This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
2012 Progress Report: Health Reform is Opening the Insurance Market and Protecting Consumers
HealthCare.gov, March 22, 2012
The Affordable Care Act’s Rate Review policies bring an unprecedented level of scrutiny and transparency to health insurance rate increases. They ensure that, in every state, every proposed increase of 10% or more is evaluated by independent experts to assess whether they are based on reasonable assumptions and sound data.
Rate review is expected to help moderate premium increases and provide consumers with greater value for their premium dollar. Additionally, health insurance companies must provide easy to understand information to their customers about their reasons for significant rate increases, as well as publicly justify and post on their website any unreasonable rate increases.
The Affordable Care Act’s Rate Review program started for most individual and small group plans on September 1, 2011.
Through March 10, 2012, 186 increases affecting more than 1.3 million people have been posted on companyprofiles.healthcare.gov. Each provides an explanation from the insurer, including the rate increases determined to be unreasonable rate increases.
States are taking a strong lead in reviewing proposed rate increases. Of the 186 requested increases posted on HealthCare.gov as of March 10, 2012, two-thirds (125 filings) of these are being reviewed by rate review programs in the states. Only one-third (61 filings) is under review by HHS.
In the 61 instances to date where HHS is charged with conducting reviews, the Department has completed 28 determinations. HHS has determined that 20 of the 28 proposed rate increases are unreasonable. The most common reason for this determination is that the proposal would result in projected medical loss ratios (MLRs) below the 80% applicable threshold.
The title of today’s message, “Controlling costs through HHS rate reviews,” is deliberately deceptive to make a point. Supposedly, the Affordable Care Act (ACA) was designed to help control spending in health care, and the insurance premium Rate Review process was a component of cost containment. In fact, not only does the process have no impact on health care spending, it doesn’t even have any federal control over increases in health insurance premiums.
ACA regulations require that any plan with premium increases of 10 percent or more be reviewed. Although states may have some influence over rate increases, the federal government has no authority to do anything about the increases other than expose the insurers to public ridicule.
In the last six months, 20 rate increases reviewed by the federal government have been found to be unreasonable, primarily because they exceeded the 20 percent of the premium that they could use for administrative services and profits. Many of these insurers in the individual market will find that their inefficiencies are so great that they will be unable to comply with this requirement, so they really don’t need ridicule to drive home this point.
In the meantime, insurers will be able to increase their premiums 9.9 percent each year with no questions asked, at least not by the federal government. Compound that rate over several years, and then where will we be?
Obviously this ACA measure to “control costs” will have very little impact, if any, on insurance premiums and absolutely no impact on total health care spending.
There is a much more efficient model of health care financing that actually would slow the increase in health care spending while ensuring health care for everyone. Instead of playing ACA games, we should move forward with an improved Medicare for everyone.
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
Utah fifth state to join Health Care Compact
By Kirsten Stewart
The Salt Lake Tribune, March 20, 2012
Utah Gov. Gary Herbert on Tuesday signed a controversial measure to replace Medicare and Medicaid with a block grant to the states.
SB208 would have Utah join an interstate “Health Care Compact” designed to allow states to opt out of federal health reform without forgoing billions in federal funding.
But hospitals and consumer advocates warned the bill risks tying Utah’s fate to states with poorer health and higher health costs.
It also would also mean sacrificing $132 million in federal funding by 2014 because the block grants are not designed to keep pace with medical inflation, they said.
To date, four states have pledged to join the compact: Texas, Missouri, Oklahoma and Georgia. Two governors have vetoed the idea, including Arizona Gov. Jan Brewer.
Indiana Gov. Mitch Daniels Signs Health Care Compact Into Law
By Shonda Werry
Health Care Compact Blog, March 21, 2012
Gov. Mitch Daniels Monday signed the Health Care Compact into law, paving the way for restoring state control over health care policy and providing Hoosiers an alternative to the federally-run system.
The Health Care Compact is an initiative of the Health Care Compact Alliance, a nonpartisan organization dedicated to providing Americans more authority over decisions that govern their health care. It does not make suggestions on what policies individual states should pursue but advocates that health care policy decisions be made at the state level.
The Compact has been introduced in 13 states since February of 2011 and has been adopted in Texas, Georgia, Oklahoma, Missouri, and now Indiana.
For the Health Care Compact to become law, it must be approved by Congress. Once it is ratified, states will then be responsible for crafting their own policies.
Since the political barriers to enacting a national single payer program seem to be insurmountable, at least for the near future, many single payer activists are pursuing state level single payer models of reform. To be truly single payer, federal legislation would be required to free up funds from federal programs. The Health Care Compact should give us pause as to whether or not we want to give states that much control over our federal tax funds.
Under the Health Care Compact, Medicare and Medicaid funds would be transferred to the states under a block grant. To understand the significance of block grants for programs such as these, one need look no further than the House Budget proposal introduced yesterday by Congressman Paul Ryan. His proposal for block grants for Medicaid would eventually cut the federal contribution in half, leaving the states to fill in the gap.
With the budget problems that states already face, what would happen to coverage for Medicaid-eligible beneficiaries under a block grant? Even if all funds were combined into a single risk pool, these Medicaid cuts would result in either benefit reductions or in the need for higher state-based revenues, whether as taxes or premiums.
Six states – Texas, Georgia, Oklahoma, Missouri, Indiana, and Utah – have now passed the Health Care Compact. They are asking to use funds from existing federal programs to establish their own state health care programs. With their tight budgets and a further decrease in federal funding, would any of these states pass a single payer program that provided all necessary health care services for everyone? Of course not. Instead they seek to establish insurance markets that cross state lines, promoting the sale of low-premium, lowest-common-denominator plans that would destroy the financial security that health plans should be offering.
Keep this in mind as you work on state single payer solutions. When we ask for waivers (federal legislation) to allow states to use existing federal funds for state single payer programs, that process would also allow other states that are in the process of crushing unions, destroying retirement security, wiping out public primary and secondary education, driving up state college tuition to unaffordable levels, and so forth, to use their freedom to wipe out health security for their own people.
That seems like too dear of a price for our fellow Americans to pay. We can avoid that simply by enacting a national single payer program – an improved Medicare for everyone.
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
From HMOs to ACOs: The Quest for the Holy Grail in U.S. Health Policy
By Theodore Marmor, PhD and Jonathan Oberlander, PhD
Journal of General Internal Medicine, March 13, 2012 (Online)
The United States has been singularly unsuccessful at controlling health care spending. During the past four decades, American policymakers and analysts have embraced an ever changing array of panaceas to control costs, including managed care, consumer-directed health care, and most recently, delivery system reform and value-based purchasing. Past panaceas have gone through a cycle of excessive hope followed by disappointment at their failure to rein in medical care spending. We argue that accountable care organizations, medical homes, and similar ideas in vogue today could repeat this pattern. We explain why the United States persistently pursues health policy fads — despite their poor record — and how the promotion of panaceas obscures critical debate about controlling health care costs. Americans spend too much time on the quest for the “holy grail” — a reform that will decisively curtail spending while simultaneously improving quality of care — and too little time learning from the experiences of others. Reliable cost control does not, contrary to conventional wisdom, require fundamental delivery system reform or an end to fee-for-service payment. It does require the U.S. to emulate the lessons of other nations that have been more successful at limiting spending through budgeting, systemwide fee schedules, and concentrated purchasing.
Emulation, Not Innovation
We do not know how far ACOs will spread or what impact they, medical homes or other delivery system reforms will have on health care spending. But our history of failed cost control offers sobering lessons about exaggerated expectations, the limits of organizational reforms, and the recurring temptation to oversell reform ideas like ACOs as panaceas and the harbingers of a new, radically transformed, and vastly improved health care system. Such ideas should be seen as supplements, rather than the basis for a national strategy of health care cost control.
We believe that the U.S. needs less innovation and more emulation. That is, in order to control costs effectively Americans should focus less on (re)inventing the latest delivery system or payment method, and instead pay more attention to what other countries do to slow health care spending. Global budgets, fee schedules, systemwide payment rules, and concentrated purchasing power may not be modern, exciting or “transformational”. But they have the advantage of working.
Why have we spent decades trying to circumvent the obvious? We need to emulate the health care policies that do work in other nations, and give up on pursuing our many innovations that haven’t worked. Haven’t we had enough of modern, exciting and transformational failures?
By James G. Kahn, M.D., M.P.H.
Sunday night’s CNN special narrated by journalist Fareed Zakaria titled “Global Lessons — The GPS Road Map for Saving Heath Care” was interesting and initially promising, but ultimately disappointing.
It started out with superb references to other countries, then became illogical and gutless. In the end, the “solutions” offered by Zakaria to cure our broken health care system didn’t flow from the evidence presented earlier in the program. Remarkably, the U.S. implications of successful single-payer models were ignored.
Zakaria started out with a reasonable report on Britain’s single-payer National Health Service: its good quality, universal access and low cost. He also gave a fair account of the evidence-based, evaluative work of the National Institute for Health and Clinical Excellence, NICE (which is being undermined now, something he failed to mention).
He interjected a few comments about long wait times in Britain for non-urgent care, and raised the bogey of high taxes as the price one has to pay for such a system. But on balance the account was generally favorable.
Taiwan’s adoption of single-payer national health insurance was treated next. Zakaria noted that with Taiwan’s shift to a single-payer system in 1995, the proportion of the country’s uninsured dropped from 41 percent to 8 percent within a year. He also described other positive aspects of the Taiwanese health system. Overall, this segment was quite favorable and accurate.
Then came Switzerland. Here he gave a reasonable report about the country’s system of highly regulated private insurers (who can’t profit from selling basic health insurance policies and must offer insurance to all comers). He was incorrect, however, in equating the Swiss reform with the Affordable Care Act in the U.S.
Then the logical connections fell apart.
Zakaria proceeded directly to a segment on “consumer-driven care,” interviewing a corporate CEO who recently wrote in praise of free-market medicine in The Atlantic. Here Zakaria at least pointed out that there’s no evidence that a free-market approach will control costs, saying that the only evidence of competition working is for elective procedures like Lasik surgery, whereas most health care costs arise unpredictably or stem from chronic disease.
He then looked at ACOs, accountable care organizations, in the form of an uncritical interview with Dr. Atul Gawande, the surgeon and writer for The New Yorker. Gawande emphasized how uncoordinated and excessive care contribute importantly to our nation’s high health care costs. Zakaria noted that there are ACO experiments, but failed to emphasize the lack of evidence that we can scale up ACOs.
Next was also an uncritical, indeed quite favorable, report on efforts in Camden, N.J., to provide case management care for high utilizers in “hot spots.” Zakaria glossed over the lack of solid evaluation data on the Camden experiment.
In his wrap-up, Zakaria offered his own views. He endorsed individual mandates (noting that they were first proposed by the Heritage Foundation). He said the ACA won’t control costs, and said we need a “cost control board” to decide what’s covered and what isn’t.
He explicitly rejected a pure market solution as inappropriate to health care, noting we’re not buying cars, we’re buying something for which we have little choice when it’s needed. The pure market solution won’t control costs and will leave many without care, he said.
Inexplicably, Zakaria failed to point out the implications for the U.S. of the successful British and Taiwan experiences, and instead said that we need to “acknowledge what’s on the ground” in the U.S. (read: path dependence), and thus need to fix the current “messy mixed model” we currently have.
As I said at the beginning: promising opening, but ultimately disappointing in acceptance of our current structurally defective health care financing system. Viewers deserve a more coherent and brave progression from evidence to action.
Dr. James G. Kahn is a professor at the Philip R. Lee Institute for Health Policy Studies at the University of California, San Francisco. Dr. Kahn is an expert in policy modeling in health care, cost-effectiveness analysis, evidence-based medicine, and administrative costs in U.S. health care. He is also a board member and immediate past president of Physicians for a National Health Program – California.
The Righteous Mind: Why Good People Are Divided by Politics and Religion
By Jonathan Haidt
We can define moral capital as the resources that sustain a moral community. More specifically, moral capital refers to “the degree to which a community possesses interlocking sets of values, virtues, norms, practices, identities, institutions, and technologies that mesh well with evolved psychological mechanisms and thereby enable the community to suppress or regulate selfishness and make cooperation possible.”
The Moral Matrix
The left builds its moral matrix an three of the six foundations, but it rests most firmly and consistently on the Care foundation.
Liberals are often suspicious of appeals to loyalty, authority,and sanctity, although they don’t reject these intuitions in all cases (think of the sanctification of nature). For American liberals since the 1960s, I believe that the most sacred value is caring for victims of oppression. Anyone who blames such victims for their own problems or who displays or merely excuses prejudice against sacralized victim groups can expect a vehement tribal response.
Some liberals began to see powerful corporations and wealthy industrialists as the chief threats to liberty. These “new liberals” (also known as “left liberals” or “progressives”) looked to government as the only force capable of protecting the public and rescuing the many victims of the brutal practices of early industrial capitalism. Liberals who continued to fear government as the chief threat to liberty became known as “classical liberals,” “right liberals” (in some countries), or libertarians (in the United States).
You can see the fork in the road by looking at the liberal moral matrix. It rests on two foundations primarily: Care and Liberty (plus some Fairness, because everybody values proportionality to some extent). Liberals in 1900 who relied most heavily on the Care foundation – those who felt the pain of others most keenly – were predisposed to take the left-hand (progressive) fork. But liberals in 1900 who relied more heavily on the Liberty foundation – those who felt the bite of restrictions on their liberty most keenly – refused to follow. In fact, libertarian writer Will Wlkinson has recently suggested that libertarians are basically liberals who love markets and lack bleeding hearts.
Social Conservative Wisdom
We have found that social conservatives have the broadest set of moral concerns, valuing all six foundations relatively equally. Their breadth – and particularly their relatively high settings on the Loyalty, Authority, and Sanctity foundations – give them insights I think are valuable, from a Durkheimian utilitarian perspective (i.e., recognizing that human flourishing requires social order and embeddedness).
A more positive way to describe conservatives is to say that their broader moral matrix allows them to detect threats to moral capital that liberals cannot perceive. They do not oppose change of all kinds (such as the Internet), but they fight back ferociously when they believe that change will damage the institutions and traditions that provide our moral exoskeletons (such as the family). Preserving those institutions and traditions is their most sacred value.
Morality binds and blinds. It binds us into ideological teams that fight each other as though the fate of the world depended on our side winning each battle. It blinds us to the fact that each team is composed of good people who have something important to say.
This book explained why people are divided by politics and religion. The answer is not, as Manichaeans would have it (i.e., battleground of forces of light and of darkness), because some people are good and others are evil. Instead, the explanation is that our minds were designed for groupish righteousness. We are deeply intuitive creatures whose gut feelings drive our strategic reasoning. This makes it difficult – but not impossible – to connect with those who live in other matrices, which are often built on different configurations of the available moral foundations.
Social psychologist Jonathan Haidt, in “The Righteous Mind,” provides us with a background on the evolution and development of the moral matrices that have contributed to our political divide. Although some might want to challenge details of his Moral Foundations Theory, there is absolutely no doubt that moral differences do exist, and he has provided plenty of experimental data to show that political views do correlate with the six moral foundations described.
Single payer supporters certainly identify with the Care foundation. That’s what single payer is all about – making sure that absolutely everyone is able to receive needed health care. Care is the most defining moral foundation of liberals. In contrast, Loyalty, Authority, and Sanctity are barely on the radar screen of many liberals.
Social conservatives are driven by all six foundations of the moral matrix, especially Loyalty, Authority, and Sanctity. Although they are also driven by Care, Care can be suppressed to some extent by by the “groupish righteousness” of Loyalty, Authority, and Sanctity. Although libertarians are often included on the right with conservatives, libertarians are unique in that they are influenced very little by the moral foundation of Care. Unabashed libertarians likely would never be single payer supporters.
So if social conservatives are partly driven by the moral foundation of Care, would they ever support single payer reform? In fact, many of them do. Most believe that everyone should have health care, and many recognize the efficiency of the single payer model. However, the groupish righteousness of Loyalty, Authority, and Sanctity often keeps them from breaking ranks with their conservative peer groups. Nevertheless, there does seem to be an opening for conservatives to join forces with liberals in advancing the concepts of single payer.
What about the liberals? They would certainly welcome the opportunity to work with conservatives on single payer. But if we listen to Jonathan Haidt, the liberals have been making a mistake by remaining oblivious to the conservatives’ moral values of Loyalty, Authority, and Sanctity – fundamentals of moral capital.
He writes, “If you are trying to change an organization or a society and you do not consider the effects of your changes on moral capital, you’re asking for trouble. This, I believe, is the fundamental blind spot of the left. It explains why liberal reforms so often backfire, and why communist revolutions usually end up in despotism. It is the reason I believe that liberalism – which has done so much to bring about freedom and equal opportunity – is not sufficient as a governing philosophy. It tends to overreach, change too many things too quickly, and reduce the stock of moral capital inadvertently. Conversely, while conservatives do a better job of preserving moral capital, they often fail to notice certain classes of victims, fail to limit the predations of certain powerful interests, and fail to see the need to change or update institutions as times change.”
As a liberal, I confess that I am fixated on the moral foundation of Care. I also confess that I have a blind spot on the full range of moral capital. However, the conservatives do not have a blind spot on Care, even if they seem to have other priorities. Do you suppose that the conservatives would be willing to help us liberals understand the moral capital hidden in that blind spot, in exchange for liberals helping the conservatives understand better what it means to Care?
200th Anniversary Article: Major Trends in the U.S. Health Economy since 1950
By Victor R. Fuchs, Ph.D
The New England Journal of Medicine, March 15, 2012
It is difficult to see how the health sector can continue to expand rapidly at the expense of the rest of the economy, but every past prediction of a sustained slowing of the growth of health expenditures has been proved wrong. Rapid growth may continue as a result of political gridlock regarding the form that curbs on expenditures should take. There is no public consensus about how much care should be provided for the poor and sick or how it should be done. Similarly, there’s no public consensus regarding efforts to increase the efficiency of care. A rational approach to the financing, organization, and delivery of care seems politically impossible. However, the observation by de Tocqueville that in the United States “events can move from the impossible to the inevitable without ever stopping at the probable” may prove to be prescient.
Victor Fuchs tells us, “There is no public consensus about how much care should be provided for the poor and sick or how it should be done.” Why? We know that all health care reform efforts since 1950 have fallen short of our goal of health care for everyone. We know that a single payer national health program would provide all essential care for everyone. Why should this be politically impossible? Haven’t we already moved from the impossible to the inevitable? If so, let’s accept that and get to work on fixing our health care system so it takes care of everyone.
In a single cartoon, Politico’s Matt Wuerker demonstrates the U.S. health care system as it is, and as it should be.
Click on this Kaiser Health News link:
Association of Hospital Spending Intensity With Mortality and Readmission Rates in Ontario Hospitals
By Therese A. Stukel, PhD; Elliott S. Fisher, MD, MPH; David A. Alter, MD, PhD; Astrid Guttmann, MD, MSc; Dennis T. Ko, MD, MSc; Kinwah Fung, MSc; Walter P. Wodchis, PhD; Nancy N. Baxter, MD, PhD; Craig C. Earle, MD, MSc; Douglas S. Lee, MD, PhD
JAMA, March 14, 2012
The extent to which better spending produces higher-quality care and better patient outcomes in a universal health care system with selective access to medical technology is unknown.
Numerous studies have investigated whether higher health care spending produces better patient outcomes and higher quality of care. Evidence from the United States and other countries has been conflicting. Several studies focusing on short-term outcomes within a given state found that being treated in higher-spending hospitals was associated with better in-hospital or 30-day mortality. In contrast, a national study found that regional differences in spending intensity were largely attributable to use of the hospital as a site of care and greater overall use of specialists, imaging, and diagnostic testing but that patients treated in regions with higher spending intensity did not have better survival or quality of care. Whether these findings would hold true in a country with universal access to health care but a far lower supply of specialists and more selective access to medical technology is unknown.
Our objective was to assess whether acute care patients admitted to Canadian hospitals that treat patients more intensively (and at higher cost) have lower mortality and readmissions and higher quality of care.
We found that higher hospital spending intensity was associated with better survival, lower readmission rates, and better quality of care for seriously ill, hospitalized patients in Ontario in a universal health care system with more selective access to medical technology. Higher-spending hospitals were higher-volume teaching or community hospitals with high-volume or specialist attending physicians and having specialized programs, such as regional cancer centers, and specialized services, such as on-site cardiac catheterization, cardiac surgery, and diagnostic imaging facilities. The study also points to plausible mechanisms through which higher spending may be associated with better outcomes.
Benefits appeared early, suggesting an acute-phase hospital effect. For acute conditions, timely access to preoperative and in-hospital specialist care, skilled nursing staff, rapid response teams, cardiac high-technology services, and regional cancer centers, all found in the higher-spending systems, are related to better outcomes. These systems also provided consistently, but not strikingly, higher levels of evidence-based care and collaborative ambulatory care, both shown to improve care. Higher spending on evidence-based services delivered in the acute phase of care for severely ill hospitalized patients—by far the largest component of spending for our cohorts—is indeed likely to be beneficial.
To place the study in context, the United States has a 3- to 4-times higher per capita supply of specialized technology, such as computed tomography and magnetic resonance imaging scanners, but a similar supply of acute care beds and nurses. Ontario 2001 population rates of cardiac testing and revascularization lagged behind corresponding 1992 US rates and paralleled the supply of cardiologists and catheterization facilities. It is therefore possible that Canadian hospitals, with fewer specialized resources, selective access to medical technology, and global budgets, are using these resources more efficiently, especially during the inpatient episode for care-sensitive conditions. Canada’s health care expenditures per capita are about 57% of those in the United States. At this spending level, there might still be a positive association between spending and outcomes.
We cannot rule out the possibility that higher-intensity hospitals coded more aggressively, but there is less incentive to do so in a system with global hospital budgets.
This study shows that in Ontario, a province with global hospital budgets and fewer specialized health care resources than the United States, outcomes following an acute hospitalization are positively associated with higher hospital spending intensity. Higher spending intensity, in turn, is associated with greater use of specialists, better patient care, and more use of advanced procedures. These results suggest that it is critical to understand not simply how much money is spent but whether it is spent on effective procedures and services.
eAppendix – to article above (15 pages):
Costing Data Sources
The following is an excerpt from Guidelines on Person-Level Costing Using Administrative Databases in Ontario that describes the costing methodology for acute inpatient hospitalizations, emergency visits (ED), and physician services, based on Ontario healthcare utilization data. Total costs (direct costs and overheads) for acute care and ED are available from the Ontario Ministry of Health and Long-Term Care (MOHLTC) Health Data Branch and are based on Ontario Cost Distribution Methodology (OCDM). Fees associated with physician visits are available directly from the Ontario Health Insurance Plan (OHIP) Schedule of Claims and Benefits while fees paid to physicians are tracked in the OHIP physician billing database.
No Free Lunch: The Relationship Between Cost and Quality
By Karen E. Joynt, MD, MPH; Ashish K. Jha, MD, MPH
JAMA, March 14, 2012
For the past 30 years, research from investigators at Dartmouth has demonstrated large and persistent variations in costs and quality across the US health care system. Beyond simply showing that cost and quality vary by geography, the Dartmouth Atlas has demonstrated that in many communities, care is so fragmented and ineffective that greater spending on Medicare beneficiaries often leads to worse outcomes because some patients receive services that are redundant and low value and that may even have substantial risks.
However, some US policy makers have misinterpreted the Dartmouth research and in the troves of data have found what they believe to be a free lunch: given the inverse relationship between costs and quality, it follows that it should be possible to simultaneously reduce spending and improve care. Although this notion is attractive, much of the subtlety of the Dartmouth work has been lost in translation. What Dartmouth investigators have documented through careful work is that dysfunctional systems produce expensive, poor-quality care.
Data from Dartmouth researchers and others have thus led policy makers to feel comfortable with broad payment reductions, in many cases targeting hospitals as a major source of savings for the Medicare program. The Affordable Care Act requires that the Centers for Medicare & Medicaid Services (CMS) make a series of payment reductions to hospitals, and CMS has proposed other reductions. Nearly every proposal to reduce Medicare spending, from Democrats and Republicans alike, seems to contain reductions in Medicare payments to hospitals. The notion that payments to hospitals can be reduced while maintaining or improving the quality of care delivered at these hospitals has become so ingrained in policy circles as to be a given.
Recently, however, an increasing amount of evidence has emerged that should counter this misperception. Several studies suggest that higher spending at the patient or hospital level may in fact be associated with better clinical outcomes.
What are federal policy makers to do? One lesson is that although broad-based reductions in hospital reimbursement may spur some institutions to innovate and eliminate waste, others will surely cut costs indiscriminately, eliminating exactly those services that are vital for good hospital care. Given that many hospitals may not have a clear sense of how to make these reductions without compromising on important services and personnel, patients will likely be negatively affected. An alternative approach is to target poor coordination, wasteful spending, and ineffective care more directly through programs such as bundled payments and accountable care organizations, which encourage coordination and integration first and spending reductions second. Ultimately, the best way to save money on hospital care is to more aggressively target preventable hospitalizations by bolstering primary care. These kinds of efforts are more likely to be successful in eliminating waste without jeopardizing patient outcomes. Although paying hospitals less may appear to be a good strategy to save money, the findings reported by Stukel et al serve as a timely reminder that this approach is likely to have negative consequences for patients.
This is a landmark study. Among Ontario hospitals, higher spending intensity was associated with lower mortality, readmissions, and cardiac event rates. Let’s see if we can learn the right policy lessons from this.
With our very high levels of health care spending, yet mediocre quality and outcomes, attention has been directed to attempting to identify the basis of these discrepancies, especially by looking at the Dartmouth findings which have suggested that all too frequently there is no relationship or perhaps even an inverse relationship between greater spending in hospitals and high quality outcomes. This task has been made difficult by the fact that several other studies have shown that greater spending has improved outcomes.
The authors of this new study decided to look at hospitals in Ontario, Canada to try to identify more precisely whether or not increased spending does improve quality and outcomes. Although they didn’t state this as a reason, this was an astute move since Canadian hospitals are globally budgeted – a fact that dramatically reduces the incentives to increase the intensity of services for the purpose of increasing revenues. Attention is given to using resources to benefit the patient, without the perverse motive of increasing income by adding services of negligible or negative value.
In this environment, it worked. If patients needed more care, they got it, and they were better off for it. Incidentally, even with this extra care, they spent much less per patient than we do in the United States.
In the JAMA editorial accompanying this article, the authors indicate that this confirms further that there is “no free lunch” in trying to recover higher costs while improving quality. They suggest a few policy lessons.
Of great importance, efforts to reduce spending in high cost hospitals should not be indiscriminate since that risks eliminating “exactly those services that are vital for good hospital care.” Such reductions can negatively affect patients.
They suggest targeting “poor coordination, wasteful spending, and ineffective care more directly through programs such as bundled payments and accountable care organizations, which encourage coordination and integration first and spending reductions second.” Integrated, coordinated care is a great idea, and likely accounts for much of the improved outcomes in Ontario hospitals. But can we in the United States really achieve this through bundled payments and accountable care organizations?
Only certain clinical scenarios are subject to bundling. Even when bundled, the cost containment is achieved by providing a discount to the bundled package. Not only are there pricing issues, such as possible inadequate funding of the services, there is the much greater problem that this does nothing for total global spending. It more likely results in not much more than mere cost shifting. That won’t correct the fundamental dysfunctions in U.S. health care financing.
Much has been written about accountable care organizations. Unfortunately, as they are evolving, it looks like they won’t be much more than a replay of managed care innovations such as physician-hospital organizations, or loose provider networks under an HMO umbrella – except all dressed up in new clothing. It is particularly difficult to understand how the organization can be accountable for the care of the patient, when that patient is free to obtain care anywhere and may not even be aware that they are assigned to one organization. Again, integration and coordination are great, but that should occur throughout the medical community at large rather than through isolated, commercialized entities.
A most important policy lesson advanced by the editorialists is that “the best way to save money on hospital care is to more aggressively target preventable hospitalizations by bolstering primary care.” In fact, Canada has a much more robust primary care infrastructure than the United States, which is likely another contributor to getting the right patients into the Ontario hospitals at the right time. We need to do much more to reinforce primary care in the U.S. – far more than the meager measures in the Affordable Care Act.
The paramount take home policy lesson is that a single payer system such as that in Canada not only has vastly superior methods of financing and distributing health care resources efficiently and equitably, it also creates a milieu in which the patient is placed at the pinnacle, and the health care system is positioned to serve that patient optimally.
Updated Estimates for the Insurance Coverage Provisions of the Affordable Care Act
Congressional Budget Office
In preparing the March 2012 baseline budget projections, the Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT) have updated estimates of the budgetary effects of the health insurance coverage provisions of the Affordable Care Act (ACA).
CBO and JCT now estimate that the insurance coverage provisions of the ACA will have a net cost of just under $1.1 trillion over the 2012–2021 period — about $50 billion less than the agencies’ March 2011 estimate for that 10-year period.
CBO and JCT’s projections of health insurance coverage have also changed since last March. Fewer people are now expected to obtain health insurance coverage from their employer or in insurance exchanges; more are now expected to obtain coverage from Medicaid or CHIP or from nongroup or other sources. More are expected to be uninsured.
Compared with prior law, the ACA is now estimated by CBO and JCT to reduce the number of nonelderly people without health insurance coverage by 30 million to 33 million in 2016 and subsequent years, leaving 26 million to 27 million nonelderly residents uninsured in those years.
So the projected federal spending on the Affordable Care Act over the next decade will be $50 billion less than previous projections. Directing attention to that flimsy fact hides the real news in this report. Instead of 23 million individuals being left uninsured, as the CBO previously predicted, it is now estimated that 26 to 27 million will have no insurance at all.
These numbers are approaching the 34.7 million uninsured in 1990 – a time when health reform was pushing its way back to the top of the political agenda. It was a national disgrace that we had allowed ourselves to become world leaders in both health care spending and health care injustice!
So now we finally have passed health reform legislation, but what have we actually accomplished? Higher costs, deterioration in the protection afforded by insurance, and projected uninsured rates close to those when we began this whole process.
Wasting the next decade or two tinkering with the Affordable Care Act, pretending that we’re making real progress, just won’t cut it. There are no adequate policies in the ACA model on which to build substantial reform. We need truly efficacious reform that covers absolutely everyone equitably in a universal program – a single payer national health program.
Every year that goes by without acting brings us ever more health care tragedies, not to mention financial hardship. We can’t wait around while we watch the unfolding of the failure of the ACA experiment. We need reform now. It’s an absolute moral imperative!
Patient Protection and Affordable Care Act; Establishment of Exchanges and Qualified Health Plans; Exchange Standards for Employers
Department of Health and Human Services
Federal Register publication date: March 27, 2012
Final rule, Interim final rule.
Excerpts from pages 34-37
Summary of Regulatory Changes
If the Exchange is an independent State agency or not-for-profit entity established by the State, we proposed that its governing board meet the standards outlined in §155.110(c)(1) through §155.110(c)(4) of the proposed rule, which included: the Exchange accountability structure must be administered under a formal, publicly-adopted operating charter or by-laws; the Exchange board must hold regular public meetings; representatives of health insurance issuers, agents, brokers, or other individuals licensed to sell health insurance may not constitute a majority of the governing board; and, all members of the governing board must meet conflict of interest and qualifications standards.
Several commenters urged HHS to apply conflict of interest standards to eligible contracting entities.
Response: We generally defer to States to establish conflict of interest standards for eligible contracting entities beyond the prohibition of health insurance issuers being eligible contracting entities, as established in section 1311(f)(3) of the Affordable Care Act and codified in §155.110(a)(1)(iii). We believe that many States have existing conflict of interest laws, have appropriate expertise in this area, and can support Exchanges in the development of conflict of interest standards for such entities.
Commenters suggested broadening the list of groups identified as having a conflict of interest in proposed §155.110(c)(3)(ii) to include: health care providers; anyone with a financial interest; anyone with a spouse or immediate family with a conflict of interest; major vendors, subcontractors, or other financial partners of conflicted parties; members of health trade associations and providers; and, health information technology companies. Commenters recommended that such groups be limited or prohibited from participation in an Exchange. Other commenters recommended that individuals with ties to the insurance industry participate through technical panel or advisory group instead of through board membership.
Response: As proposed, §155.110(c)(3)(ii) ensures as a minimum standard that the groups with the most direct conflict of interest cannot form a majority of voting members on a governing board. We believe that further definition of conflict of interest may create inconsistencies with State law and other existing State standards, but note that Exchanges may expand the list or further define conflict of interest. For example, a State may elect to prohibit any conflicted members from serving on the board.
Final rule, Interim final rule. (644 pages):
Skim reading this 644 page HHS rule on the state insurance exchanges to be established under the Affordable Care Act makes you realize even more how unnecessarily complicated this legislation had to be merely to accommodate the private insurance industry. If you are suffering from euphoria, read this rule and it will cure you.
As everyone knows, the Affordable Care Act was written by and for the private insurance industry. Just to show how much the insurance industry’s influence extends into the Obama administration you merely need to look at the rule on the governing board composition and conflict of interest, to wit, “representatives of health insurance issuers, agents, brokers, or other individuals licensed to sell health insurance may not constitute a majority of the governing board.”
Absolutely astounding! The private insurance industry can occupy up to one-half of the seats on the governing board! Amongst all of the other members of the board, they need only one friend. Watching the reform process take place it is clear that they have friends everywhere!
During the comment period, many expressed concern about this obvious conflict of interest, suggesting even that insurers participate as an advisory group rather than through board membership. And HHS’s response? “We believe that further definition of conflict of interest may create inconsistencies with State law and other existing State standards.”
This is an outrage! Mobilize the forces!
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