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Above the Fold

Why High Deductible Plans Matter

Jun 19, 2012• 27

By Paul Levy

Someone once showed me an analysis that demonstrated that the sum of workers’ salaries and benefits has stayed remarkably constant in real terms over the last two decades. This means that companies have compensated for the increasing cost of health insurance over time by holding back on wage increases.

You can understand this. After all, if companies are not able to increase the price of goods and services they sell to the public, they need to hold factor costs relatively constant. So if it was costing them more and more to provide health insurance to their workers, an offsetting amount would have to be removed from possible wage increases.

This dynamic is still in place, but it is showing up in a different way, by shifting costs to workers in the form of higher deductible health insurance policies. Deductibles are different from co-pays, where you plunk down $15 or $20 for each appointment or prescription. With deductibles, you pay the first costs incurred as you and your family make use of the health care system, the entire cost of the office visit or of the prescription, until a preset amount is reached. After that level is reached, you still pay the co-pays. A recent story in the Washington Post documented this trend.

Currently, this kind of high-deductible policy is often combined with health saving accounts that are funded by the employer. These accounts let patients buy medical services and drugs with pretax dollars. So, although your insurance plan might require you to pay more of a deductible out of your own money, you could still use the HSA to cover those out-of-pocket expenses.

The Brave New World (of Health Insurance Exchanges)

Jun 19, 2012• 1

By Trudy Lieberman

New York Times reporter Abby Goodnough’s piece last week about the health insurance exchange in Massachusetts is instructive—especially since other states are trying to set up their own versions of these shopping bazaars where the uninsured can buy coverage if the health reform law eventually takes effect. For the last three years we have been suggesting there’s an untold story in the Bay State about how the law is working, so we were glad to see Goodnough’s reporting and offer a tip of the hat.

Goodnough gets into the subject with a success story: the tale of Peter Kim, who lost his employer-sponsored health insurance in 2005 when he opted for a career as an independent consultant. He found that shopping for insurance in the open market was a complicated affair, and that most plans were too expensive. He eventually chose coverage for catastrophic illness.

Then he discovered his state’s health insurance exchange, called the Connector. After just an hour of research, he found a plan with a monthly premium of only $1,086, a better deal than the coverage he previously had. And ideally, that’s how exchanges should work, Goodnough said.

The trouble, she reports, is that so far the Connector has not drawn enough full-paying customers like Peter Kim.

As Goodnough notes, the exchanges have drawn little journalistic scrutiny so far, despite their key place in health reform. (And, we note, despite the fact that they grew out of initiatives backed by former Massachusetts governor and current presidential candidate Mitt Romney.)

Ozombiecare

Jun 19, 2012• 6

By Matt Barry

President Obama’s push for near-universal health insurance coverage may be harder to kill than most zombies.

If the Supreme Court decides to take a metaphorical stake to Obama’s health-care overhaul law and tosses the individual mandate out on the front steps of the court, there could still be life left in that battered and bruised corpse.

Bloomberg Government senior health policy analyst Peter Gosselin took a close look at various alternatives to the individual mandate, should the court rule against it. Gosselin’s study, “A Plan to Replace the Individual Mandate If the High Court Strikes It Down,” finds that a voluntary, auto-enrollment process — similar to that used to enroll employees in corporate 401(k) retirement plans –could be an effective substitute.

Gosselin found that “even if auto-enrollment performs at a lower level of its effectiveness in retirement savings, it could offset much or all of the non-group enrollment loss of six million people expected if the mandate is overturned.”

As important as the sheer numbers of people, the study found that auto-enrollment “could largely restore the mix of young and old, healthy and unhealthy people that the mandate was intended to ensure and that’s needed to make an insurance system work well.”

Depending on how the high court rules, we may need to rename the much fought-over law to Ozombie Care.

You Get What You Pay For

Jun 18, 2012• 15

By David Dranove

Two recent research papers remind us that it may be difficult to cut U.S. healthcare spending without harming quality. The first, written by a research team led by University of Chicago economist Tomas Philipson, appears in the latest issue of Health Affairs and has deservedly garnered a fair bit of media attention. The authors examine cancer spending and survival times for patients in the United States and ten European countries during the period 1983-1999 (later data were not available.) Their data confirm what we already know about health spending; the average cost of treating a cancer patient was about $15,000 higher in the United States. But the data also show that the typical U.S. cancer patient lives nearly two years longer; most of the difference is attributable to prostate and breast cancer patients. The gain appears to be due to greater longevity rather than early diagnosis. Using generally accepted measures of the value of a life, they conclude that the benefits of additional health spending outweigh the costs by a factor of 4:1 or higher. The latter calculation does not consider QALYs (quality adjusted life years) and so may be overstated. The authors acknowledge that other nations may do a better job of cancer prevention, so that their overall approach to cancer may be superior to that in the U.S., but they can find no evidence of this one way or another.

Philipson’s study suggests that U.S. healthcare consumers may get a substantial bang for their higher bucks. Maybe the U.S. system is not so inefficient after all. What about efficiency within the U.S. system? Some providers are far more expensive than others. Is the higher cost worth it? A new study by a team led by MIT economist Joseph Doyle, and released as an NBER Working Paper, suggests that you may get what you pay for within the United States. Doyle and his colleagues ask whether higher cost hospitals in the United States achieve better outcomes than lower cost hospitals. It is not easy to answer this question, because higher cost hospitals may admit more severely ill patients. This results in a statistical problem known as selection bias that is difficult to eliminate with available severity measures.

A (Real) Tragedy at the CDC

Jun 18, 2012• 9

By PAUL LEVY

At the recent Health Care Quality Summit in Saskatoon, Sarah Patterson, the Virgina Mason Medical Center expert on Lean process improvement, noted, “I’d rather have no board rather than an out-of-date board. They have to be real.” She was referring to the PeopleLink Board that is placed is key locations in her hospital to provide real-time visual cues to front-line staff as to how they are doing in meeting quality, safety, work flow, and other metrics in the hospital.

Now comes the CDC, announcing in April 2012, that 21 states had significant decreases in central line-associated bloodstream infections between 2009 and 2010.

CDC Director Thomas R. Frieden, said “CDC’s National Healthcare Safety Network is a critical tool for states to do prevention work. Once a state knows where problems lie, it can better assist facilities in correcting the issue and protecting patients.”

I am trying to be positive when progress is made, and I am also trying to be respectful of our public officials — whom I know to be dedicated and well-intentioned — but does Dr. Frieden really believe that posting data from 2009 and 2010 has a whit of value in helping hospitals reduce their rate of infections?

Try to imagine how you as a clinical leader, a hospital administrator, a nurse, a doctor, a resident, or a member of the board of trustees would use such data. Answer: You cannot because there is not use whatsoever.

I am also perturbed by the CDC’s insistence on using a “standardized infection ratio” as opposed to a simple count of infections or rate of infections per thousand patient days.

The Coming Boom for Hospital Chains – and Bust for Non-Profits

Jun 18, 2012• 12

By E. Thomas Wood

For more than a year, I have immersed myself in the history of for-profit hospital chains and their associated enterprises. My goal is to produce an account of the for-profit sector that will be a valuable resource to all parties involved in the serious health care policy-making that must surely take place in coming years.

Along the way, I have begun to understand the pressures that will soon make for-profit provider chains an even greater force than they already are – and will lead to an existential crisis in the non-profit hospital sector.

Hospitals wield immense influence in every city and county in the U.S. They are always among the largest employers in town. They touch the lives of all in the community as the sites of all births, most deaths and many health events in between.

Even the smallest hospital, in the smallest town, is worth tens of millions of dollars. Thus, for example, buyers in 2010 paid $28 million for a 124-bed facility in Marion, South Carolina (population 7,000), and $86 million for a 108-bed hospital in Ottumwa, Iowa (population 25,000). And at the upper end of the scale, another buyer acquired the 2,000-bed Detroit Medical Center for $1.5 billion.

Those buyers were for-profit hospital chains, and the sellers were non-profit operators. Some of the factors motivating such transactions have been around since the advent of the for-profit chain era in the 1960s – including inadequate access to capital for charities and local governments that needed to upgrade their hospitals, competitive pressure from deep-pocketed for-profits, and crises arising from poor management and governance. Although not-for-profit hospitals have long been coping with those issues and have often chosen to solve their problems by selling out to the for-profit chains, eighty percent of American hospitals are still non-profits, with about a third of those being government-owned. Those proportions are about to change dramatically.

Safe Skyping: The Evolving Doctor-Patient Relationship

Jun 18, 2012• 4

By Jane Sarasohn-Kahn

Skype and videoconferencing have surpassed the tipping point of consumer adoption. Grandparents Skype with grandchildren living far, far away. Soldiers converse daily with families from Afghanistan and Iraq war theatres. Workers streamline telecommuting by videoconferencing with colleagues in geographically distributed offices.

In the era of DIY’ing all aspects of life, more health citizens are taking to DIY’ing health — and, increasingly, looking beyond physical health for convenient access to mental and behavioral health services.

The Online Couch: Mental Health Care on the Web is my latest paper for the California HealthCare Foundation. Among a range of emerging tech-enabled mental health services is videoconferencing, for which there is a growing roster of choices for platforms that market a variety of features beyond pure communications.

Why the Supreme Court’s Healthcare Decision Will Mean a lot … and Not so Much

Jun 18, 2012• 4

By Bob Wachter, MD

Like waiting outside the Vatican for the puff of white smoke, the nation sits on edge awaiting the Supreme Court’s ruling on the Affordable Care Act. The ruling, which is likely to be announced next week, could toss out the entire healthcare reform bill, chop off one of its limbs (probably the so-called individual mandate), or leave the ACA intact. Whatever the ruling, it will be chum for the blogosophere, particularly in the heat of presidential silly season.

The two fundamental challenges to American healthcare today are how to improve value (quality divided by cost) and how to improve access (primarily by insuring the tens of millions of uninsured people). The bill sought to address these twin challenges in ways that were complex and intertwined. I’ll argue that a decision by the Court to throw out all or part of the ACA will have a profoundly negative effect on the access agenda, but surprisingly little impact on the value agenda. To understand why requires that we focus less on the bewildering details (mandates, insurance exchanges, PCORI, CMMI, IPAB, etc.) and more on some big picture truths and tradeoffs.

The job of any healthcare system is to deliver high quality, safe, satisfying care to patients at the lowest possible cost. Although America certainly does specialty and high tech care like nobody’s business, on all of the key dimensions of value we aren’t very good. The numbers tell the sorry tale: we provide evidence-based care about half the time, there are huge variations in how care is delivered, we kill 44,000-98,000 patients per year from medical errors, and we spend 18% of our gross domestic product on medical care, far more than any other country.

The SCOTUS Pregame Show

Jun 17, 2012

By BRADLEY JOONDEPH

This post is intended for those who do not follow the Court’s work closely, but are tuning in now largely because of the ACA decision. (For avid Court watchers, this stuff is terribly obvious, so I apologize.) My goal is just to briefly explain what work is left for the Court this Term, and how it might affect the timing of when HHS v.Florida (and Florida v. HHS and NFIB v. Sebelius) are handed down.

First, the numbers. Setting aside the ACA cases, the Court essentially has twelve other decisions to hand down. (I say essentially, because Miller v. Alabama and Jackson v. Hobbsare separate cases, though they raise the same basic Eighth Amendment question. Thus, they are sure to be decided together, whether in two opinions or one, and probably with the same majority opinion author.) Those are, in the order of argument:

1. First American Financial Corp. v. Edwards (argued November 28)
2. Williams v. Illinois (argued December 6)
3. Knox v. SEIU (argued January 10)
4. FCC v. Fox Television Stations (argued January 10)
5. United States v. Alvarez (argued February 22)
6. Southern Union Co. v. United States (argued March 19)
7. Miller v. Alabama and Jackson v. Hobbs (argued March 20)
8. Christopher v. SmithKine Beecham Corp. (argued April 16)
9. Dorsey v. United States (curvelined with Hill v. United States) (argued April 17)
10. Salazar v. Ramah Navajo Chapter (argued April 18)
11. Match-E-Be-Nash-She-Wish Band v. Patchak (curvelined with Salazar v. Patchak) (argued April 24)
12. Arizona v. United States (argued April 25)

The Court will hand down one or more opinions–almost certainly more than one–this coming Monday, June 18. The Court will then announce–probably on Monday, probably before noon–whether it will hand down any more opinions later next week. Of course, it will not announce which opinions, just whether it will hand any more down.

The KP Model in the UK

Jun 17, 2012• 1

By Richard Hoey

I’ve had a couple of meetings recently with leading figures in UK health policy – one of them a senior figure at a doctors’ organisation, the other at a private health company – who both talked excitedly about the lessons Britain could learn from the US.

That’s rarer than you might think. Our National Health Service may be cautiously embracing market-led reforms, but there’s still plenty of scepticism about the US’s full-on competitive system, and people here tend to be nervous about citing it as an inspiration.

Still, the two figures I am referring to, both leading players in the British Government’s NHS reform programme, were talking not about US healthcare as a whole, but about one particular organisation with something of a cult following on this side of the Atlantic.

I am referring to Kaiser Permanente, and its ideas are about to become very big over here.

Kaiser is one of those iconic organisations that aren’t just known for what they do, but whose names come to define their particular way of doing things – in Kaiser’s case, managed care.

It is the classic managed care organisation, running all the disparate parts of the local health system as a fully integrated whole, and deftly incentivising doctors to make sure patients receive their care in the part of the health system where it can be delivered most efficiently.