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What Does the Dartmouth Atlas Have to Say About the Politics of the ACA?

Healthcare reform was a frontline topic during the recent presidential elections. The political warfare and misleading information around the Patient Protection and Affordable Care Act (PPACA), also known as Obamacare, has prevented the public from understanding its intended purpose, and has left many skeptical about its benefits. It is safe to say the general public has little to no idea about the quality of healthcare delivery in their respective regions.

In fact, it is not a far cry to claim that even healthcare professionals might not truly understand the issues facing American healthcare. Thus, most of the public is generally uninformed or misinformed about the population level problems facing the healthcare system. Therefore, it is quite simple for political parties to misguide the public and capitalize on their uninformed perceptions. If the public knew more about the flaws present in the healthcare system, perhaps they would better realize the PPACA is a reasonable start at addressing the failings of our system.

The Dartmouth Atlas Project is an online database which collects Medicare spending and utilization data from around the country. Information gathered from the database has shown immense variation in the way medical resources are utilized by even similar regions, communities, and health care organization. Evidence has repeatedly shown that, from a population perspective, areas that spend more on medical care do not consistently benefit from increased quality of care or patient wellbeing. Variation in the type of care delivered can be attributed to diverse incidence and prevalence of disease severity or the type of care a well- informed patient chooses. Variation in health care delivery is thus omnipresent and expected, because every patient is unique and medical innovation presents a growing number of care options to choose from.

However, much of the variation in healthcare practice is “unwarranted” because it cannot be explained by the degree of illness or patient preference. In fact, the two main drivers of unwarranted variation are the capacity of the local health care system to provide growing number of expensive services that must be utilized, and the physician’s practice habits that may not be evidenced based or patient preferred. The current healthcare reimbursement model propagates variation in care delivery due to the financial incentive of providing more service even when little benefit exists for the patient.

Analyzing Medicare data in a political context, the table below displays spending and service utilization data for the top ten Republican and Democratic states, based on the elections polls that tracked the popularity of each presidential candidate during the race (election polls).

These data tells a clear and simple story. The top ten Republican states have higher Medicare spending than the top ten Democratic states. The rate of hospitalization and surgical procedures are also higher for Republican states. If we investigate a procedure like percutaneous coronary interventions (PCI), the Republican states are performing more PCI procedures with equal mortality benefit compared to Democratic states. The evidence of variation in cost and utilization is a strong indication of inconsistency and inefficiency in the care delivery process. Are the Republican states providing better care by providing more care? We cannot find evidence of for such an assertion. Nor do we find evidence of harm occurring from a lack of utilization to individuals residing in democratic states.

Six of the ten Republican states sued the federal government over the individual mandate and Medicaid expansion earlier this year (Utah, Alabama, Louisiana, Texas, Georgia, and Nebraska), compared to only one democratic majority state (Maine). Yet the Republican states have a higher average of uninsured people, thus inhibiting a greater percentage of their citizens from accessing preventive healthcare. It is possible to draw many conclusions from these data, however it is intriguing that the states that have higher spending and resource utilization supported a Republican candidate who was not a supporter of the PPACA. The intrinsic values of the reform act are to cut down on waste, ensure access to preventive care, pay providers for quality rather than quantity, and reduce unwarranted practice variation and disparities by promoting accountable models of care delivery. Regardless of political stance, minimizing unwarranted variation is an ethical priority and a solution to decelerating the growing of healthcare spending in the United States. Hopefully, the continuing implementation of Obamacare over the next four years will prove to be beneficial.

Dr. Anubhav Kaul is a recent medical graduate from Ross University School of Medicine, and he is pursuing a Masters in Public Health at The Dartmouth Institute of Health Policy and Clinical Practice. Thom earned his PhD from The Dartmouth Institute for Health Policy and Clinical Practice where his dissertation focused on understanding variation in the costs and utilization of care within and between hospitals.

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Joseph Landers author of IntravenousDeterminedMDTim Tanparent, PhDBrad Fintegrity Recent comment authors
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Joseph Landers author of Intravenous
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Joseph Landers author of Intravenous

Healthcare reform is good for some people, however I see the implementation of these policies leading to some smaller hospitals going out of business. They too have patients that are uninsured and don’t have the volume of patients that larger hospital do so they have to rely on charging more for their services to recoup the money lost while taking care of those patients. If you happen to have an uninsured patient that needs to be admitted to a nursing home, it could take several weeks to months before anyone will accept the burden of giving free care and the… Read more »

Barry Carol
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Barry Carol

Bob – I agree with you on point A regarding the financing of academic medical centers. On point B, I’m not sure what the best answer or approach is to bring about price and quality transparency. I suspect that it might be easier to find one or two states willing to at least experiment with this. Perhaps it could start with disclosing contract rates for the 20 or 25 most common procedures or, maybe, all outpatient procedures and see how it works. Of course, hospitals are likely to have numerous contract rates with different insurers including more than one for… Read more »

bob hertz
Guest

Good points Barry. A lot of good points in fact.

Let me add two items as my time is short this AM.

a. Academic centers should get the extra monies they need from general tax revenue, not by overcharging their patients.

As Robert Evans and Joseph White have been saying for many years, tax the total populace rather than taxing the sick.

b. Who in national politics can we ‘enlist’ to promote price transparency?
This will be one tough set of consumer laws to get through Congress.
I am open to suggestions!

Barry Carol
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Barry Carol

Bob – I think the U.S. is far too big and too diverse for a national fee schedule to work. I remember reading a number of years back, for example, how much a typical house suitable for a middle management corporate type would cost in various parts of the country. A roughly similar house cost seven times more in suburban NYC, LA or SF than in Lake Charles, LA. Combined state and local income, sales, and property taxes also vary a lot from one state or even region within a state to another. CMS in its calculation of what a… Read more »

bob hertz
Guest

Not every city would have competition, I understand. But would a person drive even 100 miles to save $210 on a test? In rural areas, people drive $75 miles to a Walmart to save $200 on a lawnmover, they do so 7 days a week. I envision health courts as a new set of panels, with new rules. Judges would have the right to redue medical bills in cases of price gouging. It would not be win or lose….. the judge could set a price in the middle. The patient would not need a lawyer. We would want responsible doctors… Read more »

Barry Carol
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Barry Carol

On the healthcare pricing issue, I’ve long suggested that we need disclosure of actual contract reimbursement rates so price discovery is possible for both patients and referring doctors before services are rendered. It seems that either state legislators or insurance regulators or both could require this if they had the courage to stand up to both insurers and providers. Such disclosure is currently precluded by confidentiality agreements between insurers and providers. Insurers claim that such disclosure could actually drive reimbursement rates even higher as providers who are paid less will try to close or eliminate the gap between them and… Read more »

bob hertz
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To Peter1:

In my reform proposals, any patient who buys discretionary care such as imaging could request a cost comparison from all providers in their city.

If a local non-hospital was charging $40 and a hospital outpatient center was charging $250, the outpatient center would be broke in 6 months.

I also advocate health courts, where anyone who was charged $250 could take the outpatient center to a free small claims court and get a refund.

This would bend the cost curve, all right,

Contact me at bob.hertz@frontiernet.net for a summary of my proposed new laws.

thanks

Peter1
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Peter1

“If a local non-hospital was charging $40 and a hospital outpatient center was charging $250, the outpatient center would be broke in 6 months.” bob, there aren’t any left to get lower quotes from. Either Duke or UNC or Alamance Regional have bought or established their own. One choice left for $40 imaging, and some drive from me. Wonder when that will be bought out as well. As for Small Claims, that’s not easy in this state as the lawyers have locked up even that limited recourse for ordinary citizens. Small claims is only free if you win AND COLLECT.… Read more »

Margalit Gur-Arie
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…and one more thing. Since this thread is about variations in services, I don’t think that replacing random variations with institutionalized variations by patient ability to pay is the right answer.

Margalit Gur-Arie
Guest

Barry, if a hospital system wishes to pay its executives millions of dollars, and build posh spas and weight-loss palaces, or gourmet restaurants, then so be it. But in this case they ought to pay taxes first. The real charity care these systems provide is nowhere near what they would have paid in taxes and it should theoretically diminish under the ACA. And yes, I know this is a drop in the bucket, just like everything else that is inconvenient for corporations and wealthy folks, but so is one meal-on-wheels for an elderly poor person, and we seem only too… Read more »

Barry Carol
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Barry Carol

Peter1 – I don’t think the hospital CEO is trying to impress the Board. Instead, he/she is probably trying to impress patients and potential patients, especially those with good commercial insurance and, in the case of the latest equipment and technology, the doctors with practice privileges at the hospital that it wants to keep so they continue to refer their patients to that hospital. From a patient’s perspective, if they can get a procedure done equally well at the equivalent of a Four Seasons or Ritz Carlton hotel vs. a Days Inn or Motel 6 and the co-pay is the… Read more »

Peter1
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Peter1

“I don’t think the hospital CEO is trying to impress the Board.”

Maybe yes and no. Board sets a direction and looks for candidate to fulfill. Seems everyone is working toward Taj Mahal facility – which sets expectations for patients as well.

Tim Tanparent, PhD
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Tim Tanparent, PhD

Bloated compensation of hospital executives is one facet of the greed at these tertiary fiefdoms. They pressure their doctors to order what is best for the hospital (and the bottom line) and not for the patient. The AMA just issued a warning to doctors in this regard, for whatever that is worth.

Keep the beds churning and the scanners humming and the operating rooms full and the chemo pumping is the corner suite mantra.

Peter1
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Peter1

Hospitals also infect the community outside their own walls. Here in the NC, UNC Hospital, our glorious state non-profit, sets up outlier clinics that utilize their empire mentality.

They bought a local imaging center that was charging $40 per shot then upped the price to $250 per shot – cash pay.

bob hertz
Guest

Barry does have a point, in that even if hospital CEO’s worked for miinimum wage out of community spirit, hospital costs would still be very high. Most American hospitals are overbuilt, over-equipped, and overstaffed regardless of what their CEO is paid. Ironically, Medicare has had a lot to do with this cost explosion. The cost of hospital expansion was literally built into Medicare reimbursements until the 1980’s, and it is still reflected in payments for outpatient care. Incentives matter. No hospital goes broke by charging more, in fact the opposite is still the case. As Jeff Goldsmith pointed in this… Read more »

Peter1
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Peter1

“Barry does have a point, in that even if hospital CEO’s worked for miinimum wage out of community spirit, hospital costs would still be very high.
Most American hospitals are overbuilt, over-equipped, and overstaffed regardless of what their CEO is paid.”

Bob, this has more to it than the CEO compensation/cost ratio. Hospital CEOs need to justify their compensation. What better way than to impress boards with empire building – more buildings, more high tech equipment, more billings, more high paid specialists etc.

Brad F
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Anubhav
While more difficult to obtain, a comparison between <65 commercially insured population in red vs blue domains will assist in uncovering associations. I too, am skeptical of confounding, but if utilization trends similarly in both groups, 65, political geography remains a variable of potential import, albeit one of many. I see your post as provocative and engaging, but a tad simplistic. Keep digging however.
Brad

Barry Carol
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Barry Carol

Peter1 – The compensation of BCBS executives, hospital CEO’s and bank CEO’s is what it is. It’s determined by a market mechanism. How you or I think the system should work is largely irrelevant. As for credit unions, they are very simple businesses that take deposits from members and make loans to members. For what it’s worth, the banks that still owe money to TARP are all relatively small banks. The big banks long since paid their loans back with interest and taxpayers actually made money on them. At one time, savings and loans were also a relatively simple business… Read more »

Peter1
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Peter1

Last comment from me as this is too much off topic.

Taxpayers had to bail out savings & loan because they were deregulated. Compare how many S&L execs went to jail compared to now.

Banks paid the taxpayer back with our own money.

Barry Carol
Guest
Barry Carol

Peter1 – Believe it or not, I agree with you that the CEO’s of publicly traded corporations are paid far more than need be, at least in theory. For better or worse, they way it works (and has always worked in modern times) is something like this: The Board of Directors hires a compensation consultant and tells him or her that we want to pay our CEO a compensation package that will put us in the 50th or 75th percentile (pick your number) in our industry. The consultant prepares a presentation outlining the numbers for competitors and for CEO’s in… Read more »

Peter1
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Peter1

Barry, non-profit hospitals should operated like a credit union, at least my credit union (SECU-NC). They’re in business to serve their depositors and the CEO makes no where near what typical bank CEOs make. Guess how many credit unions were involved in the great bank heist of 2008? Guess how many credit unions needed TARP money? Shouldn’t BCBS executives be paid according to how much they saved their premium payers instead of how much non profit profit they make? Everyone “rails” when premiums continue to escalate at compounded rates while those making the health care decisions continue to get fully… Read more »