PNHP

Downward trend in costs still double the growth of the economy

Downward trend in costs still double the growth of the economy

Date: Wed, 9 Jun 2004 11:31:34 -0700
Downward trend in costs still double the growth of the economy

Health Affairs
June 9, 2004
Tracking Health Care Costs: Trends Turn Downward In 2003
By Bradley C. Strunk and Paul B. Ginsburg

Total health care spending per privately insured person rose 7.4 percent in 2003. This increase was 2.1 percentage points lower than the 2002 increase of 9.5 percent, which was itself slightly lower than the 2001 increase of 10 percent. Therefore, it is now clear that we have entered a period of decelerating cost trends following a steep acceleration during 1996-2001.

Nevertheless, the cost trend remained high by historical standards and continued to outpace U.S. economic growth by a sizable margin. With per capita gross domestic product (GDP) increasing 3.8 percent in 2003, the gap between it and the trend in health care spending remained larger than the average 2.5-percentage-point gap over the past thirty years.

http://content.healthaffairs.org/cgi/content/full/hlthaff.w4.354/DC1

Center for Studying Health System Change
June 9, 2004
Health Care Spending Growth in 2003 Posts First Major Slowdown in a Decade
Despite Downtick, Health Care Spending Growth Continues to Outpace Economic
Growth

Gail Shearer, director of health policy analysis, Consumers Union:

“Despite a modest slowdown, health care costs continue to rise rapidly, threatening the affordability of health insurance for more and more people. Marketplace changes-combined with recent legislation that provides tax incentives that encourage high-deductible coverage-are steering our health care system further from the goal of spreading costs broadly across the entire population. Tragically, the long-term impact is likely to be increased financial barriers to getting needed health care, placing a growing burden on the sick and those with low-incomes.”

http://www.hschange.org/CONTENT/681/

Comment: “Downward trend” and “slowdown” have little meaning to patients to
whom costs are being shifted in order to relieve the purchasers of the burden of paying for health care costs that are increasing at twice the rate of growth of the U.S. economy.

We clearly need new policies, and single payer sounds more and more like just the right solution.

The high costs of for-profit care

The high costs of for-profit care

CMAJ (Canadian Medical Association Journal)
June 8, 2004
Commentary
The high costs of for-profit care
By Steffie Woolhandler and David U. Himmelstein

Why do for-profit firms that offer inferior products at inflated prices survive in the market? Several prerequisites for the competitive free market described in textbooks are absent in health care.

First, it is absurd to think that frail elderly and seriously ill patients, who consume most care, can act as informed consumers (i.e., comparison-shop, reduce demand when suppliers raise prices or accurately appraise quality). Even less vulnerable patients can have difficulty gauging whether a hospital’s luxurious appurtenances bespeak good care.

Second, the “product” of health care is notoriously difficult to evaluate, even for sophisticated buyers like government. Physicians and hospitals create the data used to monitor them; self-interest puts the accuracy of such data into question. By labelling minor chest discomfort “angina” rather than “chest pain,” a US hospital can garner both higher Medicare payments and a factitiously improved track record for angina treatment. It is easier and more profitable to exploit such loopholes than to improve efficiency or quality.

Even for honest firms, the careful selection of lucrative patients and services is the key to success, whereas meeting community needs often threatens profitability. For example, for-profit specialty hospitals offering only cardiac or orthopedic care (money-makers under current payment schemes) have blossomed across the United States. Most of these new hospitals duplicate services available at nearby not-for-profit general hospitals, but the newcomers avoid money-losing programs such as geriatric care and emergency departments (a common entry point for uninsured patients). The profits accrue to the investors, the losses to the not-for-profit hospitals, and the total costs to society rise through the unnecessary duplication of expensive facilities.

Finally, a real market would require multiple independent buyers and sellers, with free entry into the marketplace. Yet, many hospitals exercise virtual monopolies. A town’s only hospital cannot compete with itself, but can use its market power to inflate its earnings. Not surprisingly, for-profit hospital firms in the United States have concentrated their purchases in areas where they can gain a large share of the local market. Moreover, many health care providers and suppliers enjoy
state-conferred monopolies in the form of licensure laws for physicians and hospitals and patent protection for drugs. Additionally, government pays most health costs – even in the United States. Indeed, public funding for health care in
the United States exceeds total health spending in Canada on a per capita
basis. It’s an odd market that relies largely on public funds.

Privatization results in a large net loss to society in terms of higher costs and lower quality, but some stand to gain. Privatization creates vast opportunities for powerful firms, and also redistributes income among health workers. Pay scales are relatively flat in government and not-for-profit health institutions; pay differences between the CEO and a housekeeper are perhaps 20:1. In US corporations, a ratio of 180:1 is average. In effect, privatization takes money from the pockets of low-wage, mostly female health workers and gives it to investors and highly paid managers.

Behind false claims of efficiency lies a much uglier truth. Investor-owned care embodies a new value system that severs the community roots and Samaritan traditions of hospitals, makes physicians and nurses into instruments of investors, and views patients as commodities. Investor ownership marks the triumph of greed.

For the full commentary:
http://www.cmaj.ca/cgi/content/full/170/12/1814

For the CMAJ article, “Payments for care at private for-profit and private not-for-profit hospitals: a systematic review and meta-analysis,” by P.J. Devereaux, et al: http://www.cmaj.ca/cgi/content/full/170/12/1817

Comment: Physicians for a National Health Program is a single issue organization, advocating for the single payer model of universal health insurance. But most of us are strongly opposed to the intrusion into the health care delivery system of for-profit corporate boards and their passive investors. Both the article and commentary should be read in their entirety for a better understanding of why we are so deeply offended by the ethical compromises of investor-controlled health care.

Democracy dwindles with rise in inequality

Democracy dwindles with rise in inequality

American Political Science Association
June 7, 2004
American Democracy in an Age of Rising Inequality
By the Association’s Task Force on Inequality and American Democracy

Among the Task Force’s findings based on analysis of the U.S. economy, voting and other forms of political participation, and government policy making:

* The United States has, in effect, 2 classes of citizenship: Wealthier Americans are far more active across the board – from voting to contacting government officials and joining pressure groups in Washington-than are those with lower incomes.

* Both major political parties target many of their resources on recruiting those who are already the most privileged and involved.

* The Internet, which offers opportunities for virtual political participation and communication among citizens, may actually be reinforcing existing inequalities because it is more accessible to affluent, non-Hispanic whites, and the highly educated.

* The decline in union membership has reduced the traditional role of blue-collar trade unions in bringing working Americans into the political process.

* The rise of “public interest” citizen associations has not significantly corrected the bias of the system toward the more privileged.

* The economic disparities of U.S. citizens are growing more sharply in the United States than in other democratic nations like Britain, Canada, France,
Germany and Italy.

Economic gaps have widened not just between the poor and the rest of society
but also between privileged professionals, managers and business owners on
the one hand, and the middle strata of regular white-collar and blue-collar employees on the other. Indeed, the report noted, “the very richest one percent of Americans has pulled away from not only the poor but also the middle class.” Individuals with privilege were less likely to press for policies aimed at problems with medical costs, education, housing, jobs and child care that affect the less well-off.

Theda Skocpol, Director of the Center for American Political Studies at Harvard University:

“…disparities in participation ensure that ordinary Americans speak in a whisper while the most advantaged roar. The concerns of lower or moderate income Americans, racial and ethnic minorities, and legal immigrants are systematically less likely to be heard by government officials. In contrast, the interests and preferences of the better-off are conveyed with clarity, consistency, and forcefulness.”

http://www.apsanet.org/news/index.cfm#inequality

Press release:
http://www.apsanet.org/Inequality/MediaPressRelease.pdf

To download a 22 page short version of the report:
http://www.apsanet.org/Inequality/generalreport.cfm

Comment: As if democracy alone were not enough, it seems that we need new
policies that will incentivize ordinary Americans to become a roaring voice in the democratic process. Without such policies, health care equity will remain only our pipe dream. But then could the roar of the masses with their disparate needs ever drown out the clear, consistent and forceful roar of the better-off?

Back to work. And back to whispering…

Canadian and American health status the same, except for the poor and uninsured in the U.S.

Canadian and American health status the same, except for the poor and uninsured in the U.S.

Statistics Canada
and
Centers for Disease Control and Prevention
June 2004

Joint Canada/United States Survey of Health, 2002-03
By Claudia Sanmartin and Edward Ng, Health Analysis and Measurement Group,Statistics Canada
and
Debra Blackwell, Jane Gentleman, Michael Martinez and Catherine Simile,
National Center for Health Statistics, Centers for Disease Control and Prevention, United States

Conclusions

The JCUSH (Joint Canada/United States Survey of Health) represents a unique
population health survey conducted jointly by two national statistical agencies, Statistics Canada and the United States National Center for Health Statistics. The use of a common questionnaire and identical data collection and processing methods provides highly comparable data. As a result, the findings from JCUSH provide valuable insights regarding similarities and differences between Canada and the United States in a manner not previously possible.

Overall, the health status of Canadians and Americans is generally similar with most individuals in both countries reporting that they are in good, very good or excellent health. More Americans, however, reported being at either end of the health status spectrum – in excellent health and in fair and poor health – compared with Canadians. This was particularly true among women. This may be associated with the higher rate of highly severe mobility limitation and obesity among American women. There were relatively few differences between men.

Canadians and Americans were similar regarding access to health care services provided under similar funding models. In the case of dental services, for example, where most depend on private insurance, access was similar in the two countries.

Canadians and Americans differed overall, however, regarding access to health care services provided under different insurance models such as those covering physician services. While Canadians are similar to insured Americans regarding access to a regular medical doctor and regarding unmet health care needs, they face significantly less barriers to care when compared with uninsured Americans.

The greatest differences between the two countries are related to differentials by income in health. While there has been solid evidence for some time of the social gradient in health status in both Canada and the United States, this is the first time that we have been able to examine the question of whether there are systematic differences in health status by social position in the two countries. One of the important findings of this survey is that Americans in the poorest income quintile report fair or poor health, obesity and severe mobility impairment more frequently than their Canadian counterparts. At the other end of the income spectrum, there are no systematic differences in the reporting of fair or poor health or mobility impairment among the most affluent households on either side of the border.

http://www.statcan.ca/english/freepub/82M0022XIE/2003001/pdf/82M0022XIE2003001.pdf
or
http://www.cdc.gov/nchs/data/nhis/jcush_analyticalreport.pdf

Comment: In the first population health survey to provide both a comprehensive and precise comparison of the United States and Canada, two dramatic conclusions are evident. First, Canadians and insured Americans have similar access, whereas uninsured Americans clearly have impaired access and greater unmet health care needs. Second, affluent Canadians and Americans have comparable levels of health whereas low income Americans have poorer health than low income Canadians.

The conclusion seems inescapable that the unmet health care needs and poorer
health are due to lack of affordability because of lack of insurance. But many opponents of comprehensive health care reform have tried to explain these differences by claiming that there are fundamental cultural differences in low income Americans and low income Canadians, differences that do not extend into the average income and affluent sectors.

Maybe the United States does fail on other parameters of social solidarity that result in less favorable health outcomes for the poor. But a great first step to address these differences would be to eliminate financial barriers to health care by providing comprehensive coverage for everyone.

For-Profit Hospitals are Costlier Than Non-Profits

EMBARGOED UNTIL:Monday, June 7, 5:00 p.m. 2004
Contacts: Dr. PJ Devereaux (cell) (289) 237-3748
Dr. Steffie Woolhandler (617) 665-1032
Dr. Quentin Young (312) 782-6006

For-Profit Hospitals are Costlier Than Non-Profits, Study Finds
Evidence Against For-Profit Health Care Now Conclusive

* Please Click on the below links to access the article and editorial

Payments for care at private for-profit and private not-for-profit hospitals

The high costs of for-profit care

Charging the patient to save the system?

Investor-owned hospitals have 19% higher charges than non-profit hospitals, according to a study appearing today in the Canadian Medical Association Journal. The study, the most comprehensive analysis comparing for-profit and non-profit facilities, was carried out by a highly respected team of physicians and statisticians at McMaster University led by Dr. PJ Devereaux. That team had previously reported that investor-owned hospitals have 2% higher death rates. The researchers, though based in Canada, used data from U.S. hospitals, since for-profits are rare in Canada. The possible introduction of for-profit hospitals is expected to be a campaign issue in upcoming Canadian elections.

In an accompanying editorial, Drs. Steffie Woolhandler and David Himmelstein of Harvard Medical School calculate that converting all investor-owned hospitals (13 percent of U.S. hospitals) to non-profit ownership could have saved $6 billion of the $37 billion spent on care at investor-owned hospitals in 2001.

“Investor-owned hospitals charge outrageous prices for inferior care.” said Dr. Steffie Woolhandler. “That’s not just an opinion, it’s now a proven fact. The for-profits skimp on nurses, but spend lavishly on their executives and paper-pushers.” Previous research by Drs. Woolhandler and Himmelstetin, based on financial filings by virtually all U.S. hospitals, found that administration accounted for 24.5% of total costs at non-profit hospitals vs. 34% at for-profits, while payroll costs for clinical personnel were 7 percentage points higher at non-profits.

Dr. Woolhandler also noted that: “Previous studies have shown a consistent pattern – investor-ownership compromises care and raises costs. For-profit dialysis clinics have higher death rates. For-profit nursing homes deliver lower quality care. For profit hospices give dying patients less care. For-profit rehab facilities cost Medicare more. And for profit HMOs deliver poor quality care and have extraordinarily high overhead costs. In fact, the Congressional Budget Office has concluded that HMOs actually increases Medicare costs by at least $2 billion each year — and President Bush and the Republicans in Congress just handed them an extra $46 billion in the Medicare drug bill.” Dr. Himmelstein, Associate Professor of Medicine at Harvard commented: “For-profit hospitals milk the system for legal, but outrageous payments for executives and shareholders. And they also routinely bilk the system through fraud. Columbia/HCA — the largest hospital firm — paid a $1.7 billion settlement for overbilling Medicare last year. Tenet — the second largest — paid a half a billion dollars to settle fraud and abuse charges in the 1980’s (when the firm was known as NME) and is under investigation again for massive billing fraud, and performing hundreds of unnecessary heart operations. And HealthSouth — which dominates the rehab hospital market — just admitted to $3.4 billion in fraudulent accounting. In each case, the CEO who presided over the fraud was forced out. But only after Columbia/HCA’s got $324 million, Tenet’s received $111 million, and HealthSouth’s pocketed $112 million. In health care, crime pays handsomely.”

The researchers at McMaster are considered leading experts on research methodology. The team of 20 researchers reviewed 788 medical articles on hospital care, eventually honing in on the 8 highest quality and most relevant studies– which included a total of 350,000 patients and a median of 324 hospitals in each study. They contacted the original authors to verify the findings, then used advanced statistical techniques to combine the 8 studies. Of the 8 studies, only one showed that for-profits had lower costs. However, all of the non-profit hospitals included in this study were managed by a for-profit firm — in other words, both groups of hospitals in the study were under for-profit management.

“We can no longer afford to leave health care to the marketplace” said Dr. Quentin Young, National Coordinator of Physicians for a National Health Program. “This study demonstrates the marvelous opportunities for improved health services when the U.S. adopts a national health insurance system (single-payer) based on traditional not-for-profit care.”
________________

“The High Costs of For-Profit Care,” Steffie Woolhandler and David U. Himmelstein. Canadian Medical Association Journal, 1814-1815, June 8, 2004.

“Payments for Care at Private For-Profit and Private Not-for-Profit Hospitals: A Systemic Review and Meta-Analysis,” P.J. Devereaux et al, Canadian Medical Association Journal, 1817-1824, June 8, 2004.

A bibliography of references on the negative impact of investor-ownership on health care is also available.

####

Physicians for a National Health Program (www.pnhp.org) is an organization of 12,000 physicians advocating for non-profit national health insurance. PNHP has chapters and spokespeople across the country. For contacts, call (312) 782-6006.

A single-payer response to the health care crisis

A single-payer response to the health care crisis

By Ross C. Anderson (mayor of Salt Lake City)
   

A health care crisis in this country is having a profound impact on the lives of millions of people. We live in one of the wealthiest nations in the world, yet more than 44 million of our citizens are without access to health care coverage, including 8.5 million children.

 Those who are covered, and employers who provide health care benefits to employees, are experiencing skyrocketing increases in the costs of medical insurance. Those higher costs are due largely to the huge profits of the middle-man insurance companies and the exorbitant compensation paid to insurance company executives.

 The reasons for lack of health care coverage are varied. Many people are self-employed and unable to afford the cost of health insurance. Millions of people work for employers who don’t provide health insurance. Others are unemployed but not poor enough to qualify for Medicaid.

The consequences of living without health insurance are often devastating. The cost of basic preventive health services such as prenatal care, well-child check-ups and cancer screenings can be prohibitive. Many of the uninsured go without preventive care, waiting until a health disaster strikes before seeking assistance, and then often facing bills that bankrupt them. Or, worse yet, they may be unable to obtain medical services because of their inability to pay.

The Institute of Medicine has estimated that 18,000 adults in America die every year because they are uninsured. Women with breast cancer who don’t have health insurance are twice as likely to die as those who are covered. Uninsured men are nearly twice as likely to be diagnosed at a late stage of colon cancer as those who are covered. A lack of health insurance and the high cost of medical care can have a disastrous effect on individual lives and on our entire community.

The rising cost of health care is negatively impacting all sectors of our economy. City government has been hit hard. The cost to Salt Lake City Corporation of providing employee benefits has risen 59.5 percent since 1998, primarily due to the increase in health care costs. The increase in health insurance costs has caused significant budget challenges, leading to a loss of jobs and a decrease in city services. Likewise, in 2003, employers across the nation faced average one-year premium increases of 13.9 percent for private health insurance.

There is a solution to this crisis. As a nation we can do more to provide all of our citizens access to basic, quality health care services. But to accomplish this will require the political courage to stand up to those in the health care industry resistant to change.

Creation of a system that provides access to health care for all Americans could best be accomplished by developing a single-payer system under which a government-sponsored entity serves as the insurer for all Americans. Under this system, physicians, hospitals and drug companies would remain privately owned. Only insurance coverage would be centralized.

A single-payer system is better for patients and better for doctors. Canada, which has a single-payer system, spends $1,000 less per capita on health care than does the United States, but delivers more care and greater choice for patients. Combining the single-payer efficiency of Canada’s system with the much higher funding of ours would yield better care than Canada’s or ours at present.

Under a single-payer system, the General Accounting Office projects an administrative savings on health care costs of 10 percent — which in 2002 amounted to $150 billion dollars. This savings alone would cover the cost of providing medical care to those currently without health care coverage.

The Congressional Budget Office projects that a single-payer system would reduce health care costs overall by $225 billion, while providing comprehensive care to all Americans. No other plan provides this kind of savings.

We can no longer afford our current health care delivery system. A single-payer system would provide health care coverage for all Americans, create greater efficiency in our health care system and result in a healthier population. It would benefit the vast majority of patients, employers, governmental entities and taxpayers.

We can stand up to those who continue to gain from the inefficiency of our current system — the insurance companies, enormous hospital chains and pharmaceutical companies that comprise the health care oligarchy — and create a fair, efficient, single-payer health care system for all Americans.
   
   

Feachem's Kaiser study not credible

Feachem’s Kaiser study not credible

British Journal of General Practice
June 2004
Questioning the claims from Kaiser
By Alison Talbot-Smith, Shamini Gnani, Allyson M Pollock and Denis Pereira Gray

Summary

Background: The article by Feachem et al, published in the BMJ in 2002, claimed to show that, compared with the United Kingdom (UK) National Health Service (NHS), the Kaiser Permanente healthcare system in the United States (US) has similar healthcare costs per capita, and performance that is considerably better in certain respects.

Aim: To assess the accuracy of Feachem et al’s comparison and conclusions.

Method: Detailed re-examination of the data and methods used and consideration of the 82 letters responding to the article.

Results: Analyses revealed four main areas in which Feachem et al’s methodology was flawed. Firstly, the populations of patients served by Kaiser Permanente and by the NHS are fundamentally different. Kaiser’s patients are mainly employed, significantly younger, and significantly less socially deprived and so are healthier. Feachem et al fail to adjust adequately for these factors. Secondly, Feachem et al have wrongly inflated NHS costs by omitting substantial user charges payable by Kaiser members for care, excluding the costs of marketing and administration, and deducting the surplus from Kaiser’s costs while underestimating the capital charge element of the NHS budget and other costs. They also used two methods of converting currency, the currency rate and a health purchasing power parity conversion. This is double counting. Feachem et al reported that NHS costs were 10% less per head than Kaiser. Correcting for the double currency conversion gives the NHS a 40% cost advantage such that per capita costs are $1161 and $1951 for the NHS and Kaiser, respectively. Thirdly, Feachem et al use non-standardised data for NHS bed days from the Organisation for Economic Cooperation and Development, rather than official Department of Health bed availability and activity statistics for England. Leaving aside the non-comparability of the population and lack of standardisation of the data, the result is to inflate NHS acute bed use and underestimate the efficiency of performance by at least 10%. Similar criticisms apply to their selective use of performance measures. Finally, Feachem et al claim that Kaiser is a more integrated system than the NHS. The NHS provides health care to around 60 million people free at the point of delivery, long-term and psychiatric care, and continuing care after 100 days whereas Kaiser provides care to 6 million people, mainly employed and privately insured. Important functions, such as health protection, education and training of healthcare professionals, and research and development are not included or properly costed in Feachem et al’s integrated model.

Conclusion: We have re-examined the statements made by Feachem et al and show that the claims are unsupported by the evidence. The NHS is not similar to Kaiser in coverage, costs or performance.

http://www.rcgp.org.uk/webmaster/ebjgp/journallogin.asp?OrigURL=/journal/index.asp

BBC
JAN. 17, 2002
NHS ‘worse value than US provider’

Professor Richard Feachem:

“If an NHS patient moved to Kaiser they would be delighted with the experience, and if a Kaiser patient moved to the NHS they would be horrified.”

http://news.bbc.co.uk/1/hi/health/1764713.stm

Comment: The 2002 BMJ article by Richard Feachem et al has been cited frequently as proof that an American HMO is superior to the British National Health Service. 82 letters were published in response to the BMJ article, all challenging the validity of Feachem’s conclusions.

This article by Alison Talbot-Smith et al provides a definitive compilation and analysis of the criticisms of Feachem’s article. There is now absolutely no doubt that Feachem’s claims are not supported by the evidence.

The opponents of public models of reform likely will continue to cite Feachem’s work as proof that private HMOs are superior to publicly administered or publicly owned models of health care funding and delivery (even though this is an unwarranted extrapolation of his invalid conclusions). But with the publication of Talbot-Smith’s definitive critique, anyone who continues to use Feachem’s study to advance his or her arguments can be summarily dismissed as not being a credible voice in the debate.

——————————————————————————————-

Message: 2
Date: Sat, 29 May 2004 11:42:19 -0700
Subject: qotd: Judy Feder on single payer

Kaisernetwork.org HealthCast
5/11/2004
Policy Options To Expand Health Insurance Coverage Lauren Leroy: …a recent report that was published by the Institute of Medicine called “Insuring America’s Health” … set out a set of principals that any proposal or any policy that would be adopted to provide insurance coverage should meet. And those include coverage that is universal, continuous, affordable to individuals and society, sustainable, and offers access to high quality care. …which of the options of the proposals do you think best meet these criteria?

Judy Feder, dean of policy studies at Georgetown University: I think that the criteria that the Institute of Medicine has laid out are certainly the right ones for evaluating our health care system, but they are one mean feat for any kind of political proposal. And because Lauren asked me to keep the answers short, and because I am an honest woman, whatever one’s politics, the only thing that comes close to meeting all these criteria I would say would be a single payer system. It could be Medicare for all, but it would be substantially improved benefits than Medicare now offers evenwith the new drug benefit. So if you really are going to hold yourselves to those criteria, you don’t have a lot of choices…

And later…

Lauren Leroy:
…what have you learned about what are the critical messages that might convince the us, the 85% who are insured about the value of covering them, the 15%, to shift political will a bit?…

Judy Feder:
…What I believe is to start where the questioner asked about what is in it for me who has insurance. And we do need more stability. We do want lower costs. We do want to know that our coverage will be secure for us. And there are policy proposals that do make coverage more affordable and more secure for those of us who have it at the same time that we bring in other people. And I think being explicit about that is fine. I think that it is – and I am persuaded by others who have been making this argument longer than I – I think that we have to be willing to mobilize people around what’s the right thing to do. And what kind of a society do we want to live in? And I think that if we avoid that question and try to con people into “it’ll be okay,”

we’re not going to get from here to there. And so I would urge everybody, if you believe that, to start saying it and to say it loud and often and to tell elected officials you are willing to pool your resources to make that possible.

http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=1139

Comment: …start saying it and say it loud and often…

Feachem’s Kaiser study not credible

Feachem’s Kaiser study not credible

British Journal of General Practice
June 2004
Questioning the claims from Kaiser
By Alison Talbot-Smith, Shamini Gnani, Allyson M Pollock and Denis Pereira Gray

Summary

Background: The article by Feachem et al, published in the BMJ in 2002, claimed to show that, compared with the United Kingdom (UK) National Health Service (NHS), the Kaiser Permanente healthcare system in the United States (US) has similar healthcare costs per capita, and performance that is considerably better in certain respects.

Aim: To assess the accuracy of Feachem et al’s comparison and conclusions.

Method: Detailed re-examination of the data and methods used and consideration of the 82 letters responding to the article.

Results: Analyses revealed four main areas in which Feachem et al’s methodology was flawed. Firstly, the populations of patients served by Kaiser Permanente and by the NHS are fundamentally different. Kaiser’s patients are mainly employed, significantly younger, and significantly less socially deprived and so are healthier. Feachem et al fail to adjust adequately for these factors. Secondly, Feachem et al have wrongly inflated NHS costs by omitting substantial user charges payable by Kaiser members for care, excluding the costs of marketing and administration, and deducting the surplus from Kaiser’s costs while underestimating the capital charge element of the NHS budget and other costs. They also used two methods of converting currency, the currency rate and a health purchasing power parity conversion. This is double counting. Feachem et al reported that NHS costs were 10% less per head than Kaiser. Correcting for the double currency conversion gives the NHS a 40% cost advantage such that per capita costs are $1161 and $1951 for the NHS and Kaiser, respectively. Thirdly, Feachem et al use non-standardised data for NHS bed days from the Organisation for Economic Cooperation and Development, rather than official Department of Health bed availability and activity statistics for England. Leaving aside the non-comparability of the population and lack of standardisation of the data, the result is to inflate NHS acute bed use and underestimate the efficiency of performance by at least 10%. Similar criticisms apply to their selective use of performance measures. Finally, Feachem et al claim that Kaiser is a more integrated system than the NHS. The NHS provides health care to around 60 million people free at the point of delivery, long-term and psychiatric care, and continuing care after 100 days whereas Kaiser provides care to 6 million people, mainly employed and privately insured. Important functions, such as health protection, education and training of healthcare professionals, and research and development are not included or properly costed in Feachem et al’s integrated model.

Conclusion: We have re-examined the statements made by Feachem et al and show that the claims are unsupported by the evidence. The NHS is not similar to Kaiser in coverage, costs or performance.

http://www.rcgp.org.uk/webmaster/ebjgp/journallogin.asp?OrigURL=/journal/index.asp

BBC
JAN. 17, 2002
NHS ‘worse value than US provider’

Professor Richard Feachem:

“If an NHS patient moved to Kaiser they would be delighted with the experience, and if a Kaiser patient moved to the NHS they would be horrified.”

http://news.bbc.co.uk/1/hi/health/1764713.stm

Comment: The 2002 BMJ article by Richard Feachem et al has been cited frequently as proof that an American HMO is superior to the British National Health Service. 82 letters were published in response to the BMJ article, all challenging the validity of Feachem’s conclusions.

This article by Alison Talbot-Smith et al provides a definitive compilation and analysis of the criticisms of Feachem’s article. There is now absolutely no doubt that Feachem’s claims are not supported by the evidence.

The opponents of public models of reform likely will continue to cite Feachem’s work as proof that private HMOs are superior to publicly administered or publicly owned models of health care funding and delivery (even though this is an unwarranted extrapolation of his invalid conclusions). But with the publication of Talbot-Smith’s definitive critique, anyone who continues to use Feachem’s study to advance his or her arguments can be summarily dismissed as not being a credible voice in the debate.

——————————————————————————————-

Message: 2
Date: Sat, 29 May 2004 11:42:19 -0700
Subject: qotd: Judy Feder on single payer

Kaisernetwork.org HealthCast
5/11/2004
Policy Options To Expand Health Insurance Coverage Lauren Leroy: …a recent report that was published by the Institute of Medicine called “Insuring America’s Health” … set out a set of principals that any proposal or any policy that would be adopted to provide insurance coverage should meet. And those include coverage that is universal, continuous, affordable to individuals and society, sustainable, and offers access to high quality care. …which of the options of the proposals do you think best meet these criteria?

Judy Feder, dean of policy studies at Georgetown University: I think that the criteria that the Institute of Medicine has laid out are certainly the right ones for evaluating our health care system, but they are one mean feat for any kind of political proposal. And because Lauren asked me to keep the answers short, and because I am an honest woman, whatever one’s politics, the only thing that comes close to meeting all these criteria I would say would be a single payer system. It could be Medicare for all, but it would be substantially improved benefits than Medicare now offers evenwith the new drug benefit. So if you really are going to hold yourselves to those criteria, you don’t have a lot of choices…

And later…

Lauren Leroy:
…what have you learned about what are the critical messages that might convince the us, the 85% who are insured about the value of covering them, the 15%, to shift political will a bit?…

Judy Feder:
…What I believe is to start where the questioner asked about what is in it for me who has insurance. And we do need more stability. We do want lower costs. We do want to know that our coverage will be secure for us. And there are policy proposals that do make coverage more affordable and more secure for those of us who have it at the same time that we bring in other people. And I think being explicit about that is fine. I think that it is – and I am persuaded by others who have been making this argument longer than I – I think that we have to be willing to mobilize people around what’s the right thing to do. And what kind of a society do we want to live in? And I think that if we avoid that question and try to con people into “it’ll be okay,”

we’re not going to get from here to there. And so I would urge everybody, if you believe that, to start saying it and to say it loud and often and to tell elected officials you are willing to pool your resources to make that possible.

http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=1139

Comment: …start saying it and say it loud and often…

How Can National Policymakers Improve Health Coverage Tax Credits

Economic and Social Research Institute
May 2004
How Can National Policymakers Improve Health Coverage Tax Credits
Provided
under the Trade Act of 2002?
By Stan Dorn

Health Coverage Tax Credits (HCTCs) provided under the Trade Act of 2002 are
important far out of proportion to the number of qualifying individuals, fewer than 300,000 workers who lost their jobs because of international trade plus early retirees receiving pension payments from the Pension Benefit Guarantee Corporation (PBGC). HCTCs provide the country’s first test of whether the uninsured can be helped effectively by fully refundable tax credits that are paid directly to insurers when premiums are due each month.

…problems have already emerged that, earlier this month, prompted 54 Senators in both parties to support reforms that would increase the size of the credit, expedite credit payment to ease beneficiaries’ cash flow problems, offer new health plan choices to some beneficiaries, increase the number of beneficiaries receiving consumer protections, and make certain other changes.

http://www.esresearch.org/newsletter/trade_act_options.pdf

Comment: Much has been written about the fundamental policy flaws of using tax credits in an attempt to expand health care coverage. The report by Edwin Park of the Center on Budget and Policy Priorities describes some of these problems (http://www.cbpp.org/2-18-04health2.htm).

This Economic and Social Research Institute report by Stan Dorn addresses the narrower issue of the logistical difficulties in administering the tax credits under Trade Act of 2002. If you read only the two page Executive Summary of this report, you will see that the current design and various proposed solutions have created a logistical nightmare. You’ll understand why only 3.6% of those currently eligible have enrolled.

Tax credits that support our current fragmented system will drive up costs and fall far short on goals of universality and equity. We can do far better without increasing costs. A single payer system would ensure affordable access to comprehensive services for all of us. Why aren’t the Democrats and Republicans putting this model on the table? Members of both parties support these flawed tax credits. In a democracy, shouldn’t the electorate be fully informed about superior alternatives as well?

Enthoven on Americans' sense of equity

Enthoven on Americans’ sense of equity

The 11th Princeton Conference:
Managing Cost and Quality Through the Health Care Delivery System:
Managing Care within Organized Delivery Systems
May 21, 2004

Question from audience:

…do you see this push for the health savings accounts, the health reimbursement accounts as being something which is likely to promote or work against the development of prepaid group practices and the image that you see (employer making a fixed dollar contribution and granting employees choice of competing plans, especially prepaid group practices)?

Alain C. Enthoven, Ph.D., Marriner S. Eccles Professor of Public & Private Management, Stanford University:

Well, I think it works against because it tends to shred the fabric of solidarity. …I think the high deductible approach is a real mistake… In fact, Kaiser Permanente is surrendering to the inevitable in introducing $1500 deductible plans because they have to because their competitors are doing it in small groups, and they’ve been losing members in small groups. But I think that the $1500 deductible idea is going to shift costs from the well to the sick. Right away those people with chronic conditions are going to be paying $1500 a year out-of-pocket that they weren’t paying before. And, I don’t know, maybe that’s another route to the single payer. You know, when enough Americans are–when their sense of equity is offended by that, then maybe a lot of them will say, well, it’s time for us to have national health insurance…

http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=1159

Comment: Professor Enthoven’s vision of managed competition has never really been tested adequately since every player in the age of managed care jockeyed for their own best positions, rather than cooperating in developing an ideal market of truly integrated health plans competing on quality and price. And there is no conceivable scenario in which his model ever will be adequately tested, especially since even large healthcare markets cannot support enough fully integrated and mutually exclusive health systems to establish a competitive base.

We have now moved into the age of consumerism in which healthcare costs are
contained by making patients individually sensitive to those costs. Every rational health policy expert agrees that patient cost-sharing will shift costs from the well to the sick. Certainly Professor Enthoven agrees.

It seems that, as we investigate various models of reform and recognize the deficiencies of each, we keep turning our thoughts to the possibility of adopting the single payer model. Even Professor Enthoven recognizes that our sense of equity may bring us to that.

Breakfast Forum on International Health Care Quality Measurement Efforts

Breakfast Forum on International Health Care Quality Measurement Efforts Monday, June 7, 2004
7:30 am – 8:30 am, Pacific time
International Perspectives on Quality Improvement:
A Report on the Commonwealth Fund’s International Working Group on Quality Indicators

Join experts on the front lines of the international effort to establish standards for measuring the quality of health care across nations in a June 7 breakfast briefing and discussion during the AcademyHealth annual research meeting.

Members of The Commonwealth Fund’s International Working Group on Quality Indicators will outline their recently completed work, reported in the May/June issue of Health Affairs, as well as review the group’s newly released report to the health ministers of the five participating countries. That report includes detailed country-by-country data on the various quality indicators studied. The briefing and discussion will be videotaped and made available later in the day via the Fund’s Web site, www.cmwf.org.

Established in 1999, The Commonwealth Fund’s International Working Group on Quality Indicators is a critical step forward in the development of international measures of health care quality. This unique collaboration and technical exchange brought together representatives of five industrialized countries-Australia, Canada, New Zealand, the United Kingdom, and the United States-committed to the development of a set of indicators to help benchmark and compare health care system performance across countries while helping clinical leaders and policymakers identify areas for improvement.

In addition to government officials, Working Group members included leading academic experts in quality measurement, representatives from the Organization for Economic Cooperation and Development (OECD), the World Health Organization (WHO), The Nuffield Trust, the Canadian Council on Health Services Accreditation, and The Commonwealth Fund.

Program Moderator: Robin Osborn, Director, Program in International Health Policy and Practice, The Commonwealth Fund
Panelists:

* Arnold Epstein, MD, Harvard School of Public Health
* Philip Davies, Australian Department of Health and Ageing
* Colin Feek, Ministry of Health, New Zealand
* John Millar, MD, Population Health and Surveillance, Provincial Health Services Authority, Canada

Location:
Garden Salon Two
Town and Country Hotel and Resort
San Diego, CA

A continental breakfast will be served.

For more information, visit The Commonwealth Fund’s Web site, www.cmwf.org, or contact:
Olivia Ralston
212-606-3852 (office)
or@cmwf.org
Bill Silberg
212-606-3841 (office)
917-679-2743 (cell)
wms@cmwf.org
Mary Mahon
212-606-3853 (office)
917-225-2314 (cell)
mm@cmwf.org

Enthoven on Americans’ sense of equity

Enthoven on Americans’ sense of equity

The 11th Princeton Conference:
Managing Cost and Quality Through the Health Care Delivery System:
Managing Care within Organized Delivery Systems
May 21, 2004

Question from audience:

…do you see this push for the health savings accounts, the health reimbursement accounts as being something which is likely to promote or work against the development of prepaid group practices and the image that you see (employer making a fixed dollar contribution and granting employees choice of competing plans, especially prepaid group practices)?

Alain C. Enthoven, Ph.D., Marriner S. Eccles Professor of Public & Private Management, Stanford University:

Well, I think it works against because it tends to shred the fabric of solidarity. …I think the high deductible approach is a real mistake… In fact, Kaiser Permanente is surrendering to the inevitable in introducing $1500 deductible plans because they have to because their competitors are doing it in small groups, and they’ve been losing members in small groups. But I think that the $1500 deductible idea is going to shift costs from the well to the sick. Right away those people with chronic conditions are going to be paying $1500 a year out-of-pocket that they weren’t paying before. And, I don’t know, maybe that’s another route to the single payer. You know, when enough Americans are–when their sense of equity is offended by that, then maybe a lot of them will say, well, it’s time for us to have national health insurance…

http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=1159

Comment: Professor Enthoven’s vision of managed competition has never really been tested adequately since every player in the age of managed care jockeyed for their own best positions, rather than cooperating in developing an ideal market of truly integrated health plans competing on quality and price. And there is no conceivable scenario in which his model ever will be adequately tested, especially since even large healthcare markets cannot support enough fully integrated and mutually exclusive health systems to establish a competitive base.

We have now moved into the age of consumerism in which healthcare costs are
contained by making patients individually sensitive to those costs. Every rational health policy expert agrees that patient cost-sharing will shift costs from the well to the sick. Certainly Professor Enthoven agrees.

It seems that, as we investigate various models of reform and recognize the deficiencies of each, we keep turning our thoughts to the possibility of adopting the single payer model. Even Professor Enthoven recognizes that our sense of equity may bring us to that.