PNHP

Study: No Cost Savings With Electronic Medical Records

Study: No Cost Savings With Electronic Medical Records

By SACHA PFEIFFER
WBUR Radio / NPR, Nov. 20, 2009

BOSTON — A new Harvard study finds that computerized medical records don’t save money or make hospitals more efficient, despite claims that health information technology could generate huge financial returns.

The study has major implications for national health reform. Congress is counting on savings from health I.T. to help fund the cost of revamping the health care system, and the Obama administration plans to use about $30 billion in federal stimulus money to spur the nationwide adoption of health I.T., such as electronic medical records.

But Harvard Medical School professor Steffie Woolhandler says an analysis of 4,000 hospitals nationwide found no cost benefit from computerization.

“If people think we’re going to pay for health reform off of savings on hospital computerization, they’re really sorely mistaken,” said Woolhandler, one of the study’s co-authors. “There are no savings we were able to find looking at five years of information.”

The researchers examined data from 2003 to 2007, including from hospitals on the “100 Most Wired List” compiled by Hospital and Health Networks magazine. They analyzed the data for evidence of increased quality, cost savings, or improvements in administrative efficiency.

Besides finding no indication that computerization lowers costs, the researchers found that some hospitals actually saw administrative costs rise after computerizing, probably due to the expense of buying and maintaining equipment and paying for technology staffs.

And those increased administrative expenses weren’t just one-time upfront costs of purchasing computer systems; those expenses remained elevated even several years after computerization had taken place.

In addition, the research showed that computerization hasn’t helped hospitals become more efficient, although it may have “modestly improved the quality of care for heart attacks,” according to the study.

One reason computerization may not be improving efficiency and quality of care: many medical software programs are designed primarily to help hospitals with their billing, accounting and registration needs, not their clinical work.

When hospital computer systems are designed with clinical care in mind, Woolhandler said, they can help prevent medication errors, flag a patient’s drug allergies, and ensure that prescriptions are written properly.

“I’m still a believer in computerization; I’m not a total Luddite,” Woolhandler said. “But I think computerization is very often done wrong. And, certainly from a cost perspective in the U.S., it’s done wrong more than it’s done correctly…so I think we need to be smarter about the way we computerize in this country.”

The study appears online in the American Journal of Medicine.

http://www.wbur.org/2009/11/20/medical-records

No hospital savings with electronic records: study

By Susan Heavey
Reuters, Fri Nov 20, 2009

WASHINGTON (Reuters) – New electronic record systems installed in thousands of U.S. hospitals have done little to rein in skyrocketing healthcare costs, Harvard University researchers said in a study released on Friday.

A review of roughly 4,000 hospitals from 2003 to 2007 found that while many had moved away from the paper files that still dominate the U.S. healthcare system, administrative costs actually rose, even among the most high-tech institutions.

Advocates of such technology have been pushing for greater use of computerized health records to prevent costly errors and allow greater coordination among caregivers and patients. But adoption has been slow, prompting Congress to offer $19 billion in incentives as part of an economic stimulus bill.

The results, published in The American Journal of Medicine, come as the Senate presses ahead with legislation to expand access to healthcare. While the bill does not provide funds to buy necessary equipment, it does aim to facilitate their use and boost standards.

President Barack Obama has pointed to greater utilization of e-health records to help generate savings at a time when the nation’s healthcare costs far outpace inflation.

But lead author Dr. David Himmelstein, an associate professor at Harvard Medical School, and his team found so far the savings are not there.

“Our study finds that hospital computerization hasn’t saved a dime, nor has it improved administrative efficiency,” said Himmelstein, who oversees clinical computing at Cambridge Hospital in Massachusetts. “Claims that health IT will slash costs and help pay for the reforms being debated in Congress are wishful thinking.”

The push for wider electronic medical records affects companies like Microsoft Corp and Google Inc to others such as McKesson Corp and Allscripts Misys Healthcare Solutions Inc.

National government standards for many health IT products are due next month. But even with the passage of the stimulus bill’s funds, many experts expect it to take years before most Americans have an electronic health record.

The researchers found administrative costs increased slightly from 24.4 percent in 2003 to 24.9 percent in 2007, with facilities that computerized the most quickly seeing the largest jump. Hospitals with the highest costs tended to be smaller, for-profit, non-teaching ones in cities, they added.

Computerized records have yet to prove more efficient “because the commercial marketplace does not favor optimal products,” creating programs to focus more on codes and billing than doctors’ needs and patient care, they said.

Electronic records did show some improvements in tracking the quality of care delivered in cases of heart attacks, but it was unclear if those measure actually translated into improvements in patients’ health, they said.

The researchers analyzed data from the industry’s Healthcare Information and Management Systems Society, hospital reports on costs incurred through the Medicare insurance program for the elderly and the 2008 Dartmouth Health Atlas, which compiles government health data.

Their study was released by the nonprofit Physicians for a National Health Program, which backs a single-payer U.S. health insurance.

(Editing by Chris Wilson)

http://www.reuters.com/article/domesticNews/idUSTRE5AJ0MQ20091120

Breast cancer screening and the uninsured

The New York Times, Nov. 20, 2009

Your editorial on the U.S. Preventive Services Task Force recommendation against routine screening mammograms for healthy, low-risk women under the age of 50 takes a wise and balanced view. Nonetheless, this controversy has demonstrated a broad national consensus about the value of breast cancer screening. After practicing family medicine for nearly 30 years, I would observe that a critical aspect of this issue has been totally ignored: the deadly impact of lack of health insurance.

Uninsured women are much more likely to be diagnosed with advanced-stage breast cancer than their insured peers. This is well documented in a 2008 report by the American Cancer Society. In 2005 while 75 percent of women with insurance had had a mammogram in the past two years, only 33 percent of women uninsured greater than 12 months had this test. Just 8 percent of insured women aged 18-64 of all ethnic groups had Stage III or IV breast cancer at diagnosis, compared with 18 percent of uninsured women. All breast cancer patients with insurance had an 89 percent five-year survival compared with only 77 percent five-year survival for those who were uninsured.

Clearly lack of insurance coverage increases the likelihood that a condition like breast cancer will go undetected and, when found, be less responsive to treatment.

A new Harvard study in the American Journal of Public Health shows being uninsured increases a person’s risk of death by 40 percent. Furthermore, the American Cancer Society report “Spending to Survive” published in February of this year documented 25 representative cases of cancer patients who were fully insured yet had to limit or give up treatment or even declare bankruptcy because of insurance policy co-pays, deductibles or policy limits. I recently had a patient who refused a mammogram because she feared that if anything was found she would become uninsurable.

The current health reform bills in Congress are very complex. They seem to trying to impact some of these problems, but they leave many insurance company policies unmentioned and untouched such as time-consuming and resource-expensive prior authorization and payment procedures and increasingly high co-pays and deductibles for care, diagnostic tests and medications. At best they would limit middle-class family costs to 20 percent of income (!) and leave at least 17 million uninsured. In contrast, a single-payer, Medicare-for-all program would be vastly less complex and less expensive, be truly universal and save tens of thousands of lives annually.

Jeoffry B.Gordon, M.D., M.P.H.
San Diego, CA

http://community.nytimes.com/comments/www.nytimes.com/2009/11/20/opinion/20fri1.html?permid=7#comment7

Veterans Day

Editorial
Berkshire Eagle
Wednesday, Nov. 11

On Veterans Day, America honors those who fought in World War II, Korea, Vietnam, Iraq, Afghanistan and other war zones, as well as World War I, which is passing deeper into history and is represented by only one surviving American veteran. America should also take this opportunity to assess if current veterans are being well-treated by the nation they serve, which means sending them to fight only in justifiable wars and providing them whatever health care they require. In this area, we can and must do a lot better.

President Obama is pondering his options in Afghanistan, which former vice president Dick Cheney sees as dithering. If Mr. Cheney had spent more time dithering about Iraq, a needless misadventure that continues to claim American lives as it winds down, he perhaps, for one example of many, would not have had to admit that he was wrong to claim the insurgency there had been broken when it was ramping up. We prefer Mr. Obama’s cautious, considered approach, and his late night visit to Dover Air Force Base in Delaware to honor 18 veterans killed in action in Afghanistan shows he knows what it is at stake. There is no evidence that either Mr. Cheney or his pupil President Bush ever roused themselves from bed to make that same visit or saw troops as much more than cannon fodder and campaign props.

The U.S. must root out al-Qaida and its allies, but it cannot engage in nation-building — certainly not in a nation
that is one in name only, whose president is corrupt and whose populace is increasingly conflicted about the U.S. presence. While an escalation is out of the question, the administration cannot allow its enemies to survive and fester there either.

With health care reform dominating the news, a Harvard Medical School research team Tuesday released a timely and sobering report estimating that 2,266 U.S. military veterans under the age of 65 died last year because they lacked health insurance and had limited access to care. This is far more than the 155 troops killed last year in Afghanistan. Unhappily, the weak and watered down health care reform plans slogging through Congress won’t begin to address this shameful situation.

These numbers are of no concern to the aging reform protesters who bray about socialized medicine while benefiting from their own socialized medicine in the form of Medicare. But they should shame every American embarrassed that a wealthy nation leaves as many of its citizens without health insurance as we do. That so many veterans, many of whom return from foreign wars with mental scars as well as physical, are uninsured and receive little or no health care is a national disgrace.

Pittsfield honors its veterans today with a parade and ceremony at the World War I monument on South Street, which is undergoing a major restoration. As attendees admire this remarkable monument and honor our veterans, we hope they will keep in mind those veterans who deserve much more from their nation.

Health IT savings projections are baseless

Hospital Computing and the Costs and Quality of Care: A National Study

By David U. Himmelstein, MD, Adam Wright, PhD, Steffie Woolhandler, MD, MPH
The American Journal of Medicine
November 20, 2009
BACKGROUND
Many believe that computerization will improve health care quality, reduce costs, and increase administrative efficiency. However, no previous studies have examined computerization’s cost and quality impacts at a diverse national sample of hospitals.
DISCUSSION
We used a variety of analytic strategies to search for evidence that computerization might be cost-saving. In cross-sectional analyses, we examined whether more computerized hospitals had lower costs or more efficient administration in any of the 5 years. We also looked for lagged effects, that is, whether cost-savings might emerge after the implementation of computerized systems. We looked for subgroups of computer applications, as well as individual applications, that might result in savings. None of these hypotheses were borne out. Even the select group of hospitals at the cutting edge of computerization showed neither cost nor efficiency advantages. Our longitudinal analysis suggests that computerization may actually increase administrative costs, at least in the near term.
The modest quality advantages associated with computerization are difficult to interpret. The quality scores reflect processes of care rather than outcomes; more information technology may merely improve scores without actually improving care, for example, by facilitating documentation of allowable exceptions.
Why has information technology failed to decrease administrative or total costs? Three interpretations of our findings seem plausible. First, perhaps computerization cannot decrease costs because savings are offset by the expense of purchasing and maintaining the computer system itself. Although information technology has improved efficiency in some industries (eg, telecommunications ), it has actually increased costs in others, such as retail banking.
Second, computerization may eventually yield cost and efficiency gains, but only at a more advanced stage than achieved by even the 100 “Most Wired” hospitals.
Finally, we believe that the computer’s potential to improve efficiency is unrealized because the commercial marketplace does not favor optimal products. Coding and other reimbursement-driven documentation might take precedence over efficiency and the encouragement of clinical parsimony. The largest computer success story has occurred at Veterans Administration hospitals where global budgets obviate the need for most billing and internal cost accounting, and minimize commercial pressures.
CONCLUSIONS
Whatever the explanation, as currently implemented, health information technology has a modest impact on process measures of quality, but no impact on administrative efficiency or overall costs. Predictions of cost-savings and efficiency improvements from the widespread adoption of computers are premature at best.
http://www.amjmed.com/home
PNHP press release:
https://pnhp.org/news/2009/november/projections-of-savings-from-health-it-are-baseless-harvard-researchers-say
VA’s VistA:
http://www.innovations.va.gov/

As currently implemented, health information technology (HIT) has no significant impact on administrative efficiency or overall costs, even in the “100 Most Wired” hospitals. Members of Congress should quit pretending that expanding HIT will produce savings that will help pay for the increased spending called for in their legislation.
This should not be interpreted as a blanket condemnation of HIT. The system used by the Veterans Administration hospitals has improved quality, though their system was designed specifically to enhance patient care. Profitable, proprietary, commercial HIT systems are usually designed to improve billing and cost accounting (and to make money for the vendors), whereas patient care information management in these proprietary systems is designed to mesh with these business functions that are given a higher priority.
We should really think about whether we want to continue to use our public funds to promote private, entrepreneurial HIT systems that have a business orientation, or if we should use those funds for further development of less expensive, open-source HIT systems designed specifically to enhance the quality of patient care, just as the VA health system has done. Their award-winning system, VistA, is available for use in the private sector (VA’s VistA – link above). Isn’t it more logical to look at a system that actually works, and one that that’s already paid for and that we own?
The following is from the PNHP release (link above):
Dr. Steffie Woolhandler, professor of medicine at Harvard and study co-author, said several factors may explain why health IT has failed to reduce administrative costs.
“Any savings may have been offset by the costs of purchasing and running new computer systems,” she said. “In addition, most software is designed around the accounting and billing needs of hospitals, not the clinical side.”
She noted that a computer success story in recent years has been at the Veterans Administration, where global budgets eliminate most billing and internal cost accounting, allowing physicians to focus instead on delivering care.
“The VA system now has our nation’s highest quality and patient approval ratings,” Woolhandler said. “Congress should take note: to get the most benefit from our health care dollars and from health IT, we should adopt a single-payer, Medicare-for-all program. Nothing short of that will allow us to reap the full potential of computerization or to provide comprehensive, quality and affordable care to all.”

Projections of savings from health IT are baseless, Harvard researchers say

National survey of U.S. hospitals shows information technology has yielded neither administrative efficiencies nor cost savings

EMBARGOED until
Nov. 20, 2009, 12:01 a.m. EST

Contact:
David Himmelstein, M.D.
Steffie Woolhandler, M.D., M.P.H.
Mark Almberg, PNHP, (312) 782-6006, mark@pnhp.org

The increased computerization in U.S. hospitals hasn’t made them cheaper or more efficient, Harvard researchers say, although it may have modestly improved the quality of care for heart attacks.

The findings, published in today’s [Friday’s] online edition of The American Journal of Medicine, contradict claims by President Obama and many lawmakers that health information technology (health IT), including electronic medical records, will save billions and help make reform affordable.

“Our study finds that hospital computerization hasn’t saved a dime, nor has it improved administrative efficiency,” said lead author Dr. David Himmelstein, associate professor at Harvard Medical School and former director of clinical computing at Cambridge Hospital in Massachusetts. “Claims that health IT will slash costs and help pay for the reforms being debated in Congress are wishful thinking.”

The study uses data from the most extensive survey ever undertaken of hospital computerization. Data from approximately 4,000 hospitals for the years 2003 to 2007, including those on a list of the “100 Most Wired,” were analyzed for evidence of increased quality, cost savings or improvements in administrative efficiency.

The data came from the authoritative Healthcare Information and Management Systems Society (HIMSS) Analytics annual survey of hospital computerization; Medicare Cost Reports that virtually all hospitals submit annually to the Centers for Medicare and Medicaid Services (CMS); and the 2008 Dartmouth Health Atlas, which compiles CMS data on costs and quality of care.

Although the researchers found that U.S. hospitals increased their computerization between 2003 and 2007, they found no indication that health IT lowered costs or streamlined administration, even in the “most wired” institutions. While U.S. hospital administrative costs increased slightly, from 24.4 percent in 2003 to 24.9 percent in 2007, hospitals that computerized most rapidly actually had the largest increases in administrative costs. (By way of comparison, older studies have estimated administrative costs in Canadian hospitals at 12.9 percent).

The study found no evidence of lagged effects, e.g. lower costs in 2007 resulting from information technology introduced in 2003.

Modest quality gains were noted in the treatment of heart attacks (acute myocardial infarction) in more-computerized hospitals, but even these small improvements may merely represent better documentation rather than actual gains to patients.

Himmelstein said a report from the Congressional Budget Office in 2008 signed by Peter Orszag, now Obama’s budget director, expressed skepticism about claims by the RAND Corp. and others that health IT could generate $80 billion annually in savings.

“Part of the CBO’s skepticism was based on the limited information available to the RAND study and similar studies,” Himmelstein said. “But this new, detailed, national survey of diverse hospitals shows such doubts are well-founded. Information technology can’t rescue us from our national health care crisis.”

Dr. Steffie Woolhandler, professor of medicine at Harvard and study co-author, said several factors may explain why health IT has failed to reduce administrative costs.

“Any savings may have been offset by the costs of purchasing and running new computer systems,” she said. “In addition, most software is designed around the accounting and billing needs of hospitals, not the clinical side.”

She noted that a computer success story in recent years has been at the Veterans Administration, where global budgets eliminate most billing and internal cost accounting, allowing physicians to focus instead on delivering care.

“The VA system now has our nation’s highest quality and patient approval ratings,” Woolhandler said. “Congress should take note: to get the most benefit from our health care dollars and from health IT, we should adopt a single-payer, Medicare-for-all program. Nothing short of that will allow us to reap the full potential of computerization or to provide comprehensive, quality and affordable care to all.”

******
“Hospital computing and the costs and quality of care: a national study,” David U. Himmelstein, M.D., Adam Wright, Ph.D., and Steffie Woolhandler, M.D., M.P.H., The American Journal of Medicine, Nov. 20, 2009 (online).

Physicians for a National Health Program (www.pnhp.org) is an organization of 17,000 doctors who advocate for single-payer national health insurance. To contact a physician-spokesperson near you, visit www.pnhp.org/stateactions or call (312) 782-6006.

Weighing the Evidence for Single-Payer

By Ann Settgast, M.D., and Elizabeth Frost, M.D.
Minnesota Medicine, Nov. 2009

As physicians, we are troubled by the direction of federal health care reform. Whether via a public health insurance option or an insurance mandate, the proposals on the table build on the structure of our broken system—the most costly, fragmented, and bureaucratic in the world.

President Barack Obama acknowledged in his national address this summer that a single-payer system is the only way to cover all Americans. We agree, and we encourage him to re-embrace this solution to the health care crisis.

Conventional wisdom leads us to believe there are only two culprits responsible for skyrocketing health care costs—doctors and patients. Doctors order too many unnecessary tests, and patients demand too much care. We acknowledge that overtreatment of patients guided by improper incentives must be addressed. The issue of patients overusing care also must be confronted. However, the problem of overuse is minuscule compared with the consequences of underuse. In its most extreme form, underuse of health care contributes to more than 45,000 deaths in the United States annually, as revealed in a study by Wilper et al. in the American Journal of Public Health. But blaming doctors and blaming patients ignores the elephant in the room: private insurance.

Our unique multipayer financing structure based on private health insurance produces enormous waste. Of every health care dollar spent in the United States, 31 cents is spent on administration (more than double that of other industrialized nations). So we are wary of proposals that seek to simply expand private insurance and in so doing provide a bailout for this industry. Such expansion may decrease our embarrassing numbers of uninsured, but it will not solve our problems. Private insurance has been likened to an umbrella that melts in the rain. Consider the disturbing fact that 62 percent of all personal bankruptcies are related to medical bills. More astonishing is the fact that 77 percent of Americans who go bankrupt because of medical bills had insurance when they became ill. Because it is a business, private insurance has, at its core, the bottom line. The only way to succeed is to selectively recruit healthy patients or to deny coverage to patients when they become sick. As professionals who strive to make sick people well, we find this model for our system illogical and fatally flawed.

Elimination of U.S.-style private insurance has been a prerequisite to achieving universal health care coverage in every other industrialized nation. We ask, “What if the rest of the world is right?” Only under single-payer can we eliminate the administrative costs associated with billing hundreds of payers and the sizeable overhead of the private insurance industry. These overhead dollars are spent marketing, underwriting, lobbying, and fighting claims—none of which makes our patients healthier. Elimination of this administrative waste would save more than $400 billion annually.

As physicians, we are obligated to use evidence-based medicine. The reform debate must be held to the same standard. Ample evidence, including studies by the Congressional Budget Office and the Government Accountability Office, shows single-payer can assure universal coverage while saving money. For those who say competition among insurers is needed to keep costs down, we say the experiment must end. It has been tried. It has failed. For those who ask whether something is better than nothing (ie, implementation of a public option), we again look at the evidence. A number of states have tried to patch their systems with piecemeal reforms over the past two decades. None has produced universal coverage while controlling costs.

For those who suggest we would lose choice under a single-payer system, we ask, choice of what? Choice of insurance plan—yes. Choice of doctor and hospital—no. A high-quality system is not one in which our patients choose their insurance plan but one in which they choose their doctor. Single-payer is the only reform option that actually expands choice. Bringing private insurance or a public option to more Americans retains limited provider networks and restricted choice.

For those who say single-payer is socialized medicine and worry that government bureaucrats will suddenly begin making health care decisions, they need to remember that single-payer is publicly financed but privately delivered. Medical decisions should be made by patients and doctors.

Given the magnitude of these difficult economic times, including a projected $1.8 trillion federal deficit for 2009 and rising unemployment, it is high time to reconsider the most fiscally conservative and financially sustainable option for reform—a single-payer system.

Ann Settgast and Elizabeth Frost are primary care physicians practicing in the Twin Cities. They co-chair the Minnesota chapter of Physicians for a National Health Program.

Mercer – Employers hold line on costs?

In a tough year, employers hold the line on health benefit cost increases

Mercer
November 18, 2009

* Employers hold cost growth to 5.5 percent in 2009, the lowest increase in a decade

* Growth in use of wellness or health management programs accelerates as large employers look to hold down cost without cost-shifting

* Small employers added consumer-directed health plans in 2009, helping to push up enrollment in these high-deductible plans to 9 percent of all covered employees

However, benefit cost growth outpaced inflation in 2009 by a widening margin.

The ongoing workforce health management (or “wellness”) movement gained considerable momentum in 2009, as offerings of virtually every type of health management program – from health risk assessments to disease management programs to behavior modification programs – rose significantly. While not conclusive, survey results suggest these programs are having an impact: Medical plan cost increases in 2009 were about two percentage points lower, on average, among employers with extensive health management programs than among those employers offering limited or no health management programs. And nearly three-fourths of employers that have measured the return on their investment in health management programs say they are satisfied with the year-over-year savings, lower utilization rates or improved health risks.  However, only about a third of all large employers have formally measured ROI.
 
“A lot more employers were willing to place their bet on health management in 2009,” said Linda Havlin, a worldwide partner and Mercer’s global health and benefits intellectual capital leader. “But they will want to see continual gains. Measuring health management ROI is inherently challenging and continues to evolve.”

Small employers held down cost increases by sharply raising deductibles for in-network PPO services. Consistent with past years, employers kept premium contributions relatively stable, choosing to keep the cost of coverage affordable while shifting the burden to those who use health services.

While growth in CDHP offerings in 2009 was evident only among small employers, the plans are still more common among larger employers: CDHPs are offered by 20 percent of employers with 500 or more employees, and 43 percent of those with 20,000 or more employees.

http://www.mercer.com/summary.htm?idContent=1364345

Comment:

By Don McCanne, MD

In their just released 2009 report on employer-sponsored health benefit programs Mercer seems to be celebrating the fact that this year employers have held the line on benefit cost increases. Is their optimism warranted?

Overall, the cost growth for 2009 is 5.5 percent, the lowest increase in a decade. However that increase outpaced inflation by a widening margin. The gap means that health care continues to consume an increasing percentage of wages, whether paid by the employee directly or through forgone wage increases.

Mercer cites two mechanisms for slowing cost increases: 1) small employers simply shifted more costs to the employees by raising deductibles, and 2) larger employers expanded their wellness and health management programs.

Since high deductible plans have lower premiums, small employers were able to avoid the full increases in health care costs, but their employees were further burdened by greater out-of-pocket expenses. Many large employers already offer high deductible plans and have been benefiting from this cost shift to the employee. Although Mercer frames this as being beneficial since it slows the increase in employers’ costs, it is detrimental for their employees since it expands the incidence of underinsurance.

Mercer suggests that wellness programs may have been the primary reason for the slowing of costs for large employers, but is that a valid conclusion? Most wellness interventions would demonstrate benefits in the out-lying years, but the early impact would be negligible on changing the need for health care services. Although many employers express satisfaction with these programs, most of them have not made any effort to measure the actual impact.

There is a far more logical explanation for the two percentage point advantage that they report in their health care costs. The health insurance underwriting cycle is a pattern of repeated larger gains and smaller gains that are due in part to periods of aggressive marketing by the insurers to gain greater market share. In those aggressive years, lower returns are the trade off. Once market share is established, premiums are pushed up to provide greater profit margins.

Insurers and plan administrators have found a new niche in wellness services. They are heavily marketing these products now and so are expected to be in the trough of the underwriting cycle. Once the market for these products stabilizes, we can expect the cycle to move into a peak, catching employers off guard when their health benefit program costs sharply increase in spite of having instituted these wellness programs. It is likely that the response of the employers will be to change their benefit designs which inevitably will result in even more underinsurance.

The point is that health care costs are continuing to increase at intolerable rates and that the purported slowing noted in this report is merely an artifact of the underwriting cycle combined with an expansion of underinsurance.

In an improved Medicare for all program underinsurance and underwriting cycles wouldn’t even exist, but Congress is insisting that we build on our current dysfunctional financing system, in spite of its perversities. How smart is that?

Conyers Derides White House Strategy on Health Care

By KATHARINE Q. SEELYE
Prescriptions Blog
New York Times
November 19, 2009

Representative John Conyers Jr., Democrat of Michigan and the second-most senior member of the House, today ripped into President Obama and Rahm Emanuel, the White House chief of staff, accusing them of “bowing down” to “nutty right-wing” proposals just to get a health care bill passed.

“I’m getting tired of saving Obama’s can in the White House,” Mr. Conyers, one of the most liberal members of the House and chairman of the Judiciary Committee, said in a radio interview on “The Bill Press Show.”

“I mean, he only won by five votes in the House, and this bill wasn’t anything to write home about,” Mr. Conyers said of the health care legislation that the House passed on Nov. 7. “The public option is only available — which is the only way you manage cost and give some competition to 1,300 other health insurance companies — the only way he could have got that through is that progressives held their nose and voted for the plan anyway.”

Mr. Conyers also complained that the idea of a single-payer system had been “taken off the table from the beginning.”

Asked if the president had shown enough leadership on health care, Mr. Conyers said, “Of course not, of course not.”

“You know,” he added, “holding hands out, and beer on Friday nights in the White House, and bowing down to every nutty right-wing proposal about health care, and saying on occasion that public options aren’t all that important, is doing a disservice to the Barack Obama that I first met, who was an ardent single-payer enthusiast himself.”

In the interview, Mr. Press said Democrats were saying that they feared the president would “just sign anything.”

Mr. Conyers agreed, saying “that’s essentially what Rahm Emanuel has said,” adding that he was tired of his approach of “give us anything and we will declare victory.”

“But look,” Mr. Conyers concluded, “the bill doesn’t go into effect for three years. Many of the people that we are trying to help will be dead by then.”

When the interview was over, Mr. Press said to his audience, “He’s in rare form this morning.”

http://prescriptions.blogs.nytimes.com/2009/11/19/conyers-derides-white-house-health-care-strategy/

Mercer – Employers hold line on costs?

In a tough year, employers hold the line on health benefit cost increases

Mercer
November 18, 2009
* Employers hold cost growth to 5.5 percent in 2009, the lowest increase in a decade
* Growth in use of wellness or health management programs accelerates as large employers look to hold down cost without cost-shifting
* Small employers added consumer-directed health plans in 2009, helping to push up enrollment in these high-deductible plans to 9 percent of all covered employees
However, benefit cost growth outpaced inflation in 2009 by a widening margin.
The ongoing workforce health management (or “wellness”) movement gained considerable momentum in 2009, as offerings of virtually every type of health management program – from health risk assessments to disease management programs to behavior modification programs – rose significantly. While not conclusive, survey results suggest these programs are having an impact: Medical plan cost increases in 2009 were about two percentage points lower, on average, among employers with extensive health management programs than among those employers offering limited or no health management programs. And nearly three-fourths of employers that have measured the return on their investment in health management programs say they are satisfied with the year-over-year savings, lower utilization rates or improved health risks. However, only about a third of all large employers have formally measured ROI.
“A lot more employers were willing to place their bet on health management in 2009,” said Linda Havlin, a worldwide partner and Mercer’s global health and benefits intellectual capital leader. “But they will want to see continual gains. Measuring health management ROI is inherently challenging and continues to evolve.”
Small employers held down cost increases by sharply raising deductibles for in-network PPO services. Consistent with past years, employers kept premium contributions relatively stable, choosing to keep the cost of coverage affordable while shifting the burden to those who use health services.
While growth in CDHP offerings in 2009 was evident only among small employers, the plans are still more common among larger employers: CDHPs are offered by 20 percent of employers with 500 or more employees, and 43 percent of those with 20,000 or more employees.
http://www.mercer.com/summary.htm?idContent=1364345

In their just released 2009 report on employer-sponsored health benefit programs Mercer seems to be celebrating the fact that this year employers have held the line on benefit cost increases. Is their optimism warranted?
Overall, the cost growth for 2009 is 5.5 percent, the lowest increase in a decade. However that increase outpaced inflation by a widening margin. The gap means that health care continues to consume an increasing percentage of wages, whether paid by the employee directly or through forgone wage increases.
Mercer cites two mechanisms for slowing cost increases: 1) small employers simply shifted more costs to the employees by raising deductibles, and 2) larger employers expanded their wellness and health management programs.
Since high deductible plans have lower premiums, small employers were able to avoid the full increases in health care costs, but their employees were further burdened by greater out-of-pocket expenses. Many large employers already offer high deductible plans and have been benefiting from this cost shift to the employee. Although Mercer frames this as being beneficial since it slows the increase in employers’ costs, it is detrimental for their employees since it expands the incidence of underinsurance.
Mercer suggests that wellness programs may have been the primary reason for the slowing of costs for large employers, but is that a valid conclusion? Most wellness interventions would demonstrate benefits in the out-lying years, but the early impact would be negligible on changing the need for health care services. Although many employers express satisfaction with these programs, most of them have not made any effort to measure the actual impact.
There is a far more logical explanation for the two percentage point advantage that they report in their health care costs. The health insurance underwriting cycle is a pattern of repeated larger gains and smaller gains that are due in part to periods of aggressive marketing by the insurers to gain greater market share. In those aggressive years, lower returns are the trade off. Once market share is established, premiums are pushed up to provide greater profit margins.
Insurers and plan administrators have found a new niche in wellness services. They are heavily marketing these products now and so are expected to be in the trough of the underwriting cycle. Once the market for these products stabilizes, we can expect the cycle to move into a peak, catching employers off guard when their health benefit program costs sharply increase in spite of having instituted these wellness programs. It is likely that the response of the employers will be to change their benefit designs which inevitably will result in even more underinsurance.
The point is that health care costs are continuing to increase at intolerable rates and that the purported slowing noted in this report is merely an artifact of the underwriting cycle combined with an expansion of underinsurance.
In an improved Medicare for all program underinsurance and underwriting cycles wouldn’t even exist, but Congress is insisting that we build on our current dysfunctional financing system, in spite of its perversities. How smart is that?