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Above the Fold
Capitol Shortage: Can the Two Democratic Parties Get It Together on Health Reform?
As an exceptionally grumpy American summer grinds to a conclusion, it is apparent that only a bipartisan solution will enable Congress and the Obama Administration to complete health reform. No, we’re not talking about co-operating with the Republicans. Other than a handful of contrarian Republican moderates on the Senate Finance Committee, at least one of whose votes might be needed for eventual passage, the Republicans are irrelevant to the final outcome.
No, the bipartisan solution we’re talking about is co-operation between the two Democratic parties represented in Congress: the “Safe-Seat” Democrats- the Pacific Heights/Beverly Hills/Berkeley Hills/Upper West Side/Harlem Democrats and the “Running Scared” Democrats from the western, southern and border states, who actually require independent and some moderate Republican support to get elected. These parties have very little in common other than the Capital D after their names.
The Right to Live
After generations in denial, doctors and lawmakers are paying attention to
the importance of allowing sick people a dignified death, and to the value of
helping patients and their families let go and say good-bye. Aggressive medical
intervention in terminal cases is increasingly considered an avoidable cruelty,
inflicted on a suffering patient by someone — occasionally a doctor, but more
often a family member — unable to acknowledge the inevitable.
As an intern, I see this almost every day, and I’m grateful that most
physicians now go out of their way to emphasize to patients and their families
the limitations of medical technology. Medical students attend lectures on
caring for dying patients, and medical journals remind doctors of the importance
of letting patients die with respect and, as far as possible, without pain.
But as an experience in my own family made clear, this newfound concern for a
good death can be taken too far during a patient’s final days.
Health Panels are a NICE Way of Improving Care and Controlling Costs
By ADRIAN BAKER
One of the proposals for health care reform is to have a panel of medical experts oversee Medicare, in order to improve quality and reduce cost. Butfalse accusations permeating the debate have scared people into thinking that would mean a government bureaucrat deciding what treatments you should or shouldn’t have, and would ultimately deny your grandma her vital drugs. Like any debate involving the future, fear of the unknown is going to be used by those who want to maintain the status quo for their own self interest. But health panels are not unknown. They have been used in Britain for ten years, and have proven to work.
Health panels are a simple enough idea: experts look at the evidence out there and make sure it’s the best that is available. They then make recommendations based on analysing hundreds of studies and consulting numerous stakeholders. The recommendations suggest the best form of treatment and care for a particular condition, or advise on areas your doctor may be unsure about.Continue reading…
Will Republicans Be Spoilers Or Problem Solvers on Health Care Reform?
In theory Congress’ return from recess next week could offer a new beginning to the health care reform process, giving everyone a chance to take a deep breath and recalibrate the components of change.
Nine months into the wrangling around a new Administration, the talk-show right has seemingly hijacked the discussion on health
care, Democrats’ signature issue, with the standard tools that demagogues have always used: leveraging popular prejudices with oversimplification, hyperbole, and distortion. The die-hard GOP faithful’s leaders – Gingrich, Palin and others (see this off-the-deep-end speech by Rep. Mike Rogers (R-Mich)) – are of course playing spoilers, independent of the cost. They hope to goad centrist voters into abandoning the Democrats so they can retake power. Witness South Carolina Republican Jim DeMint’s comment, “If we’re able to defeat Obama on this, it will be his Waterloo. It will break him.”
The problem with this approach is that we’re still early on in our national discussion about change and about health care. An increasing number of Americans may be frustrated with Democrats, but after 10 years of Republican rule, few Americans see them as a party of fresh ideas or having an interest in helping anyone but the wealthy and powerful. Americans may have short memories, but they likely still recall that Republicans were just thrown out for a multitude of significant sins. So if everyone you know sends around Obama-as-Hitler arguments, heckling and hoping the Dems will quickly self-destruct may seem like a reasonable strategy. It is doubtful, however, that the other 75 percent of us buy that thinking.
Tweaking Medical Education to Leverage EHRs
Tweaking Medical Education to Leverage EHRs
By GLENN LAFFEL
Author’s Note:The purpose of this 5-part series is to make the case for implementing a widespread, systematic approach to HIT education in medical schools and continuing medical education programs for physicians. Previous posts reviewed challenges posed by the HIT Deluge and the Impact of EHRs on Medical Education.
EHRs have begun an inevitable march into the lives of all physicians. The US government has established an ambitious plan for their deployment, and providers seem both eager to comply and anxious to avoid financial penalties associated with not doing so.
But as described in Part II of this series, EHRs can have deleterious effects on the education of medical students and residents. These include disrupting interactive sessions involving educators and trainees and complicating patient-physician communication.
Jay Morrow and Alison Dobbie of Texas Southwestern Medical Center argue that much of this negative impact derives from a mistaken perception that EHRs are a health care delivery method rather than a medium through which physicians deliver care. It follows from this argument that the quality-improving, cost-reducing benefits of EHRs can only be realized if multiple systems and user-based factors are aligned to optimize utilization of the new medium.
Medical educators can begin the alignment process by developing answers these 3 questions:
When Should EHR Education Begin?
Arguably, the process should begin as early as possible. Since the 1970s, medical curricula have included non-science oriented courses such as “Introduction to the Patient,” “Communication Skills” and the like. These courses present ideal opportunities to introduce the new medium.
Students in such courses should be taught to navigate through and use basic EHR functions such as order entry, lab look-up, messaging and charting. Ideally, this exposure should occur outside the clinical setting so trainees can focus on mastering the EHR interface itself. At this time, it should be possible to identify those in need of extra help with keyboard skills, and to provide assistance as necessary.
Keyboarding skills should not be assumed, even for the current generation of physician-trainees. In a 2007 focus group of first-year students at Texas Southwestern for example, 62% of the participants expressed concerns about such skills, and many claimed to have better texting than typing abilities.
If students master keyboarding and EHR navigation skills before starting their clinical rotations, they can focus the latter time on traditional learning exercises, such as clinical reasoning, diagnosis, acquiring medical procedure skills and interacting with ancillary caregivers and patients.
After Reform
Ornish Alienates HuffPo’s Class Warriors
By MERRILL GOOZNER
Ariana Huffington recently anointed diet-and-exercise guru Dean Ornish as her chief medical correspondent. With all the guff her site had taken from the science-based medicine crowd for giving free rein to anti-vaccinists, faith healers and the no-evidence-needed alternative medicine freaks, I thought it was a smart move — a tack toward the responsible center, if you will.But in a post this week, Ornish recounted his 14-year-battle to get Medicare to pay for a pilot project to test lifestyle intervention as a cure for heart disease (which wouldn’t save Medicare money, but would save more lives for the same money expended as, say, giving those people cholesterol-lowering medication). What he drew from his saga was that the government can’t be trusted to run health care, and that health care reformers needed to rise above the right-left divide and unite around reimbursing physicians for keeping people well.It was a classic case of crunchy granola versus the class warriors. The comments section was overwhelmed with hostile attacks on Ornish’s above-the-fray moralizing. The commentators defended single-payer, pointed out the indiscriminate nature of many diseases, articulated the special needs of the poor whose stress and multiple jobs make them especially prone to disease, etc. etc. What was striking was how thoughtful and well-reasoned many of the comments were, a far cry from conspiracy-minded rants of that usually dominate the comments space.
Time for a Closer Look (and Lower Costs)
By ROGER COLLIER
One of the effects of the exaggerations, misinterpretations, distortions, and downright lies about Congressional health care reform proposals—mostly from far-right politicians and their hangers-on—has been to deter more objective analysis.
In fact, two key features of the current Senate and House bills—the insurance exchange structure, and the controversial public plan option—need much closer examination, and possibly considerable revision.
FIRST, the insurance exchange structure. It’s a reasonable concept: if insurers were to compete via an exchange for individual and small group business, they would offer highly competitive rates to attract as much business as possible.
Unfortunately, as a Health Affairs blog piece by the former managers of the PacAdvantage exchange makes clear, it isn’t as simple as that. PacAdvantage, which served some 150,000 California small business employees, ultimately collapsed and closed its doors in 2006, a victim of adverse selection. As the PacAdvantage managers explain, having insurers also marketing directly to small groups allowed them to cherry pick the best risks, leaving the less-good risks in the exchange. As adverse selection continued its work, the exchange went into a death spiral with worsening exchange risk leading to higher rates, leading to the least-bad risks leaving the exchange, leading to even higher exchange rates, and so on.
The obvious way to avoid this problem in national reform is to require that ALL individuals and ALL small group employees be included in each regional exchange. Unfortunately, health reforming politicians have adopted “you’ll be able to retain your existing coverage” as part of their reform pitch. It’s understandable, since forcing groups to switch to an exchange is not going to help the prospects of legislation that’s already in trouble, but it instantly opens the door to cherry-picking by insurers, with the prospect of failure of every exchange.
Is there a solution? Rather than imposing an additional mandate on businesses, current bills could be modified to require that all insurers participate in the exchange, and that their exchange rates be no higher than those offered directly to any insured group, thereby forcing insurers to treat exchange and non-exchange insureds as part of the same pool and avoiding the adverse selection effect.
SECOND, the public plan option. So far, the political controversy has focused on the obvious arguments for and against the public plan: it would force insurers to offer better rates, but it could push millions of Americans out of private coverage into a government program.
A close look at data from Medicare Advantage, in which private plans compete with the traditional government option, indicates that both arguments are questionable.
MA’s private coverage alternative is indeed more costly than traditional Medicare, by some 13 percent—more than $11 billion in 2009. However, most of the difference is due to the additional benefits offered. The private plans’ 2009 base bids to CMS—excluding the cost of additional benefits—averaged 102 percent of FFS rates, with HMO and PPO bids averaging just 99 percent of FFS.
These base bid rates include profit and administrative costs, in contrast to the FFS rates which exclude both administration and financing costs. Even the most conservative estimate of these additional costs would put fully-loaded FFS rates above those of the average private plan.
The comparison of Medicare FFS and MA plans is further skewed by the MA bid process. Not only do the ridiculously high “county benchmarks” used in payment setting favor high bids, but the payment formula (which discounts the difference between the base bid and the benchmark, but not the base bid itself) encourages excessive loading of profit and administration into the base bid. In other words, in a more rationally designed competitive environment, average private plan costs should be significantly below those of traditional Medicare.
In terms of the current Senate Health and House bills, with proposed payment rates higher than Medicare, the public plan looks even less competitive. While there would undoubtedly be some who would opt for a government program over a private plan, the vast majority are likely to choose the lower cost option, with the public plan more likely to increase health care costs than decrease them.
Are there compromises that might satisfy liberal politicians’ desires for a public plan? One possibility is to build a “trigger” into the bills that would allow creation of public plans only where private plans fail to meet cost control benchmarks.
Another possibility is to build on the existing public plan for the non-elderly: Medicaid. Congressional committees are already proposing Medicaid expansions, while simultaneously proposing subsidies to make exchange participation more affordable for non-Medicaid eligibles, leading to an anomalous situation in which one family may receive free Medicaid coverage, while a second family whose income is only a few dollars greater is forced to pay a significant part of the exchange premium in order to comply with an individual coverage mandate.
A less costly and unfair approach might be to allow individuals to buy-in to Medicaid. Since average per capita Medicaid costs are approximately $2000, compared with estimated subsidy costs of close to $4000 (based on CBO estimates, in 2009 dollars), this would eliminate both the anomaly and the need for subsidies, with a potential dramatic reduction in the ten-year cost of reform of some $770 billion.
Roger Collier was formerly CEO of a national health care consulting firm. His experience includes the design and implementation of innovative health care programs for HMOs, health insurers, and state and federal agencies. He is editor of Health Care Reform Update.
More on health care reform by this author:
The Health Care Cost Shifting Myth
By AUSTIN FRAKT
There is a pervasive notion that providers of health care can make up for lower payments received from one set of payers (e.g. Medicare, Medicaid, uncompensated care) by increasing prices charged to other payers (e.g. private insurance companies). To the extent it occurs cost shifting offsets attempts to control overall health care costs through reduced fees paid by public insurers. It makes “bending the cost curve” harder.
However, it is a myth that providers can fully shift costs. That they could do so violates, in most cases, principles of economics. Moreover, empirical evidence suggests cost shifting, where it occurs, is done so a minimal level: only a small fraction of decreased payments by public payers shows up as an increase in charges to private payers. Losses associated with one payer are largely not recouped from another.
Some take price discrimination as evidence of cost shifting. However, price differentials are not necessarily the recouping of losses from one payer by overcharging another. As described in the 2001 Health Affairs paper by Richard Frank “Prescription Drug Prices: Why Do Some Pay More Than Others Do?” price discrimination can be due to unequal bargaining power across classes of purchasers. In other words, in maximizing profits, providers charge different prices to different market segments. In such cases, by definition, profits cannot be further increased by cost shifting.
It’s true that cost shifting could theoretically occur under specific conditions. One case is when a provider has monopoly power that it has not fully exploited, for instance charging private insurers less than it could. More fully exploiting its monopoly power with respect to those payers, such a provider can recoup losses. Still, there is a limit to how much of the lost revenue can be recouped. The monopoly profit-maximizing price level imposes a ceiling.
Another instance in which cost shifting could occur is in a more competitive market in which all providers have roughly the same level of undercompensated care. All competitors in such a market might choose to increase charges to private insurers by the same amount, maintaining their relative competitive positions. However, if one competitor elects to reduce costs or reduce its burden of undercompensated care, it might be able to charge private insurers less then others, thereby increasing its market share. So, cost shifting may not be a stable equilibrium.
The literature provides estimates of the extent of cost shifting in cases where it is theoretically possible. The March 2009 MedPAC Report to Congress: Medicare Payment Policy (Chapter 2A) includes a summary of such evidence. It concludes that the dominant dynamic in the market is that hospitals with strong market power have abundant financial resources. In turn they have a high cost structure (perhaps due to provision of relatively higher quality care) that causes lower or negative Medicare margins. In contrast, hospitals that are forced to run efficiently are adequately funded by Medicare payments. That is, Medicare payments are sufficient to cover costs but some hospitals run inefficiently and make it appear otherwise. Therefore, MedPAC has concluded that increased Medicare payments to hospitals would not reduce rates charged to private insurers. The primary effect would be to induce lower cost operations.
The MedPAC report cites mixed evidence from the literature on the level of cost shifting, as does the December 2008 CBO report Key Issues in Analyzing Major Health Insurance Proposals. A few studies from the 1980s found evidence of cost shifting at a rate of up to fifty cents on the dollar. However, conditions in the 1990s were less conducive to cost shifting and the rates were found to be on the order of a 0.4 to 1.7 percent increase in private payments in response to a 10 percent reduction in Medicare and Medicaid fees. In a 2005 study of geographic variation in health costs of the Federal Employees Health Benefits Program, the GAO concluded that the considerable variation it found was not due to variations in payments from other payers.
In conclusion, cost shifting is not as large and widespread a phenomenon as some would believe. Under some market conditions it is inconsistent with economic theory. And, while it can occur under other market conditions it is far from a dollar-for-dollar shift in costs. The most recent studies of the phenomenon find little evidence of cost shifting or very low levels of it. Claims that reductions in public payments for health care will necessarily show up as commensurate increases in private payments are unfounded.
Austin Frakt blogs at The Incidental Economist and is a health economist and principal investigator with the Department of Veterans Affairs’ Health Services Research and Development Service and assistant professor with the Boston University School of Public Health, Department of Health Policy and Management. The views expressed in this post are his alone and do not necessarily reflect the positions of Boston University or the Department of Veterans Affairs.
