Month: March 2012

Why Healthcare Is Different (No, Really)

Mar 27, 2012

By Andrew Oram

Working in the health care space has forced me to give up many hopes and expectations that I had a few years ago. Forgive me for being cynical (it’s an easy feeling to have following the country’s largest health IT conference, as I reported a month ago), and indeed some positive trends do step in to shore up hope. I’ll go over the redeeming factors after listing the five tough lessons.

1. The health care field will not adopt a Silicon Valley mentality

Wild, willful, ego-driven experimentation–a zeal for throwing money after intriguing ideas with minimal business plans–has seemed work for the computer field, and much of the world is trying to adopt a “California optimism.” A lot of venture capitalists and technology fans deem this attitude the way to redeem health care from its morass of expensive solutions that don’t lead to cures. But it won’t happen, at least not the way they paint it.

Health care is one of the most regulated fields in public life, and we want it that way. From the moment we walk into a health facility, we expect the staff to be following rigorous policies to avoid infections. (They don’t, but we expect them to.) And not just anybody can set up a shield outside the door and call themselves a doctor. In the nineteenth century it was easier, but we don’t consider that a golden age of medicine.

Instead, doctors go through some of the longest and most demanding training that exists in the world today. And even after they’re licensed, they have to regularly sign up for continuing education to keep practicing. Other fields in medicine are similar. The whole industry is constrained by endless requirements that make sure the insiders remain in their seats and no “disruptive technologies” raise surprises. Just ask a legal expert about the complex mesh of Federal and state regulations that a health care provider has to navigate to protect patient privacy–and you do want your medical records to be private, don’t you?–before you rave about the Silicon Valley mentality. Also read the O’Reilly book by Fred Trotter and David Uhlman about the health care system as it really is.

The Great Game

Mar 27, 2012

By Richard Hoey

Last week, the British Government’s Health and Social Care Bill finally completed what has been one of the most tortuous passages through Parliament of any piece of legislation in recent memory.

The bill has been the subject of 15 months of intense political wrangling and more than a thousand amendments – many focused on its provisions for greater competition in the National Health Service (NHS).

Competition is a fact of life in most areas of UK society, but as soon as it is proposed within the sphere of the state-funded NHS, many people here start to get very jittery about it.

The key concern among critics is that competition between multiple providers will fragment the NHS and remove one of its big potential advantages – its ability to get different elements of healthcare working together within a single, integrated system.

On the other hand, proponents of competition argue that state monopolies like the NHS can become sluggish and unproductive, and that an injection of competition is just what is needed to drive efficiency and push up quality.

Health Care Jujitsu

Mar 27, 2012• 9

Not surprisingly, yesterday’s debut Supreme Court argument over the so-called “individual mandate” requiring everyone to buy health insurance revolved around epistemological niceties such as the meaning of a “tax,” and the question of whether the issue is ripe for review.

Behind this judicial foreplay is the brute political fact that if the Court decides the individual mandate is an unconstitutional extension of federal authority, the entire law starts unraveling.

But with a bit of political jujitsu, the president could turn any such defeat into a victory for a single-payer healthcare system — Medicare for all.

Here’s how.

The dilemma at the heart of the new law is that it continues to depend on private health insurers, who have to make a profit or at least pay all their costs including marketing and advertising.

Decentralizing the Analysis of Health Data

Mar 26, 2012

By Harley Geiger

The transition from paper to digital health care records promises a significantly enhanced ability to leverage claims and clinical data for secondary uses – uses beyond that for which the health data was originally collected, such as research, public health surveillance, or fraud prevention. Done properly, these secondary uses of data that were originally collected for treatment or payment can aid the creation of a more effective, information-driven health care system. For example, researchers are using digital claims data to provide the public with comparisons of the quality and cost effectiveness of treatment for particular conditions among plans or health care facilities in a given market.

Patient privacy and data security are among the first considerations of agencies establishing such programs, and many agencies have instituted strong technical controls (such as de-identifying the data) and policy frameworks to protect the confidentiality and integrity of the data. Although a strong policy framework is essential, the technical architecture of information exchange is another important factor. This week, the Center for Democracy & Technology (CDT) released a report challenging the prevailing centralized model of health data analysis and urging Dept. of Health and Human Services (HHS) to explore distributed systems for secondary use programs. The paper comes at the same time that the Centers for Medicare and Medicaid (CMS) issued a final rule for its risk adjustment program – mandated by the Affordable Care Act of 2010 – that would use a distributed system as a default, changing course from the proposed rule, which would have required a centralized model.

Health Reform: Still the Best-Covered Social Policy Story, Ever.

Mar 26, 2012• 11

By Harold Pollack

Two years ago, I put myself in hot water by making the simple (admittedly somewhat hyperbolic) claim:

Because it is so easy to find bad reporting and public stupidity, it is easy to overlook something. Press coverage of health care reform was the most careful, most thorough, and most effective reporting of any major story, ever.

This column appeared on April Fools’ Day. Some readers didn’t quite believe that I was serious. I was. Others were simply horrified. Allison Kilkenny, writing in the Huffington Post, typified the reaction among frustrated left-of-center commentators who had just witnessed the “death panels” debacle, the demise of the public option, and similar depressing episodes: “Harold Pollack went out on a limb, and unfortunately fell off the edge.” Andrew Sullivan said something similar.

The Columbia Journalism Review’s Trudy Lieberman was more brutal:

Last week, The New Republic turned over its health care blog “The Treatment” to an odd commenter on media coverage—University of Chicago professor Harold Pollack, who runs the university’s Center for Health Administration Studies. I thought I knew most of those who dabble in these waters, but Pollack’s name took me by surprise. Pollack, a special correspondent for The Treatment, may know something about welfare programs and substance abuse, but we on Campaign Desk take issue with his credentials as a press critic and dispute his central point….

Better coverage than the Vietnam War; the civil rights movement; the consumer movement? Really? In the case of the civil rights struggle, the press helped change the discourse; Americans began to view race in a new way, which led to the eventual passage of the Civil Rights Act. During the Vietnam War, the media effectively changed the public dialogue from a war we couldn’t lose to one we could not win. In the early days of the consumer movement, media coverage of Ralph Nader led Congress to enact significant consumer protections. Coverage of health reform has hardly risen to that level.

Losing one’s credentials as a “press critic” is a particularly low blow. The only thing worse would be to lose the moniker “Democratic strategist” on the cable talk circuit. I appreciate where Lieberman is coming from, but I think she missed my point, which was actually intended to be sobering.
Continue reading…

IPAB and Medicare Costs Are Bad Medicine

Mar 26, 2012• 23

By Douglas Holtz-Eakin

During the original debate over the Affordable Care Act, I wrote that the proposed law failed to address out-of-control Medicare spending. Two years later, this urgent problem remains.

Medicare is awash in a sea of red ink — $280 billion in cash flow deficits already and getting worse — that is driving the U.S. credit rating south and threatening the very foundations of the U.S. economy. It makes no sense to sit idly by while the social safety net unravels and the promise of our future dims.

Advocates argue the health care law solves this problem. Specifically, it creates the Independent Payment and Advisory Board, which will be formed in 2014 and could make its first recommendations in 2015. This advisory board will consist of 15 officials appointed by the president. Board members will be required to make recommendations to cut Medicare funding in years when spending growth exceeds targeted rates. For Congress to block these recommendations, it must veto the board’s proposal with a 60 percent majority and pass alternative cuts of the same size.

In other words, this board puts Medicare on a budgetary diet. What’s wrong with that?

First, the system is clearly set up so that the advisory board, rather than Congress, makes the policy choices about Medicare. This means that the IPAB is not just an advisory body — despite its name. And policy choices, which should be made by elected representatives, are not.

Second, the advisory board threatens the quality of patient care. It can, in essence, ration the health care available to seniors. While technically prohibited from directly altering Medicare benefits, the IPAB will have no choice but to attempt to ratchet back spending by slashing providers’ reimbursement rates.

Will Obamacare Drive Out Employer-Sponsored Insurance?

Mar 26, 2012• 23

By David Dranove

Many opponents of Obamacare claim that large employers will drop employee health coverage in droves. The Wall Street Journal has made this argument a centerpiece of its opposition to the health exchanges. The argument has some face validity – employers that drop coverage can save about $10,000 per employee in insurance costs but only have to pay fines of $2000 per employee. What employer would not want to save $8000 per employee?

Supporters of Obamacare argue that if employers do not pay for insurance, they will have to increase wages. This will temper the incentives of employers to drop coverage. This follows from a classic model in labor economics that says that employers have to give workers a competitive wage/benefits bundle, and that the mix of wages and benefits is largely fungible. Thus, if benefits fall by $10,000, wages will increase by about the same amount. The theory is well accepted.

While it has been difficult to construct empirical tests of this theory, the available evidence is largely supportive (though the evidence of 1:1 fungibility is less compelling than the evidence of some degree of fungibility.) This may explain why the Congressional Budget Office predicts that only a few million workers will lose their employer sponsored coverage and get pushed onto the exchange. Even so, the Wall Street Journal and others have dismissed this theory and evidence, arguing that employers who drop coverage will pocket the full savings and therefore than tens of millions of workers will be affected.

I want to propose a simple test of the naysayers’ position. The test relies on evidence that the Wall Street Journal and others should find unimpeachable –stock market valuations. This is a quick and dirty test but the results are so compelling that I think it is sufficient.

Simple, But wrong, Approach on Readmissions

Mar 25, 2012• 1

By Paul Levy

The tendency of government to impose crude performance metrics on hospitals is a well known phenomenon, but its use is growing as jurisdictions look for ways to cut their budgets. The latest example is found in Massachusetts.

As reported by the MA Hospital Association:

Governor Deval Patrick’s FY2013 state budget proposal includes $40 million in rate cuts for hospitals. A significant portion of these cuts would be made through highly questionable policy changes. One of the more troubling policies would double penalties on hospitals for re-admissions that occurred in 2010.

The 2012 MassHealth acute hospital RFA – the main contract between the state and hospitals serving Medicaid patients — introduced a new preventable readmission penalty for hospitals that MassHealth determined had higher-than-expected preventable readmission rates.

Inpatient payment rates for 24 hospitals were reduced by 2.2% in FY2012. Now the administration is proposing to double the penalty to 4.4% in FY2013. There are so many things wrong with this. First, as I have reported in the past:

Even if the readmission rate is the right metric to use for comparison purposes, we don’t have a model that would accurately compare one hospital to the others. This suggests that the time is not ripe to use this measure for financial incentives or penalties. It might give the impression of precision, but it is not, in fact, analytically rigorous enough for regulatory purposes.

Continue reading…

The Case For Rational Rationing

Mar 24, 2012• 41

By Merrill Goozner

The House Republicans on Thursday took another swipe at the alleged rationing in Obamacare, voting to eliminate the independent advisory panel that will propose cuts in Medicare spending when it grows substantially faster than the rest of the economy.

Most people have never heard of the Independent Payment Advisory Board, but they certainly got an earful about “death panels” and “rationing” in 2010 when Republicans used it to attack the Democrats’ health care reform bill. Stoking fear of death panels and rationing helped the Republicans win control of the House.

The IPAB has nothing to do with death panels or rationing. The 15-member panel of experts will offer Congress options for holding down Medicare’s spending whenever it grows out of control. Congress has the option of either allowing those cuts to go into effect, or enacting its own menu of cost control measures.

There is no shortage of skeptical analysts who suggest Congress will be just as likely to reject IPAB recommendations and substitute nothing at all. After all, every Congress over the past decade has rejected imposing previously enacted cuts on physician pay. Why will the IPAB cuts be any different?

The reality is that neither party has a good track record when it comes to holding down Medicare spending, and the level of debate Thursday reflected their perennial obsession with the next election, not the next generation. “Do you remember death panels?” cried Rep. Jack Kingston, R-Ga., on the House floor. “It’s not necessarily a death panel, but it is a rationing panel and rationing does lead to scarcity for some. Who’s going to get the needed treatment, an 85-year-old or the 40-year-old with children?”