PNHP

Jacob Hacker and Paul Pierson: American Amnesia

Jacob Hacker and Paul Pierson: American Amnesia

American Amnesia

How the War on Government Led Us to Forget What Made America Prosper

By Jacob S. Hacker and Paul Pierson

This book is about an uncomfortable truth: It takes government – a lot of government – for advanced societies to flourish.

But Americans have never been good at acknowledging government’s necessary role in supporting both freedom and prosperity. And we have become much less so over the last generation. We live in an era of profound skepticism about government. Contemporary political discourse portrays liberty and coercion as locked in ceaseless conflict. We are told that government is about “redistribution” and the private sector about “production,” as if government only reshuffles the economic deck rather than holding many of the highest cards. We are told “free enterprise” and “big government” are engaged in a fierce zero-sum battle (one side’s gain is the other’s loss), when, in fact, the modern partnership between markets and government may well be humanity’s most impressive positive-sum bargain (making both sides better off). We are told the United States got rich in spite of government, when the truth is closer to the opposite: The United States got rich because it got government more or less right.

We suffer, in short, from a kind of mass historical forgetting, a distinctively “American Amnesia.”

**

Like other advanced democratic nations, the United States has what economic analysts call a “mixed economy.” In this public-private arrangement, markets play the dominant role in producing and allocating goods and innovating to meet consumer demand. Apple brings us iPhones, and it earns sizable profits by doing so.

Alongside companies like Apple, however, government plays a dominant or vital role in the many places where markets fall short.

**

Although the modern robber barons can be found in many parts of our economy, three stand out: health care, finance, and energy. Other sectors have barons, but none rivals these big three in the scale of the tolls they extract or the scope of their political influence.

**

No doubt the United States is doing something with the extra trillions it has poured into the medical sector over the last few decades. On the available evidence, however, what it is mainly doing is paying higher tolls to the robber barons.

**

To reverse this spiral, we must reestablish a government with the capacity to foster broad prosperity. We need to ensure that ordinary voters and diffuse interests are capable of triumphing over concentrated interests, And we need to rescue the ideal of the mixed economy from the mists of American Amnesia. Many changes have swept the American economy since the 1970s. Yet our biggest problem is not a lack of attractive policy options. Our biggest problem is our politics. The mixed economy is as necessary as ever – indeed, in a world of increased interdependence and complexity, more than ever. And despite all the changes of recent decades, it is still within our grasp. We need better policies to restore its potential. But above all, we need a better politics.

**

But we should also recognize just how valuable the mixed economy is, how fundamental the role of government is within it, and how badly we are served by the misleading juxtapositions that dominate public debate: markets versus the state, freedom versus tyranny, free enterprise versus big government. From a more realistic and historically grounded starting point, we can have more vigorous, reasoned, fact-based debates that reflect the diversity of our values and priorities as well as the inevitable uncertainties about the best ways to tackle complex problems. We can seek positive-sum bargains and broad consensus about how to improve the mixed economy and address new challenges, learning over time how to adjust the nimble fingers of the market and the strong thumb of government to best grasp our future.

**

A government that effectively promotes human flourishing is a government worth fighting for. More than ever, the problems we face demand a sustained and principled defense of a vital proposition: The government that governs best needs to govern quite a bit. Americans must remember what has made America prosper.

**

Simon and Schuster
http://books.simonandschuster.com/American-Amnesia/Jacob-S-Hacker/9781451667820

Amazon
http://www.amazon.com/American-Amnesia-Government-America-Prosper/dp/1451667825

***

Comment:

By Don McCanne, M.D.

When you read this exceptional book by Jacob Hacker and Paul Pierson, it becomes clearer why we have such an expensive health care system that is only mediocre in its performance.

They remind us how half a century ago we had a well-functioning “mixed economy” wherein both the government and the private sector fulfilled their appropriate roles in facilitating a vibrant economy.

In recent decades there has been a shift toward believing that we need to cut back on big government and rely more on the marketplace. But in health care, the market works very well for the modern robber barons (higher costs) but not so well for patients (mediocrity). Conservatives, neoliberals and an accommodating press perpetuate the conviction that private insurers, private Medicare Advantage plans, and private Medicaid managed care plans all ensure better care than the government is capable of providing. Although the government still remains the largest source of health care funds, the “concentrated interests” (plutocracy) and their legislative lemmings place with the private sector much greater control on how those funds are spent.

As long as we have an imbalance in our mixed economy that disproportionately favors the private sector, while suppressing those functions provided well only by the government, we cannot expect to achieve the health care reform goals of true universal coverage, universal access, universal comprehensiveness, efficiency, and, most importantly, equity. Governments do these well, whereas the private sector acting alone does them poorly, if at all.

It is important to understand that the private sector performs better when the government is functioning well under a public-private partnership. To address our American amnesia, everyone should read this book. Liberals, progressives, and moderates will surely understand. Many conservatives in the business community will understand after this refresher course on why we do want the government involved in those activities that only the government does well. Hard Randians (amoral or cold-hearted libertarians) likely will not, but there is nothing we can say that would ever satisfy them since they are lost in their ill-conceived fictional utopia created by Ayn Rand.

Randians aside, we need to remember the words of the authors: “A government that effectively promotes human flourishing is a government worth fighting for.”

Jacob Hacker and Paul Pierson: American Amnesia

American Amnesia

How the War on Government Led Us to Forget What Made America Prosper

By Jacob S. Hacker and Paul Pierson

This book is about an uncomfortable truth: It takes government – a lot of government – for advanced societies to flourish.

But Americans have never been good at acknowledging government’s necessary role in supporting both freedom and prosperity. And we have become much less so over the last generation. We live in an era of profound skepticism about government. Contemporary political discourse portrays liberty and coercion as locked in ceaseless conflict. We are told that government is about “redistribution” and the private sector about “production,” as if government only reshuffles the economic deck rather than holding many of the highest cards. We are told “free enterprise” and “big government” are engaged in a fierce zero-sum battle (one side’s gain is the other’s loss), when, in fact, the modern partnership between markets and government may well be humanity’s most impressive positive-sum bargain (making both sides better off). We are told the United States got rich in spite of government, when the truth is closer to the opposite: The United States got rich because it got government more or less right.

We suffer, in short, from a kind of mass historical forgetting, a distinctively “American Amnesia.”

**

Like other advanced democratic nations, the United States has what economic analysts call a “mixed economy.” In this public-private arrangement, markets play the dominant role in producing and allocating goods and innovating to meet consumer demand. Apple brings us iPhones, and it earns sizable profits by doing so.

Alongside companies like Apple, however, government plays a dominant or vital role in the many places where markets fall short.

**

Although the modern robber barons can be found in many parts of our economy, three stand out: health care, finance, and energy. Other sectors have barons, but none rivals these big three in the scale of the tolls they extract or the scope of their political influence.

**

No doubt the United States is doing something with the extra trillions it has poured into the medical sector over the last few decades. On the available evidence, however, what it is mainly doing is paying higher tolls to the robber barons.

**

To reverse this spiral, we must reestablish a government with the capacity to foster broad prosperity. We need to ensure that ordinary voters and diffuse interests are capable of triumphing over concentrated interests, And we need to rescue the ideal of the mixed economy from the mists of American Amnesia. Many changes have swept the American economy since the 1970s. Yet our biggest problem is not a lack of attractive policy options. Our biggest problem is our politics. The mixed economy is as necessary as ever – indeed, in a world of increased interdependence and complexity, more than ever. And despite all the changes of recent decades, it is still within our grasp. We need better policies to restore its potential. But above all, we need a better politics.

**

But we should also recognize just how valuable the mixed economy is, how fundamental the role of government is within it, and how badly we are served by the misleading juxtapositions that dominate public debate: markets versus the state, freedom versus tyranny, free enterprise versus big government. From a more realistic and historically grounded starting point, we can have more vigorous, reasoned, fact-based debates that reflect the diversity of our values and priorities as well as the inevitable uncertainties about the best ways to tackle complex problems. We can seek positive-sum bargains and broad consensus about how to improve the mixed economy and address new challenges, learning over time how to adjust the nimble fingers of the market and the strong thumb of government to best grasp our future.

**

A government that effectively promotes human flourishing is a government worth fighting for. More than ever, the problems we face demand a sustained and principled defense of a vital proposition: The government that governs best needs to govern quite a bit. Americans must remember what has made America prosper.

**

Simon and Schuster
http://books.simonandschuster.com/American-Amnesia/Jacob-S-Hacker/9781451667820

Amazon
http://www.amazon.com/American-Amnesia-Government-America-Prosper/dp/1451667825

When you read this exceptional book by Jacob Hacker and Paul Pierson, it becomes clearer why we have such an expensive health care system that is only mediocre in its performance.

They remind us how half a century ago we had a well-functioning “mixed economy” wherein both the government and the private sector fulfilled their appropriate roles in facilitating a vibrant economy.

In recent decades there has been a shift toward believing that we need to cut back on big government and rely more on the marketplace. But in health care, the market works very well for the modern robber barons (higher costs) but not so well for patients (mediocrity). Conservatives, neoliberals and an accommodating press perpetuate the conviction that private insurers, private Medicare Advantage plans, and private Medicaid managed care plans all ensure better care than the government is capable of providing. Although the government still remains the largest source of health care funds, the “concentrated interests” (plutocracy) and their legislative lemmings place with the private sector much greater control on how those funds are spent.

As long as we have an imbalance in our mixed economy that disproportionately favors the private sector, while suppressing those functions provided well only by the government, we cannot expect to achieve the health care reform goals of true universal coverage, universal access, universal comprehensiveness, efficiency, and, most importantly, equity. Governments do these well, whereas the private sector acting alone does them poorly, if at all.

It is important to understand that the private sector performs better when the government is functioning well under a public-private partnership. To address our American amnesia, everyone should read this book. Liberals, progressives, and moderates will surely understand. Many conservatives in the business community will understand after this refresher course on why we do want the government involved in those activities that only the government does well. Hard Randians (amoral or cold-hearted libertarians) likely will not, but there is nothing we can say that would ever satisfy them since they are lost in their ill-conceived fictional utopia created by Ayn Rand.

Randians aside, we need to remember the words of the authors: “A government that effectively promotes human flourishing is a government worth fighting for.”

How effective has covering young adults on parents’ insurance been?

Young Adult Insurance Coverage And Out-Of-Pocket Spending: Long-Term Patterns

By Marc L. Berk and Zhengyi Fang
Health Affairs, April 2016

From the Abstract

The Affordable Care Act appears to have improved health insurance coverage for young adults (ages 18–30). But data from twenty national surveys conducted between 1977 and 2013 paint a more complex picture, showing coverage rates lower in 2013 than they were thirty-six years earlier.

http://content.healthaffairs.org/content/35/4/734.abstract

***

Comment:

By Don McCanne, M.D.

Although the provision in the Affordable Care Act (ACA) that allowed individuals up to age 26 to be covered through their parents’ insurance was partially effective, the rate of coverage for young adults was lower in 2013 than it had been 36 years earlier. Some progress!

The point is the ACA is a series of patches superimposed on our highly fragmented, dysfunctional health care financing system. This patch – extending family coverage into early adult years – fell far short of the one goal of insuring all young adults. In fact, all ACA patches combined are falling far short of our goals of universality, affordability and equity, and we are still left with a highly fragmented, dysfunctional health care financing system.

A improved Medicare that covered everyone would fix this.

High costs of hepatitis medicine make a good case for universal Medicare

By the Editorial Board
Salt Lake Tribune, April 4, 2016

Those who continue to argue that there is a “free market solution” to the unconscionable costs and gaps in the American health care system have to explain away the train wreck surrounding new cures for hepatitis C.

The good news is that there is a cure for hepatitis C, a blood disease that can lead to a slow and painful death as it destroys a victim’s liver. In fact, now there are a few. Gilead Sciences markets concoctions called Sovaldi and Harvoni. Janssen Research offers a drug called Olysio.

The bad news is that the cost of the full treatment regimen for a single patient can run from $83,000 to $189,000. That, obviously, is well beyond the reach of nearly every household and understandably enough to scare off both private insurance carriers and government-funded Medicaid.

The worse news is that, because the United States clings to the idea that wellness is a commodity subject to rational market forces, nobody is trying to limit these awful costs.

Pharmaceutical research is expensive, yes. But American drug companies remain by far the most profitable part of the health care sector.

The drug companies charge so much for these medications for one reason: Because they can.

Functioning free markets do not — and never will — exist in health care because the sellers so often hold all the cards. Unlike someone in the market for a car, a television or a cell phone, people who need a particular medication cannot just decide not to buy a product until the price comes down, or just to do without it altogether. Unless they are interested in dying, or watching a family member die.

Civilized nations — a term that excludes the United States when discussing health care — either regulate the prices of drugs or use their concentrated purchasing power to negotiate a reasonable cost. In India, for example, a dose that is identical to what costs more than $90,000 here costs $900.

Drug makers argue that even the staggering cost of Sovaldi or related drugs is a bargain compared to avoided costs of more treatment, surgeries, disability, early death, etc.

But that doesn’t help the uninsured family that can’t afford either the drug or the alternative. And it isn’t always enough to push insurers to pay up, because Insurance Company A may bear the cost now, only to see the clients move on and endow Insurance Company B — or Medicaid or Medicare — with the avoided costs months or years later.

It is notable that single-payer systems, such as in the United Kingdom, have done the math and agreed to pay high — though less than in the U.S. — prices for these drugs. That’s because, in those nations, the single payer does, indeed, come out ahead by paying a lot now but saving many multiples of that later.

In other words, the case made by the drug companies for allowing them to charge such high prices is also an argument for Medicare for all.

http://www.sltrib.com/opinion/3738478-155/editorial-high-costs-of-hepatitis-medicine

How effective has covering young adults on parents’ insurance been?

Young Adult Insurance Coverage And Out-Of-Pocket Spending: Long-Term Patterns

By Marc L. Berk and Zhengyi Fang
Health Affairs, April 2016

From the Abstract

The Affordable Care Act appears to have improved health insurance coverage for young adults (ages 18–30). But data from twenty national surveys conducted between 1977 and 2013 paint a more complex picture, showing coverage rates lower in 2013 than they were thirty-six years earlier.

http://content.healthaffairs.org/content/35/4/734.abstract

Although the provision in the Affordable Care Act (ACA) that allowed individuals up to age 26 to be covered through their parents’ insurance was partially effective, the rate of coverage for young adults was lower in 2013 than it had been 36 years earlier. Some progress!

The point is the ACA is a series of patches superimposed on our highly fragmented, dysfunctional health care financing system. This patch – extending family coverage into early adult years – fell far short of the one goal of insuring all young adults. In fact, all ACA patches combined are falling far short of our goals of universality, affordability and equity, and we are still left with a highly fragmented, dysfunctional health care financing system.

A improved Medicare that covered everyone would fix this.

Fixing consumer-directed health care by making physicians financial counselors

Study Of Physician And Patient Communication Identifies Missed Opportunities To Help Reduce Patients’ Out-Of-Pocket Spending

By Peter A. Ubel, Cecilia J. Zhang, Ashley Hesson, J. Kelly Davis, Christine Kirby, Jamison Barnett and Wynn G. Hunter
Health Affairs, April 2016

Abstract

Some experts contend that requiring patients to pay out of pocket for a portion of their care will bring consumer discipline to health care markets. But are physicians prepared to help patients factor out-of-pocket expenses into medical decisions? In this qualitative study of audiorecorded clinical encounters, we identified physician behaviors that stand in the way of helping patients navigate out-of-pocket spending. Some behaviors reflected a failure to fully engage with patients’ financial concerns, from never acknowledging such concerns to dismissing them too quickly. Other behaviors reflected a failure to resolve uncertainty about out-of-pocket expenses or reliance on temporary solutions without making long-term plans to reduce spending. Many of these failures resulted from systemic barriers to health care spending conversations, such as a lack of price transparency. For consumer health care markets to work as intended, physicians need to be prepared to help patients navigate out-of-pocket expenses when financial concerns arise during clinical encounters.

From the Introduction

In recent years an increasing number of Americans have chosen health insurance plans with high out-of-pocket expenses, in the form of deductibles, copayments, or coinsurance rates. According to economic theory, such plans should make consumers more sensitive to the price of health care services. Indeed, copayments have been shown to reduce health care use. However, high out-of-pocket spending can also create financial burdens for patients. In 2014 one in three Americans reported having difficulty paying health care bills. Many patients did not adhere to prescribed health care interventions because of difficulty paying for them. In addition, some patients reported that the financial burden of paying for medical care caused them to miss mortgage payments or led them to personal bankruptcy.

On the one hand, patients with high out-of-pocket spending have an opportunity to behave as informed consumers in the health care Marketplace. On the other hand, their status as consumers exposes them to potential financial burden. Ideally, patients will recognize this trade-off between the medical benefits and the financial costs of receiving health care services, incurring out-of-pocket expenses only when the benefits of receiving the services outweigh the costs.

In this article we present a qualitative content analysis of health care spending discussions from outpatient clinic visits for patients with breast cancer, rheumatoid arthritis, or depression who saw specialists who treat these conditions. We present a series of physician behaviors that interfered with patients’ efforts to either lower their out-of-pocket expenses or understand the pros and cons of less costly health care alternatives.

From the Study Results

Our qualitative content analysis revealed two broad categories of physician behaviors that led to missed opportunities to reduce out-of-pocket expenses. The first set of behaviors involved the physician’s failure to address the patient’s financial concerns, in which the physician did not make an explicit effort to either acknowledge or deal with the seriousness of the patient’s concerns. The second category involved instances where physicians did make explicit efforts to deal with patients’ financial concerns but failed to resolve such concerns satisfactorily.

From the Discussion

Many health care policies are ultimately played out “at the bedside,” by influencing the way doctors and patients make medical decisions. In the case of policies promoting health care consumerism, many patients are faced with important decisions about whether the benefits of health care interventions justify their financial cost. In this qualitative, observational study of outpatient interactions, we identified a range of physician behaviors that stand in the way of helping patients make informed decisions about ways to potentially lower their out-of-pocket spending. Some behaviors reflect physicians’ failures to fully engage with patients’ financial concerns, from never acknowledging such concerns, to dismissing them too quickly, to getting sidetracked discussing frustration with a system that creates such high out-of-pocket spending. Other behaviors reflect physicians’ efforts to engage patients about their financial concerns but efforts that potentially fall short, because physicians fail to resolve uncertainty about out-of-pocket expenses or turn to temporary solutions without making long-term plans to reduce patients’ spending.

We recognize that physician-patient communication is a two-way street and that some of the failures described here resulted in part from patients having difficulty clearly and explicitly expressing their financial concerns. Patients have difficulty partly because health care consumerism is a relatively recent phenomenon in the United States for most people, meaning that patients have not had substantial experience that would help them become savvier about the health care marketplace. Nevertheless, it is still incumbent on physicians to do their best to overcome patients’ difficulties communicating about their expenses.

We acknowledge that many of the potential failures we have identified here, if they truly do reflect physician failure, also reflect more general failure of the US health care system. Physicians in the United States have difficulty factoring financial concerns into health care decisions in part because out-of-pocket spending is often difficult to determine and health care prices are often opaque. Consequently, physicians under time constraints cannot be expected to fully resolve patients’ financial concerns in the space of any single outpatient appointment.

From the Conclusion

Ideally, when people face high out-of-pocket spending for health care services, they will act like savvy consumers, exploring the pros and cons of their alternatives with full knowledge of the financial consequences of those alternatives. This confidence is undermined whenever clinical interactions lead patients to miss opportunities to explore less costly alternatives or to identify means by which they can receive their current interventions at lower prices.

http://content.healthaffairs.org/content/35/4/654.abstract

***

Comment:

By Don McCanne, M.D.

Although the theme of this article seems to be that physicians should improve their skills in communicating with patients about their out-of-pocket spending for health care in order to enable spending reductions that are the goal of the ever-increasingly prevalent consumer-directed health care plans. But there is a much more important message buried in this study. Physicians do not have the time nor the tools and are basically incapable of assisting patients with their burdensome cost sharing.

Patients are mostly on their own to try to negotiate past the financial barriers to care, or, failing to do so, accept the fact that they may have to forgo the recommended health care simply because they cannot afford to pay for it. Training physicians in personal financial management so that they can counsel patients on how they can manage their deductibles and other expenses, and then expecting physicians to dedicate a significant portion of the patient interaction time to that counseling are just not practical uses of the very limited time the physician has with the patient – time that should be fully dedicated to managing the patient’s medical problems.

Also buried in the full article is this comment: “From this sample of 3,000 transcripts, we excluded visits that were conducted by primary care physicians, nurse practitioners, or nurses because these clinicians are often not the ones that prescribed the expensive interventions relevant to the diseases in question.”

Wow! Primary care was excluded because that is not where the expensive interventions occur? So primary care really does provide greater value? Yet most primary care (except sometimes certain preventive services) falls below today’s higher deductibles, and thus the patient is quite sensitive to primary care costs because it usually lacks first dollar coverage.

It is not the lack of training of health care professionals in patient-consumer financial counseling that is the problem. It is the transfer of financial responsibility to the patient that is causing the difficulties. Many other nations that spend much less on health care than we do are able to provide first dollar coverage. We can as well. We can control costs in a much more patient-friendly manner through an improved Medicare that covers everyone.

Fixing consumer-directed health care by making physicians financial counselors

Study Of Physician And Patient Communication Identifies Missed Opportunities To Help Reduce Patients’ Out-Of-Pocket Spending

By Peter A. Ubel, Cecilia J. Zhang, Ashley Hesson, J. Kelly Davis, Christine Kirby, Jamison Barnett and Wynn G. Hunter
Health Affairs, April 2016

Abstract

Some experts contend that requiring patients to pay out of pocket for a portion of their care will bring consumer discipline to health care markets. But are physicians prepared to help patients factor out-of-pocket expenses into medical decisions? In this qualitative study of audiorecorded clinical encounters, we identified physician behaviors that stand in the way of helping patients navigate out-of-pocket spending. Some behaviors reflected a failure to fully engage with patients’ financial concerns, from never acknowledging such concerns to dismissing them too quickly. Other behaviors reflected a failure to resolve uncertainty about out-of-pocket expenses or reliance on temporary solutions without making long-term plans to reduce spending. Many of these failures resulted from systemic barriers to health care spending conversations, such as a lack of price transparency. For consumer health care markets to work as intended, physicians need to be prepared to help patients navigate out-of-pocket expenses when financial concerns arise during clinical encounters.

From the Introduction

In recent years an increasing number of Americans have chosen health insurance plans with high out-of-pocket expenses, in the form of deductibles, copayments, or coinsurance rates. According to economic theory, such plans should make consumers more sensitive to the price of health care services. Indeed, copayments have been shown to reduce health care use. However, high out-of-pocket spending can also create financial burdens for patients. In 2014 one in three Americans reported having difficulty paying health care bills. Many patients did not adhere to prescribed health care interventions because of difficulty paying for them. In addition, some patients reported that the financial burden of paying for medical care caused them to miss mortgage payments or led them to personal bankruptcy.

On the one hand, patients with high out-of-pocket spending have an opportunity to behave as informed consumers in the health care Marketplace. On the other hand, their status as consumers exposes them to potential financial burden. Ideally, patients will recognize this trade-off between the medical benefits and the financial costs of receiving health care services, incurring out-of-pocket expenses only when the benefits of receiving the services outweigh the costs.

In this article we present a qualitative content analysis of health care spending discussions from outpatient clinic visits for patients with breast cancer, rheumatoid arthritis, or depression who saw specialists who treat these conditions. We present a series of physician behaviors that interfered with patients’ efforts to either lower their out-of-pocket expenses or understand the pros and cons of less costly health care alternatives.

From the Study Results

Our qualitative content analysis revealed two broad categories of physician behaviors that led to missed opportunities to reduce out-of-pocket expenses. The first set of behaviors involved the physician’s failure to address the patient’s financial concerns, in which the physician did not make an explicit effort to either acknowledge or deal with the seriousness of the patient’s concerns. The second category involved instances where physicians did make explicit efforts to deal with patients’ financial concerns but failed to resolve such concerns satisfactorily.

From the Discussion

Many health care policies are ultimately played out “at the bedside,” by influencing the way doctors and patients make medical decisions. In the case of policies promoting health care consumerism, many patients are faced with important decisions about whether the benefits of health care interventions justify their financial cost. In this qualitative, observational study of outpatient interactions, we identified a range of physician behaviors that stand in the way of helping patients make informed decisions about ways to potentially lower their out-of-pocket spending. Some behaviors reflect physicians’ failures to fully engage with patients’ financial concerns, from never acknowledging such concerns, to dismissing them too quickly, to getting sidetracked discussing frustration with a system that creates such high out-of-pocket spending. Other behaviors reflect physicians’ efforts to engage patients about their financial concerns but efforts that potentially fall short, because physicians fail to resolve uncertainty about out-of-pocket expenses or turn to temporary solutions without making long-term plans to reduce patients’ spending.

We recognize that physician-patient communication is a two-way street and that some of the failures described here resulted in part from patients having difficulty clearly and explicitly expressing their financial concerns. Patients have difficulty partly because health care consumerism is a relatively recent phenomenon in the United States for most people, meaning that patients have not had substantial experience that would help them become savvier about the health care marketplace. Nevertheless, it is still incumbent on physicians to do their best to overcome patients’ difficulties communicating about their expenses.

We acknowledge that many of the potential failures we have identified here, if they truly do reflect physician failure, also reflect more general failure of the US health care system. Physicians in the United States have difficulty factoring financial concerns into health care decisions in part because out-of-pocket spending is often difficult to determine and health care prices are often opaque. Consequently, physicians under time constraints cannot be expected to fully resolve patients’ financial concerns in the space of any single outpatient appointment.

From the Conclusion

Ideally, when people face high out-of-pocket spending for health care services, they will act like savvy consumers, exploring the pros and cons of their alternatives with full knowledge of the financial consequences of those alternatives. This confidence is undermined whenever clinical interactions lead patients to miss opportunities to explore less costly alternatives or to identify means by which they can receive their current interventions at lower prices.

http://content.healthaffairs.org/content/35/4/654.abstract

Although the theme of this article seems to be that physicians should improve their skills in communicating with patients about their out-of-pocket spending for health care in order to enable spending reductions that are the goal of the ever-increasingly prevalent consumer-directed health care plans. But there is a much more important message buried in this study. Physicians do not have the time nor the tools and are basically incapable of assisting patients with their burdensome cost sharing.

Patients are mostly on their own to try to negotiate past the financial barriers to care, or, failing to do so, accept the fact that they may have to forgo the recommended health care simply because they cannot afford to pay for it. Training physicians in personal financial management so that they can counsel patients on how they can manage their deductibles and other expenses, and then expecting physicians to dedicate a significant portion of the patient interaction time to that counseling are just not practical uses of the very limited time the physician has with the patient – time that should be fully dedicated to managing the patient’s medical problems.

Also buried in the full article is this comment: “From this sample of 3,000 transcripts, we excluded visits that were conducted by primary care physicians, nurse practitioners, or nurses because these clinicians are often not the ones that prescribed the expensive interventions relevant to the diseases in question.”

Wow! Primary care was excluded because that is not where the expensive interventions occur? So primary care really does provide greater value? Yet most primary care (except sometimes certain preventive services) falls below today’s higher deductibles, and thus the patient is quite sensitive to primary care costs because it usually lacks first dollar coverage.

It is not the lack of training of health care professionals in patient-consumer financial counseling that is the problem. It is the transfer of financial responsibility to the patient that is causing the difficulties. Many other nations that spend much less on health care than we do are able to provide first dollar coverage. We can as well. We can control costs in a much more patient-friendly manner through an improved Medicare that covers everyone.

Why Do We Pay So Much for Health Care – But Get Such Poor Results?

By N.F. Hanna, M.D.
New York Observer, April 5, 2016

As a primary care physician practicing for three decades in the same location, I have had the privilege of seeing patients regularly across a span of many years. I have celebrated my patients’ joys and triumphs, but also mourned with them in their deepest tragedies and sorrows. I have shared and continue to share in their trials and vulnerabilities, and often as more than their doctor; patients sometimes confide in me things they do not even share with their families.

The result: I have encountered far too many heartbreaking stories, more than enough to be certain that our health care system is deeply broken. Too many patients watching their savings disappear overnight in the face of staggering medical bills, even those resulting from low-quality care. Too many people working tirelessly for the false promise that health insurance equals financial security. Too many families living in fear of slipping into poverty because of one illness. The physical, financial, and emotional pain is often unbearable, creating a bitterly vicious cycle that continues to spiral downward.

These stories are sobering reminders that as nationwide debates about health care in America amplify again during this election season, real-life casualties of our broken system suffer quietly. The mainstream conversation is often frustratingly complex and politically-driven. Meanwhile, in the midst of a fray of political demagoguery and confusion, countless American families are struggling at the hands of a system they may not fully understand.

The heart of the problem with the American health care system can be boiled down to one troubling question: why are Americans paying much more per person for health care than those in other developed nations, but getting much less in terms of quality? As a physician with over 40 years of experience practicing medicine in the United States and the United Kingdom, I naturally view this tragic “pay more, get less” paradox through a clinician’s eyes. As is taught in medical school, it all starts with carefully diagnosing the problem.

Let us start with diagnosing the “pay more” element of the paradox. First, the facts: we are paying far more for health care than any other Western industrial nation. Consider that in 2012 the U.S. paid $8,745 per person on health care. This was double what was paid on health care per person in most developed countries in the world, including France and the U.K. Spending growth has continued, and the U.S. today spends about $10,000 per person annually. As a direct consequence, many sources site medical bills as the number one cause of personal bankruptcies (which are akin to financial “death”) across the U.S. A study in The American Journal of Medicine found that 62 percent of all 2007 bankruptcies, using a conservative definition, were medical bankruptcies. Sadly insurance is not enough to offer protection; over three-quarters (78 percent) of medical debtors were insured at the onset of their illness.  And this is a crisis not only on the personal and family level, but also on the national level. Health care spending in the U.S. has increased dramatically over the years and continues to grow.

What is behind these staggering costs? I explore several primary factors that are discussed in depth in my book, “Dying of Health Care.” The first four of these factors are caused by doctors and the latter five are caused by other players in the system, leaving doctors and patients alike as victims: excessive testing, overprescribing, direct-to-specialist referrals and consultations, doctors not assessing costs to the system overall, health insurance and medical billing industry waste, overpriced pharmaceuticals and medical devices, direct-to-consumer pharmaceutical advertising, increasing administrative costs for medical practices, and a fragmented hospital system.

One of these factors that is a particularly tough pill to swallow is the cost of health insurance and medical billing. Health insurance companies are like a middleman between providers and patients, so their costs should be kept as low as possible since the money is not being used to care for patients directly. Unfortunately, the costs are astronomical and far greater than in other nations. Because of how difficult insurance companies have made it for providers to get paid for their services (their incentive is to maximize their profits), they have in effect created their own menace: medical billing companies. Fifteen years ago, I had never heard of the medical billing business, but today it is one of the most thriving components in the health care industry. If insurance companies are like the middleman between providers and patients, medical billing companies are like the middleman to the middleman; both of them take a significant cut of your health care dollars. As a poignant example of the heavy burden that medical billing codes and processes create, Duke University Hospital at one point had 900 beds for patients … compared to its 1,300 billing clerks.

Another important factor to highlight briefly is excessive testing, which has multiple causes. Unfortunately, testing begets more testing, as one test often leads to a desire to order other follow-up testing due to coincidental findings. And these tests sometimes lead to unnecessary invasive procedures, which can harm or even kill a patient. Excessive testing, of course, also costs a great deal of money at the same time, thus contributing to both sides of the “pay more, get less” paradox.

Now, on to the “get less” half of the paradox. It would seem reasonable that the U.S. spends far more on health care than any other nation in the world, so long as our health results are the best in the world as well. Unfortunately, this is very far from the truth. That American patients are “getting less” in terms of quality is not a question to debate. To evaluate this, there are several studies that consider a variety of health metrics and rank the health care systems of nations around the world. The common conclusion across all of them: the U.S. is not delivering the quality that the price tag would suggest. And, truthfully, it is not even close. As just one example, a 2014 study ranked the health care systems of 11 developed nations, considering factors such as quality of care and access to doctors. It found that the U.S. ranked last overall. Within particular subcategories, studies have shown that the U.S. ranks 25th out of the 34 developed countries in the Organization for Economic Cooperation and Development (OECD) in terms of hospital beds per 1,000 people, and it ranks 28th in doctors per 1,000 people.

In my opinion, life expectancy is the best metric to consider in evaluating a health care system because it is the cumulative effect of all aspects of health. Sadly, our life expectancy ranks 27th among the 34 OECD nations. So, let us bring together our analysis of the “pay more” and “get less” components. The U.S. spent $8,745 per person in total health expenditures in 2012, as discussed, and its total population life expectancy at birth was 78.7 years.  Compare this to Spain, which spent $2,998 per person and achieved a life expectancy of 82.5 years. Take a look at the chart below, which plots the life expectancy of several countries against per-person health care spending. In reading the chart, the most efficient and effective systems fall in the upper left area. From our conversation thus far, you would expect the U.S. to be an outlier in that its system is so expensive and not as effective. But saying it is an outlier is a major understatement.

Life expectancy at birth and health spending per capita (Source: OECD Health Statistics, World Bank for non-OECD countries)

Life expectancy at birth and health spending per capita (Source: OECD Health Statistics, World Bank for non-OECD countries)

Note particularly how far the U.S.’s life expectancy mark falls below the trend curve, which is where you would expect it to fall based on its amount of spending. Clearly, something is seriously amiss.

Perhaps the saddest element of “getting less”: iatrogenic diseases, or diseases caused by medical or surgical intervention, are a major issue in the U.S. In her commentary in The Journal of the American Medical Association, Dr. Barbara Starfield of Johns Hopkins University, citing three previous studies, estimated the number of American deaths due to iatrogenic causes to be 225,000 per year. In other words, about 225,000 American deaths per year are actually caused by medical care. If classified as such, this would make iatrogenic causes the third most common cause of death in the United States, after heart disease and cancer. To make matters worse, as Dr. Starfield points out, these numbers may actually be on the lower end of comparable estimations, and they only include iatrogenic diseases that directly lead to death. Indeed, iatrogenic diseases are a contributor to our disappointingly low life expectancy numbers as well as the high cost of our health care.

The consequences of our painful paradox – the heartbreaking stories I mentioned at the beginning – are real and they are tragic. Over the years, I have seen that the physical, emotional, and financial health of a patient are closely tied together. All three aspects are crucially and inseparably intertwined; any one of the three can adversely, or positively, affect the other two. Too many times I have seen serious, unexpected illnesses – in addition to physically threatening my patients’ health – eliminating their financial security. Of course, when these patients find themselves without the means to support their families or sometimes to even survive, there is an unbearable psychological impact and that, in turn, affects their physical health.

The urgency to act has never been greater. We have traveled through 100 years of band-aid health care reform attempts, leading up to a confusing mix of mostly private and some public care. The most recent and perhaps the most controversial reform, the Affordable Care Act, is not a viable solution to mend our system. We are still on a path of financial un-sustainability, and people’s premiums, co-payments, co-insurances, and deductibles have only risen. As author of the best-selling “America’s Bitter Pill,” Steven Brill, explained, “Put simply, with Obamacare we’ve changed the rules related to who pays for what, but we haven’t done much to change the prices we pay.”

The reality is that there are solutions that can work to heal our ailing system that both improve the quality and reduce the cost of our health care. These include implementing a more standardized system of medical decision-making that takes into account cost and empirically proven effectiveness, which would smooth out the wide divergences that come from the subjectivity of medical decision-making. A single-payer system for all, in my view, is a critical solution that will rein in our costs and improve our care by eliminating the waste surrounding insurance and medical billing companies, creating negotiating power for cheaper pharmaceuticals and medical devices (these are far more expensive in the U.S. than abroad), uniting electronic health records to reduce inefficiencies, changing the way doctors are paid away from the fee-for-service system (which rewards for quantity of care, regardless of effectiveness), and overseeing the standardization discussed previously. The truth, in fact, is that the United States is almost totally alone among developed nations in lacking universal health care.

Regardless of your perspective on the appropriate treatment for our health care woes, we as a nation must be knowledgeable and engaged about the subject. We must be aware of the distressful, painful stories of Americans (including, I am sure, many of the people reading this article) who have been victims of a broken system. We must boldly look through the cloud of political posturing and journalistic sensationalism and stand up for the health of our children, our parents, our brothers, and our sisters.

The diagnosis is daunting, but clear. We must together rise above politics and treat this cancer inside us.

N.F. Hanna, M.D. is a primary care physician with nearly 40 years of experience practicing medicine in the U.S. and U.K. He is the author of the newly released book, Dying of Health Care: How the System Harms Americans Physically and Financially, and How to Change It.

http://observer.com/2016/04/why-do-we-pay-so-much-for-healthcare-but-get-such-poor-results/

The Salt Lake Tribune editors make case for Medicare for all

High costs of hepatitis medicine make a good case for universal Medicare

Editorial
The Salt Lake Tribune, April 4, 2016

Those who continue to argue that there is a “free market solution” to the unconscionable costs and gaps in the American health care system have to explain away the train wreck surrounding new cures for hepatitis C.

The good news is that there is a cure for hepatitis C, a blood disease that can lead to a slow and painful death as it destroys a victim’s liver. In fact, now there are a few. Gilead Sciences markets concoctions called Sovaldi and Harvoni. Janssen Research offers a drug called Olysio.

The bad news is that the cost of the full treatment regimen for a single patient can run from $83,000 to $189,000. That, obviously, is well beyond the reach of nearly every household and understandably enough to scare off both private insurance carriers and government-funded Medicaid.

The worse news is that, because the United States clings to the idea that wellness is a commodity subject to rational market forces, nobody is trying to limit these awful costs.

The drug companies charge so much for these medications for one reason: Because they can.

Functioning free markets do not — and never will — exist in health care because the sellers so often hold all the cards.

Civilized nations — a term that excludes the United States when discussing health care — either regulate the prices of drugs or use their concentrated purchasing power to negotiate a reasonable cost.

Drug makers argue that even the staggering cost of Sovaldi or related drugs is a bargain compared to avoided costs of more treatment, surgeries, disability, early death, etc.

It is notable that single-payer systems, such as in the United Kingdom, have done the math and agreed to pay high — though less than in the U.S. — prices for these drugs. That’s because, in those nations, the single payer does, indeed, come out ahead by paying a lot now but saving many multiples of that later.

In other words, the case made by the drug companies for allowing them to charge such high prices is also an argument for Medicare for all.

http://www.sltrib.com/opinion/3738478-155/editorial-high-costs-of-hepatitis-medicine

***

Comment:

By Don McCanne, M.D.

If there is any good in the fact that drug companies are gouging patients and payers it is that the citizenry may finally awaken to the fact that we need the government involved to straighten out this crisis, and, by extension, that we can finally get past the anti-government hangup preventing us from enacting a single payer system. We can thank the editors of The Salt Lake Tribune for reminding us that the solution we need is a single payer Medicare for all.

The Salt Lake Tribune editors make case for Medicare for all

High costs of hepatitis medicine make a good case for universal Medicare

Editorial
The Salt Lake Tribune, April 4, 2016

Those who continue to argue that there is a “free market solution” to the unconscionable costs and gaps in the American health care system have to explain away the train wreck surrounding new cures for hepatitis C.

The good news is that there is a cure for hepatitis C, a blood disease that can lead to a slow and painful death as it destroys a victim’s liver. In fact, now there are a few. Gilead Sciences markets concoctions called Sovaldi and Harvoni. Janssen Research offers a drug called Olysio.

The bad news is that the cost of the full treatment regimen for a single patient can run from $83,000 to $189,000. That, obviously, is well beyond the reach of nearly every household and understandably enough to scare off both private insurance carriers and government-funded Medicaid.

The worse news is that, because the United States clings to the idea that wellness is a commodity subject to rational market forces, nobody is trying to limit these awful costs.

The drug companies charge so much for these medications for one reason: Because they can.

Functioning free markets do not — and never will — exist in health care because the sellers so often hold all the cards.

Civilized nations — a term that excludes the United States when discussing health care — either regulate the prices of drugs or use their concentrated purchasing power to negotiate a reasonable cost.

Drug makers argue that even the staggering cost of Sovaldi or related drugs is a bargain compared to avoided costs of more treatment, surgeries, disability, early death, etc.

It is notable that single-payer systems, such as in the United Kingdom, have done the math and agreed to pay high — though less than in the U.S. — prices for these drugs. That’s because, in those nations, the single payer does, indeed, come out ahead by paying a lot now but saving many multiples of that later.

In other words, the case made by the drug companies for allowing them to charge such high prices is also an argument for Medicare for all.

http://www.sltrib.com/opinion/3738478-155/editorial-high-costs-of-hepatitis-medicine

If there is any good in the fact that drug companies are gouging patients and payers it is that the citizenry may finally awaken to the fact that we need the government involved to straighten out this crisis, and, by extension, that we can finally get past the anti-government hangup preventing us from enacting a single payer system. We can thank the editors of The Salt Lake Tribune for reminding us that the solution we need is a single payer Medicare for all.

Anthem and Dignity collude with employers, shafting employees

Anthem Blue Cross, Dignity Health Partner to Improve Health, Lower Employer Costs

Business Wire, March 31, 2016

Anthem Blue Cross and Dignity Health, one of the largest hospital systems in the country, have collaborated to introduce a new tiered EPO/PPO plan designed to improve employee health and lower costs through an integrated care management system.

The Premier Tiered EPO/PPO product is designed for self-insured large groups, or employers with more than 101 employees and will launch on May 1, 2016 in Ventura County.

The plans are designed to offer choice and flexibility for employees who are members. They can select from either the Exclusive Provider Organization (EPO) that provides the best price with a pre-determined network of high value Dignity Health providers, or a Preferred Provider Organization (PPO) which provides access to a wider range of providers to choose from at varying copay and cost share levels. The new product combines the managed care capabilities and expertise of both organizations, with a focus on clinical quality, access and efficiency of health care services.

“As health care providers, we understand the challenges employers face in managing health care access and cost of care,” said Duncan Ross, Dignity Health Vice President, Employer Relations. “This collaboration with Anthem creates a care management model that will help employers reduce costs and provide a better patient experience for their employees, and reflects our mission of service and commitment to our communities.”

http://www.businesswire.com/news/home/20160331006282/en/Anthem-Blue-Cross-Dignity-Health-Partner-Improve

***

Comment:

By Don McCanne, M.D.

In announcing their new program that will “improve health and lower employer costs,” Anthem Blue Cross and Dignity Health show us once again that by relying on the private sector to control health care financing, we will continue to see innovations that serve their industries well, but at a cost to patients.

In this case Anthem and Dignity are providing a competitively priced product that will be cheaper for employers, but it will cause employees to choose between either an exclusive provider organization with severe restrictions in choice of providers or a preferred provider organization with moderate restrictions in provider choice but greater exposure to out-of-pocket spending. Either choice is worse for the employees than under more typical employer-sponsored plans of the past.

Under a well-designed single payer system, patients would have choice of their health care professionals and hospitals, and financial barriers would be removed by providing first dollar coverage. Many other features of a single payer system would control costs in a patient-friendly manner.

Anthem and Dignity collude with employers, shafting employees

Anthem Blue Cross, Dignity Health Partner to Improve Health, Lower Employer Costs

Business Wire, March 31, 2016

Anthem Blue Cross and Dignity Health, one of the largest hospital systems in the country, have collaborated to introduce a new tiered EPO/PPO plan designed to improve employee health and lower costs through an integrated care management system.

The Premier Tiered EPO/PPO product is designed for self-insured large groups, or employers with more than 101 employees and will launch on May 1, 2016 in Ventura County.

The plans are designed to offer choice and flexibility for employees who are members. They can select from either the Exclusive Provider Organization (EPO) that provides the best price with a pre-determined network of high value Dignity Health providers, or a Preferred Provider Organization (PPO) which provides access to a wider range of providers to choose from at varying copay and cost share levels. The new product combines the managed care capabilities and expertise of both organizations, with a focus on clinical quality, access and efficiency of health care services.

“As health care providers, we understand the challenges employers face in managing health care access and cost of care,” said Duncan Ross, Dignity Health Vice President, Employer Relations. “This collaboration with Anthem creates a care management model that will help employers reduce costs and provide a better patient experience for their employees, and reflects our mission of service and commitment to our communities.”

http://www.businesswire.com/news/home/20160331006282/en/Anthem-Blue-Cross-Dignity-Health-Partner-Improve

In announcing their new program that will “improve health and lower employer costs,” Anthem Blue Cross and Dignity Health show us once again that by relying on the private sector to control health care financing, we will continue to see innovations that serve their industries well, but at a cost to patients.

In this case Anthem and Dignity are providing a competitively priced product that will be cheaper for employers, but it will cause employees to choose between either an exclusive provider organization with severe restrictions in choice of providers or a preferred provider organization with moderate restrictions in provider choice but greater exposure to out-of-pocket spending. Either choice is worse for the employees than under more typical employer-sponsored plans of the past.

Under a well-designed single payer system, patients would have choice of their health care professionals and hospitals, and financial barriers would be removed by providing first dollar coverage. Many other features of a single payer system would control costs in a patient-friendly manner.