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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

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…

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

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.

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.

Bush touts community health centers as a common-sense approach

The White House
May 25, 2004
Fact Sheet: Expanding Access to Health Care for Millions of Americans The President’s budgets are on track to fulfill his promise to open or expand 1,200 Community Health Centers to serve an additional 6.1 million Americans by 2006. The President’s budget for FY 2005 continues to fulfill this promise with a request of $1.8 billion for Community Health Centers — a 57% increase since 2001 — enabling the program to serve an additional 1.6 million individuals and open or expand over 330 more health centers.

Community Health Centers are an important part of the President’s agenda to
make America’s world-leading health care more accessible, and more affordable.

http://www.whitehouse.gov/news/releases/2004/05/20040525-5.html

Los Angeles Times
May 26, 2004
Bush Highlights Community Health Centers in 2005 Plan
By Edwin Chen and Vicki Kemper

In a campaign-style “conversation” at Youngstown State University, Bush touted neighborhood clinics, a centerpiece of his healthcare agenda, as a primary way to expand access to medical services.

The National Assn. of Community Health Centers, a nonprofit organization that represents the clinic network, welcomed Bush’s support for the centers but said still more funding was needed.

In 2002 and 2003, about 1,250 clinics applied for federal funds, but only 411 applications were approved, the group said. The association reported earlier this year that 36 million Americans lacked access to basic medical care. There are about 3,500 community health centers across the country, serving up to 13 million people, most of whom live in low-income urban neighborhoods or underserved rural areas. About 40% of those people have no health insurance, and many more are underinsured and cannot afford to meet the cost of their high deductibles and co-payments.

Most of the clinics, which provide primary medical care and basic dental services, receive little or no federal funding.

Neighborhood clinics are “a common-sense approach to making sure the healthcare system works . without centralizing the decision-making process in Washington, D.C.,” Bush said.

http://www.latimes.com/news/nationworld/nation/la-na-bush26may26,1,3004657.story

Comment: Providing federal support for community health centers is the centerpiece of President Bush’s program to “make sure the healthcare system
works.”

How well is it working? 411 of 3500 or only 12% of community health centers
have received funding under his program. $1.8 billion has been budgeted to serve 13 million individuals, or $138 per individual. Realizing that our per capita health expenditures for 2004 are $6167, it is clear that $138/year will buy very little health care, especially considering the greater needs of this sector of our society.

Sadly, it looks like President Bush’s centerpiece doesn’t even have a table to hold it up.

Freelance workforce vulnerable

PR Newswire
May 25, 2004
Educated, Working, Well Paid … and No Health Insurance: A Conundrum for
Growing Freelance Workforce in New York City

The 2004 Working Today Health Insurance Affordability Survey gauged the perceptions of more than 4,000 New York City-based freelancers,independent
contractors, temps, sole proprietors and others who make their living in a
range of industries, such as media, entertainment, financial services, marketing, IT and the arts.

There are upwards of one-and-a-half million independent workers in New York
City, and tens of millions around the country (up to 30% of the nation’s workforce), according to published reports.

Among the survey’s key findings:

* 84% of NYC’s freelancers say it’s difficult for them to afford health insurance.

* Nearly all (95%) of NYC freelancers without health insurance say the primary reason they lack it is because premiums of private carriers are too expensive.

* Nearly half (47%) of NYC freelancers say they had gaps in health insurance coverage, or no coverage at all, during the past two years – and the vast majority (88%) blame high costs.

* 85% of those who experienced gaps avoided medical care during these times.

Sara Horowitz, Executive Director of Working Today:

“The rapid growth of the Form-1099 labor pool represents a fundamental shift
in the economy, yet the health insurance system remains geared solely to the
W-2 employment model. Most freelancers are too rich for public assistance
programs, and too poor to afford the premiums demanded on the open market.
It’s really appalling that millions of productive members of our society are falling through the cracks in an area as basic as health care.”

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/www/story/05-25-2004/0002180966&EDATE=

The full Working Today report, “Educated, Employed and Uninsured”:
http://www.workingtoday.org/advocacy/affordabilityreport2004.pdf

Comment: Proposals strengthening employer-sponsored coverage will never
adequately address the access and affordability issues faced by the tens of millions of freelancers in our nation. And individual mandates cannot ever fill the need if coverage remains unaffordable for freelancers.

Both single payer and health service models of reform promise universal, equitable, comprehensive coverage within a framework of genuine affordability. Other models fail to adequately contain costs and fall short on comprehensiveness and equity. Do we really need yet more studies of how lousy our system of funding health care is before we move forward with reform that will work?

Most Americans would prefer a publicly-administered insurance model to a government-owned health care delivery system. Shall we keep wasting valuable
time looking at the other inferior options, or shall we move ahead with single payer reform now?