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Above the Fold

Federal Debt, Student Loans and the Physician Workforce

Oct 24, 2011• 3

By Ian Metzler and John G. Meara MD

As of June last year, Americans now owe more in student debt than they do in credit card debt. Student borrowers are winning the dangerous debt race as both amounts hurtle toward the $1 trillion marker, student debt rose by over 500% since 1999 (1). To put this in perspective, student debt has increased at nearly double the rate of inflation seen in the housing bubble that caused the recent financial crisis. There are foreboding similarities between real estate and education. Until 2008, it was assumed that both commodities would unfailingly rise in value and that the market was far from saturated. However, the number of unemployed college graduates is rising and a recent report found that two out of five student loan borrowers were delinquent on their payments at some point in the first 5 years of their loan (2). Moreover, unlike credit card or mortgage debt, student debt is not diffusible through bankruptcy, it stays with borrowers for life.

Despite this unstable situation, in August 2011 Congress passed the Budget Control Act that will abolish subsidies from a pillar of education finance—the Federal Direct Stafford loan. Although undergraduates with the loan will continue to receive subsidies, graduate students will start accruing interest while still in school. With the skyrocketing costs of higher education and the increasing time it is taking post-grads to pay off their loans, this amount adds up quickly. For example, a medical student who matriculates in 2012 and receives the unsubsidized Stafford loan for all four years of her schooling will graduate with $5000 more in debt than a medical student who graduated this year, all resulting from interest charges that accrued while she was studying full time. It often takes medical students 10 years or more to repay all their debt, and in that time interest will continue to add up so that she actually pays $10,000 just for the interest on that single, federally-provided loan. In total, $18 billion is being passed off onto graduate students over the next ten years (3) The removal of subsidies is a subtle step but it sends a strong message. If the federal government continues to retract its commitment to financially support higher education, it risks three major effects: exaggerating the student debt crisis, inhibiting diversity in higher education and discouraging the pursuit of non-profit or socially responsible careers.

Gmail offline–not as easy as using toothpaste

Oct 23, 2011• 1

Tonight I’m getting on an 18 hour flight with no WiFi, so this morning I spent 20 minutes trying and failing to first download, then to open, then re-find the Offline Gmail app from Google. Which has changed since it was part of Gears a while back and now only works on Chrome–too much consternation from those who’d been using it the old way (as I did on an older computer). Except it doesn’t work. Or at least I can’t find it to make it work–I cant even find the place to find the apps I’ve downloaded from the Chrome store (yes, it’s the only one I’ve downloaded). This wouldn’t merit a mention on THCB until I read in a NY Times article about educating children without computers. In it is this priceless quote about computer technology from Alan Eagle, a senior Google employee who sends his kids to a school with no computers in it: “It’s supereasy. It’s like learning to use toothpaste,” Mr. Eagle said. “At Google and all these places, we make technology as brain-dead easy to use as possible. There’s no reason why kids can’t figure it out when they get older.” And that arrogance is the reason why Google will eventually fade. Clearly Mr Eagle has never used the Chrome App for offline Gmail. But perhaps he’ll come round to my house and help me find it!

CMS Wants Docs to Ante Up to ACO Poker Game

Oct 21, 2011• 59

By Michael Millenson

In a high-stakes political, clinical and economic poker game that goes by the name of Accountable Care Organizations (ACOs), the Centers for Medicare & Medicaid Services (CMS) has just issued a call for doctors and hospitals to grab some chips and ante up.

The set-up goes like this: one of the biggest potential changes in how health care is actually delivered contained in the Accountable Care Act was ACOs. They’re voluntary, but they allow doctor- or hospital-led organizations that take responsibility for coordinating the care of at least 5,000 Medicare beneficiaries to get reimbursed at a higher rate for providing better-quality, lower-cost care. It’s supposed to be a win-win-win for providers, patients and taxpayers and part of a more general move towards “value-based purchasing.”

The problem is that the draft rules proposed by CMS for ACOs back in March looked like a sucker’s bet. Not only were the requirements complex and expensive, the rewards were meager and the odds of winning were unattractive, particularly considering the initial costs to set up an ACO. The big health care systems and physician organizations that had been clamoring for a seat at the table when ACOs were first proposed told CMS they didn’t like the “house rules” and weren’t going to play. Although the concept of ACOs has deep bipartisan roots, a group of Senate Republicans anxious to pounce on any administration shortcomings jumped in with “serious concerns” about one more possible ObamaCare failure.

A Doctor’s Vision for Medicare

Oct 21, 2011• 22

By H. Gilbert Welch, MD

Everybody knows what the federal budget’s long-term problem is. The president knows. The Republicans in Congress know. The Democrats in Congress know. The policy community knows. You know.

It’s Medicare.

I am a physician who has been studying Medicare data throughout my professional life. But now that I’m closing in on becoming a beneficiary, I am thinking more about what I’d like my Medicare program to look like.

My Medicare would be guided by three basic principles:

It should not bankrupt our children. Let’s be clear: Medicare is rightly the central source of concern in the deficit debate. Its expenditures are totally out of control, and represent a huge income transfer to the elderly from their children. It’s a program crying out for a budget.

So let’s pick a number — more specifically, a proportion of total economic output — to cap Medicare. Now the number is 3% to 4% of GDP. We can live with that. Distribute it to geographic regions based simply on how many beneficiaries live there. Expect howls of protest: Urban areas will complain their labor costs are higher; rural areas will complain they cannot achieve the same economies of scale. And everybody will argue that their patients are sicker.

Ignore them all: Make it a block-grant program. Sure, this raises other issues, but you get the principle.

For those who view this as a tea party solution, consider this: I drive a 1999 Volvo and live in Vermont — that should tell you something.

It should not waste money on low-yield medicine. I don’t change my Volvo’s oil every 1,500 miles, even though some mechanics might argue that it would be better for its engine. Nor do I buy new tires every 10,000 miles, even though doing so would arguably make my car safer. But in Medicare (as well as the rest of U.S. medical care) such low-yield interventions are routine.

Want Better Treatment From Your Doctor? Be Likeable

Oct 20, 2011• 7

By BRIAN GOLDMAN, MD

Whether at work or at home, pleasantries can make life a lot easier.

And based on the results of a study published in the October 2011 issue of the journal Pain, the same may be true in the doctor’s office.

Researchers from Ghent University in Belgium took forty men and women (seventeen men and twenty three women) – none of whom were health professionals – and showed them photos of six different patients labeled two each with negative traits (e.g. egoistical, hypocritical, or arrogant), neutral traits (e.g. reserved, or conventional), or positive traits (e.g. faithful, honest, or friendly). After viewing the photos, participants watched short videos of the same six patients undergoing a standard physiotherapy assessment for shoulder pain. Then they were asked to rate the level of pain the patients were experiencing while undergoing the assessment.

Here’s where it gets interesting. If two patients in the study had identical levels of shoulder pain, the study participants concluded that the patient with the positive attitude had worse pain than the one with the bad attitude. In other words, if you had pain and had a nice manner, your pain was taken seriously. If you had the same amount of pain and you weren’t deemed “likeable,” your pain was more likely to be ignored or underrated.

The Super Committee: Bracing for More Medicare Cuts

Oct 20, 2011• 4

By MERRILL GOOZNER

I attended a depressing forum on cost-saving ideas for Medicare to present to the Congressional “Super Committee” charged with coming up with $1.2 trillion in budget savings by the end of the year. The tone was ominous, best summed up by Mark Smith, president of the California HealthCare Foundation. “In times of crisis, meat-axes are taken to whole sectors. If you don’t believe me, ask the people who used to work for Lehman Brothers,” he said.

Here’s the backdrop. President Obama in his mid-September budget reduction plan called for coming up with an additional $320 billion in Medicare savings over the next decade, which would be on top of the half trillion dollars in Medicare cost reductions contained in the Affordable Care Act. The president would get there largely by cutting payments to hospitals and other providers, although the president also called for higher premiums on wealthier seniors for physician and drug coverage.

Will the Super Committee look for the same $320 billion in cuts to Medicare? A good case can be made that Medicare’s contribution to the $1.2 trillion recommendation should be less than what the president sought. The Congressional Budget Office’s current baseline projections for federal spending over the next decade has Medicare spending $7.4 trillion out of a total of $44 trillion. That’s 16.8% of ALL federal spending (defense, Social Security, discretionary domestic programs, you name it). Apply that 16.8% to $1.2 trillion and you get about $202 billion as Medicare’s “fair share,” not the $320 billion proposed by the president.

Still, there were precious few ideas at this morning’s forum that would come up with even a fraction of that total. Robert Berenson of the Urban Institute and Steve Phurrough of the Agency for Healthcare Research and Quality, both former top-ranking officials at the Center for Medicare and Medicaid Services, outlined a series of steps CMS could take to get better pricing, stop paying for uncalled for operations, and only pay the price of the “least costly alternative” when medical interventions are comparable. But most of those changes would require Congressional approval (fat chance), and none of the examples given (they spent a lot of time talking about implantable cardio-defibrillators, where an estimated 25% to 30% of the million operations each year are in patients who don’t really need them) raised more than a billion dollars.

Lessons from the CLASS Act

Oct 20, 2011• 1

By David Dranove

Last week, the Obama Administration decided not to implement the Community Living Assistance Services and Supports (CLASS) Act. This Act authorized the Department of Health and Human Services (DHHS) to sell a low price/limited benefit long term care insurance (LTCI) plan, provided that the plan would be actuarially sound. The Act also required DHHS to perform a 75 year financial projection. After a year of analysis, DHHS concluded that there was the plan could not cover its costs and so it pulled the plug on CLASS.

I first learned about CLASS when I was asked by a senior economist in DHHS to provide a strategic assessment of the business prospects for CLASS. DHHS officials were appropriately concerned that the low price/limited benefit plan would almost surely suffer from adverse selection and end up losing money. So they wanted to know whether CLASS could offer additional LTCI plans to cover the losses in the base plan. I persuaded Cory Capps (a former colleague and partner with BatesWhite, an economic consultancy) and Leemore Dafny (my current colleague at Northwestern) to help with the analysis. We shared ideas with economists working within DHHS.

We viewed this as a traditional market analysis. Anyone can enter a market and lose money – the base CLASS plan would be a poster child for this obvious point. We wanted to understand whether there were any opportunities to turn a profit in the LTCI market. We also wanted to understand why, if there are profits to be had, private insurers had not already exploited these opportunities?

The Untimely Death of Long-Term Health Insurance

Oct 18, 2011• 17

By Robert Reich

The Administration’s decision to pull the plug on long-term health insurance in the new healthcare law (so-called Community Living Assistance Services and Support or, as it was known by healthcare insiders, CLASS) offers an important lesson.

As written, the law had three incompatible parts.

First, it required beneficiaries to receive at least $50 a day if they had a long-term illness or disability (to pay a caregiver or provide other forms of maintenance). That $50 was an absolute minimum. No flexibility on the downside.

Second, insurance premiums had to fully cover these costs. In budget-speak, the program was to be self-financing. Given the minimum benefit, that meant fairly hefty premiums.

Third, unlike the rest of the healthcare law, enrollment was to be voluntary. But given the fairly hefty premiums, the only people likely to sign up would know they’d need the benefit because they had or were prone to certain long-term illnesses or disabilities. Healthier people probably wouldn’t enroll.

Yet if the healthier didn’t enroll, the program would have to be financed entirely by the relatively unhealthy — which meant premiums would have to be even higher. So high, in fact, that even the relatively unhealthy wouldn’t be able to afford it.

End of story. End of program.

Dr. Watson I Presume

Oct 18, 2011

By JOHN MOORE

Little over a month ago, IBM and WellPoint announced an agreement wherein WellPoint will deploy IBM’s latest and greatest super computer and artificial intelligence mega-mind Watson. Watson’s claim to fame was its ability to beat the human Jeopardy champions much like Big Blue beat reigning chess champion Garry Kasparov in 1997. Since that Jeopardy match, IBM has been quite vocal about its desire to apply Watson in the medical arena, we’ve been buried in press releases and briefings, but the WellPoint announcement is the first one of any real consequence. Having interviewed both IBM and WellPoint, following is our review and assessment.

Background:
Watson is a relatively new form of artificial intelligence, based to some extent on neural networks. What is unique about Watson is that it has been developed (trained) to understand the nuances of language. It is a question & answer system that uses among other techniques, natural language processing, to extract meaning out of unstructured data. In developing Watson for the Jeopardy challenge, one of the key design parameters was for Watson to answer a question in under three seconds – plenty fast enough in a diagnosis/treatment decision scenario. This is a key reason why Watson may have enormous utility in the healthcare sector where so much data is unstructured, the pace of change is so high and the ability to chose the optimum treatment patient plan for a given diagnosis is less than ideal today.

Why Not a Nurse?

Oct 18, 2011• 21

By John Goodman

After Hurricane Katrina hit New Orleans, several hundred thousand refugees descended on Dallas, Houston and other Texas cities. Many of them needed medical care. Unfortunately, Texas wasn’t prepared.

If a natural disaster hit Oregon, the victims would have fared much better. The state’s 8,500 nurse practitioners (NPs) are free to come to the aid of people in need of care, with no legal obstruction. In Oregon, nurses with the proper credentials and licensure may open their practices anywhere they choose and operate in the same capacity as a primary care physician without oversight from any other medical professionals. They can draw blood, prescribe medications, and even admit patients to the hospital.

In Texas, which has some of the most stringent regulations in the country, however, a nurse practitioner can’t do much of anything without being supervised by a doctor who must:

Not oversee more than four nurses at one time.
Not oversee nurses located outside of a 75 mile radius.
Conduct a random review of 10 percent of the nurses’ patient charts every 10 days.
Be on the premises 20 percent of the time.

Note that under the rubric of “nurse,” there are a host of subcategories. In general, nurse practitioners have the skills to prescribe, treat and do most things a primary care physician can do. They generally must have completed a Registered Nurse and a Nurse Practitioner Program and have a Masters or PhD degree. In addition, there are physician assistants, registered nurses, licensed vocational nurses, emergency medical technicians, paramedics and army medics. In most states, each of these categories has its own set of restrictions and regulations, delineating what the practitioners can and can’t do.