BMJ
March 13, 2004
Use of hospitals, physician visits, and hospice care during last six months of life among cohorts loyal to highly respected hospitals in the United States
By John E Wennberg, et al

Academic medical centres in the United States with reputations for excellence differed dramatically in the care they provided to patients during the last six months of life.

…physicians have been shown to adapt their decisions about admission and discharge to the availability of intensive care unit beds, admitting more patients with lower severity of illness and extending their length of stay when more beds are available. In the light of this evidence, the likely explanation for the variations in acute hospital care and physician visits is variation in bed and workforce capacity relative to the size of population loyal to the 77 hospitals.

http://bmj.bmjjournals.com/cgi/content/full/328/7440/607

And…

The New York Times
March 13, 2004
An M.R.I. Machine for Every Doctor? Someone Has to Pay
By Reed Abelson

…doctors, their traditional sources of income squeezed, discover a new one: diagnostic imaging.

Instead of sending patients to a radiologist or one of four local hospitals, doctors in Syracuse have been particularly aggressive about installing imaging equipment – particularly M.R.I. machines – in their own offices.

There are signs that more machines may translate into too much imaging. Excellus points to data that suggest use of M.R.I.’s in Syracuse is two-thirds higher than in Rochester, for example, and higher than the national average.

And…

Health Affairs
March/April 2004
Growth Of Single-Specialty Medical Groups
By Lawrence P. Casalino, Hoangmai Pham and Gloria Bazzoli

Using site-visit data from the Community Tracking Study, we show that specialists are increasingly forming large single-specialty medical groups, particularly in orthopedics and cardiology, where new technologies have increased the number of diagnostic imaging and surgical services that can be
provided in outpatient settings.

CTS site visits have provided little evidence that single-specialty groups, to date, are developing many of the organized quality-improving and cost-reducing processes to be expected in a focused factory. The current system pays specialists for increasing, not decreasing, the quantity and complexity of services provided and does not pay them for improving quality. Previous research has shown that physicians who own ancillary facilities tend to increase the amount of ancillary services they provide. Health plan executives at many CTS sites believe that increased specialist use of ancillary services is increasing health care costs.

http://content.healthaffairs.org/cgi/content/full/23/2/82

Comment: There is now ample evidence in the health policy literature to show that excess capacity in the health care system results in over-utilization, defined as an increase in utilization without a reasonably commensurate improvement in health care outcomes.

It is important to establish an optimum level of capacity ensuring that services will be there when needed but not enabling excessive utilization. A single payer system separates budgets for operation of the health care system from budgets for capital improvements, precisely for these reasons.

When we depend on market forces to establish capacity, the decision makers
head for the money. Thus, as Wennberg has shown in another study, Boca Raton
has a capacity that allows about a 30% excess in the level of services, but
without a demonstrable improvement in outcomes.

A single payer system not only establishes fairness in funding and in allocation of resources, but it also allocates resources more effectively. Will someone explain why we continue to support our current expensive but wasteful, less effective, and inequitable system when we know how to make it better?

Silicon Valley Biz Ink
(PRNewswire)
March 10, 2004
Health Care Costs Not a Difficult Problem for Most Americans

Majorities of the U.S. public say they know what their health care premiums, doctor visits, prescription drugs and deductibles cost while far fewer say they do not, according to the results of a recent new Harris Interactive poll conducted for The Wall Street Journal Online’s Health Industry Edition.

Overall, few found paying for health care difficult… Humphrey Taylor, chairman of The Harris Poll at Harris Interactive:

“The good news is that most people do not find it difficult to pay their insurance premiums or out-of-pocket costs. The bad news is that those who find it very difficult — up to 20 million adults — include many sick, low-income people who really need the care.”

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=SVBIZINK4.story&STORY=/www/story/03-09-2004/0002125200&EDATE=TUE+Mar+09+2004,+02:52+PM

Comment: Although most Americans are concerned about the future affordability of health care, they are not yet having difficulties meeting the costs. The large majority, at any given point in time, are relatively healthy and have only modest or negligible health care costs.

Although many will develop significant medical problems and move into the minority sector with higher care costs, younger, healthier individuals will replace them, ensuring that the healthy will always remain a significant majority. As long as the financial exposure remains quite tolerable, this large, healthy majority may never become a potent force in the health care reform movement.

Will we ever have enough solidarity to support reform that would ensure affordable access to health care for the minority who do have significant
health care needs?

Maybe we are moving in another direction and instead developing solidarity on the contemporary modification of Russell Long’s famous quotation: “Don’t tax you, don’t tax me, don’t even tax that rich fellow behind the tree.”

Weak health care market forces lead to thoughts of government solutions

Health Affairs
March/April 2004
Are Market Forces Strong Enough To Deliver Efficient Health Care Systems?
Confidence Is Waning
By Len M. Nichols, Paul B. Ginsburg, Robert A. Berenson, Jon
Christianson
and Robert E. Hurley

The quest for greater efficiency in the delivery of health care services is eternal in a country that spends far more on health care than any other, consistently has growth in spending that outstrips that of income, is unable to provide insurance coverage to at least 15 percent of its population, and ranks poorly among industrialized countries in systemwide measures such as life expectancy and infant mortality. Add to this our quality problems, and it is hard to be complacent about the value U.S. citizens receive for their health care dollars. Inefficiency also puts a very high public-sector price tag on universal coverage, which helps polarize the politics of this issue.

Typically, all analyses of health system reform address the same key question: What and how much can markets do alone, and how much help might they need from government to produce more efficient outcomes or a more equitable distribution of health care resources? As we enter another season of broad debate about the structure of health care financing, the Community Tracking Study (CTS) site visits of the Center for Studying Health System Change (HSC) can make a unique contribution to analyses of the power and limits of market forces.

The CTS is a longitudinal study that tracks changes in local health care systems nationwide. Researchers conduct site visits to twelve randomly selected and nationally representative communities every two years to interview leaders of the local health care system about changes in the organization, delivery, and financing of health care and the impact of those changes on people.

We were struck by how many of our respondents-especially those traditionally
not predisposed to seek larger roles for government-echoed sentiments similar to the following. An insurance broker said, “The delivery system is a mess. The sectors don’t talk. No one wants to change. The government must do something.” A surprised benefit consultant reported: “There now is a lack of resistance to government involvement.” And capturing a sentiment expressed in many different ways, one local policymaker said, “If the private sector can’t figure all this out, it’s scary to think that we might actually end up running to government-I mean, HCFA!-to do it.”

The theme of “everyone feels constrained from changing his own behavior” cut
across many respondents’ views. Some kind of intervention stronger than what
has been tried before is thought to be necessary to force change. At the same time, there was general recognition that “fault” lies all around and that all sectors-including public programs-need to change their behavior for high-quality, effective health care to become more affordable in the long run. Perhaps it is this recognition of shared blame and shared self-interest in the status quo-plus a growing awareness in each community that health care creates jobs and contributes to local economic health-that has led a diverse array of leaders to begin to look to government as a focal point for a solution, at least as a convener or referee among stakeholders with diverse interests.

What is palpable across the twelve communities we studied is the recognition that private market forces are limited in their ability to achieve social objectives in health care services, and a growing sense that a broader conversation about what to do next should begin soon. This conversation may find more willing participants than would have been possible four to six years ago.

http://content.healthaffairs.org/cgi/content/abstract/23/2/8

Alain Enthoven responds (excerpts):

It is late, probably too late, to avert the inexorable progression to “Medicare for All.” U.S. employers would need to have an epiphany soon. But when it comes to health care, most of their horizons are so limited and their vision so constrained that such a change seems unlikely. What is becoming most likely is that the winning candidate in 2008 will make “Medicare for All” a foundation of his or her platform. And employers, incapable of controlling costs and desperate to get medical expenses off their financial statements, will lead the candidate’s campaign finance committee. Labor and small business will join them. The large and growing numbers of uninsured, by then reaching well into the middle class, will consider the issue to be of top priority.

Medicare for all will end up with an impasse like Canada’s, only much more
costly. The Medicare model will not deliver efficient health care systems. A
properly structured market model, based on existing demonstrated successes,
could.

http://content.healthaffairs.org/cgi/content/abstract/23/2/25

Comment: A final quote from the Nichols, et al article: Given how emphatically the nation rejected substantially more government involvement in health care decision making via the Clinton Health Security Act, it is a testament to the extent of malaise among private health care market participants today that a willingness to reconsider major government involvement surfaced frequently in our interviews during our 2002-03 site visits. At the same time, many respondents quickly added caveats such as, “But we can’t say that out loud.” Thus, the next system overhaul discussion period is likely to be long, for much political and educational work will have to precede any consensus decision to intervene in particular ways.

Reuters
Mar 5, 2004
Health Insurance Crisis Lingers for Biz
By Chris Morris

Friends held a benefit for Tony Thompson at the Hard Rock Cafe in December.
Thompson, one of the best-known drummers of the ’70s and ’80s, had died Nov.
12 after being diagnosed with renal cell cancer. Doctors had removed one of
his kidneys, but by then the cancer had spread to his lungs and liver.

Thompson was uninsured.

“He couldn’t afford it,” says his widow, Patrice Thompson. “When I met him,
he had no money.”

Patrice now faces hospital and medical bills that she calls “astronomical.” In 2002, the nonprofit Washington, D.C.-based Future of Music Coalition (FMC) conducted an online survey and found that 44% of its 2,400 musician respondents did not have any health insurance.

Widow Patrice Thompson:

“I don’t understand how it has gone on this long without somebody doing something about it, or at least pitching a bitch about it.”

http://www.reuters.com/newsArticle.jhtml?type=musicNews&storyID=4509891

Comment: It might be expected that a fragmented, patchwork system of health
insurance coverage that depends on variables such as employment, job stability, financial resources and other similar factors would not serve musicians well. This flawed system has failed to reduce the problems of the uninsured. And the rest of us are paying too much for coverage that is progressively deteriorating.

We can easily fix our system of funding health care so that everyone would
have permanent, comprehensive coverage. But if we limit our efforts to patching our existing fragmented system, the problems of the musicians and the rest of the uninsured will never be resolved.

Center for American Progress
March 3, 2004
Keep America Working: Restoring Jobs to Ensure American Prosperity
An Address by Sen. Hillary Rodham Clinton

American companies that continue to try to keep up with health care and pension costs find it increasingly difficult to do so. We are seeing now double-digit increases in health care, and we’re seeing the collapse of many of our pension systems that are basically being held aloft by a lot of accounting and prayers.

So how do we deal with this? Well, we can deal with it in a patchwork, incremental fashion, but eventually we’re going to have to decide. We’re
going to have to decide, are we going to provide a more level playing field
for our manufacturers by figuring out a way to deal with those legacy costs
which were, remember, built up because they thought they were doing the right thing for American workers and their families? Are we going to figure out a more sensible way to deal with health care and pension costs? Or are we going to continue to try to shift those burdens so that more and more is put on the employee and the employer and we have no end in sight of the increase in cost.

It’s also clear that this set of issues is politically volatile, as I can attest from my efforts ten years ago. And perhaps, though, the time is slowly coming. We weren’t ready ten years ago, we didn’t really understand the full cost of what we were up against, but it’s becoming more and more difficult to ignore the implications of these policies for the economy, and there have to be some attempts to reach a consensus that begins to solve these problems…

http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=35989
Comment: “… patchwork, incremental fashion…”? “… eventually we’re going to have to decide.” “… the time is slowly coming.” The time has come. The question is no longer whether we need changes but what those changes will be.

Although Sen. Clinton will not be able to lead the charge since she spent most of her political capital on her prior attempt at reform, at least she is venturing out with guarded rhetoric revealing that she does understand that incremental patches simply will not do it.

Center for American Progress
March 3, 2004
Keep America Working: Restoring Jobs to Ensure American Prosperity
An Address by Sen. Hillary Rodham Clinton

American companies that continue to try to keep up with health care and pension costs find it increasingly difficult to do so. We are seeing now double-digit increases in health care, and we’re seeing the collapse of many of our pension systems that are basically being held aloft by a lot of accounting and prayers.

So how do we deal with this? Well, we can deal with it in a patchwork, incremental fashion, but eventually we’re going to have to decide. We’re
going to have to decide, are we going to provide a more level playing field
for our manufacturers by figuring out a way to deal with those legacy costs
which were, remember, built up because they thought they were doing the right thing for American workers and their families? Are we going to figure out a more sensible way to deal with health care and pension costs? Or are we going to continue to try to shift those burdens so that more and more is put on the employee and the employer and we have no end in sight of the increase in cost.

It’s also clear that this set of issues is politically volatile, as I can attest from my efforts ten years ago. And perhaps, though, the time is slowly coming. We weren’t ready ten years ago, we didn’t really understand the full cost of what we were up against, but it’s becoming more and more difficult to ignore the implications of these policies for the economy, and there have to be some attempts to reach a consensus that begins to solve these problems…

http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=35989
Comment: “… patchwork, incremental fashion…”? “… eventually we’re going to have to decide.” “… the time is slowly coming.” The time has come. The question is no longer whether we need changes but what those changes will be.

Although Sen. Clinton will not be able to lead the charge since she spent most of her political capital on her prior attempt at reform, at least she is venturing out with guarded rhetoric revealing that she does understand that incremental patches simply will not do it.

Health Affairs
February 25, 2004
The Cost Of Tax-Exempt Health Benefits In 2004
By John Sheils and Randall Haught

It is important to understand that the tax expenditure for health benefits accrues to workers rather than employers.

We have defined “tax expenditure” as the additional taxes that would be paid
if these benefits were included in taxable income. This depends on the marginal tax rate of the workers receiving these benefits (which varies with personal income and filer type) rather than that of the employer providing them.

We estimate that the average health benefit tax expenditure will be about
$1,482 per family in 2004. However, it is heavily skewed toward high-income
groups. The average will be $2,780 for families with incomes of $100,000 or
more per year, but only $102 for families with incomes of less than $10,000
per year. This reflects the fact that families with relatively higher incomes are more likely to have employer coverage and are in higher tax brackets.

Proposals have emerged that would replace the current health benefit tax
expenditure with a refundable tax credit. Workers would be required to count
the value of employer-sponsored health benefits as income when computing
their taxes, which would increase their incentives to enroll in less costly
health plans. A refundable tax credit of perhaps $1,500 for individuals and
$3,500 for families would be provided to all Americans and would be phased
out as income rises. This would refocus the health benefit tax expenditure
on lower-income people to help the uninsured obtain coverage. The tax credit
also would be available for all health insurance including nongroup coverage
(excluding Medigap), which does not now qualify for tax preferences.

However, these proposals raise several concerns. For example, eliminating the relative tax advantages of employer coverage could cause some employers
to stop offering coverage, assuming that their workers will purchase their
own nongroup coverage with the help of the tax credit. Without a mandate for
all to offer coverage, this could result in a partially offsetting increase
in the number of uninsured people, as the convenience and economy of employer-group coverage disappears. Also, nongroup insurance,which is difficult to obtain in many areas, is much more costly to administer than group coverage, so overall costs would increase. These problems must be addressed before these types of tax credit models can be a viable alternative.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w4.106

The full report:
http://content.healthaffairs.org/cgi/reprint/hlthaff.w4.106v1.pdf

Comment: Taxpayers currently are paying for health care for higher income
individuals, which is a benefit that lower income individuals do not receive. Current tax preferences for employer-sponsored plans are highly inequitable because of their regressive nature.

Several policy analysts have suggested discontinuing this inequitable tax
treatment of employer-sponsored plans, and replacing it with refundable tax
credits. Employers would welcome this opportunity to shift the responsibility for obtaining coverage to the employee who would then have to turn to the individual market. But the inequities of the individual market are much more profound than is the current tax injustice. And it is highly unlikely that standard policies could ever be established that would ensure equitable coverage and affordability within the private plan marketplace.

Why do we keep considering all of these other deficient schemes when an
equitably-funded universal system of social insurance would work just
fine?

Daily Herald
3/2/2004
Optimism in key sector
By Mike Comerford

Large scale layoffs in the last three years have been headline grabbers but keeping the local economy afloat has been the steady strength of area small
and mid-sized businesses.

An optimism index compiled by the National Federation of Independent Business indicates optimism in the small business sector in the first quarter of this year was higher than any quarter of the go-go 1990s and near an all-time record.

An eyebrow raising 17 percent of small businesses said they plan to hire employees in the next three months. Banks are vying to capture growing smaller companies, 25 percent of whom said this quarter they intend to expand their businesses. That’s near a pace not seen since the mid- 1980s.

Small businesses, according to the National Federation of Independent Business, also say they are re-building their inventories. Historically, taxes have been the biggest worry on the minds of managers at small businesses. But this year, health insurance costs were the single-biggest problem, they told the business association.

“The only fly in the ointment is health insurance,” said Bill Dunkelberg, chief economist, National Federation of Independent Business. “Consequently, about 40 percent of small businesses don’t offer health-care insurance.”

http://www.dailyherald.com/search/main_story.asp?intid=38048121

Comment: Small businesses are thriving, thank goodness. But the escalating cost of health insurance has driven small businesses to look for solutions such as association health plans and consumer-directed products. Although these approaches would provide relief for the business owner, they shift costs to the employee-patient, making essential care unaffordable for many. And close to half of the employers have already abandoned any attempt to provide health care coverage.

It really is time to end our inadequate and wasteful system of employer-sponsored private plans, but not until we have in place a better alternative.

Small businesses should join with us in advocating for a more affordable and
more equitable system of universal social insurance. It’s good for business.
It’s good for employees. And it’s good for all of us.