OP-ED

The Oregon Experiment Revisited

It has been a couple of weeks since the landmark Oregon Experiment paper came out, and the buzz around it has subsided.  So what now?  First, with passage of time, I think it is worth reflecting on what worked in Oregon.  Second, we should take a step back, and recognize that what Oregon really exposed is that health insurance is a small part of a much bigger story about health in general.  This bigger story is one we can’t continue to ignore.

So let’s talk quickly about what worked in Oregon.  Health insurance, when properly framed as insurance (i.e. protection against high, unpredictable costs) works because it protects people from financial catastrophe.  The notion that Americans go bankrupt because they get cancer is awful and inexcusable, and it should not happen. We are a better, more generous country than that.  We should ensure that everyone has access to insurance that protects against financial catastrophe.  Whether we want the government (i.e. Medicaid, Medicare) or private companies to administer that insurance is a debate worth having.  Insurance works for cars and homes, and the Oregon experiment makes it clear that insurance works in healthcare.  No surprise.

The far more interesting lesson from Oregon is that we should not oversell the value of health insurance to improving people’s health.  While health insurance improves access to healthcare services (modestly), its impact on health is surprisingly and disappointingly small.  There are two reasons why this is the case.  The first is that not having insurance doesn’t actually mean not having any access to healthcare.  We care for the uninsured and provide people life-saving treatments when they need it, irrespective of their ability to pay.  Sure – we then stick them with crazy bills and bankrupt them – but we generally do enough to help them stay alive.  Yes, there’s plenty of evidence that the uninsured forego needed healthcare services and the consequences of being uninsured are not just financial.  They have health consequences as well.  But, claims like 50,000 Americans die each year because of a lack of health insurance? The data from Oregon should make us a little more skeptical about claims like that.

So what really matters?  Right now, we are pouring $2.8 trillion into healthcare services while failing to deliver the basics.  To borrow a well-known phrase, our healthcare system is perfectly designed to produce the outcomes we get – and here’s what we get: mediocre care and lousy outcomes at high prices.  Great.

Let’s use cardiovascular disease as an example.  We know it kills more Americans than any other condition.  The CDC estimates that we spend about $500 Billion on CV disease.  With that kind of spending, you’d think we would be really good at managing it.  When it comes to cardiovascular disease, management is relatively straightforward: there are four risk factors worth thinking about: hypertension, diabetes, high cholesterol, and smoking.  But guess what?  We’re really not that good at managing these conditions, and evidence suggests that health insurance has almost nothing to do with it.  Here’s the evidence.:

  1. Hypertension: nearly 70 million adults (1 in 3) have it.  More than half of these Americans’ blood pressure is poorly controlled.  Rates of poor control are only marginally worse among the uninsured (58%) than among the insured (51%).
  2. Diabetes: Nearly 26 million people have it. Rates of poor control?  You guessed it: about half, and the same between the uninsured (46%) and the insured (44%).
  3. High cholesterol:  Again, about 70 million adults (1 in 3) have it.  Rates of control?  Even worse!  About 1/3 have their cholesterol under control.  The proportion with poor control is lower among the insured (60% versus 77%) than the uninsured, but even among the insured, frankly, cholesterol management is terrible.
  4. Smoking: About 50 million people smoke.  None of them have it under adequate control (by definition).  Most of these people have health insurance.

Type of insurance really doesn’t matter. A landmark New England Journal paper in 2003found that the quality of care for privately insured Americans was about as bad as it was for those on government insurance or who were uninsured. On a global measure of how often patients get the right care, insurance really doesn’t make a big difference. See below:

*From: Asch SM, Kerr EA, Keesey J, Adams JL, Setodji CM, Malik S, et al. Who Is at Greatest Risk for Receiving Poor-Quality Health Care? New England Journal of Medicine. 2006;354(11):1147-56. PubMed PMID: 16540615.

This, of course, begs the question: how can we be spending so much money and not doing better on cardiovascular disease management?  How can this be?  The knee-jerk reaction that I hear over and over again is to blame the patient – they are not compliant with their medications.  They don’t follow up.  They don’t understand their condition.  But these are weak excuses for a healthcare system that only pays when a patient visits a doctor’s office or an ER or a hospital.  We have a supply driven healthcare system because of a failure of imagination – we only seem to know how to pay for visits and medications and tests and procedures.

If we’re going to get healthcare to improve health, we have to seriously rethink the way we pay for it.  I don’t mean adding a 1% incentive to a doctor’s reimbursement for measuring blood glucose.  That doesn’t do much and is usually just insulting.  I mean adding incentives to make providers focus on managing patients’ health.  The problem right now is that no one gets paid if they figure out how to get patients to take their medications regularly.  No one gets paid to communicate more effectively with their patients or get them to quit smoking.  We don’t financially reward providers who improve health.  In fact, we punish them: because as people get healthier, they will have fewer visits, decreasing provider revenue.

This is more than a diatribe against fee-for-service.  It’s a diatribe against paying for healthcare. We need to find a way to pay for health.  Yes, it sounds naïve, but we have to start thinking outside the box if we want transformative changes rather than iterative ones.  For instance, what if we paid for better blood pressure control?  Instead of getting paid to measure every patient’s blood pressure (as many pay-for-performance schemes do), what if we paid for lowering blood pressure among those with severe hypertension?  Yes, there are issues of case-mix adjustment, but those are solvable.  For each one of us, the things that would improve our health surely vary.  What if the payment system could take patient preference into account, paying for things that we each individually valued as important to our health and well-being?  None of this is easy.  But we surely haven’t built this insanely complex and dysfunctional payment system because it’s the easiest way to pay for healthcare.  We got here despite ourselves.

My lesson from the Oregon experiment is that our system pours hundreds of billions of dollars into stuff, but pays little attention to whether any of that stuff is improving people’s health.  Adding more people to the insurance rolls –pouring more money into a low value healthcare system – isn’t going to improve people’s health.  Will it help the uninsured financially?  Sure.  Is providing financial security to poor Americans a good thing to do?  Absolutely.  No American should be one car accident away from bankruptcy.  But until we improve the underlying functioning of the healthcare delivery system, we shouldn’t expect any intervention that improves access to more healthcare services to have a meaningful effect on people’s health.

Ashish Jha, MD, MPH is the C. Boyden Gray Associate Professor of Health Policy and Management at the Harvard School of Public Health. He blogs at An Ounce of Evidence.He will serve as a Senior Editor-in-Chief for Healthcare: The Journal of Delivery Science and Innovation. Submission is open now, and the first issue will be released in late spring 2013.

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Veritas1919Confused PersonBob SnodgrassVik KhannaRob Recent comment authors
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Bob Snodgrass
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Bob Snodgrass

Let’s agree that Medicaid expansion is important and that less affluent Americans are often not in optimal health, nor receiving even adequate medical care. Did those who got into Oregon Medicaid receive good health care? They felt that they were healthier and they certainly had less financial stress, which are good things. It seems that my fellow physicians wrote a lot of prescriptions. I’m uneasy about quality of care, about the analysis that the NEJM printed and even somewhat about Dr. Jha’s analysis. Was hypertension treated successfully? Can’t tell, but it doesn’t sound encouraging. The paper says that 13.9% of… Read more »

Bob Hertz
Guest

Thanks Rob. I do not have statistics for private insurance but i do have the numbers for Medicare.

Between 2000 and 2010, the number of hospitalizations under Medicare was flat, but payouts to hospitals almost doubled in dollar volume.

I assume this happened because hospitals spend a lot of time figuring out how to game the fee schedule and hit the high paying DRG’s.

I do agree with you that hospitals are money pit, at least until they close.

But I wonder if we are as close to controlling hospital costs as ytour comment implies.

bob hertz
Guest

Rob, you raise good points about the need for better communication and disease management. However, if a few ER visits and ICU stays are avoided, and at some expense, the hospitals will just charge more for the transplant and cancer patients and premature infants who are hospitalized unavoidably. The US has been cutting down hospital visits both in number and in days per visit for 20 years — and yet we spend more on hospitals then ever. That is due to our graded and overly generous fee schedule. The fees charged for a transplant just go from $200,000 to $300,000,… Read more »

Rob
Guest

If the dog is fat, the owner should stop feeding it so much. The problem is with the owner, not the dog. Hospitals can’t simply charge more for transplant or cancer patients, as they are paid based on negotiated fee schedules and will only be paid what the payer will agree to. This system does not even resemble a free market system where the provider controls the cost of any given service. Yes, hospitals try and compensate, but more by doing an ACO (which is why they spend so much on computer systems) and getting “shared savings” with Medicare, etc.… Read more »

Vik Khanna
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Comment Professor Jha and I agree completely on this central point: health is not health care. Societally, we have foolishly…even incompetently…intermingled the two for decades. The result of that intermingling is a sort of health care identity confusion, where it is impossible for the major players in this drama (consumers, purchasers, clinicians, administrators, and policy makers) to agree on even basic operational definitions, such as what constitutes quality care (and there are legitimate differences of opinion) and a fair price. Alas, at the end of the day, the reductases in this cascade (as is true throughout US culture) are money… Read more »

bob hertz
Guest

Good points, Rob, but the vast bulk of spending in any health plan is on behalf of patients who are far past the threshold of benefitting from better office visits and primary care. Let me use a crude (but not inaccurate) actuarial example. In a group of 100 people, 4 persons on average will have cancer or major heart surgery or a broken back. Their claims will average $75,000 each for total spending of $300,000. Another 46 persons will have moderate chronic illnesses with average spending of $5,000 each, for total spending of $200,000. The last 50 persons will not… Read more »

Rob
Guest

I agree with your overall point, that we need to focus on large claims, but am not sure your numbers are accurate. I wonder if you tally up how many ER visits could be averted through good care, how many hospitalizations prevented, how many ICU visits avoided through early intervention and better interaction, you’d find a very strong case for managing a person’s care through better access to good care. There is a disease that results in (at least) 20% of heath care costs: waste. I believe that this number is grossly low, however, and does not account for visits… Read more »

Veritas1919
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Veritas1919

It is preferable to not go to the doctor for those without insurance and knew that inability pay would mean enduring abuse from the bill collectors employed by the healthcare industry. It is hard enough to make ends meet without the added stressors of destroyed credit ratings threats and verbal abuse. Poor credit ratings can and do lead to homelessness. I believe your study is invalid because it based on the premise that these patients received quality care. I can personally attest to the problems in Oregon’s Healthcare system. I was also kicked out of one hospital and denied medical… Read more »

Rob
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I think clarification of your statement: “If we’re going to get healthcare to improve health, we have to seriously rethink the way we pay for it. ” is warranted. If this means that the government should take over, or that it should be made more private, it is obviously not true (which I assume you agree about). Reimbursing sickness and compliance with documentation standards (as we do) will result in lots of sick people with lots of documentation (as we have). So how can we pay healthcare providers more for causing patients to need the system less? It’s pretty obvious… Read more »

Confused Person
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Confused Person

it mystifies me when people claim that we don’t know how to do this? Don’t integrate models like Kasier pay to keep their patients healthy? Not only are the docs on salary but more importantly the providers and the insurance company are all under the same roof (two orgs though).

If that model is so good why isn’t it much cheaper with far better outcomes? (they do have slightly better outcomes but not great)..

Bubba For President
Guest

Wait – health and healthcare reform are different?

I am instituting my own personal health reforms herewith

bob hertz
Guest

I think that everyone (even libertarians) would agree that we must pay to treat contagious diseases. I think that everyone (including almost all libertarians) would agree that we should pay to treat accidents and injuries. I will gladly pay taxes to treat an uninsured car accident victim, if only from the Golden Rule. I might be next. I think that most Americans (except diehard racists and Social Darwinists) would favor public funding for the health care of children. SCHIP passed rather easily as a I remember. Again, the Golden Rule controls. Where things get murky is in how much we… Read more »

tcoyote
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tcoyote

The question is: what are we buying by spending money on health coverage? This applies to anyone who purchases it, not just the public and Medicaid patients. If all it is is a protection racket and sweeping back the tide of illness, it’s not OK.

evilcyber
Guest

Is your opinion that bankrupting people through medical bills goes ok, as long as insuring more people isn’t very effective?

I admit, I don’t quite understand your position.