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The Ryan Health Care Proposal, Part II

In a speech at the Hoover Institution today, Representative Paul Ryan (R-WI) argued again that his proposal to reform Medicare, and now his tax credit proposal for replacing the Democratic health care law for those under-age 65, would guarantee to citizens “options like the ones members of Congress enjoy.”

His proposals would not give people the guarantees members of Congress, and all other federal employees for that matter, now enjoy.

This is not a small point.

Previously on this blog, I have argued that many of the defined contribution reform proposals, Ryan’s included, should be faulted for putting all of the future risk of health care costs on beneficiaries.

Ryan’s Medicare plan would create a premium support system for seniors. The premium support amount would increase each year by the rate of basic inflation, even though health care costs have historically increased much faster. Seniors would then take this premium support payment to the market and buy their own private health insurance policy. Another recent Medicare reform proposal by the health care industry would increase a similar health care premium support payment each year by the rate of increase in the gross domestic product (GDP) +1%.

In both cases, neither insurers nor health care providers would have any of the risk, and therefore responsibility, for keeping costs under control. The entire burden for the adequacy of these premium support payments would be with the beneficiary. If health care costs rose faster than these premium supports, tied to these indexes that have always trailed health care inflation, too bad for the beneficiary. Any excess cost is borne by the individual.

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Do Hospitals Cost-Shift?

This blog continues my exploration of the great mysteries of health economics.

Northwestern University is one of Blue Cross of Illinois’ largest customers. Suppose that premiums for all BC plans are expected to increase by 10 percent, but NU is able to force Blue Cross to accept a 5 percent increase. Would you expect Blue Cross stick McDonalds with a 15 percent increase in order to cover the shortfall from NU?

I wouldn’t, for two reasons. First, McDonalds would probably threaten to take its insurance business elsewhere. Second, the scenario I have described is inconsistent with profit maximization by Blue Cross. After all, BC’s ability to stick McDonalds with a 15 percent increase surely does not depend on the price paid by NU. Any negotiator whose willingness to stick it to McDonalds is conditional on the price charged to NU is leaving money on the table and probably would have been fired a long time ago.

We might never expect BC to raise prices to some customers to make up for shortfalls from others, so why do we believe that hospitals do this all the time? It is impossible to discuss Medicare and Medicaid payments without someone invoking the mantra of cost-shifting. The theory of cost-shifting is deeply ingrained in the minds of healthcare decision makers and the policy implications of the theory are profound. Consider that if hospitals cost shift, then the burden of Medicaid cutbacks falls on privately insured patients, not on Medicaid patients and the hospitals that serve them. This calls into question whether the cutbacks will result in any savings for taxpayers and cause any harm to Medicaid beneficiaries. It also makes you wonder why hospitals that serve low income communities struggle to survive. Couldn’t they just cost-shift their way out of financial difficulty? A cost-shifting zealot would conclude that the managers of these hospitals are incompetent.Continue reading…

My Non-Linear Work Stream

In the era before Blackberrys, iPhones, instant messaging, social networks, and blogs,  I had a predictable day.

I could look at my week and count the meetings, lectures, phone calls, writing, and commuting I had to do.

Although my schedule was busy, I could schedule exercise time, family time, and creative time.

Today, I would not describe my work day as linear or predictable.   I do as much as I can, attending to every detail I remember, and hope that by the end of the week the trajectory is positive and the urgent issues are resolved.

Here’s what I mean.

Since there are no barriers to communication, everyone can communicate with everyone.   Every issue is escalated instantly.   Processes for decision making no longer involve thoughtful stepsthat enabled many problems to resolve themselves.     We’re working faster, but not necessary working smarter.   We’re doing a greater quantity of work but not necessarily a higher quality of work.

Everyone has a mobile device and their thoughts of the moment can be translated into a message or phone call, creating a work stream of what amounts to hundreds of “mini-meetings” every day.

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The Affordable Care Act Supreme Court Petitions: Issues And Implications

Wednesday, September 28 was a busy day at the Supreme Court clerk’s office.

It had been widely expected that there would be a major pleading filed with the clerk in an Affordable Care Act challenge, as the response of the United States to a certiorari petition in the Sixth Circuit’s Thomas More case, which had upheld the ACA as constitutional, was due.  A cert. petition asks the Supreme Court to exercise its discretion to review the decision of a lower court, and the losing plaintiffs in Thomas More had requested the Supreme Court to reverse that decision and find that Congress had no authority under the Commerce Clause of the Constitution to adopt the ACA’s minimum coverage requirement.

The Justice Department did file a response in that case, but very late in the day.  Earlier in the day, to the surprise of most observers, three certiorari petitions were filed, asking the Court to review thedecision of the Eleventh Circuit Court of Appeals in the Florida case, which had held the minimum coverage requirement to be unconstitutional. The Eleventh Circuit upheld several other rulings of the lower court finding other parts of the ACA to be constitutional, and had reversed the decision of the lower court striking down the entire ACA as being not “severable” from the minimum coverage requirement.

Late in the morning on the 28th, the National Federation of Independent Business and two individuals, plaintiffs in the Eleventh Circuit case filed a cert. petition, asking the Supreme Court to reverse the decision of the Eleventh Circuit refusing to hold the entire ACA to be unconstitutional.  An hour or so later, the twenty-six states that are plaintiffs  in the Eleventh Circuit case filed their own cert. petition asking the Court to strike down the entire ACA, but also asking the court to reverse the appellate court’s decision upholding the constitutionality of the ACA’s Medicaid expansions and of the employer mandate as applied to the states.

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Mandate On Its Way To the Supreme Court?

It may have looked like a non-event, but it was a significant one.

Monday September 26 was the last day on which the Obama administration could ask the Eleventh Circuit Court of Appeals to reconsider its three-judge panel’s ruling that the Affordable Care Act’s individual mandate was unconstitutional. The fact that the Justice Department took no action almost certainly means that its intent is to ask the Supreme Court to decide the issue.

The administration’s thinking was most likely dependent on three factors. First, given that the full Eleventh Circuit is considered even more conservative than the three-judge panel that struck down the mandate, the only advantage of a second hearing would have been to delay consideration by the Supreme Court. Against this was presumably factored the political risk of a further well-publicized rejection of the mandate providing additional ammunition for opponents of reform.

Second, the administration may still be able to delay a Supreme Court decision either by filing its request for a hearing at the last possible moment in November, or even by asking for a filing extension—something that the Court might be willing to consider, given the potential impact of a decision in the middle of a presidential election.

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Top-Down vs. Bottom-Up

In my last post, I discussed the role of physicians in patient safety in the US and UK. Today, I’m going widen the lens to consider how the culture and structure of the two healthcare systems have influenced their safety efforts. What I’ve discovered since arriving in London in June has surprised me, and helped me understand what has and hasn’t worked in America.

Before I arrived here, I assumed that the UK had a major advantage when it came to improving patient safety and quality. After all, a single-payer system means less chaos and fragmentation—one payer, one regulator; no muss, no fuss. But this can be more curse than blessing, because it creates a tendency to favor top-down solutions that—as we keep learning in patient safety—simply don’t work very well.

To understand why, let’s start with a short riff on complexity, one of the hottest topics in healthcare policy.

Complexity R Us

Complexity theory is the branch of management thinking that holds that large organizations don’t operate like predictable and static machines, in which Inputs A and B predictably lead to Result C. Rather, organizations operate as “complex adaptive systems,” with unpredictability and non-linearity the rule, not the exception. It’s more Italy (without the wild parties) than Switzerland.

Complexity theory divides decisions and problems into three general categories: simple, complicated, and complex. Simple problems are ones in which the inputs and outputs are known; they can be managed by following a recipe or a set of rules. Baking a cake is a simple problem; so is choosing the right antibiotics to treat pneumonia. Complicated problems involve substantial uncertainties: the solutions may not be known, but they are potentially knowable.  An example is designing a rocket ship to fly to the moon—if you were working for NASA in 1962 and heard President Kennedy declare a moon landing as a national goal, you probably believed it was not going to be easy but, with enough brainpower and resources, it could be achieved. Finally, complex problems are often likened to raising a child. While we may have a general sense of what works, the actual formula for success is, alas, unknowable (if you’re not a parent, trust me on this).

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The Key to Improving Our Health? Look Beyond Health Care.

The United States spent $2.5 trillion on health care in 2009, more per capita than any other nation. Yet our country is ranked 32nd in the world in life expectancy, and rates of conditions such as diabetes and obesity have increased dramatically in recent years.

If we hope to address spiraling medical costs and improve the health of all Americans, we need to begin focusing on the policies — in fields such as transportation, energy, education and agriculture — that shape the world outside the doctor’s office.

But how? Policymakers are already juggling shrinking budgets, crumbling infrastructure and competing priorities. A recently released report from the National Research Council offers a solution. The study, “A Framework and Guidance for Health Impact Assessment,” points out that good health is determined by more than money spent on the health care system. An NRC committee on health impact assessments, of which I am a member, took an in-depth look at why they are needed.

Similar to the way a Congressional Budget Office score predicts the fiscal impact of a proposed policy, an HIA identifies the likely effect on health of a decision in another field, such as building a major roadway, revitalizing a neighborhood or developing energy or agricultural policy. HIAs can help decision-makers identify unintended risks, reduce unnecessary costs and leverage opportunities to improve the health of their communities.

As a doctor, I’ve often cared for diabetics who struggle to follow exercise recommendations because there’s nowhere nearby that’s safe to exercise. I’ve seen patients with frequent asthma attacks exacerbated by living in housing with mold and poor ventilation. I’ve given diet advice to parents of overweight children, only to find that they live in a neighborhood with no grocery store for miles and eat school lunches that should but often don’t meet current nutrition guidance.Continue reading…

Social Media’s Evolving Role in Health Care

On August 23, 2011, some people in New York knew an earthquake was coming before it happened.  They weren’t psychic (as far as I know), but digital tweets from their friends in Washington, DC arrived 30 seconds before any seismic rumbles began (1, 2).  Afterwards, the U.S. Geological Survey asked people to “tweet if you felt it.” Over 122,000 people responded, providing a detailed map of activity within hours (3).  Though phones were dead near the epicenter of the quake, texts kept moving.

Welcome to SOLOMO (SOcial, LOcal, MObile) communication, connecting us instantly through handheld devices.  News now literally travels at the speed of light, with words strapped to the backs of zippy electrons. Emergency preparedness and disaster response teams are taking note, using social media to both get and spread the word.  The Red Cross has dedicated teams who monitor Facebook and Twitter (4).

While the speed of social–media communication is impressive, its volume is daunting and its content overwhelmingly messy.  Besides 300 billion emails (5), each day across the globe we send 200 million tweets(6); search the Web more than four billion times(7); and add 5,000 new blog sites to the 170 million that already exist (8). Ten million people, including the president, belong to FourSquare (9), which delivers personalized offers and local news interactively based on where you are (GPS) and what is nearby.  In the 3.5 hours we spend each day “connected” (10) we buy, sell, chat, gossip, work, cheer, complain, and advise.  We plan everything from dinner parties to Mideast revolutions, we ask about everything from movie ratings to interplanetary travel, and we monitor progress of local teams, hurricanes, and political races.

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Too Much Responsibility/Not Enough

The Health Leadership Council (HLC), a coalition of CEOs from many of the leading health care companies, has created a list of Medicare reform recommendations for the Super Committee tasked with finding at least $1.2 trillion in budget savings.

As we begin the national debate over what to do about Medicare’s unsustainable costs, I will suggest that the HLC proposal gives us one, of what will have to be many, outlines for discussion.

Their recommendations include:

  • Creating a new Medicare Exchange, beginning in 2018, where beneficiaries would have the choice of private Medicare plans as well as the traditional Medicare plan. The HLC proposal would be a defined contribution program much like the Republican Ryan plan but would differ from Paul Ryan’s in a couple of key ways. First, in the HLC proposal traditional Medicare would continue to be one of the options. Second, the annual increase in the beneficiary support premium would be more generous—the HLC is proposing an annual premium support increase equal to GDP plus 1%.
  • Gradually increasing the Medicare eligibility age from 65 to 67—starting in 2014.
  • Reforming Medicare’s cost sharing structure by increasing deductibles and co-pays as well as requiring high-income beneficiaries to pay the full cost of Medicare Part B.
  • Implementing medical liability reform including a cap on non-economic damages, a one-year statute of limitations, and a “fair share” provision that would limit damages commensurate with responsibility for the injury.

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Sharing Data on Social Media


People use Facebook, Twitter, or other social media sites as channels for self-expression. But whether updating or uploading, people are telling their social stories with only two tools: text and images.

But what if social media wasn’t confined to words and pictures, but instead, allowed users to uploaded graphs or tables? In other words, could data, pure data, become a token in our social currency?

That’s the thought contributed during a panel session at the Health 2.0 Conference in San Francisco byGary Wolf, contributing editor at Wired, and an organizer of Quantified Self, a community whose users meticulously track certain aspects of their lives, some down to infinitesimal levels, such as how they spend every minute of the day (no joke).

Wolf’s comment followed a presentation by Stead Burwell, the CEO of Alliance Health Networks, who demoed Diabetic Connect an information and community site for patients battling diabetes. Alliance spent a great deal of time (read: money) on creating user profiles that would allow visitors of the site to connect with their peers, patients who share similar experiences. But that connection, they found, was key. As Burwell said in his presentation, users not only like to receive badges and virtual rewards, they like to hand them out as well.

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