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The 100% Estate Tax

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By MERRILL GOOZNER

There is a dangerous but beguiling econometric logic behind the idea that turning Medicare over to the insurance industry will lower health care costs. It’s an idea that could catch on if the general public became convinced that there is nothing we can do acting together as a society to lower the cost of care. Only the market can do it, the Republicans claim. Force seniors (or the poor or anyone, for that matter) to have more skin in the game, and they’ll use their clout as consumers to separate the wheat from chaff in modern medicine. Expensive, wasteful tests, procedures, and drugs will wither for lack of customers.

Democrats, in attacking the Republican plan that passed the House yesterday, relentlessly hammered away at the cost to future seniors of having “more skin in the game.” Two-thirds of the cost of care within a decade of Medicare privatization in 2023 will fall on them. But the 2030s must seem very far away to people in their 40s and 50s. Isn’t it likely that they won’t think about that far-off time, but instead grab on to the promise of future lower costs, which, let’s be frank, the Affordable Care Act (health care reform) may not be able to achieve.

So here’s the real argument young and middle-aged people need to hear, and the real reason why the “more skin in the game” argument can never work for seniors or other vulnerable populations, including them when they reach that age. Seniors and the poor account for over half of health care spending. Within those groups, 5 percent of the population accounts for 50 percent of health care costs; and 20 percent of the population accounts for about 80 percent. These costs come for the most part at times when economic incentives have no influence at all on medical decision-making: in medical crises; in treating chronic conditions; and, for most Medicare patients, in the last six months of life.

That’s why a voucher program for Medicare, which will shift an increasing share of those inevitable costs onto the elderly themselves, can fairly be categorized as a 100 percent estate tax or death tax. People under 55 need to know that if the plan crafted by Rep. Paul Ryan were passed, most of them will never have a cent to leave to their children. It will all go to the health care industry to support the American way of dying.

Merrill Goozner has been writing about economics and health care for many years. The former chief economics correspondent for the Chicago Tribune, Merrill has written for a long list of publications including the New York Times, Financial Times, The American Prospect and The Washington Post. You can read more pieces by Merrill at  GoozNews, where this post first appeared.

The Health Insurance EHR

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By MARGALIT GUR-ARIE

Kaiser Health News recently published excerpts of an interview with the CEO of Aetna, Mark Bertolini. Interesting article and interesting subject, but one thing Mr. Bertolini said in connection with Aetna’s acquisition of Medicity, a vendor of Health Information Exchange (HIE) platforms, caught my attention: “We are as much a health information technology company as an insurer”. United Healthcare has also been engaged in significant HIT acquisitions for quite some time. They bought an EHR, Care Tracker, and an HIE vendor, Axolotl, amongst other things. According to the Aetna CEO, in order to create a system that functions properly, insurers “have to be able to provide an infrastructure”.  So is this the future? Will health insurance giants be providing insurance coverage to customers, and HIT infrastructure, including EHR software, to physicians and hospitals?

Most HIT experts are forecasting consolidation in the EHR market, which is currently fragmented into hundreds of less than optimal disparate software products, but is anybody seriously contemplating that the emerging forces in health care technology will be the payers? If you think about this for a moment, and if you remember doctors’ plight that EHRs mostly benefit payers, this outcome doesn’t seem so far-fetched. After all, selling health insurance and selling EHRs follows pretty much the same paradigm.Continue reading…

Summary of CMS Proposed Rule on Accountable Care Organizations

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By JORDAN T. COHEN

(Second in a series. See Part 1.)

CMS recently released the proposed rule that will regulate PPACA’s Medicare Shared Savings Program (MSSP). The MSSP relies on the accountable care organization (ACO) model in order to generate and distribute savings. HealthReformWatch.com has discussed the general framework for ACOs before. Clocking in at nearly 500 hundred pages, the proposed rule helps to flesh out what was largely a philosophical exercise in cooperative health care delivery. Below are what I believe to be a number of key pieces of the proposed rule.

Proposed Rule Highlights

The 2 ACO Models – (425.7)

There will be two ACO models. The choice between models appears to be largely geared towards minimizing ACO risk while hospitals and providers are first bringing their ACOs online.

  • One-Sided Model: A one-sided ACO shares in the savings, but is not on the hook to share in any of the losses (i.e., costs surpassing the ACO’s benchmark as determined by CMS, see below).
  • Two-Sided Model: A two-sided ACO shares in both the savings as well as the losses.

Basic Time frame and Structure

Not surprisingly, ACO hopefuls must form an agreement with CMS directly. ACOs under the MSSP must last for not less than three years after the application has been approved. (425.18).  The performance period will be 12 months. The ACO must have at least 5,000 beneficiaries, and must include a sufficient number of primary care physicians to treat the ACO beneficiary population.Continue reading…

Did Nine Patients Have to Die?

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By MICHAEL KIRSCH, MD

Recently, nine patients died in Alabama when they received intravenous nutrition that was contaminated with deadly bacteria. This type of nutrition is called total parenteral nutrition, or TPN, and is used to nourish patients by vein when their digestive systems are not functioning properly. It is a milestone achievement in medicine and saves and maintains lives every day.

What went wrong? How did an instrument of healing become death by lethal injection? What is the lesson that can emerge from this unimaginable horror?

This tragedy represents that most feared ‘never event’ that can ever occur – death by friendly fire. No survivors. Contrast this with many other medical ‘never events’ as defined by the Centers for Medicare and Medicaid Services, such as post-operative infections, development of bed sores in the hospital or wrong-site surgery. Under the ‘never events’ program, hospitals will be financially penalized if a listed event occurs. Many physicians and hospitals are concerned that there will be a ‘never events’ mission creep with new outcomes added to the list that don’t belong there. Medical complications, which are unavoidable, may soon be defined as ‘never events’.

Do we need a new category of ‘never ever ever events’ to include those that lead to fatal outcomes?

The facts of the Alabama deaths have started to emerge.  Apparently, a water faucet in the pharmacy was contaminated. Protocols and processes are violated every day in all spheres of professional life; and we usually get away with them. The absence of serious consequences breeds complacency, which is shattered by an occasional tragedy. Isn’t it after a horrible traffic accident that a local government decides to erect street lights that were requested by local residents for years? I read earlier today that the Federal Aviation Administration is requiring extensive inspections of a few hundred airplanes when small cracks were discovered in a few of them. This followed a near disaster when a 5 foot hole burst open in the roof of an airplane during flight. The plane landed and all survived. Of course, a very different outcome was possible.

Continue reading…

Three Formulas

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By MERRILL GOOZNER

During the last election campaign, Tea Party-backed Republicans across the country rode to power on a tidal wave of advertising attacking health care reform as a cut in Medicare.  It is. If efficiency programs like the accountable care organizations being formed across the country don’t hold down spending by about $500 billion over the next decade, an Independent Payments Advisory Board would make recommendations for holding growth in Medicare spending to the growth in the domestic economy (GDP) plus one percentage point.

In most years when the economy is humming along, that would be about 4 percent. Over the past decade, health care spending for seniors grew at about 6 to 7 percent — the same as health care spending for the rest of the population. So if the Medicare delivery system reforms don’t work, Congress will either have to adopt the IPAB’s recommendations or institute cuts of its own to ratchet down spending.

This week, President Obama upped the ante to meet his budget deficit reduction targets over the next decade. Medicare spending would be held to GDP plus 0.5 percent, another approximately $300 billion in cuts. About $50 billion would come from eliminating unnecessary errors and hospital re-admissions. The rest was unexplained.Continue reading…

Fostering Innovation in Healthcare IT

By JOHN MOORE

As in most sectors, innovation in healthcare IT (HIT) is by and large incremental. A tweak here and added feature there to some existing application, e.g., what we are seeing today from EHR vendors as they strive to meet meaningful use criteria. Occasionally, we may see a vendor develop something new and novel – one might put porting their EHR application onto an iPad as an example of such – but really, is that innovation or just an attempt to meet existing customer needs by tweaking software to meet the design criteria of a new form factor?

Innovation, true innovation that breaks from existing norms is exceedingly rare. Even in an industry sector such as HIT where we are seeing an unprecedented amount of money being spent, it has been difficult for this analyst firm to find real innovation that gets us excited and thinking beyond the limited constructs that seem to keep this industry perpetually incased, like an insect, in amber. Part of the reason lies with tradition (culture), another part with entrenched interests (existing/legacy IT vendors) and arguably the most important business models.

But that may begin to change as nothing elicits innovation more than a substantial change to core models of doing business. The Center for Medicare and Medicaid Services (CMS) recently released proposed rules for the establishment of Accountable Care Organizations (ACOs), which is a move towards bundled payments. Here in Massachusetts, the Governor announced introduced a bill as well to “expand the use of alternative payments and significantly reduce fee-for-service payments by end of 2015.” It is actions such as these that will open the floodgates ushering in some truly innovative approaches to optimizing the delivery of quality care.Continue reading…

Cato’s Cannon on Medicaid–Right but Wrong, again

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One of my sparring partners, Cato libertarian whizz-kid Michael Cannon, has a new column out about Medicaid and why block grants would stop a big problem. He’s right about the problem. Because states get a matching (and in some cases way more than matching) grant from the Feds, they are incented to make their Medicaid programs more expensive. Cannon echoes Ryan’s solution which is to just give them a fixed amount of money (the block grant). But that would instead incent states to spend as little as possible on Medicaid, making the program even worse for poor people than it already its–as John Goodman and others often point out. Of course none of these right-wingers, nor “sensible”centrist Dems like Tom Daschle are prepared to say the correct thing. Abolish Medicaid and fold it into the universal health insurance program that the ACA (sort of) is. Or better yet put everyone into one central pool and have them all buying into a central exchange–proposed in the House version of the ACA but skewered in the Senate.

When Projects Fail, Should We Fault the Technology?

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By JOSEPH KVEDAR, MD

Last weekend, I saw the film “Up In The Air.”  Ok, so I am a few months behind in my movie viewing.  That is what the Netflix lifestyle does for you.  There is an interesting connected health analogy running through the film and I want to explore it with you in this post.

George Clooney plays the lead character and he spends a lot of time on airplanes.  His company outsources corporate downsizing and his job is to travel the country showing up at a firm to give the bad news to the employees that are being let go.  A much younger woman, who is up and coming at his company, comes up with the brilliant idea of communicating to each individual losing his/her job by videoconference (in the movie, it looks quite a bit like Skype).  The idea is to save on travel costs by having folks like Clooney communicate by video all over the world without leaving their desks.

We first watch Clooney’s character object to the idea.  He believes the idea will never work, claiming that there is a fine art to firing people and you can’t do it over the Internet.  We then watch them perform pilot tests (they are on site at a company being downsized, but do the firings from a different room via video).  In the end, it does not work.   The last scene of the movie is about him being told he must get back on an airplane and travel to a site to practice his craft.  Video just doesn’t cut it when you are getting fired.

Those of you who have been part of connected health program adoption will see the obvious parallels.Continue reading…

Near Chicago next week? Meet Todd Park!

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If you’re near or in Chicago next Weds (April 27) and you care about health data, applications or innovation, we highly recommend that you get to a Community Forum on the Health Data Initiative. The formal invite & details follow–Matthew Holt

James M. Galloway, MD, Acting HHS Regional Director and Regional Health Administrator, Region V invites you to a community dialogue hosted in Chicago on the Health Data Initiative with Todd Park, HHS Chief Technology Officer.  Todd Park joined HHS as Chief Technology Officer in August 2009. In this role, he is responsible for helping HHS leadership harness the power of data, technology, and innovation to improve the health and welfare of the nation.

One of his priority projects, on behalf of Secretary Sebelius, is the Community Health Data Initiative.  The Community Health Data Initiative is a public-private collaboration among federal, state, local and private organizations, that aims to make indicators of health available to a broad array of users.  Health indicators represent data from populations or groups of individuals that can be used to reflect health trends or differences in health status, cost, quality, and health system performance.

This is an opportunity for public health officials, businesses, academic institutions, providers, hospitals, health plans, and advocates to learn more about the Community Health Data Initiative, in particular, on the use of health and health care data to improve performance.  More information on the initiative can be found at http://www.hhs.gov/open/datasets/communityhealthdata.html.

We hope that you can join us in a community dialogue with Todd Park!

When: Wednesday, April 27th from 2 – 4 p.m.

Where: The MidAmerica Club (inside the Aon Building)
200 E. Randolph, 80th Floor
Chicago, IL 60601

Why: You can help improve the health of our nation and the reach of this program in our community.

RSVP: Space is limited. Please RSVP for this free event by Friday, April 22nd to Ms. April Dublin at ap**********@*hs.gov or 312-353-1385

Trump wants Canadian health care?

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He may be the new darling of the tea-party, and he may be obsessed with Obama’s birthplace, but the putative leading dark horse outsider for the Republican nomination Donald Trump apparently prefers socialized medicine! Here’s what a conservative blog reports him writing in 2000: “We must have universal healthcare,” wrote Trump. “I’m a conservative on most issues but a liberal on this one. We should not hear so many stories of families ruined by healthcare expenses…..We need, as a nation, to reexamine the single-payer plan, as many individual states are doing.” I wonder how keen the Tea Partiers will be when they find out about that–even though of course for the vast majority of the Tea Party faithful Canadian-style single payer would be a much better financial deal than what they have now. And yes for you liberal wonks, I know Canada doesn’t have socialized medicine, but I don’t think the average Tea Partier could explain why!

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