The way health care is administered in the United States is unsustainable and in need of fundamental reengineering — right? During the 2008 presidential race, the country appeared to be in agreement on this point. But that all changed somewhere, somewhere after the election of a dark-skinned new president with a foreign-sounding name whom even proud Medicare card-carrying Americans were viscerally driven to deride as a socialist.
This was recently reported in The Hill: “The six largest investor-owned health insurance companies saw a 22 percent increase in combined net income in the third quarter, putting them on pace to break profit records for 2010.” The president was castigated by loud little crowds around the country for championing the overwhelmingly popular idea of a publicly funded, public health insurance alternative to challenge the partly publicly funded, private health insurance companies’ assertion that they simply cannot provide their services any cheaper. Rather than groundbreaking legislation, what we got was the president being caricatured on national television, in effigy, as The Joker — and health insurance executives laughed all the way to the bank.
Florida is concerned that it spends too much on Medicaid. Unfortunately for policymakers, proposed cuts to Medicaid are likely to be self-defeating according to an Orlando Sentinel article. They may result in more spending as well as boosting the number of people with no coverage – especially children. Components introduced under the guise of personal responsibility –such as charging $10 per month per beneficiary or $100 for non-emergency use of the emergency department– have great intuitive appeal to taxpayers and legislators, yet can backfire in practice.
Experience from Oregon suggests that even modest, sliding scale premiums result in huge drops in coverage. A report from the Health Policy Institute at Georgetown University suggests 82 percent of those who leave coverage would be children, of whom 98 percent would be below the poverty level.
There are clear examples of emergency room overuse, but what’s crystal clear in retrospect is not always evident up front. In any case, hospitals can do their part with effective triage that sends patients to lower acuity settings or back home when patients who shouldn’t be there show up.
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…
On October 1, 2013, the entire US healthcare system will shift from ICD9 to ICD10. It will be one of the largest, most expensive and riskiest transitions that healthcare CIOs will experience in their careers, affecting every clinical and financial system.
It’s a kind of Y2k for healthcare.
Most large provider and payer organizations, have a ICD10 project budget of $50-100 million, which is interesting because the ICD10 final rule estimated the cost as .03% of revenue. For BIDMC, that would be about $450,000. Our project budget estimates are about ten times that.
CMS and HHS have significant reasons for wanting to move forward with ICD10 including
1) easier detection of fraud and abuse given the granularity of ICD10 i.e. having 3 comminuted distal radius fractures of your right arm within 3 weeks would be unlikely
2) more detailed quality reporting
3) administrative data will contain more clinical detail enabling more refined reimbursement
Large healthcare organizations have already been working hard on ICD10, so they have sunk costs and a fixed run rate for their project management office. At this point, any extension of the deadline would cost them more.
Most small to medium healthcare organizations are desperate. They are consumed with meaningful use, 5010, e-prescribing, healthcare reform, and compliance. They have no bandwidth or resources to execute a massive ICD10 project over the next 2 years.
President Obama’s populist message on taxes was replicated on the health savings side of his deficit-reduction plan, which would cut spending on Medicare and Medicaid by $320 billion over the next decade and $1 trillion in the following decade.
The bulk of the savings would come from companies that provide goods and services to the programs. Payments to drug companies would be slashed by $135 billion by offering seniors in Medicare the same discounts currently mandated for poor people in Medicaid. An additional $42 billion in program savings would be achieved by reducing payments to nursing homes and home health care agencies.
And those are just the major hits taken by health-care providers in the plan, which is already drawing fierce opposition from lobbyists for industries that get whacked. Rural hospitals, big city teaching hospitals, biotechnology firms, and durable equipment manufacturers also would be in for payment cuts under the Obama blueprint.
Major trade associations representing provider groups immediately blasted the proposal, playing the same jobs card the president is using. The Pharmaceutical Research and Manufacturers Association “opposes implementing Medicaid’s failed price controls in Medicare Part D,” the group said in a prepared statement. “Such policies would fundamentally alter the competitive nature of the program, undermine its success, and potentially cost hundreds of thousands of American jobs.”
Did you know that an estimated one of every three uninsured people in this country is eligible for a government program (mainly Medicaid or a state children’s health insurance plan), but has not signed up?
Either they haven’t bothered to sign up or they did bother and found the task too daunting. It’s probably some combination of the two, and if that doesn’t knock your socks off, you must not have been paying attention to the health policy debate over the past year or so.
Put aside everything you’ve heard about ObamaCare and focus on this bottom line point: going all the way back to the Democratic presidential primary, ObamaCare was always first and foremost about insuring the uninsured. Yet at the end of the day, the new health law is only going to insure about 32 million more people out of more than 50 million uninsured. Half that goal will be achieved by new enrollment in Medicaid. But if you believe the Census Bureau surveys, we could enroll just as many people in Medicaid by merely signing up those who are already eligible!
What brought this to mind was a series of editorials by Paul Krugman and Robert Reichand blog posts by their acolytes (at the Health Affairs blog and at my blog) asserting that government is so much more efficient than private insurers. Can you imagine Aetna or UnitedHealth Care leaving one-third of its customers without a sale, just because they couldn’t fill out the paperwork properly? Well that’s what Medicaid does, day in and day out.
Put differently, half of everything ObamaCare is trying to do is necessary only because the Medicaid bureaucracy does such a poor job — not of selling insurance, but of giving it away for free!
In a rare bit of good news for the Obama administration and budget policymakers, health care costs increased last year at their slowest pace since the advent of Medicare and Medicaid in the mid 1960s.
The new analysis, released on July 25 by officials at the Centers for Medicare and Medicaid Services, the agency that administers the two programs, showed health care spending grew last year at a “historic” low 3.9 percent rate, which is slightly below 2009’s record-setting low of 4.0 percent. Health care spending as a share of the economy remained stuck at 17.6 percent, a welcome change from most years when it increases its share of total economic activity.
At a time when the White House and congressional leaders are worried about rampant long term growth of the government’s major health care insurance programs for seniors and the poor, the new data will allow government actuaries to project growth in Medicare and Medicaid over the next decade will be less than previously feared. This could potentially ease the task of the Obama administration and congressional leaders somewhat when they finally negotiate an agreement for slowing the growth of entitlement programs to help reduce the deficit.
Moreover, CMS actuaries are now saying the cost of insuring 30 million previously uninsured Americans under the president’s signature health care reform bill will add only a sliver to overall spending, and that increase is about half the projected growth rate of a year ago.Continue reading…
As we wait for the white smoke to emerge from the “grand bargain” negotiations at the White House, most Americans are already aware of the Republicans’ plan to dismantle and privatize Medicare and Social Security. But what many people may not realize is just how dangerous it would be to slash funding for a program that 60 million Americans rely on for their basic health care needs: Medicaid.
While it seems that just about every major industry or interest group has teams of lobbyists in Washington looking out for them, some of our most vulnerable citizens simply don’t have a voice in a town where unfortunately, money still talks the loudest.
Why? Medicaid covers only the impoverished and disabled, so it lacks a traditional advocacy base. This may be news to Republicans — but most poor people I know are spending all their time trying to find a job and put food on the table. Lobbying Congress just isn’t on these folks’ to-do list right now. Unfortunately, this means that my colleagues aren’t going to spend a lot of time over the next 30 days sticking up for the 60 million Americans who rely on Medicaid to pay their medical bills. That’s unfortunate, because if the Republicans are successful in turning the program into a block grant program that greatly diminishes funding to states, three awful things are going to happen — people are going to die, more jobs are going to be lost, and health care costs and taxes will actually increase.
It is all but certain he will have to leave his post at year’s end, when his recess appointment expires, because the Senate will not confirm him for a lack of Republican support.
Berwick is one of the most respected health care experts in the country—his career has been dedicated to improving quality first and with that the cost of care. With the new law giving his agency more opportunities to experiment with new approaches and the ability to more quickly implement the things that work, he was the ideal choice.
But with the Democrats ramming the law through without a political consensus to support it, Berwick also became the political whipping boy for opponents to pile on. That he has been willing to point to the things that work in places like Britain only gave the political opportunists plenty of red meat to throw into an already red hot ideological debate.
Phil Lebherz is the Executive Director of the Foundation for Health Coverage Education, which has as its mission the goals of educating uninsured people about their options to get insurance. Phil is also the Founder and Chairman of LISI, a company that provides sales support services for employee benefits insurance brokers. With colleagues at the Foundation (including Alain Enthoven, Len Schaeffer and David Helwig) Phil just released a report that was featured in Health Affairs that basically said that most uninsured people showing up in Emergency Rooms in San Diego should have been covered by Medicaid, and that the set-up of Medicaid in California makes it impossible for them to enroll themselves. This is preciously close to the conservative argument that there are no uninsured because they all “could be” covered by Medicaid. But given that under the ACA Medicaid is going to massively expand, you may surmise that I’m not altogether won over by this argument.
So a fun conversation with Phil ensued. You can listen to it here (and look at for the bit where he claims that Len Schaeffer–the man who built Wellpoint into the force it is today–is really a supporter of universal health care because he ran HCFA under Carter for a few minutes in the 1970s!). And no, it wasn’t all violent disagreement–but enough was to make it interesting.