16 April 2009

Health News of the Week

The Uninsured

The Chicago Tribune continues its excellent series on patient dumping in Chicago:
Are hospitals passing off their low-profit patients?
Indigent and under-insured patients are turning to Cook County's Stroger Hospital after not getting fully treated at non-profit hospitals, swamping the cash-strapped public facility while fueling the county's sky-high sales tax.
Which raises the fair question of whether not-for-profit hospitals have an obligation to actually provide charity care -- and how much? -- in order to qualify for their tax-advantaged status.


Medical Inflation


Slate's Timothy Noah writes:
Even before the bottom fell out of the economy, almost nobody in the United States got a real raise during the Bush years. Between 1999 and 2008, employer-sponsored health insurance premiums increased six times faster than wages. Average employer contributions to family health care plans more than doubled, and so did average worker contributions to those plans. Whatever pay increases the average worker received were wiped out, and then some, by the rapidly growing amounts deducted from his paycheck to cover health insurance.
Maggie Mahar points out that Medicare itself has been hit by the increasing cost of healthcare, and differs from most insurers in that there is no cap on the amount beneficiaries have to pay out of pocket:
in just the past seven years, the amount a retired couple can expect to lay out in the form of co-pays, deductibles, out-of-pocket costs for prescription drugs, as well has certain services not covered by Medicare has jumped 50 percent, from $160,000 to $240,000.
Ezra dissects a study by the nonpartisan McKinsey group to explain why American health care is so much more expensive than everywhere else in the world:
McKinsey estimates that the difference is not sicker Americans. Differences in diseases account for only $25 billion of the variation -- about 5 percent of the total. Nor is it that we use more health care services. McKinsey examined inpatient hospital procedures to get a sense of how treatment volume compares. America averaged 88 procedures per 1,000 residents per year. That's higher than the OECD average of 75, but it's not as high as Germany's 97 treatments per 1,000 residents, or Switzerland's 98 treatments per 1,000 residents, and both countries spend much less on health care than the United States.

The answer, in the end, is that we're getting a bad deal. You know how when you go shopping you look for sales? America sort of does the opposite of that. We pay more for each unit of care, more for health system operations, and more for health system administration. McKinsey found that "input costs—including doctors’ and nurses’ salaries, drugs, devices, and other medical supplies, and the profits of private participants in the system—explain the largest portion of high additional spending, accounting for $281 billion of spending above US ESAW. Inefficiencies and complexity in the system’s operational processes and structure account for the second largest spend above ESAW of $147 billion. Finally, administration, regulation, and intermediation of the system cost another $98 billion in additional spending."
The Wonk Room recaps both sides of the debate on whether innovations in health IT, organizational quality, and comparative effectiveness research will actually do much, if anything, to constrain the growth in costs.   For my part, I hope so, but color me skeptical.


Insurers behaving badly

The NYT writes about the unanticipated side effect of oral chemotherapies -- Insurance often doesn't cover it:
Chuck Stauffer’s insurance covered the surgery to remove his brain tumor. It covered his brain scans. And it would have paid fully for tens of thousands of dollars of intravenous chemotherapy at a doctor’s office or hospital. But his insurance covered hardly any of the cost of the cancer pills the doctor prescribed for him to take at home. Mr. Stauffer, a 62-year-old Oregon farmer, had to pay $5,500 for the first 42-day supply of the drug, Temodar, and $1,700 a month after that.
The WSJ Op-ed page argues that white is black, war is peace, and the wasteful administrative costs of private health insurance is "money well spent."

Andrew Sullivan links to a trenchant observation about the role of insurers in our system:
The simple truth is that one of the major reasons we have such a lousy health care system and receive such bad value for our money in the US is that we placed health care financing into the hands of the same folks who helped make our economic system such a disaster: private insurance companies, who are little more than disguised investment banks with the added incentive not to pay back their depositors (the premium payers).
The same insurance industry, according to Media Matters, which is employing Newt Gingrich as its stealth lobbyist:
According to the Center for Health Transformation's website, members pay tiered annual membership fees, providing varying degrees of "[a]ccess to Newt Gingrich on your company's strategy," among other benefits. Insurance groups UnitedHealth Group, the parent of UnitedHealthcare, and WellPoint Inc. are listed as "Charter" members.
Nothing wrong with that, though when Newt goes on teevee to talk about reform, it somehow never gets mentioned that his bread is buttered by the industry that he is covering.


Health Reform

Conservative Ramesh Ponnuru argues in a NYT Op-Ed that the quest for Universal Coverage is "Misguided," and offers a conservative alternative plan.  To my eye, it looks pretty identical to the one McCain proposed prior to the election; Ezra rebuts that the plan, authored by the conservative Galen Institute, is just covert rationing. (Hmm, where have I heard that phrase before?)   The Wonk Room goes further, detailing why free market principles will not work in the distorted and broken market that is health care:
1. Monopoly — occurs if a single buyer or seller can exert significant influence over prices or output: In health care, “insurer and hospital markets are increasingly dominated by large insurers and provider systems.” “The increased concentration has made it difficult for the nation to reap the benefits usually associated with competitive markets.”

2. Negative Externalities — occur if the market does not take into account the impact of an economic activity on outsiders: In the ‘wild west’ environment of the individual health market place, companies leave the sickest patients without coverage. Health care costs increase for everyone when patients are forced to forgo early and appropriate care or visit the emergency room once a condition becomes unbearable.

3. Asymmetric Information — occurs when one party has more or better information than the other party: Americans looking for coverage in the individual market have no way of comparing different policies or rarely know what the plans actually cover.

Conservative health proposals double-down on this broken marketplace.
Joe Paduda argues, extrapolating from a Commonwealth Fund Study, that
In several areas the US already has longer waiting times and poorer access to care than countries with universal healthcare. If the US adopts universal healthcare as practiced in other countries, the evidence indicates access will go up and waiting times may well go down.
Joe also writes a stinging post about the myth that government just can't do anything right:
It would take a good deal of hard work to be more incompetent than some of the health plans out there today.
Some resurgence in interest in the little bipartisan reform that could -- Wyden's Healthy Americans Act.  Is it too late?

Last week, the Public Plan option was much in the news.  The NYT editorial page wrote:
A new public plan is neither the cornerstone of health care reform nor the death knell of private insurance. It should be tried as one element of comprehensive reform. If, over time, a vast majority decides the government plan is superior, so be it.
There have been some concerns that it might be dropped as a political token, in order to achieve passage of the rest of the reform package, but Nancy DeParle, Obama's Health Reform Czar, asserted that the administration is still behind the public plan as an element of health reform, and offered some insight to the options under consideration:
A public plan is something that’s sponsored by the government, and therefore has very low or almost nonexistent administrative costs, compared to others. It doesn’t have the need to have brokers out selling; it wouldn’t have the need to have a lot of costs and profits, the way private plans would. So it has that advantage. It could operate
by the same rules that all the other plans do; it could have payments rates that are very similar. Or it could have payment rates that are the same as Medicare.
As you can see, there are some rather significant distinctions between the public plans described.  Johnathan Cohn at TNR's The Treatment explains:
One is what you might call the full, or strong, public plan option: Creating a new insurance program that the government would run directly, much as it does Medicare. The idea would be to take advantage of Medicare's efficiencies as well as government's ability to set lower reimbursement prices. Projections suggest that such a program would have the potential to offer substantially lower premiums. [...]

Of course, precisely because a strong public plan has the power to offer lower premiums, the idea is a non-starter with the insurance industry. Since it would achieve a lot of its savings by reducing reimbursement levels, it's not exacty popular with the providers of medical care. And because it is, by definition, "government run," it's anathema to most conservatives.

That's why a second version has emerged, which you might call the partial, or weaker, public plan option: Creating a plan, or set of plans, that realize some of the administrative savings you find in programs like Medicare but explicitly avoid using government bargaining power to set prices. These plans would have potential to achieve some savings, but not nearly as much; and it's not clear whether they'd be as secure, or offer the same protection to the truly sick (who rightly worry whether private carriers will take care of them), as a strong public plan.
As a provider, knowing that Medicare reimbursements are already unsustainably low, I favor the second model.  It would compete on a more level playing field with the privates, and would do less to further depress reimbursement rates.

3 comments:

Thai said...

Shadowfax, do you have a link to the health care proposal you most agree with? I haven't gone back on all your other posts.

Regards

Thai

B.Free said...

As a physician what do you do when a patient comes in and cannot afford the treatments you recommend? As a entering medical student in Fall 2009, I wonder about the ways we can provide at least a minimal level of care to those who cannot afford all the treatments.

Wouldn't the second model act like the current private insurance system, but with a government mandate that they cover more people?

www.standoutpeople.blogspot.com

Buckeye Surgeon said...

nice review