Tag: Costs

There Be Dragons: The Fiscal Risk Of Premium Subsidies In Health Reform

Dec 14, 2009• 14

By JEFF GOLDSMITH

Last week, the Congressional Budget Office weighed in on the biggest economic imponderable in the health care debate: how private health insurance premiums will behave under health reform. Building on its December 2008 CBO health insurance market analysis, CBO forecast largely benign effects from health reform’s private market reforms and subsidies on the vast majority of the presently insured (e.g. voting public).

According to CBO, only 17% of Americans in the so-called non-group market–largely individuals–would see premium increases in 2016 (the CBO reference year), because they would be required to purchase fatter benefits with less economic risk. CBO believes that the other 83% of the presently insured will see little or no change.

Analysis of how the health insurance market will behave under health reform has become ferociously politicized. After the infamous PriceWaterhouseCoopers study sponsored by health insurers suggested possible large premium increases, the CBO report might provide cover for members of Congress who are contemplating irreversibly tying the federal budget to a volatile “private” insurance market. I think the fiscal risks of a partially federalized private health benefit are significantly greater than CBO has suggested.

Your Money or Your Wife

Dec 11, 2009• 33

By JD Kleinke

Talk about perfect timing. Just as the last “death panel” falsettos fade into the droning no-government- takeover chorus, along come those “faceless government bureaucrats” from the U.S. Preventative Services Task Force to stop the music in the nation’s busy and profitable mammography suites.

No more breast self-exams or mammograms for low-risk women under 50; mammograms only every other year after the age of 50; nothing for any woman over 74. That was the thunderclap pronouncement from the acrobatically acronymic USPSTF, the dreaded “they” from the gub’mint that has the folks at Fox in full fulmination.Continue reading…

The Leaning Tower of Jello: Why No-one Believes Health Reform will be Deficit Neutral

Dec 1, 2009• 42

By JEFF GOLDSMITH

President Obama has promised not to sign any health reform legislation that increases the federal deficit. This promise recognized rising public concern about an Argentinean fiscal trend that, unchecked, could leave us with $19 trillion in federal debt in a decade.

Without that pledge, given the current economic climate, health reform would be one dead mackerel.

Some clarifications are essential here. I’m a Democrat and fervent Obama supporter. I voted for him twice (and that was just in the Virginia primary). I’m proud of our President. He has first class economic and healthcare teams. He deserves credit for not postponing health reform. He’s right: it’s simply not tolerable, morally or economically, for a wealthy nation to continue having close to 50 million uninsured people.

So Much For Comparative Effectiveness

Nov 20, 2009• 82

By MERRILL GOOZNER

The Obama administration’s commitment to cost control in health care can now be summed up in four words: Not on our watch.

Health and Human Services Secretary Kathleen Sebelius told American women this week that they have nothing to learn from the science that led to the U.S. Preventive Services Task Force guidelines on mammography.Insurance companies won’t change their payment policies, and the independent doctors and scientists who made up the USPSTF task force “do not set federal policy” or determine what services are covered by the federal government.”

What a golden opportunity has been missed to educate Americans about the implications of their health care choices. Otis W. Brawley, the chief medical officer of the American Cancer Society, in an op-ed in today’s Washington Post condemning the USPSTF guidelines, confirms that mass screening would only save at a maximum 600 out of the 4,000 women under 50 who die of breast cancer annually. What he failed to point out is that 1.14 million American women would have to be screened annually for ten years to achieve that goal. To cover the entire cohort (all women between 40 and 49) to replicate that benefit every year would require screening 11.4 million women annually. The cost, at $200 per mammogram (my initial estimate was accurate, according to this New York Times business section article), would come to $2.24 billion annually for the health care system.

Controlling Health Care Costs: How to “Bend the Curve”

Nov 10, 2009• 5

Stephen Shortell

As Congress nears passage of the first substantial health care reform in decades, there is an ominous challenge: No reform will be sustainable unless we slow the rapid growth of health care spending.

Health care costs are rising at a staggering pace. Expenditures have been increasing at 2.7% per year faster than the rest of the economy over the past 30 years. In 1980 the US spent about 8% of GDP on health care. We now spend over 17%. We need to rein in growth of health care spending to levels no higher than overall economic growth — or ideally “bend down” the growth curve to an even lower figure.

How do we “bend the curve”? What are the best ways to slow the growth of health care costs, thus making other reforms sustainable?There are three major areas in which reforms will help bring health care spending under control.Prevention: US health care is burdened by diseases that are preventable. If we can improve lifestyle issues – nutrition, exercise, obesity, tobacco use – we will lower the future incidence of diabetes, heart disease, cancer, and other costly maladies. Current health reform proposals that allocate $10 billion for a Prevention and Wellness Fund represent a major step in the right direction. Disease prevention likely provides the greatest return on investment regarding health care costs of anything we do.

Hospital and Physician Behavior: Hospitals have no incentives to prevent unnecessary hospitalization. Physicians, paid mostly by fee-for-service, have every incentive to order more tests and procedures. Neither is rewarded directly for making – or keeping – patients healthy. Key to controlling health care costs in the future will be to realign these incentives.

This will require performance measurement and public reporting for both cost and quality. Provided that predetermined quality criteria are met, hospitals and physicians who can provide better care for less money would share in the savings.

A “Third School” of Cost Containment?

Nov 2, 2009• 6

By Bill Kramer

Is there a “Third School” of reformers that could help Bill Kramer us resolve the long debate about how to contain health care spending? Drew Altman’s recent column describes the history of the debate between the “Regulators” and the “Marketeers”, and he suggests that a new school of thought – the “System Reformers” – is in the ascendance. According to Altman:

The Systems Reformers believe that the best way to bend the cost curve is not through external market incentives or regulatory controls, but from the inside out, by creating a smarter health care system with the information base, new delivery models and payment incentives that will improve quality and lower costs. . . .

The Systems Reformers’ paradigm is reflected in the “bending the curve” elements of the health reform legislation currently in Congress, which mostly come in the form of pilot projects and experiments. These include tests of ideas like Accountable Care Organizations, “pay for performance” and “bundled payments,” as well as efforts to create a smarter, evidence-based health delivery system through comparative effectiveness research.

He describes the Systems Reformers’ approach as a “third leg of the stool of cost containment strategies.”

While Altman is right about the importance of the Systems Reformers’ ideas, I don’t consider this to be a new paradigm.

A Message to America’s Physicians: Purchasing EHR Technology A Shaky State of Affairs

Oct 28, 2009• 31

By Brian Klepper and David Kibbe

Much of the conversation and debate about physician EHR adoption has centered on the single issue of the (high) cost of purchase. However, we’d like to suggest that the situation is much more complex and involves several more subtle variables.

Consider, for example, uncertainty about the future. In a recent speech, Lawrence Summers, Director of the White House’s National Economic Council for President Barack Obama, related the following analysis about decision-making under conditions of uncertainty in the marketplace, which he had first heard from Ben Bernanke, current Chairman of the Federal Reserve, in a speech Mr. Bernanke gave over 30 years ago:

“If you as a business were considering buying a new boiler, and if you knew the price of energy was going to be high, you would buy one kind of boiler. If you knew the price of energy was going to be low, you’d buy another kind of boiler. If you didn’t know what the price of energy was going to be, but you thought you would know a year from now, you wouldn’t buy any boiler at all. And in exactly that way, it is illustrated that the reduction of uncertainty, through the resolution of disputes, is, I would suggest, all important, if we are to maintain confidence.”Continue reading…

Op-Ed: Our Misplaced Faith in High-Tech Medicine

Oct 13, 2009

Merrill Goozner

By MERRILL GOOZNER

The following essay appeared on the website of the Hastings Cente r, which is running a colloquium on the values behind health care reform.

“One could make a good case that improvements in education and job creation could be a better use of limited funds than better medical care.” – Daniel Callahan, “Medical Progress: Unintended Consequences”

The president emeritus of the Hastings Center opens his insightful essay with the observation that the American people’s faith in medical progress is boundless. In this short comment, I want to expand on his thoughts by reexamining the cardinal tenets of that faith, since they embody a set of values that distract us from building a society that promotes good health, an infinitely more difficult task than building a better sick care system.Continue reading…

Pop the Cost Bubble: Unallot Medicare

Oct 5, 2009• 8

Here’s a dirty little secret: Cutting health care costs is not that difficult, nor will it harm patients. That’s because it only involves giving up unnecessary medical care—tests and treatments patients may want but really don’t need because they don’t benefit their health.

How is this supposed to happen? In Minnesota we call it “unallotment.” When the state had to reconcile a projected multibillion dollar budget deficit this year, and the Republican governor and Democratic lawmakers couldn’t agree on how to do it, the governor simply “unalloted” billions of dollars of planned expenditures.

Medicare should do the same. All Congress has to do is pass the MedPAC Reform Act of 2009 (SF 1110) and give it teeth. We can then unallot the 30 percent of Medicare expenses that most health care experts believe are unnecessary. That’s the 30 percent that goes for tests, drugs, and devices that don’t have any proven benefit but sell like hotcakes anyway.

When Gov. Tim Pawlenty decided to cut medical expenditures during the unallotment process, he took no prisoners. More than 30,000 indigent adults will simply have their medical insurance eliminated starting next March. Medicare would take a higher road, eliminating unnecessary care and costs, not “unnecessary” people.Continue reading…

Carrot or Stick? Should Patient Decision Aids Be Rewarded or Required?

Oct 1, 2009• 6

By DON KEMPER

Don kemper

Should we incent or require providers to prescribe patient decision aids?
Should we incent or require consumers to use patient decision aids?

Over-treatment is the most celebrated cause of runaway health care costs, but we shouldn’t blame the doctors. The fee-for-service system sets them up for over-treatment. First, they have been taught that offering all possible cures to every patient is good medicine. Second, malpractice law pushes them toward offering more testing and services, not less. And third, they generally get paid more when they do more. It’s hard to buck a triple-threat system like that without a little help from the patient. Fortunately, it’s not that hard for patients to provide that difference.Continue reading…