By Danny McCormick, David H. Bor, Stephanie Woolhandler and David U. Himmelstein
Health Affairs, March 2012

Abstract

Policy-based incentives for health care providers to adopt health information technology are predicated on the assumption that, among other things, electronic access to patient test results and medical records will reduce diagnostic testing and save money. To test the generalizability of findings that support this assumption, we analyzed the records of 28,741 patient visits to a nationally representative sample of 1,187 office-based physicians in 2008. Physicians’ access to computerized imaging results (sometimes, but not necessarily, through an electronic health record) was associated with a 40–70 percent greater likelihood of an imaging test being ordered. The electronic availability of lab test results was also associated with ordering of additional blood tests. The availability of an electronic health record in itself had no apparent impact on ordering; the electronic access to test results appears to have been the key. These findings raise the possibility that, as currently implemented, electronic access does not decrease test ordering in the office setting and may even increase it, possibly because of system features that are enticements to ordering. We conclude that use of these health information technologies, whatever their other benefits, remains unproven as an effective cost-control strategy with respect to reducing the ordering of unnecessary tests.

http://content.healthaffairs.org/content/31/3/488.abstract

Comment: 

By Don McCanne, MD

Through the Affordable Care Act and through the Health Information Technology for Economic and Clinical Health (HITECH) provisions of the the American Recovery and Reinvestment Act of 2009, Congress wished to bring under control the ever escalating costs of health care in the United States. This study of physicians’ electronic access to prior imaging and lab results adds to other data that indicates that the cost containment measures were merely a wish list that have failed to improve value in our health care purchasing.

As an another example, a recent report of the Congressional Budget Office on Medicare’s demonstration projects on disease management, care coordination, and value-based payment revealed that “the evaluations show that most programs have not reduced Medicare spending: In nearly every program involving disease management and care coordination, spending was either unchanged or increased relative to the spending that would have occurred in the absence of the program.”

Instead of simply wishing that these ideas would control costs, we should adopt policies that we already know are effective. We know that the financing model of the Affordable Care Act – building on our fragmented system of private plans and public programs – is the most expensive model of financing health care, and yet a model that falls far short on universality, comprehensiveness and equity.

In contrast, single payer and health service models are the least expensive, and are the most successful in achieving universality, comprehensiveness and equity. Establishing a health service model through government takeover of our entire health care delivery system is not a model that is likely to gain political traction in the foreseeable future. On the other hand, improving Medicare and converting it into a single payer national health program is much more consistent with American views of equity, justice, and choice.

We should certainly encourage the continued evaluation and development of potentially beneficial measures such as the use of health information technology. Improvement in quality and efficiency should always be our goals. But in the overall picture, such efforts would amount to mere tweaks compared to a comprehensive overhaul of the health care financing system. Let’s move forward with an improved Medicare for all.

Giving Office-Based Physicians Electronic Access To Patients’ Prior Imaging And Lab Results Did Not Deter Ordering Of Tests

By Danny McCormick, David H. Bor, Stephanie Woolhandler and David U. Himmelstein
Health Affairs, March 2012

Abstract

Policy-based incentives for health care providers to adopt health information technology are predicated on the assumption that, among other things, electronic access to patient test results and medical records will reduce diagnostic testing and save money. To test the generalizability of findings that support this assumption, we analyzed the records of 28,741 patient visits to a nationally representative sample of 1,187 office-based physicians in 2008. Physicians’ access to computerized imaging results (sometimes, but not necessarily, through an electronic health record) was associated with a 40–70 percent greater likelihood of an imaging test being ordered. The electronic availability of lab test results was also associated with ordering of additional blood tests. The availability of an electronic health record in itself had no apparent impact on ordering; the electronic access to test results appears to have been the key. These findings raise the possibility that, as currently implemented, electronic access does not decrease test ordering in the office setting and may even increase it, possibly because of system features that are enticements to ordering. We conclude that use of these health information technologies, whatever their other benefits, remains unproven as an effective cost-control strategy with respect to reducing the ordering of unnecessary tests.

http://content.healthaffairs.org/content/31/3/488.abstract

Comment: 

By Don McCanne, MD

Through the Affordable Care Act and through the Health Information Technology for Economic and Clinical Health (HITECH) provisions of the the American Recovery and Reinvestment Act of 2009, Congress wished to bring under control the ever escalating costs of health care in the United States. This study of physicians’ electronic access to prior imaging and lab results adds to other data that indicates that the cost containment measures were merely a wish list that have failed to improve value in our health care purchasing.

As an another example, a recent report of the Congressional Budget Office on Medicare’s demonstration projects on disease management, care coordination, and value-based payment revealed that “the evaluations show that most programs have not reduced Medicare spending: In nearly every program involving disease management and care coordination, spending was either unchanged or increased relative to the spending that would have occurred in the absence of the program.”

Instead of simply wishing that these ideas would control costs, we should adopt policies that we already know are effective. We know that the financing model of the Affordable Care Act – building on our fragmented system of private plans and public programs – is the most expensive model of financing health care, and yet a model that falls far short on universality, comprehensiveness and equity.

In contrast, single payer and health service models are the least expensive, and are the most successful in achieving universality, comprehensiveness and equity. Establishing a health service model through government takeover of our entire health care delivery system is not a model that is likely to gain political traction in the foreseeable future. On the other hand, improving Medicare and converting it into a single payer national health program is much more consistent with American views of equity, justice, and choice.

We should certainly encourage the continued evaluation and development of potentially beneficial measures such as the use of health information technology. Improvement in quality and efficiency should always be our goals. But in the overall picture, such efforts would amount to mere tweaks compared to a comprehensive overhaul of the health care financing system. Let’s move forward with an improved Medicare for all.

Giving Office-Based Physicians Electronic Access To Patients’ Prior Imaging And Lab Results Did Not Deter Ordering Of Tests

By Danny McCormick, David H. Bor, Stephanie Woolhandler and David U. Himmelstein
Health Affairs, March 2012
Abstract
Policy-based incentives for health care providers to adopt health information technology are predicated on the assumption that, among other things, electronic access to patient test results and medical records will reduce diagnostic testing and save money. To test the generalizability of findings that support this assumption, we analyzed the records of 28,741 patient visits to a nationally representative sample of 1,187 office-based physicians in 2008. Physicians’ access to computerized imaging results (sometimes, but not necessarily, through an electronic health record) was associated with a 40–70 percent greater likelihood of an imaging test being ordered. The electronic availability of lab test results was also associated with ordering of additional blood tests. The availability of an electronic health record in itself had no apparent impact on ordering; the electronic access to test results appears to have been the key. These findings raise the possibility that, as currently implemented, electronic access does not decrease test ordering in the office setting and may even increase it, possibly because of system features that are enticements to ordering. We conclude that use of these health information technologies, whatever their other benefits, remains unproven as an effective cost-control strategy with respect to reducing the ordering of unnecessary tests.
http://content.healthaffairs.org/content/31/3/488.abstract

Through the Affordable Care Act and through the Health Information Technology for Economic and Clinical Health (HITECH) provisions of the the American Recovery and Reinvestment Act of 2009, Congress wished to bring under control the ever escalating costs of health care in the United States. This study of physicians’ electronic access to prior imaging and lab results adds to other data that indicates that the cost containment measures were merely a wish list that have failed to improve value in our health care purchasing.
As an another example, a recent report of the Congressional Budget Office on Medicare’s demonstration projects on disease management, care coordination, and value-based payment revealed that “the evaluations show that most programs have not reduced Medicare spending: In nearly every program involving disease management and care coordination, spending was either unchanged or increased relative to the spending that would have occurred in the absence of the program.”
Instead of simply wishing that these ideas would control costs, we should adopt policies that we already know are effective. We know that the financing model of the Affordable Care Act – building on our fragmented system of private plans and public programs – is the most expensive model of financing health care, and yet a model that falls far short on universality, comprehensiveness and equity.
In contrast, single payer and health service models are the least expensive, and are the most successful in achieving universality, comprehensiveness and equity. Establishing a health service model through government takeover of our entire health care delivery system is not a model that is likely to gain political traction in the foreseeable future. On the other hand, improving Medicare and converting it into a single payer national health program is much more consistent with American views of equity, justice, and choice.
We should certainly encourage the continued evaluation and development of potentially beneficial measures such as the use of health information technology. Improvement in quality and efficiency should always be our goals. But in the overall picture, such efforts would amount to mere tweaks compared to a comprehensive overhaul of the health care financing system. Let’s move forward with an improved Medicare for all.

High health-care costs: It’s all in the pricing

By Ezra Klein
The Washington Post, March 2, 2012

There is a simple reason health care in the United States costs more than it does anywhere else: The prices are higher.

There are many possible explanations for why Americans pay so much more. It could be that we’re sicker. Or that we go to the doctor more frequently. But health researchers have largely discarded these theories. As Gerard Anderson, Uwe Reinhardt, Peter Hussey and Varduhi Petrosyan put it in the title of their influential 2003 study on international health-care costs, “it’s the prices, stupid.”

“The United States spends more on health care than any of the other OECD countries spend, without providing more services than the other countries do,” they concluded. “This suggests that the difference in spending is mostly attributable to higher prices of goods and services.”

On Friday, the International Federation of Health Plans — a global insurance trade association that includes more than 100 insurers in 25 countries — released more direct evidence. It surveyed its members on the prices paid for 23 medical services and products in different countries, asking after everything from a routine doctor’s visit to a dose of Lipitor to coronary bypass surgery. And in 22 of 23 cases, Americans are paying higher prices than residents of other developed countries. Usually, we’re paying quite a bit more.

“Other countries negotiate very aggressively with the providers and set rates that are much lower than we do,” Anderson says. They do this in one of two ways. In countries such as Canada and Britain, prices are set by the government. In others, such as Germany and Japan, they’re set by providers and insurers sitting in a room and coming to an agreement, with the government stepping in to set prices if they fail.

“In my view, health is a business in the United States in quite a different way than it is elsewhere,” says Tom Sackville, who served in Margaret Thatcher’s government and now directs the IFHP. “It’s very much something people make money out of. There isn’t too much embarrassment about that compared to Europe and elsewhere.”

And others point out that you also need to account for the innovations and investments that our spending on health care is squeezing out. “There are opportunity costs,” says Reinhardt, an economist at Princeton. “The money we spend on health care is money we don’t spend educating our children, or investing in infrastructure, scientific research and defense spending. So if what this means is we ultimately have overmedicalized, poorly educated Americans competing with China, that’s not a very good investment.”

http://www.washingtonpost.com/business/high-health-care-costs-its-all-in-the-pricing/2012/02/28/gIQAtbhimR_story.html

And…

It’s The Prices, Stupid: Why The United States Is So Different From Other Countries

By Gerard F. Anderson, Uwe E. Reinhardt, Peter S. Hussey, and Varduhi Petrosyan
Health Affairs, May/June 2003

The data show that the United States spends more on health care than any other country. However, on most measures of health services use, the United States is below the OECD median. These facts suggest that the difference in spending is caused mostly by higher prices for health care goods and services in the United States.

https://www.pnhp.org/sites/default/files/docs/Its-The-Prices-Stupid.pdf

And…

International Federation of Health Plans iFHP 2011 Comparative Price Report

The study aims to help plans better understand why health care costs are so much higher in some countries than others. The survey data showed that average US prices were once again the highest of those in the countries surveyed for nearly all of the common services and procedures reviewed.

http://www.ifhp.com/news97.html

And…

Determining the Level of Payments in Health Care

By Uwe E. Reinhardt
The New York Times, Economix Blog, March 2, 2012

In my previous post, I presented the following menu of payment systems for health care and discussed the various bases (the columns in the chart) upon which payment could be made. Now I’d like to discuss the rows in this chart – the methods by which the level of payments are determined. (The chart is available at the link below.)

Free-Market Determination:

The first row represents what one might call the free-market method, with payment levels negotiated between individual health insurers or self-paying patients on the one hand, and individual providers of health care (doctors, hospitals, and so on) on the other. It is the system long used in the private insurance sector and for uninsured patients.

As I have pointed out in a paper, “The Pricing of U.S. Hospital Services: Chaos Behind a Veil of Secrecy,” and in several earlier posts on this blog, however, this approach to setting prices for health care has had several consequences:

1. On average, the prices for health care goods and services negotiated by private health insurers in the United States tend to higher — about double or more — than prices for identical services and goods in other countries of the Organization of Economic Cooperation and Development.

2. It is in good part so because insurers do not seem to have sufficient market power, especially vis à vis hospitals, to resist very rapid price increases.

3. The varying degrees of market power among private insurers in the United States have led to pervasive price discrimination among payers, with prices for identical goods or services varying among payers by factors as high as 10.

Price-Setting in Quasi-Markets:

To avoid these consequences of individual negotiations over prices, I had recommended in a recent post a so-called “all-payer” system for health care in the United States.

Under such a system, associations of health insurers within a region (e.g., states) would negotiate with corresponding associations of hospitals, doctors and of other providers of health care uniform fee schedules (whether fee for service or bundled payments) that then would apply to all payers and providers in that region.

Unilateral Administrative Price-Setting:

Unilateral price-setting by government is the third distinct method of determining the level of the prices paid for health care. It typically is used by tax-financed, government-run, single-payer health-insurance systems, such as those of Taiwan, South Korea, Japan, Canada and the Medicare and Medicaid programs in the United States.

Unilateral, administrative price-setting shares with an all-payer system the advantage of simplicity in claims processing and, thus, lower administrative costs. Both methods furnish the ideal platform for common claims forms and electronic billing.

A major disadvantage of unilateral price-setting is clear from its name: providers may feel that they do not have sufficient say in determining the level of prices at which they are compensated for their services or products, even though they may be able to influence those fee levels by lobbying Congress.

A further disadvantage is that any administrative mechanism operated by government tends to be less flexible than would be negotiations among insurers and providers. It is not that people working in government agencies are inherently less capable than are their private-sector counterparts. It is so because governments must above all seem fair to all parties in its decisions and also fully transparent. Private parties do not labor under these constraints.

While I am on record as favoring the quasi-market approach to setting fee levels on health care, I recognize that honorable people can differ honorably in their evaluation of these approaches.

I am persuaded, however, that the opaque, price-discriminatory and administratively unwieldy – and hence very expensive – payment system of individual negotiations over fees has not served Americans well during in the last few decades.

http://economix.blogs.nytimes.com/2012/03/02/determining-the-level-of-payments-in-health-care/

Response:

Johnathon Ross
Toledo Ohio
March 3, 2012

“Single-payer” means one fund, administered by a non-profit entity accountable to the public would make payment for all medical services.

The private health insurance bureaucracies disappear as middle men. The choice of provider and decisions about care would be made by you and your doctor, not an insurer interested only in the bottom line. Medicare is one example of a functioning successful single-payer plan.

Hospitals receive monthly operating budgets creating huge administrative savings as no individual bills are necessary. Capital budgets cover new buildings and equipment, etc. New capital spending requires approval by local and state oversight boards avoiding duplicate expensive technology. Care givers jointly negotiate a single fee schedule for services lowering their billing overhead and eliminating bad debt. Malpractice costs drop as medical expenses would no longer be part of legal settlements.

Single-payer is about empathy, the soul of democracy, caring for, protecting and empowering each other including freedom to receive lifetime, comprehensive health care and to choose your own caregivers, freedom from fear of denied care, causing unnecessary suffering and death, freedom from worrying about payment if you are a health care provider, freedom to focus on preventive care and well-being, freedom from financial ruin due to medical expenses and freedom to choose any employer, or be your own employer, because everyone receives care. Let’s just do it.

http://economix.blogs.nytimes.com/2012/03/02/determining-the-level-of-payments-in-health-care/

Comment: 

By Don McCanne, MD

Yes, it is the prices, but why, and what do we do about it?

As to why, it is often said that health care prices are high in wealthier nations, and with our great wealth in the United states, we do have the highest prices. But that really isn’t so much of an explanation as it is an observation. In fact, much of the wealth is at the top, and median incomes are quite modest and are no longer able to support our very high health care prices. We are not spending a lot more on health care simply because that’s where we want to spend it.

So why are our prices higher? As Uwe Reinhardt explains, much of the pricing decision process has remained under control of the private insurance industry – classed as “free-market determination” in that the government has had little input in influencing these prices. As he states, “the opaque, price-discriminatory and administratively unwieldy – and hence very expensive – payment system of individual (private insurer) negotiations over fees has not served Americans well during in the last few decades.”

Besides “free-market determination,” other options for pricing include “quasi-markets” and “unilateral administrative price setting.”

Within quasi-markets prices are set by negotiations between associations of insurers and associations of providers, such as with all-payer systems. Although this can improve fairness of pricing and provide nominal administrative savings, it still leaves in place the most expensive model of financing health care – a combination of a multitude of private plans with public programs.

Unilateral publicly-administered price-setting is by far the most effective method achieving fair prices. It is used by single payer systems through different bases such as fee-for-service, evidence-based bundling, capitation, and institutional budgets with salaried personnel. Again quoting Uwe Reinhardt, “… governments must above all seem fair to all parties in its decisions and also fully transparent. Private parties do not labor under these constraints.”

The reason that publicly-administered price-setting is vastly superior is not simply because prices are more fair, but it is because of the innumerable other advantages of the single payer model of health care financing and delivery.

Former PNHP president Johnathon Ross, in his response to Uwe Reinhardt’s blog (posted above), explains precisely why we should use the single payer model to get our pricing right – not only achieving fair prices, but achieving that previously elusive goal of health care justice for all.

High health-care costs: It’s all in the pricing

By Ezra Klein
The Washington Post, March 2, 2012
There is a simple reason health care in the United States costs more than it does anywhere else: The prices are higher.
There are many possible explanations for why Americans pay so much more. It could be that we’re sicker. Or that we go to the doctor more frequently. But health researchers have largely discarded these theories. As Gerard Anderson, Uwe Reinhardt, Peter Hussey and Varduhi Petrosyan put it in the title of their influential 2003 study on international health-care costs, “it’s the prices, stupid.”
“The United States spends more on health care than any of the other OECD countries spend, without providing more services than the other countries do,” they concluded. “This suggests that the difference in spending is mostly attributable to higher prices of goods and services.”
On Friday, the International Federation of Health Plans — a global insurance trade association that includes more than 100 insurers in 25 countries — released more direct evidence. It surveyed its members on the prices paid for 23 medical services and products in different countries, asking after everything from a routine doctor’s visit to a dose of Lipitor to coronary bypass surgery. And in 22 of 23 cases, Americans are paying higher prices than residents of other developed countries. Usually, we’re paying quite a bit more.
“Other countries negotiate very aggressively with the providers and set rates that are much lower than we do,” Anderson says. They do this in one of two ways. In countries such as Canada and Britain, prices are set by the government. In others, such as Germany and Japan, they’re set by providers and insurers sitting in a room and coming to an agreement, with the government stepping in to set prices if they fail.
“In my view, health is a business in the United States in quite a different way than it is elsewhere,” says Tom Sackville, who served in Margaret Thatcher’s government and now directs the IFHP. “It’s very much something people make money out of. There isn’t too much embarrassment about that compared to Europe and elsewhere.”
And others point out that you also need to account for the innovations and investments that our spending on health care is squeezing out. “There are opportunity costs,” says Reinhardt, an economist at Princeton. “The money we spend on health care is money we don’t spend educating our children, or investing in infrastructure, scientific research and defense spending. So if what this means is we ultimately have overmedicalized, poorly educated Americans competing with China, that’s not a very good investment.”
http://www.washingtonpost.com/business/high-health-care-costs-its-all-in-the-pricing/2012/02/28/gIQAtbhimR_story.html

And…

It’s The Prices, Stupid: Why The United States Is So Different From Other Countries

By Gerard F. Anderson, Uwe E. Reinhardt, Peter S. Hussey, and Varduhi Petrosyan
Health Affairs, May/June 2003
The data show that the United States spends more on health care than any other country. However, on most measures of health services use, the United States is below the OECD median. These facts suggest that the difference in spending is caused mostly by higher prices for health care goods and services in the United States.
https://pnhp.org/system/assets/drupal/docs/Its-The-Prices-Stupid.pdf

And…

International Federation of Health Plans iFHP 2011 Comparative Price Report

The study aims to help plans better understand why health care costs are so much higher in some countries than others. The survey data showed that average US prices were once again the highest of those in the countries surveyed for nearly all of the common services and procedures reviewed.
http://www.ifhp.com/news97.html

And…

Determining the Level of Payments in Health Care

By Uwe E. Reinhardt
The New York Times, Economix Blog, March 2, 2012
In my previous post, I presented the following menu of payment systems for health care and discussed the various bases (the columns in the chart) upon which payment could be made. Now I’d like to discuss the rows in this chart – the methods by which the level of payments are determined. (The chart is available at the link below.)
Free-Market Determination:
The first row represents what one might call the free-market method, with payment levels negotiated between individual health insurers or self-paying patients on the one hand, and individual providers of health care (doctors, hospitals, and so on) on the other. It is the system long used in the private insurance sector and for uninsured patients.
As I have pointed out in a paper, “The Pricing of U.S. Hospital Services: Chaos Behind a Veil of Secrecy,” and in several earlier posts on this blog, however, this approach to setting prices for health care has had several consequences:
1. On average, the prices for health care goods and services negotiated by private health insurers in the United States tend to higher — about double or more — than prices for identical services and goods in other countries of the Organization of Economic Cooperation and Development.
2. It is in good part so because insurers do not seem to have sufficient market power, especially vis à vis hospitals, to resist very rapid price increases.
3. The varying degrees of market power among private insurers in the United States have led to pervasive price discrimination among payers, with prices for identical goods or services varying among payers by factors as high as 10.
Price-Setting in Quasi-Markets:
To avoid these consequences of individual negotiations over prices, I had recommended in a recent post a so-called “all-payer” system for health care in the United States.
Under such a system, associations of health insurers within a region (e.g., states) would negotiate with corresponding associations of hospitals, doctors and of other providers of health care uniform fee schedules (whether fee for service or bundled payments) that then would apply to all payers and providers in that region.
Unilateral Administrative Price-Setting:
Unilateral price-setting by government is the third distinct method of determining the level of the prices paid for health care. It typically is used by tax-financed, government-run, single-payer health-insurance systems, such as those of Taiwan, South Korea, Japan, Canada and the Medicare and Medicaid programs in the United States.
Unilateral, administrative price-setting shares with an all-payer system the advantage of simplicity in claims processing and, thus, lower administrative costs. Both methods furnish the ideal platform for common claims forms and electronic billing.
A major disadvantage of unilateral price-setting is clear from its name: providers may feel that they do not have sufficient say in determining the level of prices at which they are compensated for their services or products, even though they may be able to influence those fee levels by lobbying Congress.
A further disadvantage is that any administrative mechanism operated by government tends to be less flexible than would be negotiations among insurers and providers. It is not that people working in government agencies are inherently less capable than are their private-sector counterparts. It is so because governments must above all seem fair to all parties in its decisions and also fully transparent. Private parties do not labor under these constraints.
While I am on record as favoring the quasi-market approach to setting fee levels on health care, I recognize that honorable people can differ honorably in their evaluation of these approaches.
I am persuaded, however, that the opaque, price-discriminatory and administratively unwieldy – and hence very expensive – payment system of individual negotiations over fees has not served Americans well during in the last few decades.
http://economix.blogs.nytimes.com/2012/03/02/determining-the-level-of-payments-in-health-care/
Response:
Johnathon Ross
Toledo Ohio
March 3, 2012
“Single-payer” means one fund, administered by a non-profit entity accountable to the public would make payment for all medical services.
The private health insurance bureaucracies disappear as middle men. The choice of provider and decisions about care would be made by you and your doctor, not an insurer interested only in the bottom line. Medicare is one example of a functioning successful single-payer plan.
Hospitals receive monthly operating budgets creating huge administrative savings as no individual bills are necessary. Capital budgets cover new buildings and equipment, etc. New capital spending requires approval by local and state oversight boards avoiding duplicate expensive technology. Care givers jointly negotiate a single fee schedule for services lowering their billing overhead and eliminating bad debt. Malpractice costs drop as medical expenses would no longer be part of legal settlements.
Single-payer is about empathy, the soul of democracy, caring for, protecting and empowering each other including freedom to receive lifetime, comprehensive health care and to choose your own caregivers, freedom from fear of denied care, causing unnecessary suffering and death, freedom from worrying about payment if you are a health care provider, freedom to focus on preventive care and well-being, freedom from financial ruin due to medical expenses and freedom to choose any employer, or be your own employer, because everyone receives care. Let’s just do it.
http://economix.blogs.nytimes.com/2012/03/02/determining-the-level-of-payments-in-health-care/

Yes, it is the prices, but why, and what do we do about it?
As to why, it is often said that health care prices are high in wealthier nations, and with our great wealth in the United states, we do have the highest prices. But that really isn’t so much of an explanation as it is an observation. In fact, much of the wealth is at the top, and median incomes are quite modest and are no longer able to support our very high health care prices. We are not spending a lot more on health care simply because that’s where we want to spend it.
So why are our prices higher? As Uwe Reinhardt explains, much of the pricing decision process has remained under control of the private insurance industry – classed as “free-market determination” in that the government has had little input in influencing these prices. As he states, “the opaque, price-discriminatory and administratively unwieldy – and hence very expensive – payment system of individual (private insurer) negotiations over fees has not served Americans well during in the last few decades.”
Besides “free-market determination,” other options for pricing include “quasi-markets” and “unilateral administrative price setting.”
Within quasi-markets prices are set by negotiations between associations of insurers and associations of providers, such as with all-payer systems. Although this can improve fairness of pricing and provide nominal administrative savings, it still leaves in place the most expensive model of financing health care – a combination of a multitude of private plans with public programs.
Unilateral publicly-administered price-setting is by far the most effective method achieving fair prices. It is used by single payer systems through different bases such as fee-for-service, evidence-based bundling, capitation, and institutional budgets with salaried personnel. Again quoting Uwe Reinhardt, “… governments must above all seem fair to all parties in its decisions and also fully transparent. Private parties do not labor under these constraints.”
The reason that publicly-administered price-setting is vastly superior is not simply because prices are more fair, but it is because of the innumerable other advantages of the single payer model of health care financing and delivery.
Former PNHP president Johnathon Ross, in his response to Uwe Reinhardt’s blog (posted above), explains precisely why we should use the single payer model to get our pricing right – not only achieving fair prices, but achieving that previously elusive goal of health care justice for all.

Troubled Kodak moves to drop health coverage for Medicare-eligible, post-1991 retirees

The Washington Post, February 28, 2012

Eastman Kodak Co., looking to whittle expenses as it reorganizes under bankruptcy protection, wants to end health care benefits for about 16,000 retirees who are over age 65 and thus eligible for Medicare.

The possibility of losing their health care benefits has been a primary worry among Kodak’s 38,000 retirees. A letter Monday to Kodak retirees unaffected by the current proposal — those not yet 65 or who retired before October 1991 — did little to reassure them.

“This change …. will not apply to you,” the letter said. “However, Kodak continues to review its retiree medical, dental and survivor benefits and may in the future request court authority to modify or terminate additional benefits.”

http://www.washingtonpost.com/business/troubled-kodak-moves-to-drop-health-coverage-for-medicare-eligible-post-1991-retirees/2012/02/28/gIQAnkICgR_story.html

And…

America’s Biggest Companies, Then and Now (1955 to 2010)

By Douglas A. McIntyre
24/7 Wall St., September 21, 2010

Today’s corporate America is dominated by service companies, tech firms, and huge retailers which have thousands of locations and hundreds of thousands of workers. At the end of the decade following WWII, corporate America looked very different from it does now.  Fifty five  years ago, most of the largest corporations in the US built cars, supplied car parts, or provided fuel for America’s vehicles.

The decades-long movement away from a United States dominated by smoke stacks to one dominated by computers and malls has also caused a shift in the geographic placement of the country’s better-paid workers. In the 1920s, they migrated to the North – places like Pennsylvania, Ohio, and Michigan – where blue-collar jobs were abundant. Eight decades later their descendants are out of work in numbers that total well into the millions.

http://247wallst.com/2010/09/21/americas-biggest-companies-then-and-now-1955-to-2010/

Comment: 

By Don McCanne, MD

Think back to half a century ago. If you worked for a great American company like Eastman Kodak you were assured of having very generous health benefits for the rest of your life. Things change.

One thing that should not change is the ability to receive health care whenever you need it. Tying health insurance to employment is not a sound policy, especially in these days in which full careers are almost never with a single employer with a stable health benefit program.

Your eligibility for health care should be determined simply by the fact that you exist. The Affordable Care Act will never get us there, but a single payer national health program certainly would.

Troubled Kodak moves to drop health coverage for Medicare-eligible, post-1991 retirees

The Washington Post, February 28, 2012
Eastman Kodak Co., looking to whittle expenses as it reorganizes under bankruptcy protection, wants to end health care benefits for about 16,000 retirees who are over age 65 and thus eligible for Medicare.
The possibility of losing their health care benefits has been a primary worry among Kodak’s 38,000 retirees. A letter Monday to Kodak retirees unaffected by the current proposal — those not yet 65 or who retired before October 1991 — did little to reassure them.
“This change …. will not apply to you,” the letter said. “However, Kodak continues to review its retiree medical, dental and survivor benefits and may in the future request court authority to modify or terminate additional benefits.”
http://www.washingtonpost.com/business/troubled-kodak-moves-to-drop-heal…

And…

America’s Biggest Companies, Then and Now (1955 to 2010)

By Douglas A. McIntyre
24/7 Wall St., September 21, 2010
Today’s corporate America is dominated by service companies, tech firms, and huge retailers which have thousands of locations and hundreds of thousands of workers. At the end of the decade following WWII, corporate America looked very different from it does now.  Fifty five  years ago, most of the largest corporations in the US built cars, supplied car parts, or provided fuel for America’s vehicles.
The decades-long movement away from a United States dominated by smoke stacks to one dominated by computers and malls has also caused a shift in the geographic placement of the country’s better-paid workers. In the 1920s, they migrated to the North – places like Pennsylvania, Ohio, and Michigan – where blue-collar jobs were abundant. Eight decades later their descendants are out of work in numbers that total well into the millions.
http://247wallst.com/2010/09/21/americas-biggest-companies-then-and-now-1955-to-2010/

Think back to half a century ago. If you worked for a great American company like Eastman Kodak you were assured of having very generous health benefits for the rest of your life. Things change.
One thing that should not change is the ability to receive health care whenever you need it. Tying health insurance to employment is not a sound policy, especially in these days in which full careers are almost never with a single employer with a stable health benefit program.
Your eligibility for health care should be determined simply by the fact that you exist. The Affordable Care Act will never get us there, but a single payer national health program certainly would.