducing costs, improving quality, while covering everyone) when every other developed country in the world has managed to do it.”
I’ll offer three reasons why it’s so difficult to do this in the U.S.
1. Prices per procedure, test, consultation, drug, etc. are significantly higher in the U.S. even based on Medicare rates (Medicaid rates for drugs).
2. Defensive medicine is pervasive throughout the medical culture because of our litigation system. In Europe, most doctors perceive, correctly, that they will never be sued and therefore don’t engage in defensive medicine, at least to any significant degree. Medical dispute resolution is one area where I would love to see us move toward the approach used in other countries. My own preference is to get these cases out of the hands of juries and into specialized health courts where decisions can be more objective and consistent across the country and over time. Presiding judges would have the power to hire neutral experts to sort through conflicting scientific claims.
3. Patient expectations are much more demanding, and, I think, unreasonable in the U.S., especially around end of life care, which, in combination with defensive medicine motivated by our unpredictable legal system results in lots of overtreatment and futile treatment. Even for routine issues, many patients equate lots of tests, especially expensive imaging, with thoroughness as long as the tests are non-invasive and relatively painless to undergo.
So, instead of casting blame on insurers, and money driven doctors, hospitals, and drug companies, we patients need to look in the mirror. When our expectations become more reasonable and real tort reform allows us to start to change the culture of defensive medicine, I think the cost curve will start to bend. Robust price and quality transparency tools, along with higher co-pays to use doctors and hospitals that charge more for care of comparable quality to their lower cost competitors would also be helpful. Price controls are unlikely work and will probably cause more problems than they solve, in my opinion.
Margalit: “What I want to understand is why aren’t Kaiser premiums lower. ”
I suspect that its cost growth-rate is lower than competitors, but has no incentive to pass this along as lower premiums. It does not need more enrollees. In Northern California it already has a 44 percent share of the market. See p. 4, http://www.commonwealthfund.org/~/media/Files/Publications/Case%20Study/2009/Jun/1278_McCarthy_Kaiser_case_study_624_update.pdf And, in other markets it could only grow so fast while maintaining quality.
Furthermore, in the last several years it has increased premiums “somewhat more to fund infrastructure improvements that are expected to deliver increasing value over time. The health plan has made a capital investment of $4 billion for KP HealthConnect and spends about 3 percent of annual revenue on its information technology budget. The medical groups also invest in training physicians, which entailed some temporary loss in productivity during EHR adoption.” (Id. at p. 20.) Lastly, there has been little economic pressure on fee-for-service providers to become more efficient:
“But in our current health care system, there is no virtuous cycle of innovation, success and expansion. When Intermountain standardized lung care for premature babies, it not only cut the number who went on a ventilator by more than 75 percent; it also reduced costs by hundreds of thousands of dollars a year. Perversely, Intermountain’s revenues were reduced by even more. Altogether, Intermountain lost $329,000. Thanks to the fee-for-service system, the hospital had been making money off substandard care. And by improving care — by reducing the number of babies on ventilators — it lost money. As James tartly said, ‘We got screwed pretty badly on that.’ The story is not all that unusual at Intermountain, either. That is why a hospital cannot do as Toyota did and squeeze its rivals by offering better, less-expensive care.” http://www.nytimes.com/2009/11/08/magazine/08Healthcare-t.html?pagewanted=7&_r=2
Kaiser Permanente CEO George Halvorson echoed this when he responded to a question about why Kaiser and Mayo, which are considered to be the “best and most cost-efficient,” did not use their competitive advantages to take over their respective markets. His response: “When you look at the Mayos of the world, they’re doing well. They have a good business model that’s working for them. But everyone else has a good business model that’s working for them, too. There are $2.5 trillion in this market. There’s no reason, if you have a comfortable cash flow, why would you do hard things and heavy lifting to get to a different model?” http://voices.washingtonpost.com/ezra-klein/2009/11/an_interview_with_kaiser_perma_1.html
Perhaps Halvorson believes that competition cannot take place until consumers have sufficient information to make informed choices about their providers, not just the premium price:
“If I could add one thing to the [health care reform] bill, I would make the exchanges more robust and require them to provide consumer focused data about care team choices and performance. It can be done if it is designed into the exchange requirements. When your chance of dying within five years from late stage prostate cancer ranges from thirty percent to almost seventy percent depending on the care team you select, and when your chance of dying from major heart surgery varies by a multiple of twelve — also depending on your care team — we clearly need consumers to be able to make much better informed choices about care and the teams who deliver care.” http://voices.washingtonpost.com/ezra-klein/2009/12/letters_to_health-care_santa_c.html
Nate: “…it [Kaiser Permanente] hasn’t proven to be any more effective or cost efficient then [sic] anything else being done.”
This is based on what? I ask this rhetorically, because Nate never provides sources, because he is a self-proclaimed “expert.” In any case, it sounds like Kaiser is confident it is outperforming other providers on the basis of both quality and cost effectiveness. I don’t hear for calls of such transparency from too many other CEOs.
SHE IS BLIND
” .. I’m not sure why some people on this thread believe that “it can’t be done”
A Harvard Law grad who has NEVER held an HONEST job in his life — sure, OWE-bama has the required experience. And Biden didn’t cheat in law school.
Oh — and the USSR isn’t around anymore. Didn’t you get the memo?
Matthew, thank you for so much comedy. That’s a FACT.
Jeff Goldsmith, Peter, Barry–
Jeff– Yes, Berenson knows as much or more about Medicare than anyone. I have learned a great deal from him. And thanks for weighing in as a voice of reason on a thread that had been hi-jacked by a few voices.
I don’t mind responding to readers who disagree with me (Barry–often, Margalit- sometimes) as long as they are talking about the issue at hand–not me, or Obama, or Nazis. . . Tcoyote almost always disagrees with me, but as long as he’s talking about healthcare, not me, he raises issues that deserve discussion.
Peter–Yes, price controls do work in other countries that offer care that, on average, is at least as good–for 50% less.
I’m not sure why some people on this thread believe that “it can’t be done”–(reducing costs, improving quality, while covering everyone) when every other developed country in the world has managed to do it.
Of course, other countries also wrestle with health care inflation, but we’re the only country that endures runaway increases in prices while still not being able to cover everyone.
Suggestions that I am, at best, a starry-eyed idealist (we won’t go into what I am “at worst”), ignore the Reality in the rest of the developed world. Quite simply, they are doing a better job (by covering everyone and providing good care) at a much lower cost.
Barry–
Actually the Maryland solution has saved Medicare and Medicaid money. If you go back and read my post, you’ll find that Medicare and Medicaid agreed to pay the same rates as private insures only as long as Medicare Payments to Hospitals In Maryland Grew More Slowly Than
Average Growth in Medicare Payments to Hospitals Nationwide.
Since the 1970s, Maryland has managed to meet this standard–even though the state’s demographics, its location (in the Boston – DC corridor), and the presence of an excellent but realtively expensive teaching hospital (Hopkins) would lead one to expect higher-than average health care inflation in Maryland.
(Though Hopkins gets extra payment for being a teaching hospital, and probably receives extra payment for treating many poor patients, the Dartmouth reserach shows that it is much less wasteful than many academic medical centers. Hopkins uses fewer resources while getting good outcomes. This confirms what MedPAC has seen: when hopsitals are under financial pressure (and Maryland’s regulation of rates creates financial pressure) they CAN become more efficient.
As for Kaiser — it has successfully expanded to many other areas– Colorado, D.C., Hawaii . . . other places I can’t remember at the moment.
Under reform, for-profit insurers will be regulated and will have to play by patient-centered rules (spend 85% of premiums on healthcare, cover sick patients as well as the healthy, etc.) In this environment, I predict that Kaiser will flourish.
Just today, a friend was asking me if there is a Kaiser– or Kaiser-like model– in NYC.
I would guess that the medical culture in Manhattan would be one of the last places to accept Kaiser–but who knows? There are many savvy and intelligent people in N.Y.
MAGGIE’S SCREW-UP
” .. It seems to me that this thread reached an extreme of absurdity when Karl wrote: “Most people — if they do NOT smoke, over-eat, dope, booze heavily, or live quietly — will not have major medical problems.”
Right, Maggie.
Smoking is not a problem.
Over-eating is not a problem.
Dope (D) is not a problem.
Alcoholism has been cured.
And you know what “facts” are.
This is the STEAL-O-CRATS at their best DENIAL mode.
Nov. 2, they are getting a wake-up call.
Death and TAXES — STEAL-O-CRATS love both. Estate taxes at death — OWE-bama while alive.
Maggie, you’d get more respect if just admitted that Obama sets your agenda. Well, dream on, lady.
“all of them are on the same downword slope to insolvancy”
Yea, we’re living large and fiscally responsible. I wonder who’s going to run out of healthcare dollars first. How “solvent” would they be if they were paying what we pay. I guess the more you pay the more solvent you get.
“its model cannot be replicated elsewhere beyond where it is already well established because of the need for a critical mass of both patients and providers from day one.”
Even with critical mass it can’t be replicated. Look at their attempt to grow into Cleveland, originally in conjunction with one of the Unions, I forget which. People outside the West and NW just don’t take to their model of care, and it hasn’t proven to be any more effective or cost efficient then anything else being done.
The Massachusetts AG’s investigation of healthcare costs in that state found that sometimes care paid for via capitation turned out to be even more expensive than it would have been under fee for service. So, while the incentives are better aligned under capitation in theory, it’s not necessarily the answer to controlling healthcare costs.
Regarding Kaiser, better and more thorough preventive care, especially for patients who were insured by Kaiser for many years, should result in fewer hospital inpatient bed days per thousand members on an age adjusted basis. If you divide members into age groups of 21-49 and 50-64, I wonder how Kaiser’s inpatient bed days per thousand stacks up vs. their competitors. Moreover, since Kaiser owns the hospitals and their doctors are salaried, for patients who need hospitalization, not as much should happen to them while they’re there. The bottom line is that their costs and their premiums should be lower.
For Kaiser’s Medicare Advantage members, the same factors apply. In addition, every insurer gets a payment based on each member’s individual risk score. Either Kaiser’s MA members are no older and sicker than those enrolled by Pacificare, CA BS, Anthem, Health Net, etc. or they are paid more if the members are older and sicker in which case, lower costs should translate to higher profit margins. On the other hand, they could be, in effect, wasting money on excessive preventive care and/or paying their doctors considerably more than necessary to attract and hold qualified people.
As I’ve said before, even if independent analysts conclude that Kaiser does provide better care for the premium dollar, its model cannot be replicated elsewhere beyond where it is already well established because of the need for a critical mass of both patients and providers from day one.
With respect to the Maryland all payer rate setting system, it would lend itself best to inpatient care. Many outpatient services, especially imaging and standard procedures like colonoscopies can be done elsewhere for considerably less money. However, Medicaid would certainly have to pay far more than it does now and Medicare would probably have to as well especially for outpatient services while private insurers would pay less. Given the fiscal imbalance at both the federal level and in most states, it just wouldn’t be affordable to do that anytime soon even if we wanted to. That said, there should be a legislated limit to what a hospital can charge for care delivered under emergency conditions.
actually Peter 25% markup over cost, reimburse 125% od cost, major difference there.
Not sure what exactly you mean by “do it” but no country has solved healthcare spending, all of them are on the same downword slope to insolvancy. Some are just closer then others.
Jeff if your going to say I am wrong can you at least make an argument to what I said and not kill innocent straw men? My quote;
“I’m going to go out on a limb here and guess Berenson, et. al., like Maggie, never worked a day in healthinsurance. His comments, like Maggie, show a complete lack of basic facts and knowledge.”
And you respond he was medical director of an IPA, ok thanks for the compltly unrelated tidbit, my point still stands that he doesn’t grasp the basics of insurance.
Regarding Kaiser;
Point one how does spending on IT, which is suppose to lower cost supposedly, effect insurance rates? IT would be paid by reimbursements, is Maggie claiming Kaiser reimburses itself far less then what other medical centers who have not invested in IT get reimbursed. This argument has no logic and is actually counter to why everyone says they should be investing in IT, its been 10 years if they are still seei