PNHP

Denver Post editorial on battle over health care costs

Denver Post editorial on battle over health care costs

Editorial: Pointing fingers over health costs

The Denver Post
September 29, 2011

When critics insist the growth of this nation’s health care burden is unsustainable, this is what they mean: The average cost of an employer-provided family insurance plan soared by 9 percent in 2011. That’s far higher than the rate of inflation or the average growth of wages.

Nor is this year’s increase out of line with recent history.

In a word, it’s a looming disaster. And yet our political leaders mostly still refuse to come to terms with it.

Some Republicans immediately sought to blame the Affordable Care Act, which critics call Obamacare, for the latest news, although unsustainable health-care inflation predated the legislation and indeed was one of the main arguments offered in support of its passage.

But many Democrats appear equally determined to sidestep reality when discussing health care costs, insisting — in the face of all early evidence — that the Affordable Care Act will restrain costs over time, if we are patient enough.

We opposed that legislation because we were convinced — and have seen nothing since to change our opinion — that it will not, unfortunately, rein in costs to any major extent. The Congressional Budget Office certainly doesn’t think so, either.

Although both parties are still largely in denial on health care, there are exceptions. Democrats who favored a single-payer system understood that it would have a better chance of achieving cost control than most alternatives, given the experience in other countries. And other Dems have prioritized cost containment.

Some Republicans also understand the need for fundamental reform, with Rep. Paul Ryan, chairman of the House Budget Committee, leading the charge. We take issue with elements of Ryan’s approach — block grants to states for Medicaid and premium subsidies for Medicare coverage that patients would then purchase in the private market — but at least he appreciates the necessity of revamping incentives.

“At its core,” Ryan said in speech this week at the Hoover Institution, “the health care problem is one of inflation, driven by the over-utilization of services, dramatic underpayments, and massive inefficiency.”

And if nothing is done to address those issues, this nation’s future will be bleak indeed.

http://www.denverpost.com/opinion/ci_18998740

The Kaiser Family Foundation report on the 9 percent increase in family health insurance premiums brought back to the front pages the issue of unsustainable health care cost increases. The Denver Post had previously opposed the Affordable Care Act (ACA) because they “were convinced — and have seen nothing since to change our opinion — that it will not, unfortunately, rein in costs to any major extent.” So what do they see as our options?

They dismiss the political battle between the Republicans who are blaming ACA for this year’s premium increases, and the Democrats who are defending ACA as a (certainly dubious) vehicle for cost restraint.

They do give credit to Republican Paul Ryan for recognizing the problem, but they “take issue with elements of Ryan’s approach.”

And Democrats? The Denver Post editors state, “Democrats who favored a single-payer system understood that it would have a better chance of achieving cost control than most alternatives, given the experience in other countries.”

The Denver Post falls short of endorsing single payer, but it’s the only truly effective option that they seem to offer.

The better people understand the single payer model, the greater the support that we’ll see. Keep spreading the word.

How much should physicians be paid?

Higher Fees Paid To US Physicians Drive Higher Spending For Physician Services Compared To Other Countries

By Miriam J. Laugesen and Sherry A. Glied
Health Affairs, September 2011

Abstract

Higher health care prices in the United States are a key reason that the nation’s health spending is so much higher than that of other countries. Our study compared physicians’ fees paid by public and private payers for primary care office visits and hip replacements in Australia, Canada, France, Germany, the United Kingdom, and the United States. We also compared physicians’ incomes net of practice expenses, differences in financing the cost of medical education, and the relative contribution of payments per physician and of physician supply in the countries’ national spending on physician services. Public and private payers paid somewhat higher fees to US primary care physicians for office visits (27 percent more for public, 70 percent more for private) and much higher fees to orthopedic physicians for hip replacements (70 percent more for public, 120 percent more for private) than public and private payers paid these physicians’ counterparts in other countries. US primary care and orthopedic physicians also earned higher incomes ($186,582 and $442,450, respectively) than their foreign counterparts. We conclude that the higher fees, rather than factors such as higher practice costs, volume of services, or tuition expenses, were the main drivers of higher US spending, particularly in orthopedics.

http://content.healthaffairs.org/content/30/9/1647.abstract

And…

Letter

Alliance of Specialty Medicine
September 26, 2011
To:  Glenn M. Hackbarth, J.D., Chairman
Medicare Payment Advisory Commission

(excerpts)

The Alliance of Specialty Medicine (Alliance) and its member organizations are writing to express our opposition to the Chairman’s recommendations on the Sustainable Growth Rate System (SGR) proposed at the MedPAC meeting of September 15, 2011.

The Alliance recognizes that MedPAC has called for repeal of the SGR repeatedly and we welcome your understanding of the critical need to rationalize physician payment to assure stability of patient access to quality physician care. However, we were dismayed to hear the Chairman’s first recommendation to slash the conversion factor for specialist services by 5.9 percent each year for three years to be followed by a freeze for seven years. The cumulative cut to specialty physician payments would be 18 percent over the first three years. The recommendations seek to shield a small percentage of primary care services furnished by primary care specialties by imposing only a 10-year freeze rather than an absolute cut on these services.

Furthermore, while the Alliance understands MedPAC’s desire to support primary care, we have serious objections to the recommended proposal to essentially hold primary care “harmless” while cutting specialty physicians’ reimbursement.

Private Contracting with Physicians Under Medicare

The Alliance strongly supports empowering patients with the ability to obtain medical services from the physician of their choice. To that end, we believe that patients and physicians should be allowed to privately contract for Medicare services without penalty.

Sincerely,

American Academy of Facial Plastic and Reconstructive Surgery
American Association of Neurological Surgeons
American Gastroenterological Association
American Society of Cataract & Refractive Surgery
American Society of Plastic Surgeons
American Urological Association
Coalition of State Rheumatology Organizations
Congress of Neurological Surgeons
Heart Rhythm Society
North American Spine Society
Society for Cardiovascular Angiography and Interventions

http://thehill.com/images/stories/blogs/healthwatch/specialtymedpac.pdf

Comment: 

By Don McCanne, MD

Today’s message on physician income does not delve into the important topics of fee-for-service, capitation, salary and other such considerations, but rather is intended to provide a perspective on how much money physicians should take home. Having said almost nothing in this first sentence, just opening the topic undoubtedly has already provoked controversy, but we do need to take a look at this.

Before discussing physicians’ net incomes, we should first stipulate that our health care system should be designed to provide all necessary care to everyone. Since health care now is so expensive, that means that we must have some method of pooling funds, and the financing must be progressive. Medicare is an example of pooled funds with progressive financing.

Some of us can remember when Medicare was first established, physicians were allowed to set their own fees. The cost of the program skyrocketed far beyond even the highest cost projections. Medicare was forced into a system (under continual refinement) that controlled fees. Likewise, escalating costs in the private sector forced the insurers into provider contracting as a means of controlling fees. Even the plans that expose patient/consumers to the costs of health care still have limits on how much the physicians can receive.

We need to learn from other nations that have been successful in covering essentially everyone, while spending far less than the United States. The Health Affairs article demonstrates that one important difference between us and those other nations is that we pay physicians more, even with our current private insurance and public program controls on spending.

What is even more alarming is that procedure-oriented specialists are paid much more than primary care physicians. The Health Affairs study cited above looked at orthopedics as a proxy for procedure-oriented specialists. Other studies have shown that very high fees also apply to most other such specialties.

Unfortunately, this is setting up a battle between the primary care and specialty sectors of medicine. The letter to MedPAC (Medical Payment Advisory Commission) sent by the professional organizations representing high-fee specialists states, “we have serious objections to the recommended proposal to essentially hold primary care ‘harmless’ while cutting specialty physicians’ reimbursement.” It’s war.

Worse, the specialists want Medicare rules changed so that they can set their own fees and collect from the patient the full balance beyond the Medicare allowed fees. If you have looked at any Medicare payment statements recently, you know that the amounts that the patient would be responsible for are staggering. Yet this unreasonable demand is from a sector of physicians that are already paid far more than similar specialists in other nations.

How much should physicians be paid? Under our current fragmented system, Medicare is not able to determine the costs of providing care to the beneficiaries since such costs are not segregated, and it is difficult to determine how much of the practice costs should be paid by the private insurers and by cash-paying patients. If Medicare were the only payer (single payer) then pricing could be based on legitimate total practice costs and fair profits (physician net income). This method would provide the greatest value in our health care purchasing – paying enough to be sure that physicians would be there when you need them, but not paying egregiously excessive profits.

Although it would be foolish to try to specify here precise levels of physicians’ incomes for the United St
ates, we can say that adopting an efficient system of financing health care would bring us far closer to getting the levels right. This is partly what we mean by “improved” in an “improved Medicare for all.”

Eliminate the Profit Motive in Health Care

Arnold S. Relman, M.D.
Professor Emeritus of Medicine and Social Medicine, Harvard Medical School
Former Editor-in-Chief, New England Journal of Medicine
Tikkun, September 24, 2009

There are two interrelated critical issues in health reform right now: how to extend and improve insurance coverage, and how to control the unsustainable rise in health care expenditures. Virtually all of the current legislative attention is focused on the first issue but, notwithstanding claims to the contrary, none of the proposals now on the table offers any credible solution for the control of rising costs. Without control of health cost inflation, the present system will not be viable much longer.

Expansion of coverage is of course a highly desirable goal, but it inevitably increases expenditures even beyond today’s exorbitant levels. President Obama has repeatedly said he would veto any health proposal that is not “budget neutral” over the next decade. The legislation now under consideration claims to meet that requirement through savings promised by the insurance, drug and hospital industries and through reductions in Medicare expenditures (excessive payments to private insurers for Medicare Advantage plans would be a major target), possibly supplemented by taxes on employment-based health plans for high income employees. However, critics question whether these measures would fully pay for the almost one trillion dollars of new costs for covering most of the uninsured over the next decade.

But the estimate of the costs of expanded coverage does not include the cost of the constant inflationary rise in all medical expenditures, lately about 6 – 8 percent per year. This would increase total health spending by roughly another two trillion dollars over the next decade. Administration policy-makers speak hopefully of savings to be generated in the long term by switching to electronic records, using more preventive measures, and applying the information gained from studies of comparative effectiveness. But skeptics might call this “faith-based” savings, because there is no solid evidence to support such hopes. The sobering fact remains that something more must be done soon to slow medical inflation or the entire health system will inevitably slide into bankruptcy. And yet none of the legislation currently being considered addresses that problem. Adding more benefits to the system, and covering more people with public and private insurance, are certainly important, but even if those improvements were paid for, they would not slow down the numerous inflationary forces that make our medical care system unsustainable.

What are those inflationary forces? I believe the most important among them are the incentives in the payment and organization of medical care that cause physicians, hospitals and other medical care facilities to focus at least as much on income and profit as on meeting the needs of patients. I have discussed this subject in a recent book (A Second Opinion. Rescuing America’s Health Care. Public Affairs, New York, 2007). The U.S., more than any other advanced country, has come to rely mainly on private markets to deliver medical care, and on fee-for-service to pay its physicians. The incentives in such a system reward and stimulate the delivery of more services. That is why medical expenditures in the U.S. are so much higher than in any other country, and are rising more rapidly. Our business-oriented system inevitably drives up expenditures because in medical care the balancing tensions between the suppliers and consumers of services that constrain costs in ordinary business markets do not exist. Physicians, who supply the services, control most of the decisions to use medical resources, and patients, who are the consumers of those resources, do not pay most of the costs.

The economic incentives in the medical market are attracting the great majority of physicians into specialty practice, and these incentives, combined with the continued introduction of new and more expensive technology, are a major factor in causing inflation of medical expenditures. Physicians and ambulatory care and diagnostic facilities, are largely paid on a piecework basis for each item of service provided. Hospitals also bill insurers according to the days of care and the services they provide, although payments for treatment of an illness may be aggregated. However, all providers compete for income and market share, often advertising and marketing for that purpose. They almost never compete on prices because public and private insurers, not patients, pay most of the costs. Competition in the current medical market therefore tends to drive up total costs because it results in greater use of services, while rarely lowering prices.

Control of medical expenditures is unlikely without a major reform of the payment and organization of medical care. Expanding and improving the medical insurance part of the health system will not solve the expenditures problem unless the perverse incentives in the delivery of care are also corrected. In fact, expansion of insurance benefits without this other reform would probably make matters even worse. A so-called “public option” will not solve this problem either, although its competition might force private insurers to reduce their premiums or increased benefits. But even if some sort of low-cost not-for-profit insurance plan were offered as an optional choice for the uninsured and those dissatisfied with their present coverage, the inflationary effects of fee-for-service payments and an entrepreneurial medical care system would still be operating. After all, Medicare is a low-overhead plan that costs its beneficiaries less than private plans, but the rate of inflation in its expenditures is nearly as rapid as the inflation in private medical insurance expenditures. The benefits of Medicare are just as threatened as those of the private insurance system because costs are rising rapidly in both the public and private sectors of health care.           

Judging from the current debate in Washington, there is little evidence that lawmakers are aware of these facts or, if they are, that they have the stomach for resisting the powerful vested interests that stand in the way of major reform. That is why the Goldman Sachs prediction of a compromised legislative outcome is likely to be correct. At the end of this Congress we will probably end up in a position not unlike that facing the Commonwealth of Massachusetts. Over three years ago it enacted legislation that greatly expanded insurance coverage, but from the outset it faced serious financial problems in funding the increased costs. A special state commission has recommended to the Massachusetts legislature that it consider ways to eliminate fee-for-service payment of physicians in favor of some type of system that would be based on organizations of physicians and hospitals that could accept global prepayments for comprehensive care. It remains to be seen whether and how these recommendations can be implemented, but it is telling that Massachusetts seems now to realize what our national lawmakers have not yet grasped: Sustainable universal, or near-universal, coverage requires more than fixing the insurance system. It needs major reform in the payment and organization of medical care as well.

In my book, and in a recent article in the New York Review of Books (July 2), I have proposed a system of medical reforms that would deal with the cost problems in both the insurance and medical care sectors of our health care system and would ensure good care for everyone. I recommend replacement of the curre
nt mix of public and private insurance plans with universal coverage for comprehensive care that would be funded by a progressive national health insurance tax. Medical care would be provided through community-based not-for-profit multi-specialty group practices, which would be staffed by salaried physicians. When medical insurance is no longer a for-profit business, when physicians no longer are paid on a fee-for-service basis, and when the entire health care delivery system is not-for-profit, economic incentives to over- or underserve the needs of patients can be eliminated by appropriate regulation and we can expect improved quality of care at lower costs. The total national expenditure on medical care can be controlled by the level of national funding, while decisions about the proper use of medical resources can be safely left where they belong, in the hands of physicians and their patients.

Carrying out such a transformation of the health care system would of course be a formidable task, probably achievable only in gradual steps. It would require a sea change in the current political climate. A large part of the public, supported by most business leaders who are outside the medical-industrial complex, and by an awakened medical profession, would have to be convinced that a major reform of this kind offers the only chance for an equitable but affordable medical care system of good quality. In a just-published commentary in the New England Journal of Medicine (“Doctors as the Key to Health Care Reform”, NEJM, September 24, 2009) I explain how crucial change in the organization and payment of medical services is to achieving a sustainable health care system. The medical profession will have to be a willing and active partner in carrying out these reforms.

Lawmakers need votes and public support even more than the money from vested interests, so they probably would act if a majority of voters were to make its wishes clear and if the medical profession were part of this awakening. But before public opinion can be galvanized to demand a sweeping change of this kind we may, unfortunately, have to experience a disastrous financial collapse of the health care system, with widespread loss of benefits. An expansion of coverage without changing the medical care delivery system and controlling medical inflation, might very well hasten such a collapse.

Doctors as the Key to Health Care Reform

By Arnold S. Relman, M.D.
New England Journal of Medicine 2009; 361:1225-1227, September 24, 2009

Experts agree that sustainable health care reform requires reining in rising costs, but few people understand that the control of medical expenditures is largely in the hands of the medical profession. Doctors, in consultation with their patients — not insurance companies, legislators, or government officials — make most of the decisions to use medical resources, thereby determining what the United States spends on medical care.

Most doctors are paid on a fee-for-service basis, which is a strong financial incentive for them to maximize the elective services they provide. This incentive, combined with the continued introduction of new and more expensive technology, is a major factor in driving up medical expenditures. The same incentive is attracting more and more young doctors into specialties that command much higher fees — and therefore guarantee much greater income — than those earned by primary care practitioners. Primary care is rapidly becoming an endangered specialty; an important, but not the only, reason is its relatively low economic rewards.

A system like ours, which is grossly deficient in primary care physicians and dominated by specialists who are trained to use expensive tests and procedures, is inevitably costly, particularly when most specialists practice as independent small businesses, competing for patient referrals and for income. Adjusting the fees paid by insurers, with increases for primary care and decreases for specialized procedures, or basing fees on the quality or outcome of care won’t solve this problem, because specialists can easily control the volume and kinds of services they provide. Furthermore, competition doesn’t lower prices in medical care as it does in other markets, because physicians usually choose the services to be provided and are paid largely by insurance — not by the consumers for whose business they would compete if this were an ordinary market.

To judge from the health care reform proposals getting serious attention in Washington, there is little evidence that lawmakers are aware of, or understand the significance of, these facts — or that, even if they did, they would have the stomach for the major reforms needed to solve this problem.1 Having surveyed all the current legislative proposals for slowing the continued inflation of costs, the Congressional Budget Office is not optimistic. Why should it be? We are not likely to control medical inflation unless the incentives in the traditional fee-for-service payment of doctors are eliminated, but nothing on the table in the health care reform debate even comes close to eliminating them. This fact explains why the private insurance and drug industries have so far been willing to support the Obama administration’s reform proposals. These proposals would expand coverage and increase total health care expenditures, which means more income for insurers and drug manufacturers. Even after their promised help in reducing the increase in costs, these industries will make more money in the reformed system than they do now.

Massachusetts, often mentioned as a model for the nation, enacted legislation more than 3 years ago that achieved nearly universal insurance coverage but from the outset found itself struggling to keep up with rising costs. To control expenditures, a special state commission on health care payment has recommended the elimination of traditional fee-for-service payment.2,3 The commission envisions the creation of new, as-yet-undefined medical management entities that it calls “accountable care organizations” (ACOs), which would organize physicians into multispecialty teams with strong primary care staffing. ACOs could include hospitals, could be for-profit or not-for-profit, and would be expected to take risks only for their performance. Insurance carriers would continue to hold the insurance risk for their contracts with ACOs, and they would pay the latter on a per capita, risk-adjusted basis for comprehensive care. They would also use “pay for performance” as an incentive to promote quality and efficiency. The commission does not specify how physicians in ACOs would be paid, but a salary system is implied by the report’s emphasis on the argument that Massachusetts cannot afford fee-for-service payment of its doctors if it wants to provide near-universal health insurance. Whether the commission’s proposals will prove acceptable to stakeholders and, if so, whether they will ever be implemented remain to be seen.

As it moves to expand insurance coverage, the federal government will soon face the financial difficulty now confronting Massachusetts. However, I believe there is a much simpler national solution that would control costs by eliminating profit incentives and traditional fee-for-service payment while achieving all the advantages of integrated practice. It would allow physicians and their patients to control medical care with less interference by insurers or government than the recommendations of the Massachusetts commission would probably require.

I have proposed a reformed health care system based on tax-supported, universal insurance, with medical care provided by a national network of community-based, private, not-for-profit, multispecialty, doctor-managed group practices.4 The insurance would pay for comprehensive care by the groups. Successful examples of multispecialty group practices already exist in our current health care system: the Mayo Clinic, the Cleveland Clinic, the Permanente Medical Group, the Geisinger Health System, the Marshfield Clinic, the Scott and White Clinic, the Billings Clinic, Denver Health, and many others. However, most of these groups are not prepaid for comprehensive care, and they bill many different payers for their services.

Groups in the system that I propose would pay their staff physicians a salary for doing what doctors ought to be doing: providing patients with the best, most cost-effective care, within the limits of a publicly determined budget. Physicians would not be influenced by the effects of each medical decision on their own income. The groups would enable primary care physicians and specialists to work together, without competition or turf warfare, but with compensation that would be acceptable to specialists and generalists alike.

Groups would compete for patients and for published ratings of their quality — but not for income, because they would not be allowed to keep any net income. In addition, capital improvements would require approval, and groups would be held harmless for any losses due to adverse selection by patients with, or at high risk for, expensive conditions. Capitated prepayment of the groups would allow a central public agency to control the country’s total medical expenditures. This agency would establish standards for group organization, administrative operations, and accountability but would leave individual medical care decisions where they belong — in the hands of physicians and patients. Private insurance plans and employers would have no role in this system.

Achieving reform of this kind would be a major task that would probably have to be carried out in stages. The opposition by vested interests and conservative ideologues would be fierce. To persuade lawmakers to act, the majority of the public, the medical profession, and the business community would have to unite in advocating this change. But without such a political awakening, I believe that the economic incentives and organization of medical care cannot be changed, and the current slide of the system toward bankruptcy will continue. That decline, however, might ultimately cause a disaster that would generate popular demand for real reform.

http://www.nejm.org/doi/full/10.1056/NEJMp0907925

How much should physicians be paid?

Higher Fees Paid To US Physicians Drive Higher Spending For Physician Services Compared To Other Countries

By Miriam J. Laugesen and Sherry A. Glied
Health Affairs, September 2011

Abstract

Higher health care prices in the United States are a key reason that the nation’s health spending is so much higher than that of other countries. Our study compared physicians’ fees paid by public and private payers for primary care office visits and hip replacements in Australia, Canada, France, Germany, the United Kingdom, and the United States. We also compared physicians’ incomes net of practice expenses, differences in financing the cost of medical education, and the relative contribution of payments per physician and of physician supply in the countries’ national spending on physician services. Public and private payers paid somewhat higher fees to US primary care physicians for office visits (27 percent more for public, 70 percent more for private) and much higher fees to orthopedic physicians for hip replacements (70 percent more for public, 120 percent more for private) than public and private payers paid these physicians’ counterparts in other countries. US primary care and orthopedic physicians also earned higher incomes ($186,582 and $442,450, respectively) than their foreign counterparts. We conclude that the higher fees, rather than factors such as higher practice costs, volume of services, or tuition expenses, were the main drivers of higher US spending, particularly in orthopedics.

http://content.healthaffairs.org/content/30/9/1647.abstract

And…

Letter

Alliance of Specialty Medicine
September 26, 2011
To:  Glenn M. Hackbarth, J.D., Chairman
Medicare Payment Advisory Commission

(excerpts)

The Alliance of Specialty Medicine (Alliance) and its member organizations are writing to express our opposition to the Chairman’s recommendations on the Sustainable Growth Rate System (SGR) proposed at the MedPAC meeting of September 15, 2011.

The Alliance recognizes that MedPAC has called for repeal of the SGR repeatedly and we welcome your understanding of the critical need to rationalize physician payment to assure stability of patient access to quality physician care. However, we were dismayed to hear the Chairman’s first recommendation to slash the conversion factor for specialist services by 5.9 percent each year for three years to be followed by a freeze for seven years. The cumulative cut to specialty physician payments would be 18 percent over the first three years. The recommendations seek to shield a small percentage of primary care services furnished by primary care specialties by imposing only a 10-year freeze rather than an absolute cut on these services.

Furthermore, while the Alliance understands MedPAC’s desire to support primary care, we have serious objections to the recommended proposal to essentially hold primary care “harmless” while cutting specialty physicians’ reimbursement.

Private Contracting with Physicians Under Medicare

The Alliance strongly supports empowering patients with the ability to obtain medical services from the physician of their choice. To that end, we believe that patients and physicians should be allowed to privately contract for Medicare services without penalty.

Sincerely,

American Academy of Facial Plastic and Reconstructive Surgery
American Association of Neurological Surgeons
American Gastroenterological Association
American Society of Cataract & Refractive Surgery
American Society of Plastic Surgeons
American Urological Association
Coalition of State Rheumatology Organizations
Congress of Neurological Surgeons
Heart Rhythm Society
North American Spine Society
Society for Cardiovascular Angiography and Interventions

http://thehill.com/images/stories/blogs/healthwatch/specialtymedpac.pdf

Today’s message on physician income does not delve into the important topics of fee-for-service, capitation, salary and other such considerations, but rather is intended to provide a perspective on how much money physicians should take home. Having said almost nothing in this first sentence, just opening the topic undoubtedly has already provoked controversy, but we do need to take a look at this.

Before discussing physicians’ net incomes, we should first stipulate that our health care system should be designed to provide all necessary care to everyone. Since health care now is so expensive, that means that we must have some method of pooling funds, and the financing must be progressive. Medicare is an example of pooled funds with progressive financing.

Some of us can remember when Medicare was first established, physicians were allowed to set their own fees. The cost of the program skyrocketed far beyond even the highest cost projections. Medicare was forced into a system (under continual refinement) that controlled fees. Likewise, escalating costs in the private sector forced the insurers into provider contracting as a means of controlling fees. Even the plans that expose patient/consumers to the costs of health care still have limits on how much the physicians can receive.

We need to learn from other nations that have been successful in covering essentially everyone, while spending far less than the United States. The Health Affairs article demonstrates that one important difference between us and those other nations is that we pay physicians more, even with our current private insurance and public program controls on spending.

What is even more alarming is that procedure-oriented specialists are paid much more than primary care physicians. The Health Affairs study cited above looked at orthopedics as a proxy for procedure-oriented specialists. Other studies have shown that very high fees also apply to most other such specialties.

Unfortunately, this is setting up a battle between the primary care and specialty sectors of medicine. The letter to MedPAC (Medical Payment Advisory Commission) sent by the professional organizations representing high-fee specialists states, “we have serious objections to the recommended proposal to essentially hold primary care ‘harmless’ while cutting specialty physicians’ reimbursement.” It’s war.

Worse, the specialists want Medicare rules changed so that they can set their own fees and collect from the patient the full balance beyond the Medicare allowed fees. If you have looked at any Medicare payment statements recently, you know that the amounts that the patient would be responsible for are staggering. Yet this unreasonable demand is from a sector of physicians that are already paid far more than similar specialists in other nations.

How much should physicians be paid? Under our current fragmented system, Medicare is not able to determine the costs of providing care to the beneficiaries since such costs are not segregated, and it is difficult to determine how much of the practice costs should be paid by the private insurers and by cash-paying patients. If Medicare were the only payer (single payer) then pricing could be based on legitimate total practice costs and fair profits (physician net income). This method would provide the greatest value in our health care purchasing – paying enough to be sure that physicians would be there when you need them, but not paying egregiously excessive profits.

Although it would be foolish to try to specify here precise levels of physicians’ incomes for the United States, we can say that adopting an efficient system of financing health care would bring us far closer to getting the levels right. This is partly what we mean by “improved” in an “improved Medicare for all.”

Medicare for all would save lives and money

By Margaret Flowers
The Wichita Eagle, Tue, Sep. 27, 2011

There’s been quite a bit of talk lately about the contribution of health care costs to our national deficit, and understandably so.

When compared with health care in other advanced nations, the United States excels in only one area — the amount of money spent per capita annually. Despite our high spending, we leave about a third of our population either uncovered or underinsured and thus vulnerable to unneeded suffering and medical bankruptcy.

Our health outcomes are relatively poor, placing us 37th in the world, and we rank the highest in preventable deaths — more than 100,000 preventable deaths per year — when compared with other advanced nations. It’s clear we are getting poor value in return for our health care dollar.

Health care costs, which are rising 2.5 percent faster than our gross domestic product, are a leading driver of our financial deficit. In fact, if our health care costs were comparable to those of other industrial nations, which provide nearly universal health care with better outcomes, we would have a budget surplus.
Regrettably, the new federal health law, the Affordable Care Act, lacks proven cost controls and is predicted to cause U.S. health care costs to rise faster than if there had been no reform at all. It will also leave at least 23 million uninsured through 2019.

Given our high health care costs, some members of the new “super-committee” in Washington, D.C., may attempt to reduce the deficit by cutting our public health insurance programs, Medicaid and Medicare. However, doing so would be a mistake, because it would increase poverty, worsen health outcomes and increase costs.

How so? Since its enactment 46 years ago, Medicare has substantially lowered poverty and sickness among the elderly, helping not only seniors but also their families. And Medicare’s cost of health care per beneficiary is rising more slowly than for those with private health insurance.

Medicaid and Medicare have not caused our rising health care costs, but are victims of our fragmented, market-based model of health care financing. And shifting more of the cost of health care from the taxpayer to the patient through higher co-pays and deductibles, for example, will only hurt the vulnerable and will not slow rising costs.

The only effective remedy is to jettison the costly and wasteful system of using big private health insurers as middlemen and to adopt a publicly financed and independently delivered Medicare for all. This is commonly known as a “single- payer” system.

An improved Medicare-for-all system has myriad benefits, including free choice of physician and hospital; administrative savings of about $400 billion per year, which is enough to provide comprehensive high-quality health care to all who are uninsured and underinsured; the ability to negotiate lower prices for drugs; the elimination of bankruptcy and foreclosure due to medical debt; a reduced health care cost burden on businesses; and the stimulation of the economy because families will have more money for discretionary spending.

An improved Medicare for all will save lives and money. It will place our nation on the path of becoming one of the best health systems in the world — something of which we can all be proud.

Margaret Flowers, a Maryland pediatrician, is congressional fellow at Physicians for a National Health Program. She will speak at 7 p.m. today at the Murdock Theatre, 536 N. Broadway. Admission is free.

Read more: http://www.kansas.com/2011/09/27/2034838/medicare-for-all-would-save-lives.html

Do we have to accept $15, 000 premiums and higher deductibles?

Rising Health Costs Are Not Just a Federal Budget Problem

By Drew Altman, Ph.D.
Kaiser Family Foundation, September 27, 2011

Premiums for employer-provided health insurance, where 150 million Americans get their coverage, jumped 9% in 2011 while workers’ wages grew just 2%, according to our annual employer survey.  The average family policy now costs more than $15,000 per year, more than the cost of a Chevy Aveo or a Ford Fiesta.  Since we began doing this survey thirteen years ago, worker contributions to premiums have increased 168%, wages 50%, and inflation 38%.

The “Supercommittee” created by the recent debt reduction legislation will be looking for more ways to save money in government health programs, but the focus in Washington is almost entirely on cutting government spending, not curbing rising health costs overall.  Employers will be left to their own devices to try to keep health care costs down.  They have never been very successful at this, nor have private health insurance companies.  While the conventional wisdom is that private insurance does a better job of controlling costs, the opposite is true.  The Centers for Medicare and Medicaid Services (CMS) says that Medicare spending per enrollee grew at a much lower rate than private insurance between 1999 and 2009 (4.9% vs. 7.2% for comparable benefits).

In the short term, employers have few new tools to control premium increases.  Employees will continue to see more high-deductible health plans, with and without tax-preferred savings accounts, and deductibles will get even larger.  These plans have lower premiums because the big upfront deductible that people must pay before their insurance kicks in causes them to use fewer health services. The trend here is very clear, especially in firms with fewer than 200 employees where the percentage of workers in a plan with a deductible of $1,000 or more for single coverage has grown from 16% in 2006 to 50% today.  Conservatives rail about Obamacare, but they may be winning more than they are losing; it is their vision of insurance with more “skin in the game” that is gradually taking over the marketplace because employers have no other way to control costs.

Health care groups are maneuvering with defense lobbyists and health provider groups are jockeying with beneficiary advocates about who will take the brunt of the hit from the Supercommittee.  But one thing that should be clear is that reducing federal health spending is not the same thing as controlling health care costs; just ask the 150 million Americans and their employers who will be paying $15,000 when they buy a family policy this year.

http://www.kff.org/pullingittogether/rising_health_costs_federal.cfm

Summary of findings (8 pages):
http://ehbs.kff.org/pdf/8226.pdf

Comment: 

By Don McCanne, MD

When the Affordable Care Act was drafted every effort was made to leave intact the largest source of health care coverage in America – employer-sponsored health plans. Most working families will have no other choices than the plans offered by their employers. How well are they working?

The average premium for an employer-sponsored family plan is now over $15,000, paid for by employee premium contributions and foregone wage increases. As if that weren’t bad enough, more of the direct costs of health care are being shifted to employees and their families, especially through larger deductibles.

The conservatives won the health care reform battle. Health care coverage for workers was left in the more expensive private market, and consumers are being empowered with the right to decline the health care that they need but can no longer afford because of the high out-of-pocket expenses.

Yesterday’s qotd message was on framing, demonstrating how the right has taken control of our cognitive processes by superimposing the moral worldview of individual responsibility, while bypassing logic. As proof, much of the bashing of single payer advocates is coming from the left. Even though liberals understand fully the logic of single payer, they are absorbed in the process of making the Affordable Care Act work. We’ve shown that it cannot ever accomplish the goals of universal coverage and affordability, yet they insist that this right-wing consumer/market approach will get us there through incremental steps, though incrementalism hasn’t achieved our ultimate goals in over a half century of trying.

Today I received an email message that went out to another list, sent by one of the most intelligent, dedicated, progressive individuals in the health care reform movement. The title of the message was, “Don McCanne is wrong Re: [hc4ac] US Last In Mortality Amenable to Health Care.” She wrote, “The vote on the ACA has occurred; opposing it on a daily basis does not get us closer to universal coverage or price controls or to single payer; nor does intoning single payer on a daily basis.”

So abandoning single payer and tweaking a model designed by the conservative Heritage Foundation will get us there? We certainly screwed up the framing on this one!

Medtronic, UnitedHealth Group want to export U.S. health care

Medtronic, UnitedHealth Group are part of national alliance that says America's "health ecosystem" could be a big winner abroad.

By JIM SPENCER
Minneapolis Star Tribune, September 26, 2011

WASHINGTON – A coalition of U.S. health care businesses, including Minnesota-based UnitedHealth Group and Medtronic, proposes to rebuild America’s battered economy by selling the country’s “health ecosystem” internationally.

The Alliance for Healthcare Competitiveness (AHC) wants the U.S. government to build its foreign free-trade policy around the health care industry, noting that the sector has been a significant jobs creator since the recession began in 2008. Breaking down tariffs and other forms of international discrimination against America’s “health ecosystem” will allow developing countries such as China, India and Brazil to improve medical care while allowing U.S. companies to rescue the American economy by hiring more people, AHC leaders said Monday.

The worldwide need for health care in aging populations will lead to a demand for goods and services that can drive sales of American insurance, medical devices and record-keeping technology, said Simon Stevens, UnitedHealth’s president of global health and an AHC member. Further, a growing middle class in developing countries will have the money to pay for better treatment, which U.S. companies can provide.

“This is about making it easier for patients around the world to benefit from things that have demonstrably worked,” said Stevens, who once served as health minister to former British Prime Minister Tony Blair.

The push by major companies in the health sector comes as Congress and state legislatures battle over how to reform the U.S. health care system, which is beset with skyrocketing costs and inefficiencies. Americans currently pay more for health care and rank lower in life expectancy and infant mortality than much of the developed world.

AHC, which formed in 2009, claims that the immense size of the U.S. health system provides leverage for international expansion. “We’ve got a lot of wonderful technologies, wonderful approaches,” said Alex Gorsky, Johnson & Johnson’s vice chairman. “Let’s start in Minnesota: There are a lot of medical device companies that are discovering and developing products every day.”

With an economic impact of $2 trillion a year, the American health care system is “as large as the national economies of major European powers,” the AHC noted. Since 2000, the industry has added 3 million mostly high-paying jobs as the rest of the private economy shed 6 million jobs. Many of those new health care jobs owe to a graying U.S. population. People over 65 require seven times as much health care as those under 65, Gorsky said.

With the number of Chinese age 65 and over expected to grow from 100 million in 2005 to 200 million in 2015, the need for elder care is hardly unique to America, Stevens said. “The question of aging is as important in developing countries as it is here,” he said, adding that UnitedHealth is negotiating to provide a private health insurance program in India that could include one million people.

Still, the call to rebuild the U.S. economy by selling pieces of what is generally considered a broken health care system struck some experts as a bit awkward.

“It seems ironic, at best,” said Jean Abraham, a professor of health policy and management at the University of Minnesota. “To the extent that you expand into markets with unmet need with better technology and access to care, it could be mutually beneficial. The question from a global perspective is the ability to pay.”

Citing a Goldman Sachs report, AHC claims the international middle class — people making $6,000 to $30,000 per year — will grow from 1.7 billion people to 4 billion people by 2030.

The ability of the American health care industry to create successful models overseas when it could not create them here depends on the clean slate from which the effort will start, said Steve Parente, a professor of health finance and insurance at the U’s Carlson School of Management. “I don’t envy them for trying to do this through trade policy,” he said.

Still, if tariffs and other free-market obstructions can be brought to heel, the developing world lacks many of the bureaucratic burdens that now afflict U.S. health care, Parente noted.

“Medicaid is like 50 state experiments,” he said of the U.S.’s taxpayer-financed health insurance for the poor. “Medicare doesn’t permit the use of some of the technologies they want to export. Medical technology is already one of this country’s most successful exports. This is not completely laughable. What they’re exporting is what other countries want.”

http://www.startribune.com/business/130604608.html

Do we have to accept $15, 000 premiums and higher deductibles?

Rising Health Costs Are Not Just a Federal Budget Problem

By Drew Altman, Ph.D.
Kaiser Family Foundation, September 27, 2011

Premiums for employer-provided health insurance, where 150 million Americans get their coverage, jumped 9% in 2011 while workers’ wages grew just 2%, according to our annual employer survey.  The average family policy now costs more than $15,000 per year, more than the cost of a Chevy Aveo or a Ford Fiesta.  Since we began doing this survey thirteen years ago, worker contributions to premiums have increased 168%, wages 50%, and inflation 38%.

The “Supercommittee” created by the recent debt reduction legislation will be looking for more ways to save money in government health programs, but the focus in Washington is almost entirely on cutting government spending, not curbing rising health costs overall.  Employers will be left to their own devices to try to keep health care costs down.  They have never been very successful at this, nor have private health insurance companies.  While the conventional wisdom is that private insurance does a better job of controlling costs, the opposite is true.  The Centers for Medicare and Medicaid Services (CMS) says that Medicare spending per enrollee grew at a much lower rate than private insurance between 1999 and 2009 (4.9% vs. 7.2% for comparable benefits).

In the short term, employers have few new tools to control premium increases.  Employees will continue to see more high-deductible health plans, with and without tax-preferred savings accounts, and deductibles will get even larger.  These plans have lower premiums because the big upfront deductible that people must pay before their insurance kicks in causes them to use fewer health services. The trend here is very clear, especially in firms with fewer than 200 employees where the percentage of workers in a plan with a deductible of $1,000 or more for single coverage has grown from 16% in 2006 to 50% today.  Conservatives rail about Obamacare, but they may be winning more than they are losing; it is their vision of insurance with more “skin in the game” that is gradually taking over the marketplace because employers have no other way to control costs.

Health care groups are maneuvering with defense lobbyists and health provider groups are jockeying with beneficiary advocates about who will take the brunt of the hit from the Supercommittee.  But one thing that should be clear is that reducing federal health spending is not the same thing as controlling health care costs; just ask the 150 million Americans and their employers who will be paying $15,000 when they buy a family policy this year.

http://www.kff.org/pullingittogether/rising_health_costs_federal.cfm

Summary of findings (8 pages):
http://ehbs.kff.org/pdf/8226.pdf

When the Affordable Care Act was drafted every effort was made to leave intact the largest source of health care coverage in America – employer-sponsored health plans. Most working families will have no other choices than the plans offered by their employers. How well are they working?

The average premium for an employer-sponsored family plan is now over $15,000, paid for by employee premium contributions and foregone wage increases. As if that weren’t bad enough, more of the direct costs of health care are being shifted to employees and their families, especially through larger deductibles.

The conservatives won the health care reform battle. Health care coverage for workers was left in the more expensive private market, and consumers are being empowered with the right to decline the health care that they need but can no longer afford because of the high out-of-pocket expenses.

Yesterday’s qotd message was on framing, demonstrating how the right has taken control of our cognitive processes by superimposing the moral worldview of individual responsibility, while bypassing logic. As proof, much of the bashing of single payer advocates is coming from the left. Even though liberals understand fully the logic of single payer, they are absorbed in the process of making the Affordable Care Act work. We’ve shown that it cannot ever accomplish the goals of universal coverage and affordability, yet they insist that this right-wing consumer/market approach will get us there through incremental steps, though incrementalism hasn’t achieved our ultimate goals in over a half century of trying.

Today I received an email message that went out to another list, sent by one of the most intelligent, dedicated, progressive individuals in the health care reform movement. The title of the message was, “Don McCanne is wrong Re: [hc4ac] US Last In Mortality Amenable to Health Care.” She wrote, “The vote on the ACA has occurred; opposing it on a daily basis does not get us closer to universal coverage or price controls or to single payer; nor does intoning single payer on a daily basis.”

So abandoning single payer and tweaking a model designed by the conservative Heritage Foundation will get us there? We certainly screwed up the framing on this one!

Hawaii Health Authority Appointed and Sworn In

By Steven Kemble

The Hawaii Health Authority has been appointed and sworn in. the HHA “shall be responsible for overall health planning for the state and shall be responsible for determining future capacity needs for health providers, facilities, equipment, and support services.” “The authority shall develop a comprehensive health plan that includes:

1) Establishment of eligibility for inclusion in a health plan for all individuals;

2) Determination of all reimbursable services to be paid by the authority;

3) Determination of all approved providers of services in a health plan for all individuals;

4) Evaluation of health care and cost effectiveness of all aspects of a health plan for all individuals; and

5) Establishment of a budget for a health plan for all individuals in the state.

The authority shall determine the waivers that are necessary and available by federal law, rule, or regulation that are necessary to implement and maintain this chapter.

The members are:

Nathan Chang, MSW (UH School of Social Work)
Ritabelle Fernandez, MD (internist and geriatrician at KKV and KPHC, two community health centers serving the Medicaid population)
Reynaldo Graulty (former state senator, insurance commissioner, and judge)
Stephen Kemble, MD (internist and psychiatrist, working in both private practice and at Queen Emma Clinic, serving a Medicaid population)
S. Peter Kim, MD (child psychiatrist)
Lawrence Miike, MD, JD (former Director of Health)
Marion Poirier, RN (Director of National Alliance for the Mentally Ill – Hawaii)
Wendy Schwab, DDS (Dentist and single-payer advocate from Maui)
Jory Watland (Former director of Kokua Kalihi Valley, community health center, and Director of Health Care for All Hawaii)

Maryland pediatrician to speak on national health care in Wichita

By Deb Gruver
The Wichita Eagle, Mon, Sep. 26, 2011

Margaret Flowers tired of insurance companies telling her how long her young patients could stay in the hospital or what she could prescribe to make them feel better.

The Maryland pediatrician eventually left her private practice and is now the congressional fellow of Physicians for a National Health Program, which advocates a Medicare-like approach to health care for everyone.

Flowers will speak Tuesday in Wichita during a presentation sponsored by the League of Women Voters, the Peace and Social Justice Center and The Group, a bipartisan women’s group. Her talk is titled “Medicare and the Deficit: How to Improve Health Care and Save Money at the Same Time.”

More than 18,000 physician members, medical students and other health professionals belong to Physicians for a National Health Program, Flowers said in an interview Friday.

She plans to talk about the basics of a single-payer national health insurance system and discuss “why this is a solution that would address the problems we have and how it ties into the deficit.”

Flowers said surveys show that a majority of doctors favor a single-payer approach.

She said she struggled with having insurance companies dictate how she could treat her patients. She practiced for about 15 years before leaving her office four years ago.

“I was getting really upset with the way medicine is,” she said. “It boils down to the power that insurance industries have… They profit very nicely.”

A single payer system would cut out the middleman —insurance companies — she said, and put medical decisions in the hands of doctors and patients.

Payments would be collected by one entity — either the government or a quasi-government agency — through taxes.

Opposition to a single-payer plan is “completely political,” she said.

The best way to counteract that, she said, is with education. She said she’d be happy to discuss the plan with anyone, including people who are against it.

“The beauty of this is what we’re advocating for is based on evidence of what works,” she said. “It’s not out of self-interest that we’re doing this.”

She said the group she represents has “membership from all across the global spectrum from libertarians to socialists.”

Flowers will speak at 7 p.m. Tuesday at the Murdock Theatre, 536 N. Broadway. There is no charge to attend the speech.

Seating is first-come, first-served.

http://www.kansas.com/2011/09/26/2033240/pediatrician-to-speak-on-national.html

Follow-Up Appointments Often Hard to Arrange

Obtaining follow-up psychiatric care in the Boston area can be a serious challenge, even for patients with good private insurance.

By Mark Moran
Psychiatric News, September 16, 2011 (Volume 46 Number 18 Page 22)

A survey of mental health facilities in the Boston area by individuals posing as patients recently discharged from an emergency department with mental illness found a remarkably low rate of available follow-up appointments—a finding that may come as no surprise to psychiatrists in every area of the country.

The survey, published as a letter to the editor in the August Annals of Emergency Medicine, found that of 64 sites that were contacted, only eight offered appointments, and only four offered “patients” an appointment within a two-week period.

“Disappointing but not surprising” is how psychiatrist J. Wesley Boyd, M.D., Ph.D., the lead author of the letter, described the results in an interview with Psychiatric News. “What this speaks to in my mind is the under- or de-valuation of psychiatric care.”

He is with the Cambridge Health Alliance Department of Psychiatry and the Department of Psychiatry at Children’s Hospital Boston.

Two study personnel (including a psychiatry resident who was also a coauthor of the letter and a college student applying to medical school) posed as patients insured by the Blue Cross Blue Shield of Massachusetts Preferred Provider Organization, the largest insurer in Massachusetts. They called every in-network mental health facility within a 10-mile radius of downtown Boston, claiming to have been evaluated in an emergency department (ED) for depression and discharged with instructions to obtain a psychiatric appointment within two weeks.

According to Boyd, when necessary the “patients” left a message and made a second call attempt.

(“Facilities” contacted in the survey included mental health clinics, hospitals with psychiatric departments, and neighborhood clinics in the Boston area.)

Boyd explained that the survey was originally designed to be a comparison of private insurance and Medicaid, and because reimbursement is so low in the Massachusetts Medicaid plan that virtually no private practice psychiatrists participate, the survey was confined to facilities and did not include private-practice clinicians.

The phone calls were first made to the Blue Cross facilities, and the results were so poor that Boyd and his students did not proceed with calling the Medicaid facilities.

The principal reasons for failure to make an appointment were that calls were not returned or that the facility required patients to have an in-system primary care provider. Six sites stated that they needed more information before scheduling an appointment.

Assuming that the six sites would have offered timely appointments, Boyd estimated that the highest number of facilities that would have had appointments available within the two-week period for all 64 sites that were called was 10 (15.6 percent).

He also added that the requirement by facilities that patients have an in-system primary care provider is one that does not typically apply to any other medical service and constitutes what he called a form of “stealth rationing.”

“Psychiatry is underreimbursed and a money-losing specialty for hospitals, yet they have to offer psychiatric services,” he noted. “So how do you limit the [financial] pain? By limiting the access as much as possible. That doesn’t happen if people need cataract surgery or a hip replacement or an MRI.”

In the Annals letter, Boyd stated that a third of homeless individuals and more than half of all prison and jail inmates have mental illness and that the nation’s EDs have become “de facto psychiatric wards, with 79 percent of emergency physicians reporting that their hospitals board psychiatric patients for whom appropriate treatment resources could not be found, sometimes for days.”

In remarks to Psychiatric News, Boyd said an architect friend of his who designs hospitals has informed him that he now designs EDs to include space and beds for boarded psychiatric patients. “So we are now actually designing emergency departments with space and room for boarding patients who can’t get care,” he said.

The causes of this dearth of available follow-up care are multiple, but Boyd said a principal problem is the low reimbursement for psychiatric care. “We call for higher reimbursement,” he said. “That is more than an economic issue; it is a social and cultural and political issue. We are reimbursing poorly for services necessary to patients who can’t adequately advocate for themselves, something that speaks very poorly of our culture.”

“The Crisis in Mental Health Care: A Preliminary Study of Access to Psychiatric Care in Boston” is posted at http://www.annemergmed.com/article/S0196-0644(11)00346-5/fulltext

http://pn.psychiatryonline.org/content/46/18/22.1.full?sid=242cc82f-f769-4d32-b9e4-50f286f5df3e