There’s a new CMWF study on the individual insurance market. I won’t belabor the point as I’ve done many times before. Less than 7% of Americans are in it, and just because I’m one of them is no real reason to point out that it’s a market that doesn’t work for anyone who needs it, and is somewhere between 30-50% more expensive than the group market.

The study makes those points and more.

The individual market currently is quite small, covering approximately 17 million nonelderly Americans, or about 6.7 percent of the population. This market historically has not worked well for many people seeking coverage, in particular for those who need coverage the most. Policies frequently have been unavailable to people with existing health conditions; premiums have been expensive and usually have risen faster than group insurance rates; and benefits have generally been far more limited than those in group policies.

And yet the current national policy is to drive everyone into it.

Harris Interactive is out with a survey of the people attending a recent health care conference in DC which was attended by a who’s who of health care notables. Unsurprisingly, there don’t seem to be too many new ideas.

Forty percent of respondents believe a combination of IT, practice guidelines and patient safety measures is both an effective and desirable way of containing health care costs. Furthermore, 27 percent named disease management programs as the second most effective way to better manage costs.

When asked about the most significant opportunities that their organization can pursue during the next two years, the results again underscore the growing importance of IT in health care:

• Forty-eight percent (48%) name greater emphasis on data-driven clinical care (including evidence-based medicine and advanced care management programs).
• Thirty-one percent (31%) cite the development of portable, shared electronic health records.
• Twenty-nine percent (29%) identify increasing prevalence of pay-for-performance initiatives.

With regard to the adoption of electronic medical records (EMRs), more than two-thirds (68%) of those respondents who work for hospitals, physician practices or health insurers say their organization has increased or accelerated their investments in clinical IT and EMRs and an additional 15 percent plan to make new investments soon. However, only one-third of them say they are working with other local health organizations on these initiatives.

Conversely, 38 percent say slow adoption of IT poses the most serious threat to the health care industry, closely followed by rising medical costs (37%) and the increasing number of uninsured/or under-insured (34%).

Interestingly, support for universal health insurance is relatively strong, with 49 percent of respondents in favor and 37percent opposed. However, 94 percent say such coverage is either highly unlikely or somewhat unlikely to happen during the next five years.

So we can all sing Kum-Ba-Ya over health information technology while appreciating that the problems of getting this stuff communicated between organizations are barely understood, let alone overcome. And that the disease management programs that the core of "data-driven care" are also in their infancy.

Oh and there seems to be no hope for the uninsured, and less than half of the crowd even cares.

In case you need to know more about Medicare as a whole and Medicare drug coverage, there are two new excellent web based presentations from Traci Neuman at the Kaiser Family Foundation. They are Medicare 101 and an overview of Medicare Part D’s Rx benefit. Both excellent and well worth sitting through.

Yesterday I left you hanging with three scenarios as to the future of the system; muddling through; complete collapse leading to government takeover; and system self-reform. The Industry Veteran thinks that I’m on the right track but that I need to consider some other alternatives:

Your alternative scenarios for health care economics seem a bit too despondent to me. You’re quite right to say that the stakeholders in power will try to muddle along with the same bailing wire approaches, but that’s the way the American political economy works. Our system disdains national planning, preferring instead to let the market (i.e., the oligopoly capitalists) decide. That means things must approach the crash and burn stage before our power elite considers making substantive corrections. (Any time they do point to a distant crisis well in advance of its onset, e.g., Bush and Social Security, they’re usually trying to rig the system even more radically in their favor.) Throughout American history this predisposition has often placed progressives in the anomalous position of hoping for worse because that’s the only road to better. Now as far as your alternative scenarios, #3 is wish-upon-a-star thinking. Hope is not analysis and any expectation that the rational adults in health care manufacturing will act wisely by curtailing costs seems too far fetched to take seriously. More likely the earth would cease to revolve upon its axis, continents will crash into one another and the meek will inherit the earth. The question then becomes, what will cause muddling through to fail and turn the health care system into something approximating a nationally administered system? And when will this happen?

You’re probably correct in stating that health care emerges as a more acute crisis during recessions and, right now, the business cycle appears to be on an upswing. This means 2008 may not be a pivotal year for reorganizing health care. Again you’re correct to point out that the old moles of aging baby boomers (talkin’ ’bout my generation) and the ever escalating costs of new health care technology keep burrowing beneath the ground, making the soil ever more friable for fundamental change. What are some other factors at work here?

(1) I look for small employers and state-local governments to stagger beneath the inequitable, irrational weight of health care costs before the large companies do. Even though the top 500 usually maintain self-funded health insurance programs for their employees, health care also causes problems for them, not so much in terms of the absolute costs, but from the competitive disadvantage they suffer if they have to compete against Japanese or other foreign companies who don’t bear such a heavy a burden. I recently reviewed some of the debates over Social Security when Roosevelt proposed it during the 1930s. Auto moguls such as Knudsen at GM favored it because they felt confident of their ability to pass along the cost. Seventy years later automotives are a much more mature industry. Foreign competition constrains their ability to pass through the health care costs but I don’t look for them to take the lead in nationalizing health care. They’ll be around to play a supportive role. I also imagine that other businessmen clearly understand that the current system creates a forced transfer of income and wealth from themselves to health care manufacturers and they will no longer continue to permit it.

(2) The increasing stratification of health care into a two-tiered system represents too obvious a threat to the establishment’s managers. Just as the Vietnam war in the late 60s and early 70s caused students at elite universities to question some fundamental tenets of our entire political and economic system, stratified health care can disaffect wide swathes among the middle-aged and elderly. If social class works through a health care system to baldly determine life or death, too many people can ask too many, disruptive questions. We can see signs of this already from the fact that many elderly, sick people in the middle class must "spend themselves down" to Medicaid eligibility and the states are growing more stingy with these programs all the time.

(3) There is also the possibility, one to be fervently desired, that by 2008 popular discontent with the Iraq war and Bush’s overreach on gutting Social Security will provoke a pervading discontent with his entire program of crony capitalism and evangelical, social Darwinism. (I love your phrase, "theocratic fascism," but the last time I used it, my colleague in New York said, "High fallutin’ terms like that are why John Kerry lost.) If disenchantment with the reactionaries does come about, it’s entirely plausible that the next president, Democrat or Republican, may create a nationally administered health care program as a sort of less contentious sop to a broader, popular discontent. Nixon, after all, pushed the EPA partly as a distracting palliative to his Vietnam war.

In summary, 2008 may not be the year of reckoning, but as Bogart’s Rick said to Ilsa, "Maybe not today, maybe not tomorrow, but soon, and for the rest of your life."

Since I wrote about the Center for Practical Health Reform and their intention to head off a perceived collapse in private sector health insurance at the pass,
a little more attention has been focused on the whole issue. How bad is
the current cost crisis and how long can the rest of the economy go on
pushing money into it?  The press is flowing in two flavors. First, we can’t afford the costs. Second, we’re going to pay more for more cool technology.Here’s the word from the Detroit insurers that fund their health care programs by selling cars on the side (sorry for stealing Uwe’s line): 

Health
care costs are moving front and center as the single biggest factor
impacting corporate profits and U.S. companies’ inability to compete
globally……Health expenditures rose from $1.3 trillion in 2000 to
$1.7 trillion in 2003. The health sector consumed 15.3 percent of the
nation’s gross domestic product in 2003, up from 13.3 percent in just
three years. Industry observers say the problem is bigger even than in
the 1980s, before managed care came on the scene and curbed increases
for a little more than a decade before costs started spiraling again.

Those
who pay for health care — businesses, government and individuals —
are becoming more vocal about the need to bring costs in line. But
that’s about where the agreement begins and ends.

Some rather astute observers of the system think that it can’t take much more of this. My old boss Ian Morrison and his colleagues at Harris have been suggesting that the 2008 election is about the time when this issue will get national attention.  THCB regular The Industry Veteran seems to agree:

I’ve
said it for a long time; at a certain point the top 500 (non-Pharma)
corporations will no longer be able to pass along the exorbitant health
care costs and at that point, they will pose the biggest threat to Big
Pharma. It may not come now because, as this article makes plain, some
of the big companies are pursuing diversions such as
pay-for-performance, evidence-based medicine and so forth. I give it
until about 2008 for the big companies to recognize that IT and efforts
to rationalize providers wonÂ’t adequately control costs. At that
point, if our old buddy John Dingell is still around, he may emerge as
a co-grandfather of a national health care system.

The
folks at the Center for Practical Health Reform want to get the whole
of the industry together to get past their differences, essentially so
that the health care industry as a whole can keep manufacturing an
affordable product for their customers. The problem is that the pace of
the technology change that is the major reason for driving these costs
up is not slowing, it’s speeding up. Just this weekend here’s one
article about new scanning technologies, and another about defibrillators.
Clearly there are incentives to do too many scans, and clearly there
are going to be even more incentives to put defibrillators in even more
people now that it’s been approved for virtually anyone with any heart
condition (such as a pulse). So the system will produce more services
connected to those devices. (And perhaps these scans and devices will
save other costs down the road–but that’s a separate argument we don’t
yet want to have).

But
the point is that as these costs get added onto the system, government
will more or less keep paying just as it always has over the last 30
years. Although employers are starting to eject themselves from the
system, enough of them will keep paying that disaster will not
immediately strike. In no event will there be a huge flow of money out
of the system. Why do I have some confidence in saying this?

Health
care costs are highly related to recessions, and the relative
difference in health costs to overall GDP growth causes alot of fuss.
And it does have a big impact. In the early 1970s we had Nixon’s plan
for universal care and price controls (My, how have those Republicans
changed!). In the early 1980s we had DRGs for Medicare inpatient care,
and in the 1990s we had managed care. Each of those was a reaction to
the high level of health care costs coming out of a recession as this
chart shows.

I’m beyond baffled by this NY Times report: 60 Companies Plan to Sponsor Health Coverage for Uninsured. I’m taking 2 aspirin and will comment in the morning.

The Washington Monthly has an excellent article on care quality in the VA health system. It’s well worth reading. There’s also an excellent analysis of that article by John Rodat at Health Signals New York.

I won’t say too much more other than all the studies about how well the VA is doing with DM have all been read here by diligent THCB readers, and the idea about throwing the VA open to everyone was postulated by Dave Moskowitz on these pages a few months back. I don’t know whether Phillip Longman, the new article’s author, is merely thinking the same great thoughts — but if not, well Dave, theft is the most sincere form of flattery!

My only add would be that I had a an excellent nurse practitioner, Susan Johnston from the VA facility in Temple, Texas, on my panel at the disease management for diabetes conference last week. Sue leads the telemedicine program in the VA in central Texas and using a system from Health Hero Network she has achieved remarkable results in improving the health outcomes of patients with diabetes on her program. It’s clear that the VA is leading the way in the use of telemedicine for the care of the sickest diabetics, and it’s also clear that she and her colleagues are as dedicated and as clinically excellent as any in the nation. And any significant improvement in care whether here or elsewhere in the world needs both dedicated and talented people and new systems of care.  As the IOM reported in Crossing the Chasm we can’t keep pushing our people to do more and do better without changing the system of care in which they work.

UPDATE: The ever wonderful Jane Sarasohn Kahn points THCB to a study from RAND put out last December that shows that 12 VA regions bested their surrounding community practitioners on chronic care, preventative care and disease management–and in fact any care that required a tracking process.