Health insurers’ profits 35th of 53

By Calvin Woodward
The Washington Post
October 26, 2009

Health insurance profit margins typically run about 6 percent, give or take a point or two.

Health insurers posted a 2.2 percent profit margin last year, placing them 35th of 53 industries on the Fortune 500 list. As is typical, other health sectors did much better – drugs and medical products and services were both in the top 10.

Leading the list: network and other communications equipment, at 20.4 percent.

http://www.washingtonpost.com/wp-dyn/content/article/2009/10/26/AR2009102600229.html

And…

Morningstar
October 26, 2009

Health care plans – net profit margin: 3.3%

http://biz.yahoo.com/ic/522.html

And…

American Medical News
August 24, 2009

Medical loss ratios of largest publicly traded health plans:
Average 85.2% (non-weighted, range 82.9% – 86.8%)

http://www.ama-assn.org/amednews/2009/08/24/bisb0824.htm

In simple accounting terms, profit represents the difference between gross revenues and the cost of producing and marketing the products or services sold. So what is the product that the private insurers are selling us? Administrative services.

Unlike most other businesses, the revenues of the private insurers include our own funds that essentially are held in trust for the eventual payment of medical claims – currently 85.2% as represented by their medical loss ratios. Their business costs relate strictly to their product – the administrative services – currently 14.8% of their revenues. Thus their profit margin, to make sense, should be calculated based on their business model of providing us administrative services, but not on the funds held in trust which involve negligible expenses but which provide them with long term investment income. (Profit statements for the notorious financial services industry should also be adjusted accordingly since that is also our money that they are jerking around.)

The 3.3% profit margin reported by Morningstar includes the funds held in trust, but if adjusted to include only all costs of their legitimate business operations of producing and marketing their administrative services then their profit margin is actually 22.3%. That moves them into first place on the Fortune 500 list of profitable firms, in front of the network and communications equipment industry (20.4% profit).

To be realistic, playing with these numbers does not change the fact that eliminating these profits would have only a very small direct impact on our total national health expenditures – saving less than 1% of our health care dollars. What would have a tremendous impact would be to eliminate an industry that has the incentive of a 22% profit margin on a product that is designed to reduce our access to the health care that we need, not to mention a product that places a costly administrative burden on our health care delivery system. Eliminating the private insurance industry could have a hugh direct impact on our health care spending – diverting perhaps $4 trillion over the next ten years from administrative waste, and redirecting it to patient care.

We need to take heed of this comment in today’s Los Angeles Times:

“As President Obama’s push for a healthcare overhaul moves toward its final act, the oft-vilified health insurance industry is on the verge of seeing a plan enacted that largely protects its financial interests.”

http://www.latimes.com/business/la-fi-health-insure26-2009oct26,0,11741,full.story

Book Review
“The Cancer Generation: Baby Boomers Facing a Perfect Storm,” by John Geyman, M.D. Common Courage Press, 2009. Softcover, 303 pp., $18.95.

By A.R. Strobeck Jr.

In “The Cancer Generation,” Dr. John Geyman, physician and professor emeritus of family medicine at the University of Washington, focuses on the baby boomer generation in the United States and the virtual tsunami of cancer cases that is expected to hit this 79.5-million-member demographic as more of its members move into their “golden years.”

Geyman says he aims to examine “the changing landscape of cancer in the U.S., including the extent to which the marketplace fails patients with cancer care.” He takes a hard look at how well the present state of cancer care – particularly the financing of medical services – measures up to the task of providing quality, compassionate care to those who need it.

While he draws upon the latest academic research and the book is heavily footnoted, the material is presented in a popular, accessible way, including with the abundant use of tables and graphs.

The picture he draws is not pretty. The author believes that the outlook for cancer care is bleak, largely due to the unregulated “free market” economic policies that have come to dictate both access to, and delivery of, health care in the U.S. These policies have given rise to an astronomical increase in the costs of cancer care, with treatment costs are now rising by 20 percent each year. The rising costs are putting effective care out of reach of millions.

This problem is expected to worsen, the author says, noting that the Institute of Medicine projects the number of cancer cases will double between 2000 and 2050. Meanwhile, the annual cost of treating cancer is projected to reach $1.1 trillion by 2023, more than five times what we spend today.

As a result, the aging of the U.S. population “will lead to an increasing cancer burden, both for individuals and their families as well as for the health care system itself.”

Geyman acknowledges that treatments for cancer have improved, and today’s care can be effective in many cases. He points to the dramatic increase in the survival rate among children diagnosed with cancer, for example.

But lack of health insurance, or poor quality insurance, prevents people from getting access to and obtaining proper care. The chief culprit here, he says, is the private health insurance industry, which is more concerned with increasing its profits than in assuring access to care.

More generally, however, he believes that our present market-driven health care system cannot meet the coming surge in cancer cases without drastic changes in its structure, access, delivery and methods of financing.

Geyman sees a blind faith in technology in the U.S. as fueling an explosion of new technologies, even though there is much uncertainty as to the safety and efficacy of these innovations. Unfortunately, he asserts, due to the high stakes that come with cancer, patients facing it are “especially vulnerable to accepting treatment at whatever the risks or costs.” Thus the marketplace is “setting cancer policy by default,” i.e. most of our health care dollars are going into treatment and far too little into prevention.

Cancer survivors face special challenges, he writes. They are less likely to be employed. They face three kinds of barriers to care thrown in their way by private insurance: availability, affordability and adequacy. And if these barriers are not enough, private insurance companies sometimes will go to even greater lengths to deny coverage to those afflicted.

Survivors lucky enough to have insurance face much higher co-payments. In addition, insurance firms try to cap coverage or otherwise place limits on the amount of treatment. As a result, a cancer diagnosis is often a prelude to financial crisis and bankruptcy.

Cancer survivors without insurance often find it difficult to see a doctor or to have a regular source of care. Geyman notes that it is no wonder that uninsured and Medicaid patients often have cancer at a more advanced stage when it is diagnosed. In addition, most cancer survivors often have serious co-morbidities such as heart disease or diabetes, which also go untreated at a disproportionately higher rate.

Geyman argues that everyone needs accessibility to doctors if the mortality rate of cancer is to be reduced. Unfortunately, the policies of the private health insurance industry are heading in the opposite direction, leading to uncontrolled inflation of costs; growing unaffordability of premiums; decreasing levels of coverage; a bloated bureaucracy, contributing to the waste of 31 cents of every U.S. health care dollar on administrative costs; a shrinking market of only 59 percent of employers now offering health insurance; ineffective state and federal regulation; and growing insecurity and hardship in the general population.

Racial disparities also continue to take a heavy toll: for example, cancer mortality rates are 35 percent higher for African Americans than whites.

What’s his prescription for a cure? As step No. 1, Geyman recommends establishing a public health insurance system such as single-payer Medicare for All. Such a system would provide health care services “based on medical need, not ability to pay, ” and would “eliminate much of the inefficiency and waste of the private insurance industry and actually cost employers and individuals less than we are already paying for insurance and health care.”

He outlines additional measures like establishing a national, evidence-based clinical effectiveness program; more funding for cancer research; and the strengthening of the nation’s cancer workforce, especially in primary care and geriatric oncology.

Finally, Geyman reminds us of the ethical issues surrounding cancer care, citing Dr. Martin Luther King Jr., when he said, “Of all forms of inequality, injustice in health care is the most shocking and most inhuman…. Although social change cannot come overnight, we must always work as though it were a possibility in the morning.”

Reading and acting on this book will help bring about that better day.

A.R. Strobeck Jr. worked for many years in health care administration. He resides in Chicago.

Dr. John Kitzhaber’s Unorthodox Ideas On Reforming Health Care

By J. Duncan Moore Jr.
Kaiser Health News
October 21, 2009

Q. Why are you running for governor again?

A. Costs for health care are going to continue to escalate and states will be overwhelmed. Whatever comes out of Congress this year is not going to have much impact on overall costs.

Q. How do you feel about the reform effort in Congress?

A. I’m not optimistic. I think Washington, D.C., is really badly broken. The discussion today is not about health care, it’s about both parties trying to position themselves for future majorities.

http://www.kaiserhealthnews.org/Checking-In-With/checking-in-with-kitzhaber.aspx

And…

Evaluating Health Care Plans: An Analysis of the Short- and Long-Term Fiscal Implications of Reform Plans

US Budget Watch
(supported by Pew Charitable Trusts)
October 19, 2009

Unfortunately, each bill making its way through Congress has employed at least one of these gimmicks:

* Timing Gimmicks
* Loopholes
* Omissions
* Bogus Offsets

… many provisions within the bills… would result in increases of overall health care costs.

http://crfb.org/document/evaluating-health-care-plans

The five reform bills passed by House and Senate committees will not control health care costs, and yet these are to be merged into one bill – that will not control health care costs.

What is the worst that could happen?

The second worst is that the final bill could be defeated and everyone would walk away with yet another failed attempt at reform. (Everyone would understand that very soon we would have to return to start over since the status quo is totally unacceptable.)

The very worst is that this bill could pass and everyone would walk away insisting that we have successfully reformed health care when all we have done is to establish an unnecessary and unethical ten-year long experiment that will cause financial hardship, physical suffering and even death – adverse outcomes that could be prevented with reform based on policy evidence rather than markets.

The goal of completing action on this bill before Christmas, pass or fail, and then walking away is not acceptable. We must set this bill aside and start fresh with a model that would prevent yet another decade of unnecessary grief. That model, of course, is an improved Medicare for all.

Hypertension, Diabetes, And Elevated Cholesterol Among Insured And Uninsured U.S. Adults

by Andrew P. Wilper, Steffie Woolhandler, Karen E. Lasser, Danny McCormick, David H. Bor, and David U. Himmelstein
Health Affairs
October 20, 2009

Abstract: In this paper we explore whether uninsured Americans with three chronic conditions were less likely than the insured to be aware of their illness or to have it controlled. Among those with diabetes and elevated cholesterol, the uninsured were more often undiagnosed. Among hypertensives and people with elevated cholesterol, the uninsured more often had uncontrolled conditions. Undiagnosed and uncontrolled chronic illness, which is common among insured people, is even more frequent among the uninsured.

Unrecognized or undertreated disease places uninsured people at risk for costly, disabling, or even lethal complications. For instance, many cases of kidney failure, blindness, and amputation are preventable through good diabetes control. Hypertension control is the major strategy used to combat stroke.

For the uninsured, recognition of these three conditions lags behind that of people with health insurance. Insuring the uninsured may improve care and reduce rates of disabling complications and death for Americans with these chronic illnesses.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.6.w1151v1

This study confirms that being insured not only improves the control of chronic diseases, it also improves the diagnosis in individuals who are not even aware of their disorders. Insuring the uninsured can delay or even totally prevent the disastrous complications of these chronic disorders.

Current legislative proposals would leave perhaps tens of millions of individuals without insurance coverage. We cannot afford to complete the reform process until we establish policies that would cover absolutely everyone.

Our representatives in Congress need to halt the process now while they take another look at a single payer national health program – an improved Medicare for all – which actually would cover everyone. The House will have a chance to do so in the next few weeks when Rep. Anthony Weiner introduces his amendment on the House floor that would replace the language of the reform bill with the language of the single payer model.

Those who have not done so already may be interested in watching the seven minute video of Rep. Weiner’s statement when he previously introduced the single payer amendment in committee:
http://weiner.house.gov/tv.aspx?p=112

By Kip Sullivan, JD

The New York Times reported on Saturday, October 17, that Sen. Ron Wyden (D-OR) is warning his constituents that the “public option” is not going to be available to the great majority of Americans. No one who has actually read the Senate health committee’s “reform” bill or the House “reform” bill (HR 3200) disputes this. According to the Congressional Budget Office, the “option” will be available only to about 30 million people, or about one American in ten. As the Times put it (slightly inaccurately), the “option” in the Democrats’ legislation “would be out of bounds to the approximately 160 million people already covered through employers.”

Does the public understand this? According to Wyden, they don’t. Wyden says his constituents are shocked when they are told the “option” will not be available to the vast majority of Americans. When he began informing his constituents about this truth last summer, “They nearly fell out of the bleachers,” he said (“And the public option is….,” New York Times, October 17, 2009, A10).

Democrats and “option” advocates should pay attention to Wyden’s observation. Wyden is saying, in so many words, that “option” advocates, with help from the media and the blogosphere, have fooled the public into thinking everyone will be eligible to buy insurance from the “option,” and when the public finds out this isn’t true, they’re not going to be happy.

I was not surprised by Wyden’s observation. I have written several papers warning the public that they have been the object of a “bait and switch” campaign by the leadership of the “option” movement. The “bait” in this campaign was the original version of the “option” promoted by Jacob Hacker. This version would have created an enormous public program that would have insured half the non-elderly population. Among several provisions of this first version of the “option” that would have ensured large size was one that said the “option” had to be available to all non-elderly Americans. The “switch” occurred when Democrats on the Senate Health, Education, Labor and Pensions (HELP) Committee and three chairmen of House committees drafted legislation that would create a very small and weak “option.” One of the provisions in the Democrats’ legislation that ensured their version of the “option” would be weak was a provision limiting subsidies and eligibility for the “option” to a small fraction of the population, namely, the uninsured and employees of small firms.

After reading Wyden’s warning, I examined over 50 polls to see if any pollsters had bothered to investigate the issue Wyden is raising. It would be interesting, I thought, to see if (a) pollsters had allowed themselves to be fooled by the bait-and-switch campaign for the “option” and (b), to the extent that they hadn’t been fooled, what did they find out about how badly the average American had been fooled?

I discovered that the nation’s best known polling firms have allowed themselves to be fooled. Pollsters are asking the public the wrong question. They are asking the public to comment on Hacker’s original version of the “option” (the “bait”), not the actual “option” proposed in the Senate HELP Committee bill and HR 3200. Not surprisingly, the polls tell us very little about whether the public thinks the “option” will be available to everyone or to just a small minority.

Pollsters are asking about the “bait,” not the actual “option”

Pollingreport.com is a widely used source of polling data. I don’t know how they select the polling firms they report on, but I do know many of the most recognizable polling firms appear on their website. On October 17, I visited their website, clicked on their “health policy” section, and read every one of the 52 polls listed for the period June 1 to October 8. I selected June 1 as my beginning date because congressional Democrats did not publish drafts of their bills until mid-June. October 8 was the date of the latest poll listed on Pollingreport.com as of October 17.

Twenty-three of these 52 polls asked a question related to the “option.” (In a few days, I’ll post a listing of these polls and the questions they posed in an appendix). Of these 23 polls, the questions in one of them conveyed no information about who would be eligible to participate in the “option.” The remaining 22 polls all posed questions that stated explicitly or implicitly that all Americans would be eligible to participate in the “option.” One of these 22 polls asked a follow-up question (it was a follow-up to a question asserting that the “option” would be universally available) that informed respondents that the “option” might turn out to be available to only a small fraction of the populace. None of the other polls gave so much as a hint that the “option” would be available to only a small fraction of the population.

Three of the 22 polls that conveyed some information about who would be eligible to participate in the “option” explicitly stated the “option” would be available to everyone.* For example, the September 17-20 NBC/Wall Street Journal poll asked: “Would you favor or oppose the government offering everyone a government-administered health insurance plan – something like the Medicare coverage that people 65 and older get – that would compete with private health insurance plans?” (emphasis added)

The remaining 19 polls (of the 22 that conveyed information about who could participate in the “option”) used language that would lead most readers to infer the “option” would be offered to everyone. The most common method used by these 19 polls was to state (1) the “option” would be (2) “like Medicare” and would (3) “compete” with the insurance industry. Referring to the public program as “an option” without qualification implies the program will be universally available. Comparing the program to Medicare (a program that is available to almost the entire elderly population) also implies universality. And depicting the program as a competitor with the “insurance industry” or “health insurance companies” also connotes universality. Any one of these three features – employing the word “option,” comparing the “option” to Medicare, and depicting the “option” as competing with the entire insurance industry – is sufficient to mislead the average reader into thinking the proposed “option” is going to be available to everyone. The appearance of all three features in a single question virtually guarantees that outcome.

The September 12-18 Kaiser Tracking Poll illustrates this method of misleading readers. The poll asked respondents if they favored or opposed: “Creating a government-administered public health insurance option similar to Medicare to compete with private health insurance plans.” The average reader could be expected to infer from this question that all non-elderly Americans would have the choice of enrolling with the “option.”

Sometimes polls used only two of the three deceptive phrases. For example, the question posed by the June 23-29 Quinnipiac University Poll asked, “Some people say that giving people the option of being covered by a government insurance plan will keep private insurance companies honest. Do you agree or disagree?” Here, two features – saying “people” will have access to an “option,” and referring without qualification to the entire insurance industry – are misleading.

Only one poll – the one conducted by ABC and the Washington Post between September 10 and 12 – bothered to ask how respondents felt about the “option” actually being proposed by the Senate HELP Committee bill and HR 3200. And this question came only after the poll had asked a question implying the “option” might be available to everyone. Here are the two questions:

“Would you support or oppose having the government create a new health insurance plan to compete with private health insurance plans?”
Support: 55%
Oppose:42%
Unsure: 3%

If oppose/unsure: “What if this government-sponsored plan was available only to people who cannot get health insurance from a private insurer? In that case, would you support or oppose it?”
Support: 21%
Oppose: 24%

The fact that the authors of this poll felt it necessary to ask a separate question about a version of the “option” limited to the uninsured indicates they understood that their first question implied an “option” available to all. The first question doesn’t say explicitly that the “option” will be universally available, but it conveys that impression with just one of the three deceptive features commonly used by the polls examined here. It doesn’t use the word “option,” and it doesn’t compare the “option” to Medicare; it merely depicts the “option” as competing with the entire insurance industry. In my opinion, that device alone is sufficient to connote universality. By asking the follow-up question, the authors of this poll indicate they agree with me.

What can we learn from these polls?

Of the 23 polls that posed a question about the “option,” only the ABC/Washington Post poll I just discussed could be said to be accurate, and even that is a questionable statement. To put this the other way around, at least 22 of the 23 polls I examined failed to convey accurate information about the actual “option” under consideration by Congress. It is impossible, therefore, to reach any conclusions about how the public feels about that “option.” Because 21 of the 22 polls that conveyed some information about the “option” asked questions exclusively about a version of the “option” that resembles the one Jacob Hacker originally proposed, we can only draw conclusions about that version. The one tentative conclusion we can draw is that the public appears to support the original Hacker version of the “option” – the large, Medicare-like public program. We must consider this conclusion tentative because the campaign for the “option” has been so deceptive and vague, and because the polls made no effort to undo the deception or compensate for the vagueness.

With one exception, the polls that sought to measure public support for the “option” found majority support. The one exception was a poll conducted for Fox News between July 21 and 22. That poll found 44 percent in support of the “option” and 48 percent opposed. An examination of the wording of that poll does not indicate why Fox came up with such a low estimate of public support. Among the other polls, support ranged from 52 to 76 percent. My eyeball analysis of these results suggests support did not decline over the summer as criticism of the “option” and the Democrats’ plans escalated.

It is impossible to say with any confidence whether the support reported by these polls is strong or weak. I found only one poll that offered useful information on that issue. The poll – the ABC/Washington Post poll quoted above – found that the public’s support for the “option” (the original version, not the actual one) is somewhat wide but very shallow. After posing the question I quoted above and finding a 55-percent support level, the poll asked:

“Say health care reform does NOT include the option of a government-sponsored health plan. In that case would you support or oppose the rest of the proposed changes to the health care system being developed by Congress and the Obama administration?”

Fifty percent said yes to this question. In other words, only 5 percent of respondents felt the “option” was essential to effective reform. However, we should take into consideration how vague and inept the bait-and-switch campaign for the “option” has been. A more skillful campaign for a huge public program, as opposed to the know-nothing, deceptive campaign waged on behalf of the mouse version of the “option,” might have created more enthusiasm for the “option.”

Reporters and pollsters need to do their homework

In previous essays about the “option” I have called on the leaders of the “option” movement to notify their followers and the public that Congress is not talking about the original Hacker version of the “option.” That plea has fallen on deaf ears. I will not repeat it here.

I would, however, like to urge polling firms, reporters and bloggers to report on the deception being practiced by the leadership of the “option” movement or, at minimum, to stop participating in that deception by repeating the myth that “poll after poll” shows Americans want the “public option” being discussed in Congress. If pollsters, reporters and bloggers had refused to go along with the “option” campaign’s bait-and-switch tactic, the tactic would not have worked. But they did go along with it, and the tactic appears to be working. The vast majority of Americans, even Americans who attempt to stay abreast of the health care reform issue, appear to be under the impression that the “option” will be available to the entire non-elderly population (or at least to that portion without access to a non-Medicare government program such as Medicaid).

This illusion cannot, of course, last forever. But the longer it goes on, the worse the backlash will be when Americans are finally disabused of the illusion. If they are “falling out of the bleachers” now (to quote Sen. Wyden) when they learn how few Americans will be able to participate in the “option, how are they going to feel when Republicans and the lazy media start telling them, say, next January? Americans need accurate information about the actual “option” under consideration in Congress, and they need it now. If Health Care for America Now and other “option” advocates won’t provide that information, pollsters, reporters, and bloggers should. But with woefully few exceptions, pollsters, reporters and bloggers are selling the notion that the “option” will be universally available.

Pollsters, reporters and bloggers are also selling the unproven claim that the public supports the “option” described in the Democrats’ legislation. Pollster Celinda Lake, who actively participated in the bait-and-switch campaign for the “option,” was quoted recently saying, “Poll after poll shows that large majorities of Americans support reform that offers a choice of a public health insurance plan or private insurance.” To take another example, in an interview on October 15 Tamryn Hall of MSNBC asked Sen. Mary Landrieu (D-LA), “Do you believe in the polling data that says that the American people want a public option?”

Lake’s statement and Hall’s question were not demonstrably false (it’s possible a majority of Americans support the mousey version of the “option” called for in the Democrats’ legislation), but they sure were misleading. The fact is we simply don’t know what the public thinks of the moribund little “option” proposed by the Democrats. Perhaps someday we will. Perhaps someday pollsters will get around to asking accurate questions about the real “option” – questions that do not suggest the “option” will be available to all and do not suggest that it will resemble Medicare.

Kip Sullivan, JD is a member of the Steering Committee of the Minnesota Chapter of Physicians for a National Health Program.

* An earlier version of this post erroneously stated four of 22 polls explicitly stated that the “public option” would be available to everyone.

Read the rest of this entry »

Looking Forward, Looking Back: Assessing Variations in Hospital Resource Use and Outcomes for Elderly Patients With Heart Failure

By Michael K. Ong, Carol M. Mangione, Patrick S. Romano, Qiong Zhou, Andrew D. Auerbach, Alein Chun, Bruce Davidson, Theodore G. Ganiats, Sheldon Greenfield, Michael A. Gropper, Shaista Malik, J. Thomas Rosenthal and José J. Escarce
Circulation – Journal of the American Heart Association
October 13, 2009

Background: Recent studies have found substantial variation in hospital resource use by expired Medicare beneficiaries with chronic illnesses. By analyzing only expired patients, these studies cannot identify differences across hospitals in health outcomes like mortality. This study examines the association between mortality and resource use at the hospital level, when all Medicare beneficiaries hospitalized for heart failure are examined.

Methods and Results: (Warning: This section is technical and you may want to skip it for now.) A total of 3999 individuals hospitalized with a principal diagnosis of heart failure at 6 California teaching hospitals between January 1, 2001, and June 30, 2005, were analyzed with multivariate risk-adjustment models for total hospital days, total hospital direct costs, and mortality within 180-days after initial admission (”Looking Forward”). A subset of 1639 individuals who died during the study period were analyzed with multivariate risk-adjustment models for total hospital days and total hospital direct costs within 180-days before death (”Looking Back”). “Looking Forward” risk-adjusted hospital means ranged from 17.0% to 26.0% for mortality, 7.8 to 14.9 days for total hospital days, and 0.66 to 1.30 times the mean value for indexed total direct costs. Spearman rank correlation coefficients were 0.68 between mortality and hospital days, and 0.93 between mortality and indexed total direct costs. “Looking Back” risk-adjusted hospital means ranged from 9.1 to 21.7 days for total hospital days and 0.91 to 1.79 times the mean value for indexed total direct costs. Variation in resource use site ranks between expired and all individuals were attributable to insignificant differences.

Conclusions: California teaching hospitals that used more resources caring for patients hospitalized for heart failure had lower mortality rates. Focusing only on expired individuals may overlook mortality variation as well as associations between greater resource use and lower mortality. Reporting values without identifying significant differences may result in incorrect assumption of true differences.

WHAT IS KNOWN

* Substantial variation has been documented among hospitals in the resources used to care for elderly Medicare beneficiaries with chronic illnesses during the last 6 months of life.

* By only including individuals who have died in the analyses, researchers cannot identify differences on health outcomes such as survival.

WHAT THE STUDY ADDS

* This study found variation among California teaching hospitals in survival for patients hospitalized with heart failure. This variation would have been overlooked by a study that only examined heart failure patients who died.

* When analyzing all patients hospitalized for heart failure, California teaching hospitals that used more resources had lower mortality rates.

* When analyzing all patients hospitalized for heart failure, the variation in resource use among California teaching hospitals was 27% to 44% less than the variation observed when analyzing only heart failure patients who died.

http://circoutcomes.ahajournals.org/cgi/rapidpdf/CIRCOUTCOMES.108.825612v1.pdf

As the nation attempts to identify ways of slowing the excessive growth in our health care costs, it is only natural that we would look at the great variability in health care spending that does not seem to correlate with health care outcomes. John Wennberg and his colleagues, in producing the Dartmouth Atlas, have confirmed that these variations are very real, though more recent refinements have demonstrated that the differences are not quite as great when corrected for other factors.

A prior study of California hospitals showed that these differences were not limited to those areas for which there seems to be an easier explanation (private hospitals with a liberal supply of high-tech services and professionals treating wealthier patients versus under-budgeted safety-net institutions treating low-income patients), but these Dartmouth differences were also noted between the various University of California teaching hospitals, which have similar funding, staffing and equipment.

This new study looked closer at the differences between the University of California teaching hospitals (including one private teaching hospital affiliated with UCLA). The authors showed that looking back for six months at patients who had died of heart failure did confirm the differences, although not as great since more variables were considered. Higher spending did not improve outcomes for the obvious reason that patients were selected for study on the basis of a common outcome – death.

The important contribution of this study is that they selected the same disorder as used in the death study – congestive heart failure – and looked forward for six months for the outcome of survival or death. This study showed that the teaching hospitals using more resources (spending more money) had a lower incidence of death.

Okay. Now, what care are we going to refuse to fund? Just looking at congestive heart failure alone, it is going to be very difficult to sort out the details to determine which interventions are of value and which are not. Now think of the task of sorting out these differences for all other serious disorders.

So how do we select out those services that should be eliminated from coverage? Legislators and bureaucrats certainly understand that they are not up to the task, so what do they recommend? They are suggesting that we lower spending by paying only for efficient care (i.e., by paying less money), by bundling payments and using accountable care organizations. Third party payers would distribute the funds while health care professionals would micromanage the use of those funds.

Think of the logistical nightmare of contracting with all the services and facilities that would be required in an accountable care organization. Even just informally gathering these services together to accept a bundled payment would entail similar logistical barriers. But then think of the internal conflicts that would occur when it comes time to decide how to divide up the spoils. The micromanagement within these entities would not be based on projected optimal outcomes, but they would be based on pecuniary interests.

If high-quality teaching institutions within the same university system are having difficulties fine tuning health care, how could we ever expect all facilities throughout the nation to adhere to the highest standards when they aren’t even understood?

Although we can continue to study the differences and educate professionals on better practices, we can’t really look to the Dartmouth variations as a quick source of cost savings to finance our other health care needs.

But there is one quick measure that would provide a great start for achieving a higher-value health care system. Get rid of the private insurers and establish an improved Medicare system that would include all of us. That would save about $4 trillion in the next ten years that could be used on actual health care, without increasing our national budget deficit. With a single financin

Regence campaign: Consumers must make choices to reduce health care costs

By Paul Beebe
The Salt Lake Tribune
November 14, 2009

As the battle over health care reform rages in Congress, Regence BlueCross BlueShield is using a slick Internet site, social media and billboards to say that consumers bear much of the blame for high premiums.

The message isn’t that bald, but it’s there.

“It really is about motivating people about the real cost of health care and how the choices they make each day impact those costs. To motivate consumers to take action is really what it’s all about,” Regence spokeswoman Georganne Benjamin said Wednesday.

“Cost is a big factor in this debate, and we need to address the high rate of medical spending, or we will not have meaningful health care transformation. This campaign does play a role in that,” she said.

The heart of Regence’s campaign is an interactive Web site (What’s the Real Cost?). But if a visitor overlooks or doesn’t click on a link next to a navigation button, he won’t easily discern that the site was put up by (Regence BlueCross BlueShield).

Regence is also using traditional tactics.

It has erected billboards along Interstate 15 that display two messages: “Health care hums like a machine with no off button because we don’t question it” and “Should ‘Because it’s covered’ be guiding health care?”

http://www.sltrib.com/business/ci_13562042

What’s the Real Cost? (a game):
http://www.whatstherealcost.org

How many people do you know that request health care that they know they don’t need but they want to have “because it’s covered”? In over thirty years of my very busy family practice, I cannot recall one single patient with such a request. Yet the thrust of this Regence BlueCross BlueShield campaign is to blame the patient for requesting too much health care.

We know the primary sources of the very high costs for health care in the United States. First, the administrative excesses of our fragmented financing system waste hundreds of billions of dollars each year (about four trillion in the next ten years, reformers please note). Also our prices are much higher than in other nations. Although technological advances have increased costs, they do not account for our excess spending since the level of use is comparable to that of most other nations.

So what about the excess of unnecessary care? Health care decisions are predominantly supply-side, provider-driven decisions. In spite of the plethora of anecdotes of patients demanding too much care, very few health care decisions are demand-side, patient-driven decisions. Regence couldn’t be further off target with this campaign.

Regence BlueCross BlueShield is a not-for-profit insurer, theoretically a traditional Blues plan. But it, like the other not-for-profits, has adopted the market innovations of the other Blues such as WellPoint that have converted to for-profit for the primary purpose of making money, with patient service being only a secondary necessity.

Regence BlueCross BlueShield is part of the reason for our outrageous health care costs, both for the administrative waste from its own activities and the administrative burden placed on providers, plus its ineffectiveness in improving value by improving the allocation of our health care dollars. For Regence to place the blame with the patients for demanding too much care is the ultimate of chutzpah.

Insurer ends health program rather than pay out big

By William Ehart
The Washington Times
October 14, 2009

Ian Pearl has fought for his life every day of his 37 years. Confined to a wheelchair and hooked to a breathing tube, the muscular dystrophy victim refuses to give up.

But his insurance company already has.

Legally barred from discriminating against individuals who submit large claims, the New York-based insurer simply canceled lines of coverage altogether in entire states to avoid paying high-cost claims like Mr. Pearl’s.

In an e-mail, one Guardian Life Insurance Co. executive called high-cost patients such as Mr. Pearl “dogs” that the company could “get rid of.”

“The insurance companies are cheating in order to have obscene profits,” (Mr. Pearl’s father) said.

Guardian, a 150-year-old mutual company, reported profits of $437 million last year, a 50 percent increase over $292 million in 2007. It paid dividends of $723 million to policyholders and had $4.3 billion in capital reserves, according to its annual report. The company’s investment income totaled $1.5 billion that year, a small increase from the year earlier.

http://washingtontimes.com/news/2009/oct/14/ny-insurance-company-tries-to-rid-itself-of-high-c/

Although the individual private insurance market is infamous for discriminating against individuals with a potential for high health care costs, regulations largely prohibit group plans from singling out individuals for exclusion.

When private group plans prove to be unprofitable, they can often legally skirt the regulations by shutting down the entire plan or by withdrawing from unprofitable markets, often leaving the previously insured with very difficult or near-impossible choices. No matter how well regulated, the current proposed insurance exchanges cannot prevent an insurer that is failing in a market from shutting down. Even with guaranteed issue, other insurers would also shun unprofitable markets and unprofitable plans.

This problem is much more common than many realize. Look at the Medicare Advantage programs. This year many have declined to submit bids for renewal and will withdraw from unprofitable markets. Even this highly regulated option to Medicare can abandon patients, yet Medicare can’t. This is one more important reason why we should question the wisdom of Congress in insisting that reform be based on a market of private plans instead of an improved Medicare program for all of us.

Ian Pearl’s story has a couple of other important lessons for those supporting a public option as part of the reform package. Although private plans must always protect their business interests above the interests of the patients, a public option would have a mission requiring it to place patients first. The public option would be a victim of adverse selection since it would have to function as the safety net. Attempts to adjust risk would drive private insurers out of the exchange, leaving high-cost individuals with only very expensive options.

What about private co-ops instead, owned by the beneficiaries? That would prevent insurers from “cheating in order to have obscene profits,” as Mr. Pearl Sr said. Oops. Look at the profit statement of Guardian. It is a mutual company, and the profits are returned to the policyholders as dividends. That is essentially what a co-op is! Yet that did not prevent Guardian from jerking the rug out from under Ian Pearl. Private plans with their own segregated risk pools will always use any means legal (and sometimes illegal) to protect their reserves from being spent on health care.

Creating a public option and then throwing it into the amoral, dysfunctional private insurance marketplace to have it compete on the same perverse terms as the private insurers is a very sick solution for our health care crisis.

Single payer anyone?

On Monday October 5th, Drs. Margaret Flowers and Paul Hochfeld led a delegation of 15 physicians and nurses to the White House gate. The occasion was a Rose Garden ceremony with over 100 physicians in white coats invited, a photo-op to showcase support among doctors for the President’s effort at health reform.

The single-payer delegation assembled together with the invited doctors at the inside gate. Several leading physicians recognized Dr. Walter Tsou, past-president of the American Public Health Association, and greeted him warmly. Many of the physicians also recognized and greeted Dr. Margaret Flowers, Congressional Fellow of Physicians for a National Health Program. Some took pictures of our banners.

Dr. Flowers patiently explained to a White House aide that many requests had been made to meet with the President, from Physicians for a National Health Program, from the Leadership Conference for Guaranteed Healthcare and from the Mad as Hell Doctors‘ roadshow as well as other single payer advocates. These entreaties have been ignored, she explained, in spite of the President’s September 9th, 2009 promise: “If you come to me with a serious set of proposals, I will be there to listen.”

Dr. Flowers pointed out that several of the Mad as Hell docs were in the delegation with us and that they had just completed a 26-city tour of the United States that concluded at the White House only days earlier. Supporters of the Mad as Hell Doctors along the way sent thousands of emails requesting a White House meeting only to find a solitary email in reply: stop sending these emails.

The White House staff member took PNHP business cards from Dr. Flowers and I for our contact information. He assured us that someone would be in touch with us very soon. (No one from the White House has contacted us or PNHP in the last week.) As the other doctors went in, PNHP members were told one by one that we were “not on the list.” Soon we were asked to leave the White House grounds.

Dr. Hochfeld remained at the inside gate, insisting upon a direct answer whether or not he might receive an impromptu invitation to attend the ceremony. Afterward Paul was not comfortable saying he had been invited to the photo-op. He preferred to say that he was “let in.”

Surely the White House staff, where the leader of the world’s last remaining superpower lives, knows precisely whom it does – and doesn’t – invite inside. It is no leap of imagination to think that after Dr. Hochfeld’s data was entered into the appropriate computer, someone inside must have said something like ‘good grief, let’s not give them an excuse for further protest.’

Dr. Hochfeld could not hear us cheering from a distance as he walked across the White House lawn, last of all. He reported that he was seated between two large men in suits, whom he presumed to be Secret Service agents.

At the conclusion of the ceremony we had the chance to interact again with some of the physicians in attendance. We were eager to hear from Dr. Hochfeld, who was soon inundated with interviews. He was later invited to share his impressions of the White House meeting on “Countdown with Keith Olberman.”

Our small delegation also took our banners amid a protest for peace, where dozens of activists were performing civil disobedience to demand an end to the wars in Afghanistan and Iraq and the closure of the United States’ prison in Guantanamo Bay, Cuba. We were welcomed with a spirited ovation and chants of “Healthcare, Not Warfare!”

Single-payer advocates should take note. Dr. Hochfeld was allowed to attend the ceremony, uninvited and at the last minute, because single payer cannot be ignored. Our persistence has proven effective. The goal of the mainstream discussion, orderly consensus for incremental change, with nary a ripple of discord, as remained elusive. Yet experience proves again and again that single payer swims just below the surface.

All year long it has become more and more clear – to more and more people – that single payer national health insurance is in fact the very least we need when it comes to health care reform that will work to improve our lives. As Dr. Flowers explains, “Anything less is unacceptable.”

This just-below-the-surface dynamic, combined with clear and persistent advocacy, that has taken single payer from “off the table” to “on the floor” this year. We now learn that the vote on HR 3200 – and with it, the Weiner amendment that would substitute single payer legislation for the text of the bill – may be imminent. Activists around the nation are pulling out all the stops.

So the single payer presence within the beltway continues, even now, to increase, not diminish. We also recognize that soon we will begin a new chapter in our efforts to educate and advocate for a single-payer national health program.

The other day Dr. Flowers received an email from a doctor who sought further dialogue following the President’s photo-op. Here is her reply. We can all learn from her perspective.

Don’t let the good be the enemy of the perfect

Thank you for inviting me to this conversation. I understand your concern to get some type of reform now. I hear your desperation. I have felt it myself. There is so much suffering that it is tempting to say – we must get something even if we know it is not the solution.

At some point we have to look at the facts that incremental change and compromise when it comes to health reform in this nation have not gotten us anywhere. While SCHIP is great, it has merely held the level of uninsured children at bay, not decreased it. Medicaid expansions have similarly not been able to keep up with the rising uninsured or been able to provide a financially sustainable and high quality solution. Why is this?

It is because the greatest impediment to health reform in this country is that the for profit (and not for profit in some cases, such as BCBS) health industries control the political process. No amount of incremental reform will change that. Regulation of the industry is expensive and has been ineffective. The industry can do an end-run around regulation so fast that it would make your head spin. With the proposed legislation, we will be throwing more money into an already overpriced and dysfunctional situation. We will delay enactment of better reform while we wait to see if this reform works, all the time knowing that it won’t. In the meantime, thousands of people will die unnecessarily, thousands of people will suffer, families will continue to go bankrupt and lose their homes, physicians will continue to leave practice.

Single payer was not supposed to be on the table this year, yet despite having little in the way of funding and no paid organizers (like HCAN has), we were able to move it forward and break through some of the media blackout through perseverance and dedication.

We must ask ourselves, how long are we willing to play the incremental game (knowing that while a few more get access to healthcare, many more continue to be left out)? When will we decide that we’ve reached the tipping point, and like other social justice movements, dig in and do the necessary work to enact change?

I am tired of hearing that we can’t have single payer or that it is not on the table. It will never be on the table and we will never get it until we do the work to put it there. We, as physicians (and the other health professionals), hold a unique position in society. For the most part we are seen as advocates for our patients and acting in the best interest of our patients (although sadly this vision is truer for nurses than for doctors). We are seen as “experts.” Thus, I believe that it is our professional responsibility to educate and advocate for effective reform. If we work together we can create real change. But it is harder than showing up for a photo shoot. It takes a lot of time and travel and writing and speaking and money and a willingness to put our bodies on the line.

Until more of us are willng to do this, we will have to continue to settle for crumbs. I am not willing to settle for crumbs. My part in this drama is to be a strong voice for single payer. And I won’t give in until we get there. The stories that I hear from patients and docs keep me going. Nobody should be left out. Everybody should have the same level of care. It is our responsibility to fight for this. Anything less is unacceptable.

My two cents, for what it’s worth.

Respectfully,
Margaret

“Uncomplicated” Primary Care?

By Josh Freeman
Medicine and Social Justice
October 8, 2009

I have often written about the importance of primary care, the shortage of primary care physicians, and the fact that fewer medical students are choosing primary care careers, which will exacerbate the problem. A key part of this analysis is the large number of studies, by researchers from a variety of settings, that show that the presence of a higher proportion of primary care doctors decreases cost and increases quality.

However, not everybody agrees. In an earlier post, More Primary Care Doctors or Just More Doctors?, I discussed the position taken by Dr. Richard Cooper, former Executive Vice President and Dean of the Medical College of Wisconsin and currently Professor of Medicine and Senior Fellow, Leonard Davis Institute of Health Economics, University of Pennsylvania, who argues against this position.

Dr. Cooper and a group of equally distinguished colleagues restate this position; in particular that the value of primary care is overstated. In an excerpt from (their Physicians Foundation report) they note:

“Primary care has been a central focus of health care reform. In modeling the future workforce, the Project Team acknowledged the critical importance of primary care services and the role of generalist physicians in providing them. However, the Team rejected the claim by Starfield and others of lower mortality in regions with more family practitioners as a statistical anomaly, and it questioned the wisdom of deploying generalist physicians to take responsibility for the proposed medical homes. Indeed, faced with deep and prolonged physician shortages, it saw no need for physicians to expend effort on uncomplicated primary care.”

The American Academy of Family Physicians (AAFP) in its formal response to the Physicians Foundation report includes the following:

“This study is largely a recapitulation of the primary author’s paper in Health Affairs in January of this year. In that same issue, several researchers pointed out the fundamental flaws in this simplistic research showing that important basic adjustments showed this work to strongly support the prior studies it criticized. It continues to claim that population differences explain past findings for the value of primary care and variance in spending, when these were fully accounted for in these studies. This report does not repair those flaws. It labels several well-validated and valued studies as ‘anomalous’ and ’simple frameworks’ without supporting evidence from other sources. We feel that such claims carry an obligation to point out specific errors of methodology or data, not just recapitulation of personal belief. The burden of proof is still overwhelmingly against the evidence upon which this reports rests. Its foundation is flimsy.”

Enough said about the lack of intellectual rigor, and essentially incorrectness about this piece. More important, I believe, the other assertion in the quote from Cooper’s paper, above, neatly packaged in the sentence “Indeed, faced with deep and prolonged physician shortages, it saw no need for physicians to expend effort on uncomplicated primary care”. What is this “uncomplicated primary care” of which you speak?

The myth is that primary care is about patients with colds and high blood pressure checks. The reality is that it is about people with multiple chronic diseases who need management of those conditions as well as coordination with whatever other specialists they are seeing; preventive services delivered; counseling and “asking for trouble” (”are you safe at home?”); discussion of whatever the other specialist may have recommended; and, of course, caring for acute complaints. This is hard, complex, time consuming and difficult.

(Joshua Freeman, MD is Professor and Chair of the Department of Family Medicine for the University of Kansas School of Medicine. He is author and editor of the Medicine and Social Justice blog.)

http://medicinesocialjustice.blogspot.com/2009/10/uncomplicated-primary-care.html

And…

Health Bills In Congress Won’t Fix Doctor Shortage

By Phil Galewitz
Kaiser Health News
October 12, 2009

Even as Congress moves to expand health insurance coverage to millions of Americans, it’s doing little to ensure there will be enough primary care doctors to meet the expected surge in demand for treatment, experts say.

The American Academy of Family Physicians predicts that the shortage of family doctors will reach 40,000 in the next 10 years, as medical schools send about half the needed number of graduates into primary care medicine.

A proposal backed by Senate Majority Leader Harry Reid, D-Nev., and the teaching hospital lobby to add 15,000 Medicare-funded medical residency positions — a 15 percent increase that would favor more primary care training — was considered dead on arrival because of its $10 billion price tag over a decade.

Instead, the House and Senate overhaul bills would redistribute about 1,000 unfilled residency positions to teaching hospitals that commit to creating more primary care residencies.

Proposals to significantly increase Medicare payments for primary care doctors have gone nowhere in part because the money would come from payments to higher-paid specialists — who, not surprisingly, oppose a pay cut.

Dr. Darrell Kirch, CEO of the Association of American Medical Colleges, said the extra training slots emanating from the redistribution of unfilled residency position would amount to a “drop in the bucket.”

http://www.kaiserhealthnews.org/Stories/2009/October/12/primary-care-doctor-shortage.aspx

The report by Dr. Cooper and his colleagues, cited by Dr. Freeman, was “A Report to the President and the Congress.” Since it was released only one month ago, this report likely did not influence the current legislation, but it is important because it does represent the cavalier views of all too many within and outside of the health care arena.

One of the promises of reform was to reinforce our primary care infrastructure. Although there are a few measures in the bill such as a nominal primary care bonus and a medical home pilot project, failure to train more primary care physicians will require many patients to rely on expensive care in our emergency rooms and expensive care through often inappropriate, direct self-referral to specialists.

We were promised that everyone would be covered and costs would be controlled. Neither will happen. And now the promise of providing primary care access to everyone will fall far short. Jiggling 1000 existing medical residencies just won’t do it.