So one of the perks of having a blog is that you see how people found you and I was very curious why a couple of people found my blog after searching for Karen Ryan. I’d never heard of her, having missed today’s NY Times story about how the Bush administration had paid actors to imitate reporters to make fake news clips about Medicare. So why did the phrase "from Washington I’m Karen Ryan reporting" show up in THCB?

Well you may remember a few weeks back I got all hot and bothered about a poorly researched report on the subject of whether the huge increase in health spending was good for us or not. The report was put together by a coalition of health industry groups and was very thinly veiled propaganda–even though it did have legitimate points to make. With the report was distributed a video clip. By now you’ve guessed the rest; the last line of the voice over was "from Washington I’m Karen Ryan reporting", which went into TCHB and thence into Google.

So absolute proof that the Bush administration’s efforts to defend the Medicare bill is nothing but PR. Silly really, as there are some good things in the bill (like coverage for the very poorest seniors) that they could at least make a half-assed attempt to promote properly.

The Center for Health System Change continues to pump out great stuff, including this piece from Len Nichols called 10 myths about the uninsured. Go read it because it’s very sensible and makes directly the link between the mess we have of an individual insurance market, the fact that the majority of the uninsured cannot afford insurance, and that (as Alain Enthoven will tell you) health benefits are part of compensation, not an independent cost to business. Coincidentally over at Business Word, Don Johnson, a (non-foaming at the mouth) conservative had a sensible piece on the uninsured yesterday. Don almost lets it slip in his last paragraph when he says:

I have long advocated requiring everyone who pays Social Security and Medicare payroll taxes to provide proof on their income tax forms that they have purchased basic health insurance for themselves and their dependents. If people don’t provide such proof, they are taxed the equivalent of a year’s premium, payable monthly, and that money is put into a pool that provides catastrophic health insurance to those who won’t buy health insurance for themselves.

So despite some recent comments about Enthoven and me , it seems that Don, too, is in favor of universal insurance. His version of it is called an individual mandate, with a mop-up social program for the truly indigent, those outside the system. What Don misses is that he’s only got half the solution. Yes, the uninsured should be forced to pay into the system for some of their insurance, but as Nichols points out

"if policy makers really want to increase coverage, they’re going to have to subsidize people, probably quite substantially, since most of the uninsured have incomes below twice-times poverty"

Of course there is already a cross subsidy of the uninsured by all of us who use health services and find that we are charged more than cost by providers who are also treating the uninsured. It would just be more sensible if the subsidy was clear and obvious. But again this is only half the issue. The Commonwealth Fund reported thatemployers continue to support providing health insurance. But, and this is not a minor "but", more and more of the cost of premiums are being forced onto employees. Meanwhile the proportion of smaller employers (with less than 100 employees) who believe that it is "very important" to provide insurance is only 54%, and only 44% of those employers who do not currently provide insurance think that it’s "very important" that they do so. It’s the employees of these employers who make up the majority of the working uninsured, who are themselves about 75% of the uninsured.

In other words, to get to universal insurance you either need an individual mandate, an employer mandate, or some kind of social insurance system (maybe Medicare-for-all). The first two need some cross-subsidy and the last needs to change "premiums" for "taxes." The first two also in some part rely on an individual and small groups insurance system which is a total mess, charges far more for the exact same products that are sold to large groups, and probably cannot be fixed without major legislation too. In the end, we’re not getting any of these solutions in the next few years. But at least the discussion has restarted. . . . .

The new Health Affairs is out and it’s fascinating. This journal is over 20 years old and getting better and better. I’ll try to run something from it every day this week. Sadly if you want the full articles you have to subscribe, at about $100. It’s well worth it (and I do) but I think that it’s so valuable that I wish RWJ or someone would just fund it in perpetuity so that it’s all freely available.

The first article that jumps out at me is a commentary from Alain Enthoven about not why competition has failed but why (in his words from a decade or so ago) “it hasn’t been tried.” I learnt much of what I know (and believe) about health care from Enthoven in his classes at Stanford and he in those days delivered a biting expose of the failure of government regulation to create the conditions for sensible competition in the healthcare system, which remains true to this day. His “managed competition” model was at least the partial basis for the Clinton plan, although he fell out with the Hillary team fairly early on in the process.

I somewhat parted the ways with his philosophy when he put (at the time of the Clinton plan) the interests of the market over the interested of universal insurance — as it turned out neither happened legislatively. But what is very interesting is that Enthoven has also been watching the slow emergence of what Bob Leitman calls the problem of the Nascar dads, and the rest of the baby boomers heading to, but not quite getting to Medicare by 2008-16. Here’s his forecast, and lament:

Why not “Medicare for All”?

It is late, probably too late, to avert the inexorable progression to “Medicare for All.” U.S. employers would need to have an epiphany soon. But when it comes to health care, most of their horizons are so limited and their vision so constrained that such a change seems unlikely.

What is becoming most likely is that the winning candidate in 2008 will make “Medicare for All” a foundation of his or her platform. And employers, incapable of controlling costs and desperate to get medical expenses off their financial statements, will lead the candidate’s campaign finance committee. Labor and small business will join them. The large and growing numbers of uninsured, by then reaching well into the middle class, will consider the issue to be of top priority.

While I would welcome universal coverage as long overdue, I think it would be a tragedy to lock in FFS Medicare and deny people the opportunity to save money by choosing less costly options. The recent Medicare “reform” debate shows that it will be almost impossible to dislodge FFS from Medicare. FFS makes doctors and payers adversaries. It punishes doctors for innovating in ways that make their costly services less needed. The burden of chronic disease is growing rapidly, yet our FFS delivery system is oriented toward episodic, acute care. FFS promotes the wide variations in practice patterns documented by John Wennberg and colleagues. And it certainly does not motivate quality improvement in the sense of discouraging overuse, underuse, and misuse. Providers do not bear the costs of their poor quality.“

I think his forecast is right and that his fears of a locked -in over politicized fee-for-service Medicare-for-all at some point out beyond 2010 is the likely scenario. The alternate is the Brazilianization of the US social welfare system into one for the very rich and chaos for everyone else. However, I’m not as pessimistic as Alain about the end result of that first option.

First, whatever its faults Medicare-for-all would be better for a significant chunk of the population than what we have now–including the uninsured, the underinsured and those under 65 who really need help but can’t get it, as well as those over 65 who need better drug coverage than they have now (and still won’t have after PDIMA). It would not be that much worse for anyone (other than vastly over-paid specialists, who would still get by OK).

Second, Americans love medical technology and even under a state run system they’ll happily tax themselves to get it, so we are not heading to Canada or the Soviet Union (and you won’t catch me lumping those two together that often!)

Third, I’ve concluded that meaningful reform is only possible under a single-payer system. The things we need like universal pooling of risk, and public funding for a common data exchange system can only come about easily under a single-payer/government system. It may take us a long time to get there after Medicare-for-all, but for an example look at the Brits who, much influenced over the years by Enthoven, are making the right moves to get a single-payer system in place that rewards the pay-for-performance (or at least pay-for-process) that Enthoven favors, and are putting the information technology in place that will deliver the consumer friendly health-care Jeff Goldsmith wants. (More on that later!)

UPDATE: Don Johnson (a non-foaming-at-the-mouth Republican, and yes there are some!) has some criticism of both my and Enthoven’s approach over at the Business Word. Read his point and my reply at his post.

Well this is a little late, but here goes anyway. At the very start of the year I interviewed Katherine Binns, who runs Harris Interactive’s Strategic Health Perspectives (SHP) program. SHP is a survey based research program that interviews virtually all the major players in health care and has done since the late 1980s. Back then it was called Health Care Outlook and was run in conjunction with the Institute for the Future. IFTF has since gone in a somewhat different direction with its Health Horizons program, which looks further out into the future and focuses as much on the wider meaning of health as it does on health care. SHP is focused on the next couple of years in the health care marketplace and has great up to the moment data on the realities and attitudes of the key players like doctors, consumers, employers, health plans and legislators. Katherine also has the good fortune not to only have a great team lead by Kinga Zapert to do the actual work, but also within Harris to have Humphrey Taylor and Bob Leitman to add color, and to be able to bring in old friends futurist Ian Morrison, Harvard policy, polling and politics guru Bob Blendon, and industry veteran Bill Rosenberg to help out. Full disclosure–I was part of that team from 1993-1999, but don’t let that put you off!

So what were they telling their clients at the end of last year and beginning of this one?

1) The Demonization of Pharma

The first issue concerns the pharma industry, and as I’ve hinted in THCB before the news on the PR front is terrible. What’s driving the demonization of the pharma industry? Consumers now perceive costs and value are seriously out of whack 61% of the public now perceives generic drugs as very or fairly good value. The number for branded Rx is now at 21%, only 7% above health insurance (and trust me you don’t want a score anywhere close to health insurance!). Incidentally, while overall the public that the pharmas are greedy profiteers and believes that it’s profit margins driving prices, seniors who are of course the most politically important group in health care see prices as being driven up by marketing and advertising. Meanwhile the basic awareness of drug prices being higher here than other countries is getting out. In 2000 41% knew that drug prices were much higher in the US than in other countries, and most of the rest just didn’t know. By 2003 that number is up to 63% and as consequence the re-importation furor won’t go away. Here’s a very recent Harris poll showing that people know health care (read: pharma) prices are higher here in relation to Europe, know that every thing else is cheaper here, and don’t like it.

One by-product of this is that trust in the pharma industry has dropped by 30% since 1997. They used to be closer to the top of list at 79%. By mid-2003 they were at 49% with a fall of 10% in the previous year–and these numbers were before the anti-AARP anti-pharma backlash following the Medicare bill. This means that there is plenty of mileage yet for the Democrats in bashing the pharma industry and linking it to Bush and the Republicans–so expect plenty more where that came from.

2) Consumers and the impact of cost shifting

Cost shifting and rising out of pocket costs really are beginning to be felt by consumers. Harris has created a schematic of three levels of consumers. The "Trade-up Players", the "Reluctantly Empowered", and the "Needy Shoppers". When they first developed this schema in the late 1990s, of those who were forced into a choice in terms of health plan and/or medical selection, there was a roughly 1 to 2 ratio of trading-up to trading-down. The ratio has now changed with even more trading down, or more value shopping. This has also been associated with increased non-compliance (as has been shown elsewhere in terms of the impact of three tier formularies). Whether the non-compliance is caused by out-of-pocket costs or by tiers, the higher their rates of non-compliance (such as pill splitting, not filling Rx, or delaying care) is in direct relation to out-of-pocket costs going up. Finally, the needy shoppers are going to the Internet instead of going to the doctor. Harris found that those with increased out of pocket costs in last year have had fewer in doctor visits and have increased their cyberchondriac use of the internet.

3) The Employers and the CDHP mantra

Employers have bought into the CDHP mantra to some extent, although in their view it’s not really any different from cost shifting. Employers say that higher out-of-pocket cost forces employees to be wiser consumers. However, they also think it makes them forgo needed treatment when they have a higher out of pocket cost at point of care. And they do believe that if employees get the chunk of money up front they are less likely to go for care. However, compared to cost sharing at the point of care (via copays and deductibles), employers are less concerned that CDHPs will lead to consumers making bad decisions about their healthcare needs.

However, like managed care products in the 1990s the Harris conclusion is that CDH is a phase. Harris asked the same questions about CDHP as it use to ask about managed care; employers are still confused, cranky, aimless and spineless. And they’re not sure that they’ll save money from this brave new consumer world.

Of course this year the role of health care in insurance disputes is picking up, particularly in the recent grocery workers strike in California.

4) So who’s happier then?

In a somewhat stunning reverse, the crankiest people in the health care system are happier than they were 5-7 years ago. Yup, the doctors may be furious with the lawyers, but they’re no longer so pissed at the government or more particularly the managed care UR nurse, since she stopped calling a couple of years ago. How long their distemper will stay improved is anyone’s guest. But it’s a significant barometer when the most appalling person a doctor can think of is a lawyer (even if he is John Edwards).

You can get more information about SHP and Harris from Katherine, but be warned, they’re not quite as competitively priced as THCB!

The southern California grocery workers strike is over with the Union having “won” on the issue of no premium-sharing for now, and lost on the “two-tier” wages issue. The LA Times says

At one point (according to the radio report I heard this morning) the companies wanted the employees to pay up to $95 a week in premium sharing, which would effectively have priced their employees out of health insurance a la Walmart. However, hidden behind this victory is that even for the workers there now (rather than the cheaper ones coming on board in the future) the premium contribution from the company is a defined one, and if costs go over a certain number in 2 years time as they inevitably will, the workers will have to make a contribution to premiums. As it is they have already lost first-dollar coverage.

If I was John Kerry I’d be down at the last of the picket lines right now. Workers all over America are scared of foreign and domestic cheap labor and they are terrified of losing their health care coverage. These two facts are connected. An employee can probably get another job, but maybe not one with health benefits–and of course a bad health experience with no insurance can wipe out the middle American dream in a heartbeat. That’s why, as the StonyBrook survey showed last year, workers would rather keep their health benefits than get a pay rise. The Democrats have got a winning issue here if they can figure out how to make it presentable to the public. They don’t need a solution for now, they just need to reassert that they protect workers and seniors. Watch for the rhetoric here to heat up over the summer.

Medicare drug coverage is still a big issue and those seniors who know about it still don’t like it as the latest Kaiser Family Foundation poll shows. There’s much more in this chart pack including the fact that only 15% of seniors understand the bill, and only 32% knew that it had passed into law! Of those that did know that it was now the law 75% don’t like it! However, the Harris folk notice in their most recent poll that opposition to the bill is a little lower now than when it was originally passed, and the most contentious issue by far among seniors is the banning of Canadian imports. 84% disapprove of that segment of the bill.

If I was the Republicans or their PhRMA paymasters, I might bid a strategic retreat on that front, and see if I can win the war, rather than suffer near-certain defeat protecting an over-exposed hill top. Otherwise you can be sure that by next November the Democrats will make sure that every senior in America knows about the "bad" aspects of the bill brought to them by the Republicans and those nasty pharma companies.

This is a little late but the folks over at Managed Care magazine had a nice start of year forecasting piece in their January edition which has several forecasts of the next five years.  Particularly interesting is Ken Abramowitz’s piece on why Consumer-Directed Health Care Won’t Fly. Abramovitz is no screaming lefty, in fact he works for the Carlyle Group, the defense group that’s also a home for George Bush, John Major and other right-wing refugees from the cold war. So why does he think Consumer-directed health plans will be a fad? He thinks that consumers won’t be able to figure out pricing and employers are the only groups who have a hope of negotiating properly with health plans.  I don’t share much of Abramowitz’s faith in employers but I do share his skepticism that the consumer market for health care services will be any more than a total zoo.

JD Klienke has some fun stuff to say about the consumer world and the continual crisis.  I like his last line:

Everyone will complain about the system’s myriad inefficiencies, and blame everybody else for its imminent collapse, and life will go on

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Hospitals that have been complaining that Medicare won’t let them discount to the uninsured have been told that by the Bush Administration they are wrong and that they can. Last year I wrote about how providers have been charging cash payers more than the insured’s wholesale price and that they come after you for the money.

In a related story, those hospitals who were chasing down patients and putting them in jail for non-payment are finding out that collecting on the "body attachments" will be very expensive. The WSJ reports:

In an unusual move that is sending shock waves across the hospital industry, Illinois authorities have revoked the tax-exempt status of a prominent Catholic hospital. Their decision follows a determination by local tax authorities that the hospital wasn’t a charitable institution, in part because of the way it treated needy patients.

As a result, Provena Covenant Medical Center, a hospital in Urbana with 270 licensed beds, will have to pay $1 million in property taxes, though the hospital says it plans to appeal. More worrisome to hospital-industry officials is the possibility that not-for-profit hospitals nationwide could find their tax-free status as charitable institutions challenged on similar grounds.

Last year at Bard Parker’s request I wrote some comments in his medical and Georgia Bulldog football blog A Chance to Cut to respond to his post about it. I basically said that the bad publicity would outweigh the benefits for these hospitals (scroll down to the very bottom of this page for my comments published over there). I’m obviously getting prophetic in my old age!

Ross at The Bloviator is on a high and rightly so!  He has great news about a new baby boy, and new job and a guaranteed lottery win (well maybe not the last one, but then he probably failed stats 101!)  Congrats, Ross!

Meanwhile Ross reminds me that even back in those dark days before there was a THCB, he was writing about the fact that the Medicaid games in his home state of Illinois were likely to draw the Federal scrutiny that the Wonk wrote about and the NY Times picked up on. And his last line has the question "if every state did this, would the Feds allow such maneuvers?". If we go to block grants the answer is clearly no.

While you may have thought that the New York Times was up on the news, the careful reader of THCB might have noticed that today’s story, titled U.S. Nears Clash With Governors on Medicaid Cost, shares exactly the theme of this post from Jones the Policy Wonk back in late December.

Both the NY Times and The Wonk believe that the Adminstration is gong to go after states that play games with their Medicaid accounting to increase Federal dollars into their Medicaid systems. The Wonk told us to pay attention to the appointment of Dennis Smith as CMS chief.  What was his quote in the NYT?

"The Medicaid program must be a federal-state partnership, not an exercise in financial gamesmanship," said Dennis G. Smith, the top federal official for Medicaid.

Now I actually agree that there shouldn’t be these accounting shell games, but the states do this because they are desperately short of cash to deal with their responsibilities and unlike the Feds, they can’t go into deficits for as long as the eye can see (although Arnie is trying!). They’re already cutting Meidcaid services and SCHIP (500,000 kids off those rolls in California and 300,000 in Texas according to JeanneScott). Now there’s a chance that there might be substantially more cuts as Medicaid moves to a block grant system–the adminstration’s end-game.

So I’m all for ending these games. But instead we should either be properly funding health care for the poor and vulnerable, as Medicaid is intended to do, or admit that we don’t want to and just give up on the program–as we have for 43 million citizens already. Oh well, I suppose we have to cut off these loopholes and stop running up the deficit for those Medicaid-types so that there’s enough for vital programs like tax cuts on dividends, missile defense, raiding medical marujiana co-ops, invading Iraq, subsidizing millionaire cotton farmers, giving the airwaves to media corporations for free homeland security.

UPDATE: It appears that the noises from HHS & the White House are having the impact expected amongst the Republicans in Congress. Modern Healthcare reports late today that Tenet’s best friend Senator Grassley is on the case

While Grassley may have a point about the consultants and the games they play, do you think he’d be quite so agressive if Medicaid was a subsidy program for rural hospitals that produced ethanol?